SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number 333-34835-01
PRICE DEVELOPMENT COMPANY,LIMITED PARTNERSHIP
---------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
MARYLAND 87-0516235
-------- ----------
<S> <C> <C>
(State of organization) (I.R.S. Employer Identification No.)
35 CENTURY PARK-WAY
SALT LAKE CITY, UTAH 84115 (801) 486-3911
--------------------------- -------------
(Address of principal executive offices, (Registrant's telephone number, including area code)
including zip code)
</TABLE>
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No
[X]
<PAGE>
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
FORM 10-Q
INDEX
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<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION PAGE
- ------------------------------ ----
<S> <C> <C> <C> <C>
Item 1. Financial Statements 3
Condensed Consolidated Balance Sheet as of June 30, 1999
and December 31, 1998 4
Condensed Consolidated Statement of Operations for the Three Months
and Six Months Ended June 30, 1999 and 1998 5
Condensed Consolidated Statement of Cash Flows for the
Six Months Ended June 30, 1999 and 1998 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
PART II: OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
</TABLE>
<PAGE> 2
Certain matters discussed under the captions "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Quantitative and
Qualitative Disclosures About Market Risk" and elsewhere in the Quarterly
Report on Form 10-Q may constitute forward-looking statements and as such may
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance and achievements of Price Development
Company, Limited Partnership (the "Operating Partnership") to be materially
different from future results, performance or achievements expressed or implied
by such forward-looking statements.
PART I
ITEM 1. FINANCIAL STATEMENTS
The information furnished in the accompanying financial statements listed
in the index on page 2 of this Quarterly Report on Form 10-Q reflects only
normal recurring adjustments which are, in the opinion of management, necessary
for a fair presentation of the aforementioned financial statements for the
interim periods.
The aforementioned financial statements should be read in conjunction with
the notes to the financial statements and Management's Discussion and Analysis
of Financial Condition and Results of Operations and the Operating
Partnership's Quarterly Report on Form 10-Q for the three months ended March
31, 1999 and Annual Report on Form 10-K for the year ended December 31, 1998,
including the financial statements and notes thereto.
<PAGE> 3
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1999 1998
<S> <C> <C> <C> <C> <C>
----------------- ----------------
ASSETS
Real Estate Assets, Including Assets Under Development
of $24,738 and $28,073 $ 840,852 $ 815,756
Less: Accumulated Depreciation (123,858) (114,136)
---------------- ----------------
Net Real Estate Assets 716,994 701,620
Cash 4,833 5,123
Restricted Cash 4,118 3,605
Other Assets 20,521 22,807
---------------- ----------------
$ 746,466 $ 733,155
================ ================
LIABILITIES AND PARTNERS' CAPITAL
Borrowings $ 469,285 $ 472,990
Accounts Payable and Accrued Expenses 18,976 20,411
Distributions Payable 9,894 --
Other Liabilities 775 798
---------------- ----------------
498,930 494,199
---------------- ----------------
Minority Interest 2,941 2,035
---------------- ----------------
Commitments and Contingencies
Partners' Capital
General Partner 200,525 204,384
Preferred Limited Partner 12,345 --
Common Limited Partners 31,725 32,537
---------------- ----------------
244,595 236,921
---------------- ----------------
$ 746,466 $ 733,155
================ ================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER PARTNERSHIP UNIT AMOUNTS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 1998 1999 1998
--------------- ---------------- -------------- -------------
Revenues
Minimum Rents $ 23,215 $ 18,166 $ 48,169 $ 36,077
Percentage and Overage Rents 1,136 1,239 2,138 2,309
Recoveries from Tenants 7,159 4,793 13,927 10,133
Interest 161 105 284 194
Other 67 104 209 197
--------------- ---------------- -------------- --------------
31,738 24,407 64,727 48,910
--------------- ---------------- -------------- --------------
Expenses
Operating and Maintenance 5,332 3,672 10,778 7,838
Real Estate Taxes and Insurance 3,531 2,657 6,839 5,297
General and Administrative 1,737 1,426 3,531 3,000
Depreciation 6,195 3,918 11,442 7,564
Amortization of Deferred Financing 415 485 838 744
Costs
Amortization of Deferred Leasing 177 175 345 342
Costs
Interest 7,340 3,838 14,699 7,796
--------------- ---------------- -------------- --------------
24,727 16,171 48,472 32,581
--------------- ---------------- -------------- --------------
7,011 8,236 16,255 16,329
Minority Interest in Loss (Income) of
Consolidated Partnerships 96 (94) (927) (196)
--------------- ---------------- -------------- --------------
Net Income 7,107 8,142 15,328 16,133
Preferred Unit Distribution (211) -- (211) --
--------------- ---------------- -------------- --------------
Net Income Available to Common Unitholders $ 6,896 $ 8,142 $ 15,117 $ 16,133
=============== ================ ============== ==============
Basic Earnings Per Partnership Unit $ 0.32 $ 0.38 $ 0.71 $ 0.76
=============== ================ ============== ==============
Diluted Earnings Per Partnership Unit $ 0.32 $ 0.38 $ 0.71 $ 0.75
=============== ================ ============== ==============
Basic Weighted Average Number of
Partnership Units Outstanding 21,318 21,296 21,318 21,293
Add: Dilutive Effect of Stock Options 56 124 47 128
--------------- --------------- -------------- --------------
Diluted Weighted Average Number of
Partnership Units Outstanding 21,374 21,420 21,365 21,421
=============== =============== ============== ==============
</TABLE>
See accompanying notes to financial statements.
>PAGE> 6
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999 1998
-------------------- -------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 28,359 $ 30,917
-------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Real Estate Assets, Developed or Acquired,
Net of Accounts Payable (26,381) (37,151)
(Increase) Decrease in Restricted Cash (513) 108
Net Cash Used in Investing Activities (26,894) (37,043)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Borrowings 20,284 112,977
Repayment of Borrowings (23,989) (99,264)
Proceeds from Sale of Partnership Units -- 507
Proceeds from Issuance of Preferred Units 12,345 --
Distributions to Preferred Unitholders (211) --
Distributions to Minority Interests (32) (141)
Distributions to Partners (9,894) (9,565)
Deferred Financing Costs (258) (1,488)
-------------------- ------------------
Net Cash (Used in) Provided by Financing Activities (1,755) 3,026
-------------------- ------------------
Net Decrease in Cash (290) (3,100)
Cash, Beginning of Period 5,123 5,603
-------------------- ------------------
Cash, End of Period $ 4,833 $ 2,503
==================== ==================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER PARTNERSHIP UNIT DATA)
1. BUSINESS SUMMARY AND SIGNIFICANT ACCOUNTING POLICIES
Price Development Company, Limited Partnership (the "Operating
Partnership") is primarily engaged in the business of owning, leasing,
managing, operating, developing and redeveloping malls, community centers and
other commercial properties. The tenant base includes primarily national retail
chains and local retail companies. Consequently, the credit risk is
concentrated in the retail industry. JP Realty, Inc., a Maryland corporation
(the "Company"), is the sole general partner of the Operating Partnership. The
Company conducts all of its business operations through, and holds as of
June 30, 1999 an 81% controlling general partner interest in, the
Operating Partnership. Since there are no material differences between
the Company and the Operating Partnership they will be collectively referred
to as the "Company" unless the context requires otherwise.
The interim financial data for the three and six-months ended June 30, 1999
and 1998 is unaudited; however, in the opinion of the Company, the interim
financial data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the interim
periods.
On April 1, 1998, the Company stopped accruing revenues for percentage and
overage rents based upon the adoption of Emerging Issues Task Force Issue 98-9.
On January 1, 1999, the Company started accruing these revenues again on a
straight-line basis and will continue to do so as allowed by the Emerging
Issues Task Force in late 1998. Certain amounts in the 1998 financial
statements have been restated to conform with the 1999 presentation.
2. BORROWINGS
<TABLE>
<CAPTION>
JUNE 30,
<S> <C> <C> <C>
1999
----------------
Notes, unsecured; interest at 7.29%, maturing 2005 to 2008 $ 100,000
Notes, secured by real estate; interest at 6.37%, due in 2001 95,000
Credit facility, unsecured; weighted average interest at 6.3%
during 1999 due in 2000 88,100
Mortgage payable, secured by real estate; interest at 6.68%,
due in 2008 83,869
Construction loan, secured by real estate; interest at 6.56%
as of June 30, 1999, due in 1999, subsequently extended to 2001 47,505
Construction loan, secured by real estate; interest at 6.56%
as of June 30, 1999, due in 2001 37,234
Mortgage payable, secured by real estate; interest at 8.5%,
due in 2000 12,341
Other notes payable, secured by real estate; interest ranging
from 7.0% to 9.99% maturing 2000 to 2095 5,236
----------------
$ 469,285
================
</TABLE>
During the first and second quarters of 1999, draws in the amount of
$9,684 were made on the construction loan facility collateralized by Provo
Towne Centre. The proceeds along with operating cash and proceeds from the
issuance of Operating Partnership preferred units were used to reduce the
Operating Partnership's unsecured credit facility by $12,700 since December 31,
1998.
The Operating Partnership extended its $10,000 unsecured line of credit
for 60 days to May 15, 1999 at which time it expired. The fee to extend the
unsecured line was $3.
3. PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma summary financial information for the
six months ended June 30, 1999 and 1998, is presented as if the acquisition of
NorthTown Mall and the issuance of Series A preferred units (Note 4) had been
consummated as of January 1, 1998.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30,
------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999 1998
------------------- ------------------
Total Revenues $ 64,727 $ 56,037
Net Income Available to Common Unitholder $ 15,018 $ 15,375
Basic Earnings Per Partnership Unit Share $ 0.70 $ 0.72
Diluted Earnings Per Partnership Unit Share $ 0.70 $ 0.72
</TABLE>
The pro forma financial information summarized above is presented for
information purposes only and may not be indicative of what actual results of
operations would have been had the acquisition of NorthTown Mall and issuance
of Series A preferred units been completed as of the beginning of the periods
presented, nor does it purport to represent the results of operations for
future periods.
4. PARTNERS' CAPITAL
The following table summarizes changes in partners' capital since December
31, 1998:
<TABLE>
<CAPTION>
PREFERRED General COMMON
LIMITED Partner Limited TOTAL
PARTNER Partners
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------------- ---------- ---------- ----------
Partners' Capital at December 31, 1998 $ -- $ 204,384 $ 32,537 $ 236,921
Conversion of Limited Partners' Interests -- 2 (2) --
Preferred Units Issued 12,345 -- -- 12,345
Distributions Paid -- (8,184) (1,710) (9,894)
Distributions Accrued -- (8,184) (1,710) (9,894)
Net Income 211 12,507 2,610 15,328
Preferred Unit Distribution (211) -- -- (211)
------------- ---------- ---------- ----------
Partners' Capital at June 30, 1999 $ 12,345 $ 200,525 $ 31,725 $ 244,595
============= ========== ========== ==========
</TABLE>
In April 1999, the Operating Partnership issued 510,000 Series A 8.75%
cumulative redeemable preferred units (the "Series A Preferred Units") with a
liquidation value of twenty-five dollars per unit, in exchange for a gross
contribution of $12,750. The Operating Partnership used the proceeds, less
applicable transaction costs and expenses of $405, for the repayment of
borrowings outstanding under the credit facility. The Series A Preferred
Units, which may be redeemed by the Operating Partnership on or after April 23,
2004, have no stated maturity or mandatory redemption and are not convertible
into any other securities of the Operating Partnership. The Series A Preferred
Units are exchangeable at the option of the preferred unitholder at a rate of
one Series A Preferred Unit for one share of the Company's Series A 8.75%
cumulative redeemable preferred stock beginning April 23, 2009, or earlier
under certain circumstances.
The Operating Partnership makes quarterly distributions to the Series A
Preferred unitholder on the last day of each March, June, September and
December. For the six months ended June 30, 1999, distributions for the Series
A Preferred Units were $211.
5. SEGMENT INFORMATION
In 1998, the Company adopted SFAS No. 131. The prior years' information
has been restated to present the Operating Partnership's three reportable
segments - 1) regional malls, 2) community centers, and 3) commercial
properties in conformity with SFAS No. 131.
The accounting policies of the segments are the same as those described in
the "Summary of Significant Accounting Policies." Segment data includes total
revenues and property, net operating income (revenues less operating and
maintenance expense and real estate taxes and insurance expense ("Property
NOI")). The Operating Partnership evaluates the performance of its segments
and allocates resources to them based on Property NOI.
The regional mall segment consists of 17 regional malls in seven states
containing approximately 9,810,000 square feet of total gross leasable area
("GLA") and which range in size from approximately 296,000 to 1,171,000 square
feet of total GLA.
The community center segment consists of 25 properties in seven states
containing over 3,185,000 square feet of total GLA and two freestanding retail
properties containing approximately 5,000 square feet of GLA.
The commercial properties include six mixed-use commercial/business
properties with 38 commercial buildings containing approximately 1,354,000
square feet of GLA which are located primarily in the Salt Lake City, Utah area
where the Company's headquarters is located.
The table below presents information about the Operating Partnership's
reportable segments for the six months ending June 30:
<TABLE>
<CAPTION>
REGIONAL COMMUNITY COMMERCIAL
MALLS CENTERS PROPERTIES OTHER TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
--------- ----------- ----------- --------- ---------
1999 $ 49,799 $ 10,793 $ 3,634 $ 501 $ 64,727
- ----
Total Revenues
Property Operating Expenses (1) 14,719 2,070 828 -- 17,617
--------- ----------- ----------- --------- ---------
Property NOI (2) 35,080 8,723 2,806 501 47,110
Unallocated Expenses (3) -- -- -- 30,855 30,855
Unallocated Minority Interest (4) -- -- -- 927 927
Consolidated Net Income -- -- -- -- 15,328
Additions to Real Estate Assets 21,048 4,820 746 74 26,688
Total Assets (5) 610,582 83,785 31,119 20,980 746,466
1998 $ 35,852 $ 8,900 $ 3,781 $ 377 $ 48,910
Total Revenues
Property Operating Expenses (1) 10,489 1,898 748 -- 13,135
--------- ------------ ------------ ---------- ----------
Property NOI (2) 25,363 7,002 3,033 377 35,775
Unallocated Expenses (3) -- -- -- 19,446 19,446
Unallocated Minority Interest (4) -- -- -- 196 196
Consolidated Net Income -- -- -- -- 16,133
Additions to Real Estate Assets 28,128 4,841 310 -- 33,279
Total Assets (5) 448,314 84,074 31,622 5,752 569,762
</TABLE>
- -----------------------------------
(1) Property operating expenses consist of operating, maintenance, real
estate taxes and insurance as listed in the condensed consolidated
statement of operations.
(2) Total revenues minus property operating expenses.
(3) Unallocated expenses consist of general and administrative,
depreciation, amortization of deferred financing costs, amortization of
deferred leasing costs and interest as listed in the condensed
consolidated statement of operations.
(4) Unallocated minority interest includes minority interest in income of
consolidated partnerships and minority interest of the Operating
Partnership unitholders as listed in the condensed consolidated
statement of operations.
(5) Unallocated other total assets include cash, corporate offices,
miscellaneous real estate and deferred financing costs.
<PAGE> 9
6. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Price James, a consolidated partnership of the Operating Partnership,
received a building appraised at $2,000 in exchange for accounts receivable of
$43 and $1,957 for termination of a long-term ground lease which amount was
recorded in minimum rents.
Holders of the Operating Partnership's common units elected to convert
200 and 125 common units having a recorded value of $2 and $1, respectively,
into an equal number of shares of common stock during the six months ended June
30, 1999 and 1998, respectively.
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1999 1998
<S> <C> <C> <C> <C> <C>
--------------------- --------------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
The following non-cash transactions occurred:
Distributions Accrued For General Partner Not Paid $ 8,184 $ 7,910
Distributions Accrued For Limited Partners Not Paid $ 1,710 $ 1,655
</TABLE>
7. SUBSEQUENT EVENTS
On July 21, 1999, the Operating Partnership borrowed $34,500 from its
credit facility. The Operating Partnership used the proceeds to reduce the
$95,000 notes secured by real estate to $61,223. This transaction unencumbered
four regional mall properties.
On July 28, 1999, the Operating Partnership issued 3.8 million Series B
8.95% cumulative redeemable preferred units (the "Series B Preferred Units"),
with a liquidation value of twenty-five dollars per unit, in exchange for a
gross contribution of $95,000. The Company used the proceeds, less applicable
transaction costs and expenses, to repay $90,000 in borrowings under the credit
facility and increase operating cash. The Series B Preferred Units, which may
be redeemed by the Operating Partnership on or after July 28, 2004, have no
stated maturity or mandatory redemption and are not convertible into any other
securities of the Operating Partnership. The Series B Preferred Units are
exchangeable at the option of the preferred unitholder at a rate of one Series
B Preferred Unit for one share of the Company's Series B 8.95% cumulative
redeemable preferred stock beginning July 28, 2009, or earlier under certain
circumstances.
On July 30, 1999, the Company borrowed $6,000 from the credit facility
and used the proceeds to pay $5,905 on the $47,505 Spokane Valley Mall
construction loan. The Company exercised the option to extend the construction
loan to August 2001. The fee to extend the construction loan was $154.
<PAGE> 10
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
------------------------------------------------------------------------
OF OPERATIONS
-------------
OVERVIEW
The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Operating Partnership and the notes
thereto appearing elsewhere herein.
JP Realty, Inc. is a fully integrated, self-administered and self-managed
REIT primarily engaged in the ownership, leasing, management, operating,
development, redevelopment and acquisition of retail properties in Utah, Idaho,
Colorado, Arizona, Nevada, New Mexico and Wyoming (the "Intermountain Region"),
as well as in Oregon, Washington and California. JP Realty, Inc. conducts all
of its business operations through, and held an 81% controlling general partner
interest in, Price Development Company, Limited Partnership ("the Operating
Partnership") as of June 30, 1999. The Operating Partnership's existing
portfolio consists of 50 properties, in three operating segments, including 17
enclosed regional malls, 25 community centers together with two freestanding
retail properties and six mixed-use commercial properties.
The Operating Partnership's operations before depreciation were
positively impacted by the August 1998 acquisition of NorthTown Mall as well as
its development activities which added a combined 1,028,000 square feet of
gross leasable area ("GLA") to the retail portfolio, 15,000 in March 1998,
491,000 in August 1998, and 522,000 in October 1998.
JP Realty, Inc. together with the Operating Partnership and its other
subsidiaries, shall be referred to herein as (the "Company").
CHANGE IN REVENUE RECOGNITION POLICY
On April 1, 1998, the Company stopped accruing revenues for percentage
and overage rents based upon the adoption of Emerging Issues Task Force Issue
98-9. On January 1,1999, the Company started accruing these revenues again on a
straight-line basis and will continue to do so as allowed by the Emerging
Issues Task Force in late 1998. Certain amounts in the 1998 financial
statements have been restated to conform with the 1999 presentation.
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1999 TO SIX MONTHS ENDED JUNE 30,
1998 (DOLLARS IN THOUSANDS)
Total revenues for the six months ended June 30, 1999 increased $15,817
or 32% to $64,727 as compared to $48,910 in 1998. This increase is primarily
attributable to a $12,092 or 34% increase in minimum rents to $48,169 as
compared to $36,077 in 1998. Additionally, percentage and overage rents
decreased $171 or 7% to $2,138 as compared to $2,309 in 1998. The decrease in
percentage and overage rents is primarily the result of changes in estimates
for the six months and changes in leases made with tenants.
The August 1998 acquisition of NorthTown Mall, the August expansion of
Boise Towne Square, the October 28, 1998 opening of Provo Towne Centre, the
October 1998 addition of Sears to Red Cliffs Mall and Sears Tire and Battery to
Red Cliffs Plaza, contributed $8,462 to the minimum rent increase and $308 to
percentage and overage rents. Minimum rents increased $1,957 from a non-cash
transaction in which a consolidated partnership of the Operating Partnership
received a building in exchange for cancellation of a long-term ground lease.
The additional $1,673 increase in minimum rents was the result of increases
experienced for the balance of the property portfolio.
Revenues recognized from straight-line rents were $623 in 1999 and $369
in 1998.
Recoveries from tenants increased $3,794 or 37% to $13,927 as compared to
$10,133 in 1998. Property operating expenses, including operating and
maintenance, and real estate taxes and insurance increased $2,940 or 38% and
$1,542 or 29% respectively. The acquisition of NorthTown Mall, the opening of
Provo Towne Centre and the expansion of Boise Towne Square contributed $2,734
to recoveries from tenants, $2,642 to property operating expenses, including
operating and maintenance, and $1,120 to real estate taxes and insurance.
Recoveries from tenants as a percentage of property operating expenses were 79%
compared to 77% in 1998.
Depreciation and amortization increased $3,975 or 46% to $12,625 as
compared to $8,650 in 1998. This increase is primarily due to the acquisition
of NorthTown Mall, changes in asset lives on certain tenant improvements and
the increase in newly developed GLA.
Interest expense increased $6,903 or 89% to $14,699 as compared to
$7,796 in 1998. This increase resulted from additional borrowings used to
acquire NorthTown Mall and newly constructed GLA and a decrease in capitalized
interest due to completed GLA. Interest capitalized on projects under
development was $1,039 in 1999 as compared to $1,980 in 1998.
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1999 TO THREE MONTHS ENDED JUNE
30, 1998 (DOLLARS IN THOUSANDS)
Total revenues for the three months ended June 30, 1999 increased $7,331
or 30% to $31,738 as compared to $24,407 in 1998. This increase is primarily
attributable to a $5,049 or 28% increase in minimum rents to $23,215 as
compared to $18,166 in 1998. Additionally, percentage and overage rents
decreased $103 or 8% to $1,136 as compared to $1,239 in 1998. The decrease in
percentage and overage rents is primarily the result of changes in estimates
for the three months and changes in leases made with tenants.
The August 1998 acquisition of NorthTown Mall, the August expansion of
Boise Towne Square, the October 28, 1998 opening of Provo Towne Centre, and the
October 1998 addition of Sears to Red Cliffs Mall and Sears Tire and Battery to
Red Cliffs Plaza, contributed $4,098 to the minimum rent increased $196 to
percentage and overage rents. The remaining $951 increase in minimum rents was
the result of increases experienced for the balance of the property portfolio.
Revenues recognized from straight-line rents were $343 in 1999 and $185
in 1998.
Recoveries from tenants increased $2,366 or 49% to $7,159 as compared to
$4,793 in 1998. Property operating expenses, including operating and
maintenance, and real estate taxes and insurance increased $1,660 or 45% and
$874 or 33% respectively. The acquisition of NorthTown Mall, the opening of
Provo Towne Centre and the expansion of Boise Towne Square contributed $1,470
to recoveries from tenants, $1,358 to property operating expenses, including
operating and maintenance, and $530 to real estate taxes and insurance.
Recoveries from tenants as a percentage of property operating expenses were 81%
in 1999 compared to 76% in 1998.
Depreciation and amortization increased $2,209 or 48%to $6,787 as
compared to $4,578 in 1998. This increase is primarily due to the acquisition
of the NorthTown Mall, changes in asset lives on certain tenant improvements
and the increase in newly developed GLA.
Interest expense increased $3,502 or 91% to $7,340 as compared to $3,838
in 1998. This increase resulted from additional borrowings used to acquire
NorthTown Mall and newly constructed GLA and a decrease in capitalized interest
due to completed GLA. Interest capitalized on projects under development was
$534 in 1999 as compared to $1,107 in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal uses of its liquidity and capital resources have
historically been for distributions, property acquisitions, property
development, expansion and renovation programs and debt repayment. To maintain
its qualification as a REIT under the Internal Revenue Code of 1986, as amended
(the "Code"), JP Realty, Inc. is required to distribute to its shareholders at
least 95% of its "Real Estate Investment Trust Taxable Income," as defined in
the Code. During the quarter ended June 30, 1999, the Company declared a
distribution of $.465 per share payable July 20, 1999 to the shareholders and
unitholders of record as of July 8, 1999.
The Company's principal source of liquidity is its cash flow from
operations generated from its real estate investments. As of June 30, 1999,
the Company's cash and restricted cash amounted to approximately $8.9 million.
In addition to its cash and restricted cash, unused capacity under its credit
facility at June 30, 1999, totaled $102.4 million.
The Company expects to meet its short-term cash requirements, including
distributions, recurring capital expenditures related to maintenance and
improvement of existing properties, through undistributed funds from
operations, cash balances and advances under the credit facility.
The Company's principal long-term liquidity requirements will be the
repayment $95 million mortgage debt, which matures in 2001, the repayment of
the $100 million senior notes principal payable at $25 million a year starting
in March 2005, the repayment of the $83.9 million first mortgage, which
requires a balloon payment of approximately $74.1 million in September 2008,
and the repayment of outstanding balances under the $200 million credit
facility and the repayment of principal on the Spokane Valley Mall and Provo
Towne Centre Construction loans of approximately $47.5 million and $37.2
million due October 2000, August 2001 and July 2001, respectively. On July 30,
1999, the Company paid $5.9 million of principal on the Spokane Valley Mall
construction loan and exercised the option to extend the repayment of the
remaining balance to August 2001. On July 21, 1999, the Company used proceeds
from the credit facility to reduce the $95 million mortgage debt to $61.2
million and unencumbered four mall properties.
The Operating Partnership is continuing the development of Provo Towne
Centre, an enclosed regional mall in Provo, Utah through its consolidated
partnership, Provo Mall Development Company, Ltd. On September 4, 1998, Provo
Mall Development Company, Ltd. entered into a $50 million construction loan
facility to meet its development and construction needs regarding the Provo
project. The construction loan facility is guaranteed by the Operating
Partnership. The Provo project has incurred costs of approximately $71.7
million as of June 30, 1999, which have been funded from the Company's credit
facilities and the construction loan facility. As of June 30, 1999, borrowings
on the construction loan facility were approximately $37.2 million. This
property will also represent a future long-term capital need for the Company,
as the total costs of the project are estimated to be approximately $77
million. The Company expects to fund this project through advances under its
credit facilities in combination with its construction loan facility. Provo
Towne Centre opened October 28, 1998 and contains approximately 723,300 square
feet of total GLA. The mall is currently developing a sixteen-screen Cinemark
Theater which will add approximately 74,000 square feet of the additional GLA
to the mall and is expected to open in the fourth quarter 1999.
The Company is constructing a new mall at Sierra Vista, Arizona. The
project is expected to be completed in October 1999 and will add approximately
367,000 square feet of total GLA. The construction costs have been financed
with the credit facility. The Company is also contemplating the expansion and
renovation of several of its existing properties and additional development
projects and acquisitions as a means to expand its portfolio. The Company does
not expect to generate sufficient funds from operations to meet such long-term
needs and intends to finance these costs primarily through advances under the
credit facilities together with equity and debt offerings and individual
property financing. The availability of such financing will influence the
Company's decision to proceed with, and the pace of, its development and
acquisition activities.
On April 23, 1999, the Operating Partnership issued 510,000, Series A 8.75%
cumulative redeemable preferred units in a private placement. The units
represent a limited partnership interest (the "Series A Preferred Units") with
a liquidation value of twenty-five dollars per unit. The Operating
Partnership used the proceeds of $12.8 million, less applicable transaction
costs and expenses, for the partial repayment of borrowings outstanding under
the credit facility. On July 28, 1999, the Operating Partnership issued 3.8
million Series B 8.95% cumulative redeemable perpetual preferred units in a
private placement. The units represent a limited partnership interest (the
"Series B Preferred Units") with a liquidation value of twenty-five dollars per
unit. The Company used the contribution proceeds of $95 million, less
applicable transaction costs and expenses, for the partial repayment of
borrowings outstanding under the credit facility and increase in operating
cash. Quarterly distributions to the Series A and Series B Preferred
unitholders are due on the last day of each March, June, September and
December.
On September 2, 1997, the Company and the Operating Partnership filed a
shelf registration statement on Form S-3 with the Securities and Exchange
Commission for the purpose of registering common stock, preferred stock,
depositary shares, common stock warrants, debt securities and guaranties. This
registration statement, when combined with the Company's unused portion of its
previous shelf registration, would allow for up to $400 million of securities
to be offered by the Company and the Operating Partnership. On March 11, 1998,
pursuant to this registration statement, the Operating Partnership issued $100
million of ten-year senior unsecured notes bearing annual interest at a rate of
7.29%. The Operating Partnership had entered into an interest rate protection
agreement in anticipation of issuing these notes and received $270 as a result
of terminating this agreement making the effective rate of interest on these
notes 7.24%. Interest payments are due semi annually on March 11th and
September 11th of each year. Principal payments of $25 million are due
annually beginning March 2005. The proceeds were used to partially repay
outstanding borrowings under the credit facility.
The Company intends to incur additional borrowings in the future in a
manner consistent with its policy of maintaining a conservative ratio of debt-
to-total market capitalization. The Company's ratio of debt-to-total market
capitalization was approximately 51% at June 30, 1999.
YEAR 2000 ISSUES
In the past, many computer software programs were written using two digits
rather than four to define the applicable year. As a result, date-sensitive
computer software may recognize a date using "00" as the year 1900 rather than
the year 2000. This is generally referred to as the Year 2000 ("Y2K") issue.
If this situation occurs, the potential exists for computer system failures or
miscalculations by computer programs, which could disrupt the Company's
operations.
The Company has developed a comprehensive strategy for updating its systems
for Y2K compliance. The Company's information technology ("IT") systems
include software and hardware purchased from outside vendors, as well as in-
house developed software. The Company believes that vendor developed software
and hardware will be made Y2K compliant through vendor-provided updates or
replacement with other Y2K compliant software and hardware that will be
installed, tested and in use prior to the end of 1999. In-house developed
software has been identified and assessed. Modifications are being and will
continue to be made as necessary to bring such software into Y2K compliance and
validate such in-house developed compliance prior to the end of 1999.
The Company believes that the identification of the Company's non-IT
systems which may be impacted by the Y2K problem, including those relating to
property management (e.g. alarm systems and HVAC systems) has been completed,
and that modifications, validation and implementation of necessary changes will
be completed during 1999.
The Company is also identifying third parties with which it has a
significant relationship that, in the event of a Y2K failure, could have a
material impact on its financial position or operating results. Third parties
include energy and utility suppliers, creditors, service and product suppliers
and the Company's significant tenants. These relationships, especially those
associated with certain suppliers and tenants, are material to the Company and
a Y2K failure for one or more of these parties could result in a material
adverse effect on the Company's operating results and financial position. The
Company continues to make inquiries of these third parties to assess their Y2K
readiness. The Company expects that this process will be on-going throughout
the current year.
The Company currently estimates that the costs to address Y2K, issues which
through June 30, 1999 totaled approximately $70,000, will not exceed $200,000.
Costs include incremental salary and fringe benefits for personnel, hardware
and software costs, and consulting and travel expenses associated with
addressing Y2K issues. These costs will be expensed as incurred or, in the
case of equipment or software replacement, will be capitalized and depreciated
over the expected useful life. The Company recognizes that the total cost
estimate is likely to increase as it completes its assessment of non-IT
systems. The Company is not currently able to reasonably estimate the ultimate
cost to be incurred for the assessment, remediation, upgrade, replacement and
testing of its impacted non-IT systems.
The worst case Y2K scenarios could be as insignificant as a minor
interruption in property management services provided to tenants at the
Company's Properties resulting from unanticipated problems encountered in the
IT systems of the Company or any of the significant third parties with whom the
Company does business. The pervasiveness of the Y2K issue makes it likely that
previously unidentified issues will require remediation during the normal
course of business. In such a case, the Company anticipates that transactions
could be processed manually while IT and other systems are repaired and that
such interruptions would have a minor effect on the Company's operations. On
the other hand, a worst case Y2K scenario could be as far reaching as an
extended loss of utility service resulting from interruptions at the point of
power generation, on-line transmission, or local distribution to the Company's
Properties. Such an interruption could result in an inability to provide
tenants with access to their spaces thereby affecting the Company's ability to
collect rents and pay its obligations which could result in a material adverse
effect on the Company's operating results and financial position.
The statements contained in this Quarterly Report of Form 10-Q that are not
purely historical fact are forward looking statements, including statements
regarding the Company's expectations, budgets, estimates, contemplations and
Y2K compliance. All forward looking statements included in this document are
based on information available to the Company on the date hereof, and the
Company assumes no obligation to update any such forward looking statement. It
is important to note that the Company's actual results could differ materially
from those in such forward looking statements. Certain factors that might
cause such differences include those relating to changes in economic climate,
local conditions, law and regulations, the availability of acceptance financing
the relative illiquidity of real property investments, the potential bankruptcy
of tenants and the development, redevelopment or expansion of properties and
unexpected developments surrounding the Y2K issues.
<PAGE> 14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Dollars
-----------------------------------------------------------
in Thousands)
The Operating Partnership's exposure to market risk is limited to
fluctuations in the general level of interest rates on its current and future
fixed and variable rate debt obligations. Even though its philosophy is to
maintain a fairly low tolerance to interest rate fluctuation risk, the
Operating Partnership is still vulnerable, however, to significant fluctuations
in interest rates on its variable rate debt, on any future repricing or
refinancing of its fixed rate debt and on future debt.
The Operating Partnership uses long-term and medium-term debt as a source
of capital. On June 30, 1999, the Operating Partnership had $296,445 of fixed
rate debt which consisted of $100,000 unsecured public bonds and $196,445 in
mortgages and notes secured by real estate. The various fixed rate debt
instruments mature starting in the year 2000 through 2095. The average rate of
interest on the fixed rate debt is 6.9%. When debt instruments of this type
mature, the Operating Partnership typically refinances such debt at the then-
existing market interest rates which may be more or less than the interest
rates on the maturing debt. In addition, the Operating Partnership may attempt
to reduce interest rate risk associated with a forecasted issuance of new fixed
rate debt by entering into interest rate protection agreements. The Operating
Partnership does not have any fixed rate debt maturing in 1999.
The Operating Partnership's credit facilities and existing construction
loans have variable interest rates and any fluctuation in interest rates could
increase or decrease the Operating Partnership's interest expense. At June 30,
1999, the Operating Partnership had approximately $172,840 in outstanding
variable rate debt. If the interest rate for the Operating Partnership's
variable rate debt increased or decreased by 1% during 1999, the Operating
Partnership's interest rate expense on its outstanding variable rate debt would
increase or decrease, as the case may be, by approximately $1,728.
Due to the uncertainty of fluctuations in interest rates and the specific
actions that might be taken by the Operating Partnership to mitigate the impact
of such fluctuations and their possible effects, the foregoing sensitivity
analysis assumes no changes in the Operating Partnership's financial structure.
<PAGE> 16
PART II
ITEM 1. LEGAL PROCEEDINGS
-----------------
The Operating Partnership is not aware of any pending or threatened
litigation at this time that will have a material adverse effect on the
Operating Partnership or any of its properties.
ITEM 2. CHANGES IN SECURITIES
---------------------
On April 23, 1999, the Operating Partnership sold 510,000 Series A
Preferred Units to SSB Tax Advantage Exchange Fund I, LLC for a purchase price
of $12,750,000. The Series A Preferred Units were issued in a private
transaction exempt from the registration requirements of the Securities Act of
1933 by virtue of Section 4(2) thereunder. The Series A Preferred Units are
exchangeable at the option of the preferred unitholder at a rate of one Series
A Preferred Unit for one share of the Company's Series A 8.75% cumulative
redeemable preferred stock beginning April 23, 2009, or earlier under certain
circumstances.
On July 28, 1999, the Operating Partnership sold 3,800,000 Series B
Preferred Units to Belcrest Realty Corporation and Belair Real Estate
Corporation for an aggregate purchase price of $95,000,000. The Series B
Preferred Units were issued in a private transaction exempt from the
registration requirements of the Securities Act of 1933 by virtue of Section
4(2) thereunder. The Series B Preferred Units are exchangeable at the option
of the preferred unitholder at a rate of one Series B Preferred Unit for one
share of the Company's Series B 8.95% cumulative redeemable preferred stock
beginning July 28, 2009, or earlier under certain circumstances.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Not applicable
ITEM 5. OTHER INFORMATION
-----------------
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(A) EXHIBITS
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT PAGE
Number Description Number
- ------ ----------- ------
<S> <C> <C> <C>
4.1 Form of Debt Security (4.6)*
4.2 Indenture, dated March 11, 1998, by and between the Operating Partnership and
The Chase Manhattan Bank as trustee (4.8)*
4.3 First Supplemental Indenture, dated March 11, 1998, by and between the
Operating Partnership and The Chase Manhattan Bank as trustee (4.9)*
10.1 Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership
10.2 Agreement of Limited Partnership of Price Financing Partnership, L.P.
(10(b))**
10.3 Loan Agreements related to Mortgage Debt and related documents (10(c))**
i) Deed of Trust, Mortgage, Security Agreement and Assignment of Leases and Rents
of Price Financing Partnership, L.P.
ii) Intentionally Omitted
iii) Indenture between Price Capital Corp. and a Trustee
iv) Limited Guarantee Agreement (Guarantee of Collection) for outside investors
v) Limited Guarantee Agreement (Guarantee of Collection) for Price Group
Investors
vi) Cash Collateral Account Security, Pledge and Assignment Agreement among Price
Financing Partnership, L.P., Price Capital Corp. and Continental Bank N.A.
vii) Note Issuance Agency Agreement between Price Capital Corp. and Price Financing
Partnership, L.P.
viii) Management and Leasing Agreement among Price Financing Partnership, L.P. and
Price Development Company, Limited Partnership
ix) Assignment of Management and Leasing Agreement of Price Financing Partnership,
L.P.
10.6 Registration Rights Agreement among the Company and the Limited Partners of
Price Development Company, Limited Partnership (10(g))**
10.7 Amendment No. 1 to Registration Rights Agreement, dated August 1, 1995, among
the Company and the Limited Partners of Price Development Company, Limited
Partnership**
10.8 Exchange Agreement among the Company and the Limited Partners of Price
Development Company, Limited Partnership (10(h))**
10.10 Amendment to Groundlease between Price Development Company and Alvin Malstrom
as Trustee and C.F. Malstrom, dated December 31, 1985. (Groundlease for Plaza
9400) (10(j))**
10.11 Lease Agreement between The Corporation of the President of the Church of
Jesus Christ of Latter Day Saints and Price-James and Assumptions, dated
September 24, 1979. (Groundlease for Anaheim Plaza) (10(k))**
10.12 Indenture of Lease between Ambrose and Zelda Motta and Cordova Village, dated
July 26, 1974, and Amendments and Transfers thereto. (Groundlease for Fort
Union Plaza) (10(l))**
10.13 Lease Agreement between Advance Management Corporation and Price Rentals, Inc.
and dated August 1, 1975 and Amendments thereto. (Groundlease for Price
Fremont) (10(m))**
10.14 Groundlease between Aldo Rossi and Price Development Company, dated June 1,
1989, and related documents. (Groundlease for Halsey Crossing) (10(n))**
10.15 First Amendment to Second Amended and Restated Agreement of Limited
Partnership of Price Development Company, Limited Partnership
10.16 Second Amendment to Second Amended and Restated Agreement of Limited
Partnership of Price Development Company, Limited Partnership
27. Financial Data Schedule
</TABLE>
- ---------------------------
* Documents were previously filed with the Operating Partnership's Current
Report on Form 8-K dated March 12, 1998, under the exhibit numbered in the
parenthetical, and are incorporated herein by reference.
** Documents were previously filed with the Company's Registration Statement
on Form S-11, File No. 33-68844, under the exhibit numbered in the
parenthetical, and are incorporated herein by reference.
(b) CURRENT REPORTS ON FORM 8-K
NONE
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<CAPTION>
PRICE DEVELOPMEN COMPANY,
LIMITED PARTNERSHIP
(Registrant)
<S> <C> <C>
By: JP Realty, Inc., its General Partner
August 12, 1999 /s/ G. Rex Frazier
- --------------------------------------- ---------------------------------------
(Date) G. Rex Frazier
PRESIDENT, CHIEF OPERATING OFFICER,
AND DIRECTOR
August 12, 1999 /s/ M. Scott Collins
- --------------------------------------- ---------------------------------------
(Date) M. Scott Collins
VICE PRESIDENT--CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL
& ACCOUNTING OFFICER)
</TABLE>
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT PAGE
Number Description Number
- ------- ----------- ------
<S> <C> <C> <C>
4.1 Form of Debt Security (4.6)*
4.2 Indenture, dated March 11, 1998, by and between the Operating Partnership and
The Chase Manhattan Bank as trustee (4.8)*
4.3 First Supplemental Indenture, dated March 11, 1998, by and between the
Operating Partnership and The Chase Manhattan Bank as trustee (4.9)*
10.1 Second Amended and Restated Agreement of Limited Partnership of Price
Development Company, Limited Partnership
10.2 Agreement of Limited Partnership of Price Financing Partnership, L.P.
(10(b))**
10.3 Loan Agreements related to Mortgage Debt and related documents (10(c))**
i) Deed of Trust, Mortgage, Security Agreement and Assignment of Leases and Rents
of Price Financing Partnership, L.P.
ii) Intentionally Omitted
iii) Indenture between Price Capital Corp. and a Trustee
iv) Limited Guarantee Agreement (Guarantee of Collection) for outside investors
v) Limited Guarantee Agreement (Guarantee of Collection) for Price Group
Investors
vi) Cash Collateral Account Security, Pledge and Assignment Agreement among Price
Financing Partnership, L.P., Price Capital Corp. and Continental Bank N.A.
vii) Note Issuance Agency Agreement between Price Capital Corp. and Price Financing
Partnership, L.P.
viii) Management and Leasing Agreement among Price Financing Partnership, L.P. and
Price Development Company, Limited Partnership
ix) Assignment of Management and Leasing Agreement of Price Financing Partnership,
L.P.
10.6 Registration Rights Agreement among the Company and the Limited Partners of
Price Development Company, Limited Partnership (10(g))**
10.7 Amendment No. 1 to Registration Rights Agreement, dated August 1, 1995, among
the Company and the Limited Partners of Price Development Company, Limited
Partnership**
10.8 Exchange Agreement among the Company and the Limited Partners of Price
Development Company, Limited Partnership (10(h))**
10.10 Amendment to Groundlease between Price Development Company and Alvin Malstrom
as Trustee and C.F. Malstrom, dated December 31, 1985. (Groundlease for Plaza
9400) (10(j))**
10.11 Lease Agreement between The Corporation of the President of the Church of
Jesus Christ of Latter Day Saints and Price-James and Assumptions, dated
September 24, 1979. (Groundlease for Anaheim Plaza) (10(k))**
10.12 Indenture of Lease between Ambrose and Zelda Motta and Cordova Village, dated
July 26, 1974, and Amendments and Transfers thereto. (Groundlease for Fort
Union Plaza) (10(l))**
10.13 Lease Agreement between Advance Management Corporation and Price Rentals, Inc.
and dated August 1, 1975 and Amendments thereto. (Groundlease for Price
Fremont) (10(m))**
10.14 Groundlease between Aldo Rossi and Price Development Company, dated June 1,
1989, and related documents. (Groundlease for Halsey Crossing) (10(n))**
10.15 First Amendment to Second Amended and Restated Agreement of Limited
Partnership of Price Development Company, Limited Partnership
10.16 Second Amendment to Second Amended and Restated Agreement of Limited
Partnership of Price Development Company, Limited Partnership
27. Financial Data Schedule
</TABLE>
- ---------------------------
* Documents were previously filed with the Operating Partnership's Current
Report on Form 8-K dated March 12, 1998, under the exhibit numbered in the
parenthetical, and are incorporated herein by reference.
** Documents were previously filed with the Company's Registration Statement
on Form S-11, File No. 33-68844, under the exhibit numbered in the
parenthetical, and are incorporated herein by reference.
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
Dated as of July 15, 1999
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 1 DEFINED TERMS 1
ARTICLE 2 ORGANIZATIONAL MATTERS 15
Section 2.1 Organization and Continuation 15
Section 2.2. Name 15
Section 2.3. Registered Office and Agent, Principal Office 15
Section 2.4. Power of Attorney; Compliance with Act 16
Section 2.5. Term 18
ARTICLE 3 PURPOSE 18
Section 3.1. Purpose and Business 18
Section 3.2. Powers 18
ARTICLE 4 CAPITAL CONTRIBUTIONS 19
Section 4.1. Capital Contributions of the Partners 19
Section 4.2. Issuances of Additional OP Units and Preferred Units 19
Section 4.3. Contribution of Proceeds by General Partner 23
Section 4.4. No Interest; No Return 24
Section 4.5. No Third Party Beneficiaries 24
ARTICLE 5 DISTRIBUTIONS 24
Section 5.1. Requirement and Characterization of Distributions 24
Section 5.2. Distributions Upon Liquidation 25
ARTICLE 6 ALLOCATIONS 25
Section 6.1. Allocations of Profits and Losses 25
Section 6.2. Mandatory Allocations 28
Section 6.3. Other Allocation Rules 32
Section 6.4. Allocations for Tax Purposes 32
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS 33
Section 7.1. Management 33
Section 7.2. Certificate of Limited Partnership 38
Section 7.3. Restrictions on General Partner's Authority 38
Section 7.4. Reimbursement of the General Partner 38
Section 7.5. Outside Activities of the General Partner 40
Section 7.6. Contracts with Affiliates 41
Section 7.7. Indemnification 42
Section 7.8. Liability of the General Partner 45
Section 7.9. REIT Qualification of the General Partner 46
Section 7.10. Title to Partnership Assets 46
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS 47
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 8.1. Limitation of Liability 47
Section 8.2. Management of Business 47
Section 8.3. Outside Activities of Limited Partners 47
Section 8.4. Return of Capital 48
Section 8.5. Rights of Limited Partners Relating to the Partnership 48
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS 50
Section 9.1. Records and Accounting 50
Section 9.2. Fiscal Year 50
Section 9.3. Reports 50
ARTICLE 10 TAX MATTERS 51
Section 10.1. Preparation of Tax Returns 51
Section 10.2. Tax Elections 51
Section 10.3. Tax Matters Partner 51
Section 10.4. Organizational Expenses 52
Section 10.5. Withholding; Combined Returns 52
ARTICLE 11 TRANSFERS AND WITHDRAWALS 54
Section 11.1. Transfer 54
Section 11.2. Transfer of General Partner's Partner Interest 54
Section 11.3. Limited Partners' Rights to Transfer 54
Section 11.4. Substituted Limited Partners 55
Section 11.5. Assignees 56
Section 11.6. General Provisions 57
ARTICLE 12 ADMISSION OF PARTNERS 58
Section 12.1. Admission of Successor General Partner 58
Section 12.2. Admission of Additional Limited Partners 58
Section 12.3. Amendment of Agreement and Certificate of Limited
Partnership 59
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION 59
Section 13.1. Dissolution 59
Section 13.2. Winding Up 61
Section 13.3. Negative Capital Accounts 63
Section 13.4. Accounting 64
Section 13.5. Deemed Distribution and Recontribution 65
Section 13.6. Rights of Partners 65
Section 13.7. Notice of Dissolution 65
Section 13.8. Termination of Partnership and Cancellation of
Certificate of Limited Partnership 66
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
Section 13.9. Agreement to Remain in Effect 66
Section 13.10. Waiver of Partition 66
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS 66
Section 14.1. Amendments 66
Section 14.2. Meetings of the Partners 68
ARTICLE 15 GENERAL PROVISIONS 70
Section 15.1. Addresses and Notice 70
Section 15.2. Titles and Captions 70
Section 15.3. Pronouns and Plurals 70
Section 15.4. Further Action 70
Section 15.5. Binding Effect 70
Section 15.6. Waiver 70
Section 15.7. Counterparts 71
Section 15.8. Applicable Law 71
Section 15.9. Invalidity of Provisions 71
Section 15.10. Entire Agreement 71
</TABLE>
<PAGE> 3
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP,
entered into as of July 15, 1999, by and among JP Realty, Inc., a Maryland
corporation ("JP Realty"), as the general partner, and the Persons whose names
are set forth on EXHIBIT A as attached hereto, as the limited partners,
together with any other Persons who become Partners in the Partnership as
provided herein.
ARTICLE 1
DEFINED TERMS
Except as otherwise provided herein, the following terms and phrases
shall have the meanings set forth below.
"ACT" means the Maryland Revised Uniform Partnership Act, as it may
be amended from time to time, and any successor to such statute.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 hereof and who is
shown as such on the books and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account maintained for
each Partner for each Partnership Year (i) increased by any amounts which such
Partner is obligated to restore pursuant to any provision of this Agreement or
otherwise or is deemed to be obligated to restore pursuant to Regulation 1.704-
1(b)(ii)(c) or the penultimate sentences of Regulations <section> 1.704-2(g)(1)
and 1.704-2(i)(5) and (ii) decreased by the items described in Regulations
<section> 1.704-1(b)(2)(ii)(d)(4), (5), and (6). The foregoing definition of
Adjusted Capital Account is intended to comply with the provisions of
Regulations <section> 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
<PAGE>
"AFFILIATE" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning, except if such ownership arises out of
such Person's engagement as an underwriter in a securities offering, or
controlling ten percent (10%) or more of the outstanding voting interests of
such Person, (iii) any Person of which such Person owns, except if such
ownership arises out of such Person's engagement as an underwriter in a
securities offering, or controls ten percent (10%) or more of the voting
interests, or (iv) any officer, director, general partner or trustee of such
Person or of any Person referred to in clauses (i), (ii) and (iii) above.
"AGGREGATE RESTORATION AMOUNT" means with respect to the Obligated
Partners, as a group, the aggregate balances of the Restoration Amounts, if
any, of the Obligated Partners, as determined on the date in question.
"AGREEMENT" means this Second Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time
to time.
"ARTICLES OF INCORPORATION" means the Amended and Restated Articles
of Incorporation of the General Partner filed in the State of Maryland on
September 8, 1993, as amended or restated from time to time.
"ASSIGNEE" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"AVAILABLE CASH" means, with respect to any period for which such
calculation is being made, (a) all cash received by the Partnership from any
source (including borrowings by the Partnership, cash Capital Contributions and
proceeds of the sale, exchange or other disposition of all or portions of the
Partnership assets) and any cash released from working capital, capital
replacement, debt repayment or other reserves less (b) cash expended, reserved
or required for (i) debts and expenses, interest and principal payments on any
indebtedness, capital expenditures, taxes, fees, (ii) investments in the
acquisition, development, construction, expansion or redevelopment of real
estate or personal property
<PAGE> 2
appurtenant thereto, or entities which hold direct
or indirect interests in real estate or such personal property, or (iii) other
requirements of the Partnership, including any payments of any kind to holders
of Preferred Units, in each case as reasonably determined by the General
Partner. Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"BANKRUPTCY" of a Person shall be deemed to have occurred when (a)
the Person commences a voluntary proceeding seeking liquidation, reorganization
or other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect, (b) the Person is adjudged as bankrupt or insolvent, or a
final and nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the Person, (c)
the Person executes and delivers a general assignment for the benefit of the
Person's creditors, (d) the Person files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against the
Person in any proceeding of the nature described in clause (b) above, (e) the
Person seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Person or for all or any substantial part of the
Person's properties, (f) any proceeding seeking liquidation, reorganization or
other relief of or against such Person under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof, (g) the appointment
without the Person's consent or acquiescence of a trustee, receiver or
liquidator has not been vacated or stayed within ninety (90) days of such
appointment, or (h) an appointment referred to in clause (g) is not vacated
within ninety (90) days after the expiration of any such stay.
"CAPITAL ACCOUNT" means, as to any Partner, including a substituted
partner who shall, pursuant to the provisions hereof, acquire a Partnership
Interest, a book account maintained in accordance with the following
provisions:
(1) To each Partner's Capital Account there shall be credited the
amount of cash contributed by the Partner, the initial Gross Asset Value
of any other asset contributed by such Partner to the capital of the
Partnership (net of liabilities secured by such
<PAGE> 3
contributed property that
the Partnership assumes or takes subject to), such Partner's distributive
share of Profits, the amount of any Partnership liabilities assumed by the
Partner or secured by distributed assets that such Partner takes subject
to and any other items in the nature of income or gain that are allocated
to such Partner pursuant to Section 6.2 hereof; and
(2) To each Partner's Capital Account there shall be debited the
amount of cash distributed to the Partner, the Gross Asset Value of any
Partnership asset distributed to such Partner pursuant to any provision of
this Agreement, such Partner's distributive share of Losses and any other
items in the nature of expenses or losses that are allocated to such
Partner pursuant to Section 6.2 hereof.
In the event that a Partner's Partnership Interest or portion
thereof is transferred within the meaning of Regulations
<section> 1.704-1(b)(2)(iv)(f), the transferee shall succeed to the Capital
Account of the transferor to the extent that it relates to the Partnership
Interest or portion thereof so transferred.
In the event that the Gross Asset Values of Partnership assets are
adjusted, as contemplated in paragraph (b) or (c) of the definition of "Gross
Asset Value," the Capital Accounts of the Partners shall be adjusted to reflect
the aggregate net adjustments as if the Partnership sold all of its properties
for their fair market values and recognized gain or loss for federal income tax
purposes equal to the amount of such aggregate net adjustment.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations <section> 1.704-1(b), and shall be interpreted and applied in a
manner consistent with such Regulations.
"CAPITAL CONTRIBUTIONS" means, with respect to any Partner, any
cash, cash equivalents or the initial Gross Asset Value of any property other
than money which such Partner contributes or is deemed to contribute to the
Partnership pursuant to Section 4.1 or 4.2 hereof.
<PAGE> 4
"CERTIFICATE" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the Maryland State \Department of
Assessments and Taxation, as amended from time to time in accordance with the
terms hereof and the Act.
"CODE" means the Internal Revenue Code of 1986, as amended (or any
corresponding provision of succeeding law). Reference to a section of the Code
shall be deemed to include a reference to any amendatory or successor provision
thereto.
"COMMON STOCK" means the Common Stock, par value $.0001 per share,
of the Company.
"CONSENT" means the consent or approval of a proposed action by
Limited Partners given in accordance with Sections 14.1 and 14.2 hereof and
consisting of the affirmative vote of Limited Partners holding no less than 51%
of the Limited Partner Interests (excluding Partnership Units that may be held
by the General Partner or any of its Subsidiaries as a Limited Partner).
"CONSENTING PARTNERS" has the same meaning set forth in Section
13.1.B.
"CONVERSION FACTOR" means 1.0; PROVIDED THAT in the event that the
General Partner (i) declares or pays a dividend on its outstanding REIT Shares
in REIT Shares or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii)
combines its outstanding REIT Shares into a smaller number of REIT Shares, the
Conversion Factor shall be adjusted by multiplying the Conversion Factor then
in effect by a fraction, the numerator of which shall be the number of REIT
Shares and shares of Excess 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), and the denominator of which shall be the actual
number of REIT Shares and shares of Excess Stock (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
<PAGE> 5
"DEBT SERVICE" means, for any period, the sum of interest expense
and regularly scheduled principal amortization for the most recently available
trailing twelve-month period.
"DEPRECIATION" means, for each Partnership Year, an amount equal to
the federal income tax depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such year, except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year bears to such beginning adjusted tax basis;
PROVIDED THAT if the federal income tax depreciation, amortization, or other
cost recovery deduction for such year is zero, Depreciation shall be determined
with reference to such beginning Gross Asset Value using any reasonable method
selected by the General Partner.
"EBITDA" means, for any period, the earnings of the Partnership for
such period before interest expense, taxes, depreciation and amortization,
determined in each case on a consolidated basis.
"EFFECTIVE DATE" means the date of this Agreement.
"EXCESS STOCK" has the meaning set forth in the Articles of
Incorporation.
"EXCHANGE AGREEMENT" means the Exchange Agreement, dated as of
January 21, 1994, among the General Partner and each of the Limited Partners,
relating to the rights of such Limited Partners to exchange Partnership Units
for REIT Shares.
"GAAP" means the generally accepted accounting principles in effect
in the United States.
"GENERAL PARTNER" means JP Realty, in its individual capacity and in
its capacity as general partner of the Partnership, or its successors as
general partner of the Partnership.
"GENERAL PARTNER INTEREST" means a Partnership Interest held by the
General Partner that is a general partnership interest. A General Partner
Interest shall be expressed as a number of Partnership Units, with such
Partnership Units being designated as either OP Units or Preferred Units.
<PAGE> 6
"GROSS ASSET VALUE" means, with respect to any asset of the
Partnership, such asset's adjusted basis for federal income tax purposes,
except as follows:
(a) the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be (i) in the case of any asset described
on attached EXHIBIT A, the gross fair market value as described thereto on
such EXHIBIT A, and (ii) in the case of any other asset hereafter
contributed by a Partner, the gross fair market value of such asset at the
time of contribution determined by the General Partner using such
reasonable method of valuation as it may adopt.
(b) the Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as reasonably
determined by the General Partner, immediately prior to the following
events:
(i) a Capital Contribution (other than a de minimis Capital
Contribution) to the Partnership by a new or existing Partner as
consideration for a Partnership Interest;
(ii) the distribution by the Partnership to a Partner of more
than a de minimis amount of Partnership property as consideration
for the redemption of a Partnership Interest;
(iii) the liquidation of the Partnership within the meaning of
Regulations <section> 1.704-1(b)(2)(ii)(g).
(c) the Gross Asset Values of Partnership assets distributed to any
Partner shall be the gross fair market values of such assets as reasonably
determined by the General Partner as of the date of distribution.
At all times, Gross Asset Values shall be adjusted by any
Depreciation taken into account with respect to the Partnership's assets for
purposes of computing Profits and Losses. Gross Asset Values shall be further
adjusted to reflect adjustments to Capital Accounts pursuant to Regulations
<PAGE> 7
(section) 1.704-1(b)(2)(iv)(m) to the extent not otherwise reflected in
adjustments to Gross Asset Values. Any adjustment to the Gross Asset Values of
Partnership property shall require an adjustment to the Partners' Capital
Accounts as described in the definition of "Capital Account."
"GUARANTEED AMOUNT" means, with respect to each Obligated Partner,
the amount, if any, of the Price Capital Corp. $95 million Collateralized Notes
due 2001 directly guaranteed by such Obligated Partner (or its partners in the
case of Fairfax Holding, LLC) pursuant to a Limited Guarantee Agreement, dated
January 21, 1994, by and among the Obligated Partner, Continental Bank, N.A.
and, if applicable, certain partners of the Obligated Partner.
"IMMEDIATE FAMILY" means, with respect to any natural Person, such
natural Person's spouse and such natural Person's natural or adoptive parents,
descendants, nephews, nieces, brothers, and sisters.
"INCAPACITY" or "INCAPACITATED" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him or her incompetent to manage his or her Person or
estate; (ii) as to any corporation which is a Partner, the filing of a
certificate or articles of dissolution, or its equivalent, for the corporation
or the revocation of its charter; (iii) as to any partnership which is a
Partner, the dissolution and commencement of winding up of the partnership;
(iv) as to any estate which is a Partner, the distribution by the fiduciary of
the estate's entire interest in the Partnership; (v) as to any trustee of a
trust which is a Partner, the termination of the trust (but not the
substitution of a new trustee); or (vi) as to any Partner, the Bankruptcy of
such Partner.
"INDEMNITEE" means (i) any Person made a party to a proceeding by
reason of his status as (A) a Partner, (B) a director or officer of a Partner,
or (C) an officer of the Partnership, and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner
may designate from time to time (whether before or after the event giving rise
to potential liability), in its sole and absolute discretion.
"IRS" means the Internal Revenue Service of the United States
Treasury Department.
"JP REALTY" means JP Realty, Inc., a Maryland corporation.
<PAGE> 8
"LIMITED PARTNER" means any Person named as a Limited Partner in
EXHIBIT A attached hereto, as such Exhibit may be amended from time to time, or
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a limited partner in the Partnership.
"LIMITED PARTNER INTEREST" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Limited Partners (other than holders of Preferred Units) and
includes any and all benefits to which the holder of such a Partnership
Interest may be entitled as provided in this Agreement, together with all
obligations of such Person to comply with the terms and provisions of this
Agreement. A Limited Partner Interest shall be expressed as a number of
Partnership Units, with such Partnership Units being designated as either OP
Units or Preferred Units.
"LIQUIDATION PREFERENCE AMOUNT" means, with respect to a class or
series of Preferred Units, the amount that such class or series of Preferred
Units are entitled to upon a redemption of Preferred Units or liquidation of
the Partnership, each as further described in the applicable Partnership Unit
Designation.
"LIQUIDATOR" has the meaning set forth in Section 13.2.
"MARKET VALUE OF TOTAL EQUITY" means the total value of all
outstanding Partnership Units, with the value of each Partnership Unit equal to
the product arrived at by multiplying the current market value of a REIT Share
by the Conversion Factor.
"NONRECOURSE DEDUCTIONS" means the nonrecourse deductions as defined
in Regulations <section> 1.704-2(b)(1). The amount of Nonrecourse Deductions
for a Partnership Year equals the net increase, if any, in the amount of
Partnership Minimum Gain during such Partnership Year reduced by any
distributions during such Partnership Year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Partnership Minimum Gain,
determined according to the provisions of Regulations <section> 1.704-2(c)
and 1.704-2(h).
"NONRECOURSE LIABILITY" means a liability as defined in Regulations
<section> 1.704-2(b)(3).
<PAGE> 9
"OBLIGATED PARTNER(S)" means that or those Limited Partner(s) listed
as Obligated Partner(s) on EXHIBIT B attached hereto and made a part hereof, as
such exhibit may be amended from time to time by the General Partner. Any
successor, assignee or transferee of the entire Partnership Interest of an
Obligated Partner shall be considered an Obligated Partner; provided, however,
that if an Obligated Partner, which is not an individual (an "Entity Obligated
Partner"), makes a liquidating distribution to an interest holder who is being
allocated a portion of such Entity Obligated Partner's Restoration Amount, the
General Partner shall amend EXHIBIT B to add such distributee as an additional
Obligated Partner with a Restoration Amount equal to such distributee's
allocable share of such Entity Obligated Partner's Restoration Amount and the
Restoration Amount of the Entity Obligated Partner shall be reduced
accordingly.
"OP UNIT" has the meaning set forth in Section 4.2.A.
"PARTNER" means a General Partner or a Limited Partner, and
"PARTNERS" means the General Partner and the Limited Partners.
"PARTNER MINIMUM GAIN" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations <section> 1.704-2(i)(3).
"PARTNER NONRECOURSE DEBT" means a liability as defined in
Regulations <section> 1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" means the partner nonrecourse
deductions as defined in Regulations <section> 1.704-2(i)(2). The amount of
Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership Year equals the net increase, if any, in the amount of Partner
Minimum Gain during such Partnership Year attributable to such Partner
Nonrecourse Debt, reduced by any distributions during that Partnership Year to
the Partner that bears the economic risk of loss for such Partner Nonrecourse
Debt to the extent that such distributions are from the proceeds of such
Partner Nonrecourse Debt and are allocable to an increase in Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined according to the
provisions of Regulations <section> 1.704-2(h) and 1.704-2(i).
<PAGE> 10
"PARTNERSHIP" means Price Development Company, Limited Partnership,
a Maryland limited partnership.
"PARTNERSHIP INTEREST" means an ownership interest in the
Partnership representing a Capital Contribution by either a Limited Partner or
the General Partner and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Partnership Interest may be expressed as a
number of Partnership Units.
"PARTNERSHIP MINIMUM GAIN" means the aggregate gain, if any, that
would be realized by the Partnership for purposes of computing Profits and
Losses with respect to each Partnership asset if each Partnership asset subject
to a Nonrecourse Liability were disposed of for the amount outstanding on the
Nonrecourse Liability by the Partnership in a taxable transaction. Partnership
Minimum Gain with respect to each Partnership asset shall be further determined
in accordance with Regulations <section> 1.704-2(d) and any subsequent rule or
regulation governing the determination of minimum gain. A Partner's share of
Partnership Minimum Gain at the end of any Partnership Year shall equal the
aggregate Nonrecourse Deductions allocated to such Partner (or his predecessors
in interest) up to that time, less such Partner's (and predecessors') aggregate
share of decreases in Partnership Minimum Gain determined in accordance with
Regulations <section> 1.704-2(g).
"PARTNERSHIP RECORD DATE" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, and the General Partner will establish the same date as the record date
for a distribution to its stockholders of some or all of its portion of such
distribution.
"PARTNERSHIP UNIT" has the meaning set forth in Section 4.2.
"PARTNERSHIP UNIT DESIGNATION" has the meaning set forth in
Section 4.2.
"PARTNERSHIP YEAR" means the fiscal year of the Partnership, which
shall be the calendar year.
<PAGE> 11
"PERCENTAGE INTEREST" means, as to a Partner, its interest in the
Partnership as determined by dividing the Partnership Units owned by such
Partner (other than Preferred Units) by the total number of Partnership Units
then outstanding (other than Preferred Units) and as specified in EXHIBIT A
attached hereto, as such Exhibit may be amended from time to time in accordance
with the terms of this Agreement.
"PERSON" means an individual or a corporation, partnership, trust,
unincorporated organization, association, limited liability company or other
entity.
"PREFERRED UNIT" has the meaning set forth in Section 4.2.A.
"PRIOR AGREEMENTS" means the Amended and Restated Agreement of
Limited Partnership of Price Development Company, Limited Partnership, dated as
of January 21, 1994, between the General Partner and the Limited Partners named
therein, as thereafter amended, and the First Amended and Restated Agreement of
Limited Partnership of Price Development Company, Limited Partnership, dated as
of April 22, 1999, between the General Partner and the Limited Partners named
therein, which Prior Agreements are amended and restated in their entirety by
this Agreement as of the Effective Date.
"PROFITS" and "LOSSES" mean, respectively, for each Partnership Year
or other period, the Partnership's taxable income or loss for such Partnership
Year or other period, determined in accordance with Code <section> 703(a) (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately pursuant to Code <section> 703(a)(1) shall be included in
taxable income or loss), adjusted as follows:
(1) any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses
shall be added to such taxable income or loss;
(2) in lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Partnership Year
or other period;
<PAGE> 12
(3) any items that are specially allocated pursuant to Section 6.2
hereof shall not be taken into account in computing Profits or Losses;
(4) any expenditures of the Partnership described in Code
<section> 705(a)(2)(B) (or treated as such under Regulations
<section> 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
computing Profits or Losses shall be deducted from such taxable income or
loss;
(5) in the event the Gross Asset Value of any Partnership asset is
adjusted in accordance with paragraph (b) or (c) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such Partnership asset for
purposes of computing Profits or Losses;
(6) gain or loss resulting from any disposition of any Partnership
asset with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value of
the property disposed of, notwithstanding the fact that the adjusted tax
basis of such Partnership asset differs from its Gross Asset Value; and
(7) An allocation of Partnership Profits or Losses to a Partner shall
be treated as an allocation to such Partner of the same share of each item
of income, gain, loss and deduction that has been taken into account in
computing such Profits or Losses.
"RECOURSE LIABILITY" means the amount of indebtedness owed by the
Partnership other than Nonrecourse Liabilities and Partner Nonrecourse Debt.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of January 21, 1994, among the General Partner and each of
the Limited Partners, relating to the registration of REIT Shares issued upon
exchange of Partnership Units under the Exchange Agreement.
"REGULATIONS" means the Income Tax Regulations of the Internal
Revenue Service ("IRS") as such regulations may be amended from time to time
(including Temporary Regulations). A reference to any Regulation shall be
deemed to include any amendatory or successor provision thereto.
<PAGE> 13
"REIT" means a real estate investment trust as defined in Code
<section> 856.
"REIT SHARE" shall mean a share of capital stock of the General
Partner, including a share of Excess Stock of the General Partner exchanged for
a share of such capital stock, as provided in Article Ninth of the Articles of
Incorporation or any amendatory or successor provision thereto.
"RESTORATION AMOUNT" means with respect to any Obligated Partner,
the amount set forth opposite the name of such Obligated Partner on EXHIBIT B
attached hereto and made a part hereof, as such exhibit may be adjusted from
time to time by the General Partner. If an Entity Obligated Partner makes a
liquidating distribution to an interest holder who is being allocated a portion
of such Entity Obligated Partner's Restoration Amount, the General Partner
shall amend EXHIBIT B to add such distributee as an additional Obligated
Partner, and the Restoration Amount of such additional Obligated Partner shall
equal such distributee's allocable share of the Entity Obligated Partner's
Restoration Amount, and the Restoration Amount of the Entity Obligated Partner
shall be reduced accordingly.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"TAX RATE" for any period means the highest marginal federal income
tax rate for individuals in effect during that period under the Code plus an
additional five percent (5%) of such rate.
"TERMINATING CAPITAL TRANSACTION" means any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the sale or
other disposition of all or substantially all of the assets of the Partnership.
"TOTAL LIABILITIES" means, as of the date of determination, all
liabilities of the Partnership, determined on a consolidated basis in
conformity with GAAP.
<PAGE> 14
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1. ORGANIZATION AND CONTINUATION
The Partnership is continued as a limited partnership organized
pursuant to the provisions of the Act and upon the terms and conditions set
forth in the Prior Agreements. The Partners hereby amend and restate the First
Amended and Restated Agreement of Limited Partnership of Price Development
Company, Limited Partnership, dated as of April 22, 1999, in its entirety as of
the Effective Date. Except as expressly provided herein to the contrary, the
rights and obligations of the Partners and the administration and termination
of the Partnership shall continue to be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
Section 2.2. NAME
The name of the Partnership is Price Development Company, Limited
Partnership. The Partnership's business may be conducted under any other name
or names deemed advisable by the General Partner, including the name of the
General Partner or any Affiliate thereof; provided, however, that the General
Partner may not choose the name (or any derivative thereof) of any Limited
Partner without the prior written consent of that Limited Partner. The words
"Limited Partnership," "L.P.," "Ltd." or similar words or letters shall be
included in the Partnership's name where necessary for the purposes of
complying with the laws of any jurisdiction that so requires. Subject to the
condition set forth in the second sentence of this Section 2.2, the General
Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.
Section 2.3. REGISTERED OFFICE AND AGENT, PRINCIPAL OFFICE
The address of the principal office of the Partnership in the State
of Maryland is located at 36 South Charles Street, Baltimore, Maryland 21201-
3010, and the "resident" agent in Maryland for service of process on the
Partnership in the State of Maryland at such registered office is P&M Agent
Corp. and such principal office and resident agent may be changed as the
General Partner may from time
<PAGE> 15
to time designate by notice to the Limited
Partners. The principal executive office of the Partnership is located at 35
Century Park-Way, Salt Lake City, Utah 84115, and may be changed to such other
place as the General Partner may from time to time designate by notice to the
Limited Partners. The Partnership may maintain offices at such other place or
places within or outside the State of Maryland as the General Partner deems
advisable.
Section 2.4. POWER OF ATTORNEY; COMPLIANCE WITH ACT
A. Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, seal, acknowledge, deliver, file and record
in the appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the Certificate
and all amendments or restatements thereof) that the General Partner or the
Liquidator deems appropriate or necessary to form, qualify or continue the
existence or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability to the extent
provided by applicable law) in the State of Maryland and in all other
jurisdictions in which the Partnership may or plans to conduct business or own
property; (b) all instruments that the General Partner deems appropriate or
necessary to reflect any amendment, change, modification or restatement of this
Agreement in accordance with its terms; (c) all conveyances and other
instruments or documents that the General Partner deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to, or other events
described in, Article 11, 12 or 13 hereof or the Capital Contribution of any
Partner; (e) any agreements, waivers or other instruments required by any state
or local tax authority to enable the Partnership to file combined, consolidated
or similar state or local
<PAGE> 16
income tax returns and/or to pay a combined state and
local tax on behalf of the Partnership or all of the Partners; and (f) the
Exchange Agreement and the Registration Rights Agreement; and
(2) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner, to make,
evidence, give, confirm or ratify any vote, consent, approval, agreement or
other action which is made or given by the Partners hereunder or is consistent
with the terms of this Agreement or appropriate or necessary, in the sole and
absolute discretion of the General Partner, to effectuate the terms or intent
of this Agreement.
Nothing contained herein shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement in
Articles 11.4.C and 12.3.
B. The foregoing power of attorney is irrevocable and coupled with
an interest, in recognition of the fact that each of the Partners will be
relying upon the power of the General Partner to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership, and
it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Units and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be
bound by any representation made by the General Partner, acting in good faith
pursuant to such power of attorney; and each such Limited Partner or Assignee
hereby waives any and all defenses which may be available to contest, negate or
disaffirm the action of the General Partner, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver
to the General Partner or the Liquidator, within fifteen (15) days after
receipt of the General Partner's or Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this power of
attorney.
<PAGE> 17
Section 2.5. TERM
The term of the Partnership commenced on September 13, 1993, the
date the Certificate was filed in the office of the Maryland State Department
of Assessments and Taxation in accordance with the Act and shall continue until
December 31, 2093, unless the Partnership is dissolved and terminated sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1. PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; PROVIDED THAT such business
shall be limited to and conducted in such a manner as to permit the General
Partner at all times to be classified as a REIT, unless the General Partner
ceases to qualify as a REIT for reasons other than the conduct of the business
of the Partnership, (ii) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or to own interests in
any entity engaged in any of the foregoing and (iii) to do anything necessary
or incidental to the foregoing. In connection with the foregoing, the Partners
acknowledge that the General Partner's current status as a REIT inures to the
benefit of all the Partners and not solely the General Partner.
Section 3.2. POWERS
The Partnership shall be empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein
and for the protection and benefit of the Partnership, PROVIDED THAT the
Partnership shall not take, or refrain from taking, any action which, in the
reasonable judgment of the General Partner (i) could adversely affect the
ability of the General Partner to continue to qualify as a REIT, (ii) could
subject the General Partner to any additional taxes under Code <section> 857 or
4981, or (iii) could violate any law or regulation of any governmental body or
agency having jurisdiction over the
<PAGE> 18
General Partner or its securities, unless
such action (or inaction) shall have been specifically consented to by the
General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1. CAPITAL CONTRIBUTIONS OF THE PARTNERS
In consideration of its Capital Contribution, each Partner shall
receive Partnership Units. Each Partner shall own Partnership Units, which
shall be designated under this Agreement as either "OP Units" or "Preferred
Units," in the amount set forth for such Partner in EXHIBIT A. The Partners
shall have a Percentage Interest in the OP Units as set forth for such Partner
in EXHIBIT A, which Percentage Interest shall be adjusted in EXHIBIT A from
time to time by the General Partner to the extent necessary in accordance with
the terms of this Agreement to reflect accurately exchanges of Partnership
Units for REIT Shares in accordance with the Exchange Agreement, Capital
Contributions, the issuance of additional Partnership Units (pursuant to any
merger or otherwise), a change in the number of issued and outstanding REIT
Shares pursuant to Section 7.4.D of this Agreement, or an adjustment of the
nature contemplated by Section 7.5.B hereof. Except as provided in Sections
4.2, 10.5 and 13.3 the Partners shall have no obligation to make any additional
Capital Contributions or loans to the Partnership.
Section 4.2. ISSUANCES OF ADDITIONAL OP UNITS AND PREFERRED UNITS
A. The General Partner is hereby authorized to cause the Partnership
from time to time to issue to the Partners (including the General Partner) or
other Persons additional Partnership Units or other Partnership Interests
(except that no General Partnership Interests will be issued to any Person
other than the General Partner) on the terms set forth below. The Partnership
Interest of a Partner in the Partnership is sometimes referred to as being
evidenced by one or more "Partnership Units." Partnership Units may be either
"OP Units" or "Preferred Units":
(i) An "OP Unit" is a common unit of Partnership Interest in
the Partnership and shall represent a fractional undivided share of
the Partnership Interests of all Partners
<PAGE> 19
(other than holders of
Preferred Units) issued pursuant to Sections 4.1 and 4.2. Each
additional OP Unit issued by the Partnership shall be on
substantially the same terms with regard to allocations of income,
gain, loss, deduction and credit, the right to receive distributions
and to vote or consent on matters presented to Partners as all other
outstanding OP Units.
(ii) A "Preferred Unit" is a unit of Partnership Interest
having such rights, preferences, exchange rights, voting powers and
restrictions, limitations as to distributions, qualifications and
terms and conditions as may be determined by the General Partner in
its sole and absolute discretion (but not in violation of the
provisions of Section 4.2(B) or the terms of any other Preferred
Unit(s)). There may be more than one series or classes of Preferred
Units having differing terms and conditions, but all Preferred Units
within a given series or class shall have the same rights,
preferences, exchange rights, voting powers and restrictions,
limitations as to distributions, qualifications and terms and
conditions, provided that a written designation of preferences
setting forth the above shall be set forth as a schedule to any
amendment to or restatement of this Agreement (each, a "Partnership
Unit Designation"). Subject to the terms of any other Preferred
Units, with respect to each series or class of Preferred Units, the
General Partner may, in its discretion, determine and fix, among
other terms and conditions, any of the following: (a) the series to
which such Preferred Units shall belong, (b) the distribution rate
thereon (or the method of determining such distribution rate),
(c) the price at and the terms and conditions on which such
Preferred Units may be redeemed, (d) the amount payable in respect
of such Preferred Units in the event of involuntary or voluntary
liquidation of the Partnership, and (e) the terms and conditions on
which such Preferred Units may be converted or exchanged for other
securities of the Partnership or the General Partner.
<PAGE> 20
(iii) No additional OP Unit or Preferred Unit issued by the
Partnership shall have an adverse impact on the existing Limited
Partners' right to exercise the exchange rights set forth in the
Exchange Agreement and the registration rights set forth in the
Registration Rights Agreement.
B. From time to time, the General Partner, subject to the provisions
of this Section 4.2.B and the terms of any other Preferred Units, may, without
the consent of any other Partner, cause the Partnership to issue:
(i) OP Units to the General Partner upon the issuance by the
General Partner of additional shares of Common Stock, other than in
connection with the exchange of OP Units, provided that any net
proceeds received by the General Partner as a result of the issuance
of such additional shares of Common Stock are contributed to the
Partnership as additional Capital Contributions, in accordance with
Section 4.1 (it being understood that the General Partner may issue
shares of Common Stock in connection with stock option plans,
restricted stock plans or other employee benefit plans without
receiving any proceeds and that the issuance of such shares shall
nonetheless entitle the General Partner to additional OP Units).
The number of OP Units issued to the General Partner under this
Section 4.2.B(i) shall be equal to the quotient arrived at by
dividing the number of shares of Common Stock issued by the
Conversion Factor.
(ii) Preferred Units to the General Partner upon the issuance
by the General Partner of shares of its preferred stock ("Preferred
Stock") not in connection with an exchange of Preferred Units for
Preferred Stock as may be specified in the Partnership Unit
Designation attached as a schedule to the amendment to this
Agreement designating such Preferred Units, provided that any net
proceeds received by the General Partner as a result of the issuance
of such additional shares of Preferred Stock are contributed to the
Partnership as additional Capital Contributions, in accordance with
Section 4.1. The
<PAGE> 21
number of Preferred Units issued to the General
Partner under this Section 4.2.B(ii) shall be equal to the number of
shares of Preferred Stock issued and shall have the rights,
preferences and restrictions, limitations as to distributions,
qualifications and terms and conditions substantially consistent
with the Preferred Stock that is issued.
(iii) OP Units and/or Preferred Units, as determined by the
General Partner, in its discretion, may be issued in exchange for
the contribution by any Person (the "Contributing Partner") of
additional Capital Contributions to the Partnership. The number of
OP Units and/or Preferred Units issued to a Contributing Partner
under this Section 4.2.B(iii) shall be equal to the quotient
(rounded to the nearest whole number) arrived at by dividing (x) the
initial Gross Asset Value of the property contributed as additional
Capital Contributions (net of any debt to which such property is
subject or assumed by the Partnership in connection with such
contribution) by (y) such price as may be determined by the General
Partner in connection with such contributions; provided, that, such
price is not below the fair market value of such unit as determined
in good faith by the General Partner.
(iv) Notwithstanding the foregoing, no additional OP Units
and/or Preferred Units shall be issued to the General Partner or any
of its Subsidiaries unless such issuance complies with (a) Sections
4.2.B(i) or 4.2.B(ii), as the case may be, or (b) the additional OP
Units and/or Preferred Units are issued to all Partners in
proportion to their respective Percentage Interests.
(v) The terms, conditions, rights, preferences and privileges
of each class or series of Preferred Units shall be specified in a
Partnership Unit Designation attached as a schedule to a further
amendment to this Agreement which may be adopted by the General
Partner without the consent of any Limited Partner (except to the
extent required by any outstanding class or series of Preferred
Units).
<PAGE> 22
Upon the issuance of OP Units or Preferred Units, as the case may
be, or upon the exchange of OP Units for Common Stock or Preferred Units for
Preferred Stock, EXHIBIT A shall be accordingly adjusted by the General
Partner.
C. The right of Limited Partners holding Preferred Units to exchange
such Preferred Units for any other class or series of Partnership Units or
class or series of Preferred Stock of the General Partner shall be set forth in
the amendment to this Agreement designating such class or series of Preferred
Units.
D. Notwithstanding the foregoing, no OP Unit and/or Preferred Unit
may be issued at a price below the fair market value of such unit as determined
in good faith by the General Partner as of the date of issuance of such OP Unit
or Preferred Unit, as the case may be, or, in the case of a security which is
exchangeable for or convertible into such OP Unit or Preferred Unit, as of the
date of grant of such security.
E. The General Partner shall not issue any rights, options, warrants
or convertible or exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock or Preferred Stock (collectively, "New
Securities") unless (i) the General Partner shall cause the Partnership to
issue to the General Partner Partnership Interests having substantially the
same rights, options, warrants or convertible or exchangeable securities to
purchase OP Units and/or Preferred Units, and the economic interests of the
additional Partnership Interests are substantially similar to the economic
interests of such New Securities and (ii) the General Partner contributes the
proceeds from the exercise of rights contained in such New Securities to the
Partnership.
Section 4.3. CONTRIBUTION OF PROCEEDS BY GENERAL PARTNER
In connection with any issuance of shares of Common Stock and/or
Preferred Stock pursuant to Section 4.2, the General Partner shall make a
Capital Contribution to the Partnership of the proceeds raised in connection
with such issuance; provided, that, if the proceeds actually received by the
General Partner are less than the gross proceeds of such issuance as a result
of any underwriter's discount
<PAGE> 23
or other expenses paid or incurred in connection
with such issuance, then the General Partner shall be deemed to have made a
Capital Contribution to the Partnership in the amount of the gross proceeds of
such issuance and the Partnership shall be deemed simultaneously to have
reimbursed the General Partner pursuant to Section 7.4.C for the amount of such
underwriter's discount or other expenses.
Section 4.4. NO INTEREST; NO RETURN
Except as expressly provided for in this Agreement or in a
Partnership Unit Designation attached as a schedule to an amendment to this
Agreement specifying the terms, conditions, rights, preferences and privileges
of any class or series of Preferred Units, no Partner shall have the right to
demand or to receive the return of all or any part of its Capital Contributions
to the Partnership. No Partner shall have the right to demand or receive
property other than cash in return for the contributions of such Partner to the
Partnership.
Section 4.5. NO THIRD PARTY BENEFICIARIES
This Agreement is solely for the benefit of and may be enforced
solely by the Partners hereunder, and no rights or obligations to or with
respect to any person not a Partner, whether or not such person is claiming
through a Partner, shall be deemed to exist or to arise under or as a result of
this Agreement.
ARTICLE 5
DISTRIBUTIONS
Section 5.1. REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
The General Partner shall distribute quarterly an amount equal to
100% of Available Cash generated by the Partnership during such quarter to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter in accordance with their respective Percentage Interests on such
Partnership Record Date. Notwithstanding the foregoing, (i) distributions to
Partners made in respect of the quarterly periods of a Partnership Year shall
be made in accordance with their respective Percentage Interests as of the
Partnership Record Date with respect to any such quarter and shall, in the
aggregate, not be less than an amount determined by multiplying the Tax Rate by
the taxable income and gain
<PAGE> 24
allocated to the Limited Partners under this
Agreement during such Partnership Year and (ii) the General Partner may retain
Available Cash in an amount equal to the excess of the net proceeds from the
sale or other disposition of real property investments held directly or
indirectly by or for the Partnership included in Available Cash over the amount
of capital gain dividends declared by the General Partner attributable to such
sale divided by the Percentage Interest of the General Partner as of the end of
the quarter during which such sale or other disposition occurs. In no event
may a Partner receive a distribution of Available Cash with respect to a
Partnership Unit to the extent such Partner is entitled to receive a
distribution out of such Available Cash with respect to a REIT Share for which
such Partnership Unit has been exchanged. The General Partner shall take such
reasonable efforts, as determined by it in its sole and absolute discretion and
consistent with its qualification as a REIT, to distribute Available Cash to
the Limited Partners so as to preclude any such distribution or portion thereof
from being treated as part of a sale of property to the Partnership by a
Limited Partner under Code <section> 707 or the Regulations thereunder;
PROVIDED THAT the General Partner and the Partnership shall not have liability
to a Limited Partner as a result of any distribution to a Limited Partner being
so treated.
Section 5.2. DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction, and any other cash
received or reductions in reserves made after commencement of the liquidation
of the Partnership, shall be distributed to the Partners in accordance with
Section 13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1. ALLOCATIONS OF PROFITS AND LOSSES
A. ALLOCATION OF PROFITS. After giving effect to the mandatory
allocations set forth in Section 6.2, Profits for any Partnership Year or other
applicable period shall be allocated to the Partners in the following order of
priority:
<PAGE> 25
(i) First, to the General Partner to the extent that the
cumulative Losses allocated to the General Partner pursuant to
Section 6.1.B(v) exceed the cumulative Profits allocated to the
General Partner pursuant to this Section 6.1.A(i);
(ii) Second, to each Partner to the extent of and in proportion
to the amount by which the cumulative Losses allocated to such
Partner pursuant to Section 6.1.B(iv) exceed the cumulative Profits
allocated to such Partner pursuant to this Section 6.1.A(ii);
(iii) Third, to the General Partner to the extent that the
cumulative Losses allocated to the General Partner pursuant to
Section 6.1.B(iii), exceed the cumulative Profits allocated to the
General Partner pursuant to this Section 6.1.A(iii);
(iv) Fourth, to each holder of Preferred Units to the extent of
and in proportion to the amount by which the cumulative Losses
allocated to each such holder pursuant to Section 6.1.B(ii) exceed
the cumulative Profits allocated to such holder pursuant to this
Section 6.1.A(iv);
(v) Fifth, to each Partner to the extent of and in proportion
to the amount by which the cumulative Losses allocated to such
Partner pursuant to Section 6.1.B(i), exceed the cumulative Profits
allocated to such Partner pursuant to this Section 6.1.A(v); and
(vi) Thereafter, to the Partners in accordance with their
respective Percentage Interests.
B. ALLOCATION OF LOSSES. After giving effect to the mandatory
allocations set forth in Section 6.2, Losses for any Partnership Year or other
applicable period shall be allocated to the Partners in the following order of
priority:
(i) First, to the Partners, in proportion to their respective
Percentage Interests; provided that Losses allocated pursuant to
this Section 6.1.B(i) shall not exceed
<PAGE> 26
the maximum amount of Losses
that can be allocated without causing any Partner to have a negative
Adjusted Capital Account balance (excluding for this purpose any
increase to such Adjusted Capital Account for a Partner's actual
obligation to fund a deficit Capital Account balance, including the
obligation of an Obligated Partner to fund a deficit Capital Account
balance pursuant to Section 13.3 hereof);
(ii) Second, to the holders of Preferred Units; provided that
Losses allocated pursuant to this Section 6.1.B(ii) shall not exceed
the maximum amount of Losses that can be allocated without causing
any holder of Preferred Units to have a negative Adjusted Capital
Account (excluding for this purpose any increase to such Adjusted
Capital Account for a Partner's actual obligation to fund a deficit
Capital Account balance, including the obligation of an Obligated
Partner to fund a deficit Capital Account balance pursuant to
Section 13.3 hereof);
(iii) Third, to the General Partner, until the General
Partner's Adjusted Capital Account Deficit (excluding for this
purpose any increase to such Adjusted Capital Account for the
obligation of the General Partner to actually fund a deficit Capital
Account balance) equals the excess of (i) the amount of Recourse
Liabilities over (ii) the Aggregate Restoration Amount;
(iv) Fourth, to the Obligated Partners, in proportion to their
respective Restoration Amounts, until such time as the Obligated
Partners have been allocated an aggregate amount of Losses pursuant
to this Section 6.1.B(iv) in excess of the aggregate amount of
Profits allocated to such Partners pursuant to Section 6.1.A(ii)
equal to the Aggregate Restoration Amount; and
(v) Thereafter, to the General Partner.
<PAGE> 27
This Section 6.1 shall control notwithstanding any reallocation or
adjustment of taxable income, loss or other items by the IRS or any other
taxing authority; provided, however, that neither the Partnership nor the
General Partner (nor any of their respective affiliates) is required to
indemnify any Obligated Partner (or its affiliates) for the loss of any tax
benefit resulting from any reallocation or adjustment of taxable income, loss
or other items by the IRS or other taxing authority. The provisions of this
Section 6.1 shall not be amended in a manner which adversely affects an
Obligated Partner (without the consent of such Obligated Partner), provided
that the General Partner may amend EXHIBIT B to add additional Obligated
Partners.
Section 6.2. MANDATORY ALLOCATIONS
A. [INTENTIONALLY OMITTED].
B. MINIMUM GAIN CHARGEBACK. Notwithstanding any other provision of
this Article 6, if there is a net decrease in Partnership Minimum Gain during
any Partnership Year, then, subject to the exceptions set forth in Regulations
<section> 1.704-2(f)(2), (3), (4) and (5), 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 such Partner's share of the
net decrease in Partnership Minimum Gain, as determined under Regulations
<section> 1.704-2(g). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be determined in
such section of the Regulations in accordance with Regulations
<section> 1.704-2(f). This Section 6.2.B is intended to comply with the
minimum gain chargeback requirements in Regulations <section> 1.704-2(f) and
shall be interpreted consistently therewith.
C. PARTNER MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Article 6 except Section 6.2.B, if there is a net decrease in
Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any
Partnership Year, then, subject to the exceptions set forth in Regulations
<section> 1.704-2(i)(4), each Partner who has a share of the Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations <section> 1.704-2(i)(5), shall be specially
<PAGE> 28
allocated items of
Partnership income and gain for such year (and, if necessary, subsequent years)
in an amount equal to such Partner's share of the net decrease in Partner
Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations <section> 1.704-2(i)(4). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations
<section> 1.704-2(i)(4). This Section 6.2.C is intended to comply with the
minimum gain chargeback requirement in such Section of the Regulations and
shall be interpreted consistently therewith.
D. QUALIFIED INCOME OFFSET. Notwithstanding any other provision of
this Article 6, except Sections 6.2.B and 6.2.C, in the event any Partner
receives any adjustments, allocations or distributions described in Regulations
<section> 1.704-1(b)(2)(ii)(d)(4), (5), or (6), that cause or increase an
Adjusted Capital Account deficit of such Partner, items of Partnership income
and gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
Adjusted Capital Account deficit of such Partner as quickly as possible.
E. NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
Partnership Year shall be allocated to the Partners in accordance with their
respective Percentage Interests.
F. PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse
Debt to which such Partner Nonrecourse Deductions are attributable in
accordance with Regulations <section> 1.704-2(i)(1).
G. CODE SECTION 754 ADJUSTMENTS. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code <section> 734(b)
or 743(b) is required, pursuant to Regulations <section> 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be
<PAGE> 29
specially allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Section of the Regulations.
Each Partner hereby agrees to provide the Partnership with all
information necessary to give effect to an election made under Code
<section> 754 if the General Partner determines to make such an election. With
respect to such election:
(1) Any change in the amount of the depreciation deducted by the
Partnership and any change in the gain or loss of the Partnership, for federal
income tax purposes, resulting from an adjustment pursuant to Code
<section> 743(b) shall be allocated entirely to the transferee of the
Partnership Interest or portion thereof so transferred. Neither the capital
contribution obligations of, nor the Partnership Interest of, nor the amount of
any cash distributions to, the Partners shall be affected as a result of such
election, and except as provided in Regulations <section> 1.704-1(b)(2)(iv)(m),
the making of such election shall have no effect except for federal and (if
applicable) state and local income tax purposes.
(2) Solely for federal and (if applicable) state and local income
tax purposes and not for the purpose of maintaining the Partners' Capital
Accounts (except as provided in Regulations <section> 1.704-1(b)(2)(iv)(m)),
the Partnership shall keep a written record for those assets, the bases of
which is adjusted as a result of such election, and the amount at which such
assets are carried on such record shall be debited (in the case of an increase
in basis) or credited (in the case of a decrease in basis) by the amount of
such basis adjustment. Any change in the amount of the depreciation deducted
by the Partnership and any change in the gain or loss of the Partnership, for
federal and (if applicable) state and local income tax purposes, attributable
to the basis adjustment made as a result of such election shall be debited or
credited, as the case may be, on such record.
H. PREFERENTIAL INCOME ALLOCATIONS. After giving effect to the
mandatory allocations set forth above, gross income of the Partnership shall be
allocated to the holders of Preferred Units (and within each such class or
series of Preferred Units, pro rata in accordance with the number of Preferred
Units of such class or series held by each such holder) until the cumulative
amount allocated to each such
<PAGE> 30
holder pursuant to this Section 6.2.H equals the
cumulative amount for the current and all prior years of the sum of (A) the
distributions made to each such holder pursuant to the distribution section of
the applicable Partnership Unit Designation and (B) the portions of the
distributions made to each such holder pursuant to a redemption of a Preferred
Unit under the terms of an applicable Partnership Unit Designation (if any)
that exceed the Liquidation Preference Amount (other than any accrued but
unpaid distribution thereon) per Preferred Unit established for such Preferred
Units in the applicable Partnership Unit Designation. Such allocations shall
be made in proportion to the relative excess amounts determined for each such
holder. Solely for purposes of making the required allocation under this
Section 6.2.H in the year in which the Partnership is liquidated, the amount of
any accrued but unpaid distributions in arrears in respect of the Preferred
Units (determined in accordance with the relevant provisions in the applicable
Partnership Unit Designation) shall be treated as having been distributed to
the holders of Preferred Units immediately prior to such liquidation or
redemption pursuant to the distribution section of the applicable Partnership
Unit Designation.
I. CURATIVE ALLOCATIONS. The allocations set forth in Sections
6.2.B, C and D above (the "Regulatory Allocations") are intended to comply with
certain requirements of Regulations <section> 1.704-1(b). The Regulatory
Allocations shall be taken into account for the purpose of equitably adjusting
subsequent allocations of Profits and Losses, and items of income, gain, loss,
and deduction among the Partners so that, to the extent possible, the net
amount of such allocations of Profits and Losses and other items to each
Partner shall be equal to the net amount that would have been allocated to each
such Partner if the Regulatory Allocations had not occurred.
J. ALLOCATION ADJUSTMENTS TO GENERAL PARTNER. To the extent the
General Partner realizes cumulative income or gain with respect to an interest
in a Subsidiary of the Partnership in excess of any losses or deductions to the
General Partner with respect to such interest in such Subsidiary (excluding its
interest in the Partnership itself), its share of Profits shall be reduced (or
Losses shall be
<PAGE> 31
increased) and reallocated to the Limited Partners in an amount
equal to the cumulative net income or gain of the General Partner from such
Subsidiary.
Section 6.3. OTHER ALLOCATION RULES
A. Pursuant to Regulations <section> 1.752-3(a), for the purpose of
determining each Partner's share of excess Nonrecourse Liabilities of the
Partnership, and solely for such purpose, each Partner's interest in
partnership profits shall equal such Partner's Percentage Interest.
B. The allocation of Profits and Losses for any Partnership Year
during which a person acquires a Partnership Interest (other than upon
formation of the Partnership), or during which there is a change in the
Partners' Percentage Interests, shall take into account the Partners' varying
interests for such Partnership Year pursuant to any method permissible under
Code <section> 706 that is selected by the General Partner. The method
selected by the General Partner shall apply notwithstanding any agreement
between the assignor and assignee of such Partnership Interest although the
General Partner may recognize any such agreement.
C. To the extent permitted by Regulations <section> 1.704-2(h)(3)
and 1.704-2(i)(6), the General Partner shall endeavor to treat distributions as
having been made from the proceeds of Nonrecourse Liabilities or Partner
Nonrecourse Debt only to the extent that such distributions would cause or
increase a deficit balance in any Partner's Capital Account that exceeds the
amount such Partner is otherwise obligated to restore (within the meaning of
Regulations <section> 1.704-1(b)(ii)(c)) as of the end of the Partnership's
taxable year in which the distribution occurs.
Section 6.4. ALLOCATIONS FOR TAX PURPOSES
A. Except as otherwise provided in this Section 6.4, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Sections 6.1,
6.2 and 6.3 above.
<PAGE> 32
B. In accordance with Code <section> 704(b) and 704(c) and the
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall, solely for
federal income tax purposes, be allocated among the Partners so as to take into
account any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and the initial Gross Asset Value
of such property. If the Gross Asset Value of any Partnership property is
adjusted as described in the definition of Gross Asset Value, subsequent
allocations of income, gain, loss, and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such asset
for federal income tax purposes and the Gross Asset Value of such asset in the
manner prescribed under Code <section> 704(b) and 704(c) and the Regulations
thereunder. In furtherance of the foregoing, the Partnership shall employ the
method prescribed in Proposed Regulations <section> 1.704-3(b) (the
"traditional method") or the equivalent successor provision(s) of proposed,
temporary or final Regulations.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1. Management
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and
shall be exclusively vested in the General Partner, and no Limited Partner
shall have any right to participate in or exercise control or management power
over the business and affairs of the Partnership. The General Partner may not
be removed by the Limited Partners with or without cause. In addition to the
powers now or hereafter granted a general partner of a limited partnership
under applicable law or which are granted to the General Partner under any
other provision of this Agreement, the General Partner, subject to Section 7.3
hereof, shall have full power and authority to do all things reasonably deemed
necessary or desirable by it to conduct the business of the Partnership, to
exercise all powers set forth in Section 3.2 hereof and to effectuate the
purposes set forth in Section 3.1 hereof, including, without limitation:
<PAGE> 33
(1) the making of any expenditures, the lending or borrowing of
money (including, without limitation, making prepayments on loans and borrowing
money to permit the Partnership to make distributions to its Partners in such
amounts as will permit the General Partner (so long as the General Partner
qualifies as a REIT) to avoid the payment of any federal income tax (including,
for this purpose, any excise tax pursuant to Code <section> 4981) and to make
distributions to its stockholders sufficient to permit the General Partner to
maintain REIT status), the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of evidences of
indebtedness (including the securing of same by deed to secure debt, mortgage,
deed of trust or other lien or encumbrance on the Partnership's assets) and the
incurrence of any obligations it reasonably deems necessary for the conduct of
the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of assets of the Partnership (including the exercise
or grant of any conversion, option, privilege, or subscription right or any
other right available in connection with any assets at any time held by the
Partnership);
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any terms it reasonably determines to be in the best interests
of the Partnership, including, without limitation, the financing of the conduct
of the operations of the General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons (including,
without limitation, the Partnership's Subsidiaries) and the repayment of
obligations of the Partnership and its Subsidiaries and any other Person in
which it has an equity investment and the making of capital contributions to
its Subsidiaries;
<PAGE> 34
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements
owned by the Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner considers useful or
necessary to the conduct of the Partnership's operations or the implementation
of the General Partner's powers under this Agreement, including contracting
with contractors, developers, consultants, accountants, legal counsel, other
professional advisors and other agents and the payment of their expenses and
compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash and other
assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees of the Partnership or any
division of the Partnership (including, without limitation, employees having
titles such as "president," "vice president," "secretary" and "treasurer" of
the Partnership or any division of the Partnership), and agents, outside
attorneys, accountants, consultants and contractors of the Partnership or any
division of the Partnership and the determination of their compensation and
other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate and in the
best interests of the Partnership and its Partners as a whole;
(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general partnerships, joint
ventures, trusts, corporations or other relationships that it deems desirable
(including, without limitation, the acquisition of interests in, and the
contributions
<PAGE> 35
of property to, its Subsidiaries and any other Person in which it
has an equity investment from time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise,
submission to arbitration or any other form of dispute resolution, or
abandonment of, any claim, cause of action, liability, debt or damages, due or
owing to or from the Partnership, the commencement or defense of suits, legal
proceeding, administrative proceedings, arbitrations or other forms of dispute
resolution, and the representation of the Partnership in all suits or legal
proceedings, administrative proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense, and the indemnification of any
Person against liabilities and contingencies to the extent permitted under this
Agreement;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries or any other
Person (including, without limitation, the contribution or loan of funds by the
Partnership to such Persons);
(15) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of valuation as it
may adopt;
(16) the exercise, directly or indirectly, through any attorney-
in-fact acting under a general or limited power of attorney, of any right,
including the right to vote, appurtenant to any asset or investment held by the
Partnership;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any Subsidiary
of the Partnership or any other Person in which the Partnership has a direct or
indirect interest, or jointly with any such Subsidiary or other Person;
(18) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the Partnership
does not have an interest pursuant to contractual or other arrangements with
such Person;
<PAGE> 36
(19) the payment or retirement of debt obligations by the General
Partner or the Partnership or by the General Partner on behalf of or in
connection with any Subsidiary of the Partnership;
(20) the making, execution and delivery of any and all deeds,
leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or legal instruments or agreements in writing necessary or
appropriate in the judgment of the General Partner for the accomplishment of
any of the powers of the General Partner enumerated in this Agreement;
(21) the issuance of additional Partnership Units whether OP Units
or Preferred Units or other Partnership Interests in accordance with Section
4.2; and
(22) the taking of all actions to effect the transactions
contemplated to be taken by the Partnership by Registration Statement No. 33-
68844, and as may be necessary or convenient in connection therewith.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, (except as provided in Section 7.3), to the fullest
extent permitted under the Act or other applicable law.
C. At all times from and after the date hereof, the General Partner
may cause the Partnership to obtain and maintain (i) casualty, liability and
other insurance on the properties of the Partnership and (ii) liability
insurance for the Indemnitees hereunder.
D. At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain any and all reserves,
working capital accounts and other cash or similar balances in such amounts as
the General Partner in its reasonable business judgment deems appropriate and
reasonable from time to time and in the best interests of the Partnership.
<PAGE> 37
E. In exercising its authority under this Agreement, the General
Partner may, but (except as otherwise provided herein) shall not be obligated
to, take into account the tax consequences to any Partner of any action taken
by it.
Section 7.2. CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner shall file amendments to the Certificate and do
all the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the
laws of the State of Maryland and each other state or the District of Columbia,
in which the Partnership may elect to do business or own property. The General
Partner shall be required, before or after filing, to deliver or mail a copy of
the Certificate or any amendment thereto to the Limited Partners. The General
Partner shall cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability to the extent provided by
applicable law) in the State of Maryland and any other state, or the District
of Columbia, in which the Partnership may elect to do business or own property.
Section 7.3. RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY
The General Partner may not, without the written consent of all of
the Limited Partners, take any action in contravention of an express
prohibition or limitation contained in this Agreement.
Section 7.4. REIMBURSEMENT OF THE GENERAL PARTNER
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding
distributions, payments, and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.
B. The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole and absolute
discretion, for all expenses it incurs relating to the ownership and operation
of, or for the benefit of, the Partnership; provided that the amount of such
<PAGE> 38
reimbursement shall be reduced by any interest earned by the General Partner
with respect to bank accounts or other instruments or accounts held by it on
behalf of the Partnership as permitted in Section 7.5.A.; provided further,
that if the General Partner receives distributions as a partner or equity owner
(direct or indirect) of a Subsidiary or from any Subsidiary of the Partnership
other than as a distribution from the Partnership, the amount of such
reimbursements shall be reduced by such amounts. The General Partner
represents and warrants to the Partnership and the Limited Partners that the
General Partner's sole business is the ownership of interests in and operation
of the Partnership and as such all of the General Partner's expenses will be
incurred for the benefit of the Partnership. Such reimbursements shall be in
addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7 hereof.
C. The General Partner shall also be reimbursed for all expenses it
incurs relating to the organization and/or reorganization of the Partnership
and the General Partner, the initial public offering of REIT Shares by the
General Partner, and any other issuance of additional Partnership Interests or
REIT Shares pursuant to Section 4.2 hereof. Any such reimbursement shall be
treated for purposes of maintaining Capital Accounts and allocating Profits and
Losses as a distribution to the General Partner and any distribution or loss
attributable to such expenditures shall be claimed solely by the General
Partner.
D. This section sets forth the actions required of the General
Partner and the Partnership in the event the General Partner acquires REIT
Shares in the several circumstances set forth below:
(1) In the event that the General Partner shall elect to purchase
from stockholders REIT Shares and utilizing funds provided by the Partnership
for such purpose rather than funds distributed with respect to the General
Partner's Partnership Interest, a redemption of Partnership Interests of the
General Partner (with such redemption first to be applied to the extent, if
any, that Limited Partner Units are held by the General Partner or are obtained
by the General Partner by means of an exchange therefor of REIT Shares under
the Exchange Agreement) shall occur as contemplated in Section 7.5.B of
<PAGE> 39
this Agreement reflecting a redemption in the Partnership Interest of the
General Partner attributable thereto. It is contemplated that the General
Partner may so utilize Partnership funds to purchase from stockholders REIT
Shares(a)for the purpose of any stock repurchase program or any similar
obligation or arrangement undertaken by the General Partner,(b) for the
purpose of satisfying an obligation under the Exchange Agreement (to the
extent authorized but unissued shares of Common Stock are not so used), or (c)
for any other proper purposes of the General Partner.
(2) In the event that the General Partner shall elect to purchase
from stockholders REIT Shares pursuant to any employee stock purchase plan (or
any similar obligation or arrangement undertaken by the General Partner for its
employees or for the employees of the Partnership or any Subsidiary) and
utilizing funds provided by the Partnership for such purpose rather than funds
distributed with respect to the General Partner's Partnership Interest, the
purchase price paid by the General Partner for such REIT Shares and any other
expenses incurred by the General Partner in connection with such purchase shall
be considered expenses of the General Partner and shall be reimbursed to the
General Partner by the Partnership, subject to the conditions that, if such
reacquired REIT Shares are subsequently sold by the General Partner, the
General Partner shall return such reimbursement to the extent of any proceeds
and dividends received by the General Partner for such REIT Shares.
Section 7.5. OUTSIDE ACTIVITIES OF THE GENERAL PARTNER
A. The General Partner shall not directly or indirectly enter into
or conduct any business, other than in connection with the ownership,
acquisition and disposition of Partnership Interests as a General Partner or
Limited Partner and the management of the business of the Partnership, the
ownership, acquisition and disposition of direct or indirect economic or voting
interests (representing not more than a one percent (1.0%) interest) in
entities in which the remaining economic or voting interests are held directly
or indirectly by the Partnership, and such activities as are incidental
thereto. The General Partner shall not own or enter into any agreement to
acquire any assets other than (i) Partnership Interests as a General Partner or
Limited Partner, (ii) the direct or indirect economic or voting interests
referred to above and (iii) such bank accounts or similar instruments or
accounts as it deems necessary
<PAGE> 40
to carry out its responsibilities contemplated
under this Agreement and the Articles of Incorporation. The General Partner
and any Affiliates of the General Partner may acquire Limited Partner Interests
and shall be entitled to exercise all rights of a Limited Partner relating to
such Limited Partner Interests, except as such rights are otherwise expressly
limited herein.
B. In the event the General Partner exercises its rights under
Article Ninth of the Articles of Incorporation, or any amendatory or successor
provision thereto or under Section 7.4.D(1) hereof to acquire or redeem REIT
shares, then the General Partner shall cause the Partnership to redeem from the
General Partner, or any of its Subsidiaries, Partnership Units equal to that
number of Partnership Units (such redemption to be of Limited Partner interests
first) equal to the product obtained by multiplying the number of REIT Shares
to be redeemed by the General Partner times the Conversion Factor on the same
terms and for the same aggregate price that the General Partner redeemed such
REIT Shares.
Section 7.6. CONTRACTS WITH AFFILIATES
A. The Partnership may lend or contribute funds or other assets to
its Subsidiaries or other Persons in which it has an equity investment, and
such Persons may borrow funds from the Partnership, on fair and reasonable
terms and conditions established in the sole and absolute discretion of the
General Partner in its reasonable business judgment to be in the best interests
of the Partnership. The foregoing authority shall not create any right or
benefit in favor of any Subsidiary or any other Person.
B. Except as provided in Section 7.5.A, the Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon fair and
reasonable terms and subject to such conditions consistent with this Agreement
and applicable law as the General Partner, in its sole and absolute discretion,
believes are advisable in its reasonable business judgment and the best
interests of the Partnership.
C. Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the
<PAGE> 41
Partnership, directly or
indirectly, except pursuant to transactions that are no less favorable to the
Partnership than if the transactions were with an unaffiliated third party.
D. The General Partner, (through a majority of its independent
directors) in its sole and absolute discretion determined in its reasonable
business judgment to be in the best interests of the Partnership and without
the approval of the Limited Partners, may propose and adopt employee benefit
plans, stock option plans and similar plans funded by the Partnership for the
benefit of employees of the General Partner, the Partnership, or Subsidiaries
of the Partnership in respect of services performed, directly or indirectly,
for the benefit of the Partnership, the General Partner, or any of the
Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, conflict of interest avoidance
agreements with various Affiliates of the Partnership and the General Partner,
on such terms as the General Partner, in its sole and absolute discretion,
believes, in the exercise of its reasonable business judgment, are advisable
and in the best interests of the Partnership.
Section 7.7. INDEMNIFICATION
A. The Partnership shall indemnify each Indemnitee from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, reasonable attorney's fees and other legal fees
and expenses), judgments, fines, settlements, and other amounts arising from
any and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise; provided
that the Partnership shall not indemnify an Indemnitee for any such losses,
claims, damages, liabilities, expenses, judgments, fines, settlements or other
amounts arising out of or resulting from (i) the gross negligence, fraud, or
intentional misconduct by such Indemnitee, or a violation of law by such
Indemnitee when the Indemnitee has reasonable cause to believe such action was
unlawful, (ii) the violation or breach by such Indemnitee of the provisions of
this Agreement or (iii) any transaction from which such Indemnitee received a
personal
<PAGE> 42
benefit in violation or breach of any provision of this Agreement.
Without limitation, the foregoing indemnity shall extend to any liability of
any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness
of the Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements consistent with the provisions of this Section 7.7 in
favor of any Indemnitee having or potentially having liability for any such
indebtedness; provided, however, that the foregoing indemnity will not apply if
the Indemnitee has waived its rights to any subrogation on this indemnity. The
termination of any proceeding by judgment, order or settlement does not create
a presumption that the Indemnitee did not meet the requisite standard of
conduct set forth in this Section 7.7.A. The termination of any proceeding by
conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent
by an Indemnitee, or an entry of an order of probation against an Indemnitee
prior to judgment, creates a rebuttable presumption that such Indemnitee acted
in a manner contrary to that specified in this Section 7.7.A with respect to
the subject matter of such proceeding. Any indemnification pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, and
neither the General Partner nor any Limited Partners shall have any obligation
to contribute to the capital of the Partnership or otherwise provide funds to
enable the Partnership to fund its obligations under this Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.7.A has been met, and (ii) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
<PAGE> 43
C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement with such
Indemnitee or in the writing pursuant to which such Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance on behalf of any of the Indemnitees against any liability
that may be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
E. Any liabilities which an Indemnitee incurs as a result of acting
on behalf of the Partnership or the General Partner (whether as a fiduciary or
otherwise) in connection with the operation, administration or maintenance of
an employee benefit plan or any related trust or funding mechanism (whether
such liabilities are in the form of excise taxes, penalties, restitutions or
other funding mechanism or to a participant or beneficiary of such plan, trust
or other funding mechanism, or otherwise) shall be treated as liabilities or
judgments or fines under this Section 7.7.
F. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 solely because the Indemnitee had an interest in
the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
G. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on
the Partnership's liability to any Indemnitee under this Section 7.7 as in
effect immediately prior to such amendment, modification or
<PAGE> 44
repeal with respect
to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims
may arise or be asserted.
Section 7.8. LIABILITY OF THE GENERAL PARTNER
A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership, any Partners or any Assignees for any losses, claims, damages,
liabilities, expenses, judgments, fines, settlements or other amounts incurred
due to acts or omissions of the General Partner, except if such losses, claims,
damages, liabilities, expenses, judgments, fines, settlements or other amounts
arose out of or resulted from (i) the gross negligence, fraud, intentional
misconduct or a knowing violation of law by the General Partner when it had
reasonable cause to believe such action giving rise to the violation was
unlawful (ii) the violation or breach by the General Partner of the provisions
of this Agreement or (iii) any transaction in which the General Partner
received a personal benefit in violation or breach of any provision of this
Agreement.
B. Subject to its obligations and duties as General Partner set
forth in Sections 7.1.A and 7.3 hereof, the General Partner may exercise any of
the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents. The
General Partner shall not be responsible for any willful misconduct or gross
negligence on the part of any such agent appointed by it in good faith and
without gross negligence.
C. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
<PAGE> 45
Section 7.9.
<PAGE>
REIT QUALIFICATION OF THE GENERAL PARTNER
Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary
or advisable in order (i) to protect the ability of the General Partner to
continue to qualify as a REIT or (ii) to avoid the General Partner incurring
any taxes under Code <section> 857 or 4981, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners. Nothing,
however, in this Agreement shall be deemed to give rise to any liability on the
part of the Limited Partners for the General Partner's failure to qualify or
continue to qualify as a REIT or failure to avoid incurring any taxes under the
foregoing Sections of the Code, or to give rise to any liability of the General
Partner for such failure so to qualify.
Section 7.10. TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The
General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be held by the General Partner, or such
nominee or Affiliate for the use and benefit of the Partnership in accordance
with the provisions of this Agreement; PROVIDED THAT the General Partner shall
use its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably practicable. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.
<PAGE> 46
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1. LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement,
except as expressly provided in this Agreement including Section 10.5 hereof,
or under the Act.
Section 8.2. MANAGEMENT OF BUSINESS
No Partner or Assignee (other than the General Partner, any of its
Subsidiaries or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Subsidiaries, in their
capacity as such) shall take part in the operation, management or control of
the Partnership's business, transact any business in the Partnership's name or
have the power to sign documents for or otherwise bind the Partnership.
Notwithstanding anything herein seemingly to the contrary, the transaction of
any such business by the General Partner, any of its Subsidiaries or any
officer, director, employee, partner, agent or trustee of the General Partner,
the Partnership or any of their Subsidiaries, in their capacity as such, shall
not affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.
Section 8.3. OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to any agreements entered into pursuant to Section 7.6.E
hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or a Subsidiary, any Limited Partner (other
than the General Partner) and any officer, director, employee, agent, trustee,
Affiliate or stockholder of any Limited Partner (other than the General
Partner) shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership, including
business interests and activities that are in direct competition with the
Partnership or that are enhanced by the activities of the Partnership. Neither
the Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner (other than the
General Partner) or Assignee. None of the Limited Partners nor any other
Person shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any business
<PAGE> 47
ventures of any other Person
(other than the General Partner to the extent expressly provided herein) and
such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could
be taken by such Person. In addition, the Partners recognize that certain of
the Limited Partners and their Affiliates are and may in the future be tenants
of the Partnership or other Persons or own anchor or other stores in the
Partnership's properties or other properties and in connection therewith may
have interests that conflict with those of the Partnership. In deciding
whether to take any actions in such capacity, such Limited Partners and their
Affiliates shall be under no obligation to consider the separate interests of
the Partnership and shall have no fiduciary obligations to the Partnership and
shall not be liable for monetary damages for losses sustained, liabilities
incurred or benefits not derived by the other Partners in connection with such
actions.
Section 8.4. RETURN OF CAPITAL
No Partner shall be entitled to the withdrawal or return of his
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein or as
a result of a redemption of a Partnership Interest pursuant to Section 7.5.
Section 8.5. RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP
A. In addition to other rights provided by this Agreement or by the
Act, each Limited Partner shall be furnished:
(1) a copy of the most recent annual and quarterly reports filed with
the Securities and Exchange Commission by the General Partner pursuant to
the Securities Exchange Act of 1934 and all proxy materials and current
reports on Form 8-K filed by the General Partner with the Securities and
Exchange Commission;
<PAGE> 48
(2) a copy of the Partnership's federal, state and local income tax
returns for each Partnership Year;
(3) a current list of the name and last known business, residence or
mailing address of each Partner; and
(4) a copy of this Agreement and the Certificate and all amendments
thereto, together with executed copies of all powers of attorney pursuant
to which this Agreement, the Certificate and all amendments thereto have
been executed.
B. The Partnership shall notify any Limited Partner, on request, of
the then current Conversion Factor or any change made to the Conversion Factor.
C. Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that (i) the General Partner
reasonably believes to be in the nature of trade secrets the disclosure of
which the General Partner in good faith believes is not in the best interests
of the Partnership or could damage the Partnership or its business or (ii) the
Partnership is required by law or by agreements with an unaffiliated third
party to keep confidential.
D. The General Partner shall provide advance written notice to the
Limited Partners of any proposed sale or refinancing by the Partnership or any
of its Subsidiaries, and will consult during normal business hours with any
Limited Partner who requests in writing the right to consult with the General
Partner with respect thereto. The General Partner also shall provide the
Limited Partners with quarterly tax projections for the Partnership. Subject
in all respects to Section 7.3 hereof, in no event, however, will the General
Partner be obligated to agree to any modifications to a proposed sale or
refinancing which are suggested by a Limited Partner, nor will any Limited
Partner have a veto or other right over any such proposed sale or refinancing.
<PAGE> 49
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1. RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the principal
executive office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General Partner
to be appropriate with respect to the Partnership's business, including,
without limitation, all books and records necessary to provide to the Limited
Partners any information, lists and copies of documents required to be provided
pursuant to Section 9.3 hereof. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with GAAP, or on such other basis as the General Partner determines
to be necessary or appropriate.
Section 9.2. FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
Section 9.3. REPORTS
A. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each Partnership Year, the General Partner
shall cause to be mailed to each Limited Partner as of the close of the
Partnership Year, an annual report containing financial statements of the
Partnership, or of the General Partner if such statements are prepared solely
on a consolidated basis with the General Partner, for such Partnership Year,
presented in accordance with GAAP, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner.
B. As soon as practicable, but in no event later than one hundred
five (105) days after the close of each calendar quarter (except the last
calendar quarter of each year), the General Partner shall cause to be mailed to
each Limited Partner as of the last day of the calendar quarter, a report
containing unaudited financial statements of the Partnership, or of the General
Partner, if such statements are
<PAGE> 50
prepared solely on a consolidated basis with
the General Partner, and such other information as may be required by
applicable law or regulation, or as the General Partner determines to be
appropriate.
ARTICLE 10
TAX MATTERS
Section 10.1. PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and
other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety (90)
days of the close of each taxable year, the tax information reasonably required
by Limited Partners for federal and state income tax reporting purposes.
Section 10.2. TAX ELECTIONS
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code; PROVIDED THAT the General Partner shall make the
election under Code <section> 754 in accordance with applicable Regulations
thereunder. The General Partner shall have the right to seek to revoke any
such elections (including, without limitation, the election under Code
<section> 754) upon the General Partner's determination in its sole and
absolute discretion that such revocation is in the best interests of the
Partners.
Section 10.3. TAX MATTERS PARTNER
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes within the meaning of Code
<section> 6231(a)(7). Pursuant to Code <section> 6223(c)(3), upon receipt of
notice from the IRS of the beginning of an administrative proceeding with
respect to the Partnership, the tax matters partner shall furnish the IRS with
the name, address and profit interest of each of the Limited Partners and the
Assignees to the extent that such information is provided to the Partnership by
the Limited Partners and the Assignees. The General Partner is authorized to
take any action in connection with any tax audit or continuing judicial action
as it determines in good faith is in the
<PAGE> 51
best interests of the Partners;
provided, however, that the Tax Matters Partner shall not be entitled to bind
JCP Realty, Inc. or its Affiliates in their capacity as a Limited Partner
("JCP") by any Settlement Agreement (within the meaning of Section 6224 of the
Code) and shall notify JCP in a manner and at such time as is sufficient to
allow JCP to exercise its rights pursuant to Section 6224(a)(3) of the Code.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
B. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an independent accounting
firm or the accountants for the Partnership to assist the tax matters partner
in discharging its duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.
Section 10.4. ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by
it in organizing the Partnership ratably over a sixty (60) month period as
provided in Code <section> 709.
Section 10.5. WITHHOLDING; COMBINED RETURNS
A. Each Partner hereby authorizes the Partnership to withhold from
or pay on behalf of or with respect to such Partner and Assignee any amount of
federal, state, local, or foreign taxes that the General Partner reasonably
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Partner or Assignee pursuant to
this Agreement, including, without limitation, any taxes required to be
withheld or paid by the Partnership pursuant to Code <section> 1441, 1442,
1445, or 1446. Any amount paid on behalf of or with respect to a Partner or
Assignee shall
<PAGE> 52
constitute a loan by the Partnership to such Partner or
Assignee, which loan shall be repaid through withholding of subsequent
distributions to such Partner or Assignee. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect
to make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner. Without limitation, in
such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest thereon, has been paid in
full; and any such distributions so received by the General Partner shall be
treated as having been distributed to the defaulting Limited Partner and
immediately paid by the defaulting Limited Partner to the General Partner in
repayment of such loan. Any amounts payable by a Limited Partner hereunder
shall bear interest at the lesser of (i) the base rate on corporate loans at
large United States money center commercial banks, as published from time to
time in The Wall Street Journal or (ii) the maximum lawful rate of interest on
such obligation, such interest to accrue from the date such amount is due
(i.e., fifteen (15) days after demand) until such amount is paid in full.
B. The General Partner is authorized, if it determines in good faith
that such action is in the interests to both it and the Limited Partners, to
negotiate with state and local tax authorities and/or file state and local
combined or consolidated income tax returns on behalf of the Partnership and
for all of the Partners and Assignees in respect of income of the Partnership.
To the extent any payment or accrual of state or local income taxes result in a
federal, state or local tax credit to one or more Partners, such credit shall
be allocated between the Partners in proportion to their respective average
daily Percentage Interests for the Partnership Year for which such tax is paid
or accrued and the amount allocated to each Partner shall be treated as a
distribution to such Partner and shall reduce the amount of available cash
otherwise distributable to such Partners under Article 5.
<PAGE> 53
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1. TRANSFER
A. The term "transfer," when used in this Article 11 with respect to
a Partnership Unit, shall be deemed to refer to a transaction by which the
General Partner purports to assign all or any part of its General Partner
Interest to another Person or by which a Limited Partner purports to assign all
or any part of its Limited Partner Interest to another Person, and includes a
sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise. The term "transfer" when used in
this Article 11 does not include any redemption of Partnership Units by the
Partnership from a Limited Partner or acquisition of Partnership Units from a
Limited Partner by the General Partner pursuant to the Exchange Agreement or a
distribution of Partnership Units by Boise Mall Development Company, Ltd. to
its partners.
B. No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void.
Section 11.2. TRANSFER OF GENERAL PARTNER'S PARTNER INTEREST
A. The General Partner may not transfer any of its General Partner
Interest or Limited Partner Interests or withdraw as General Partner, except as
provided in Section 11.2.B.
B. The General Partner may cause to be redeemed Partnership
Interests in accordance with Section 7.5.B hereof and may transfer its Limited
Partnership Interests but not its General Partner Interests to any wholly owned
subsidiary, but may not transfer any beneficial or record ownership interest in
such subsidiary to any other Person.
Section 11.3. LIMITED PARTNERS' RIGHTS TO TRANSFER
A. Subject to the provisions of Section 11.3.E, no Limited Partner
shall have the right to transfer all or any portion of his Partnership
Interest, or any of such Limited Partner's rights as a Limited
<PAGE> 54
Partner, without
the prior written consent of the General Partner, which consent may be given or
withheld by the General Partner in its sole and absolute discretion. Any
purported transfer of a Partnership Interest by a Limited Partner in violation
of this Section 11.3.A shall be void ab initio and shall not be given effect
for any purpose by the Partnership.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, but
not more rights than those enjoyed by other Limited Partners, for the purpose
of settling or managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. No transfer by a Limited Partner of his Partnership Units may be
made to any Person if (i) in the opinion of legal counsel for the Partnership,
it would result in the Partnership being treated as an association taxable as a
corporation, or (ii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Code <section> 7704(b).
D. Notwithstanding the provisions of Section 11.3.A (but subject to
the provisions of Section 11.3.C), a Limited Partner may, with or without the
consent of the General Partner, transfer all or a portion of his Partnership
Units to a lender as security for a loan made to or guaranteed by the Limited
Partner, provided that in connection with any such transfer the lender does not
acquire greater rights with respect to the Partnership Units than those held by
the transferring Limited Partner.
Section 11.4. SUBSTITUTED LIMITED PARTNERS
A. No Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his place. The General Partner shall,
however, have the right to consent to the admission of a transferee of the
interest of a Limited Partner pursuant to this Section 11.4 as a Substituted
Limited Partner, which consent may be withheld by the General Partner in its
discretion. If such consent is
<PAGE> 55
granted by the General Partner, the transferee
shall be admitted to the Partnership as a Substituted Limited Partner upon
furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in
Sections 2.4 and 13.1 hereof, the Exchange Agreement and the Registration
Rights Agreement and (ii) such other documents or instruments as may be
reasonably required by the General Partner in order to effect such Person's
admission as a Substituted Limited Partner. The General Partner's failure or
refusal to permit a transferee of any such interests to become a Substituted
Limited Partner shall not give rise to any cause of action for damages against
the Partnership or any Partner.
B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend EXHIBIT A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5. ASSIGNEES
If the General Partner does not consent to the admission of any
permitted transferee under Section 11.3 as a Substituted Limited Partner, as
described in Section 11.4, such transferee shall be considered an Assignee for
purposes of this Agreement. An Assignee shall be deemed to have had assigned
to it, and shall be entitled to receive, distributions from the Partnership and
the share of Profits, Losses, and any other items of income, gain, loss,
deduction and credit of the Partnership attributable to the Partnership Units
assigned to such transferee, but shall not be deemed to be a holder of
Partnership Units for any other purpose under this Agreement, and shall not be
entitled to vote such Partnership Units in any matter presented to the Limited
Partners for a vote, such Partnership Units continuing to be voted by the
Partner appearing in the records of the Partnership as owning the same. In the
event any such
<PAGE> 56
transferee desires to make a further assignment of any such
Partnership Units, such transferee shall be subject to all the provisions of
this Article 11 to the same extent and in the same manner as any Limited
Partner desiring to make an assignment of Partnership Units.
Section 11.6. GENERAL PROVISIONS
A. No Limited Partner may withdraw from the Partnership other than
as a result of a permitted transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11.
B. Any Limited Partner who shall transfer all of his Partnership
Units in a transfer permitted pursuant to this Article 11 shall cease to be a
Limited Partner upon the admission of all Assignees of such Partnership Units
as Substituted Limited Partners.
C. Transfers pursuant to this Article 11 may only be made as of the
first day of a month, unless the General Partner otherwise agrees.
D. Transfers pursuant to the Exchange Agreement may be made at any
time as specified in the Exchange Agreement.
E. If any Partnership Unit is transferred or assigned in compliance
with the provisions of this Article 11 on any day other than the first day of a
Partnership Year, then Profits, Losses, each item thereof and all other items
attributable to such Partnership Unit for such Partnership Year shall be
allocated to the transferor and the transferee by taking into account their
varying interests during the Partnership Year in accordance with Section 6.3.B.
F. All distributions pursuant to Section 5.1 attributable to a
transferred Partnership Interest (i) with respect to which the Partnership
Record Date is before the effective date of a transfer or assignment (other
than a pledge, encumbrance, hypothecation or mortgage) of the Partnership
Interest will be made to the transferor Partner, (ii) with respect to the first
Partnership Record Date after the effective date of such transfer or assignment
(other than a pledge, encumbrance, hypothecation or mortgage) shall be paid to
the transferor Partner and the transferee or assignee, ratably in accordance
with
<PAGE> 57
their respective periods of ownership of the Partnership Interest
transferred during the period with respect to which such distribution is made,
and (iii) all distributions made in respect of a Record Date after the Record
Dates described in (i) and (ii) attributable to the Partnership Interest will
be made to the transferee or assignee (other than in connection with a pledge,
encumbrance, hypothecation or mortgage).
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1. ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner Interest by a Person
designated by the Partners under Section 13.1.B shall be admitted to the
Partnership as the General Partner, effective, as the case may be, upon
completion of the Transaction or the date the notice specified in Section
13.1.B is given as therein provided. Any such transferee shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission. In the case of such admission on any day other than the first
day of a Partnership Year, all items attributable to the General Partner
Interest for such Partnership Year shall be allocated between the transferring
Partner(s) and such successor as provided in Section 6.3.B.
Section 12.2. ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. After the admission to the Partnership of the initial Limited
Partners on the date hereof, a Person who makes a Capital Contribution to the
Partnership in accordance with Section 4.2 of this Agreement or who exercises
an option to receive Partnership Units shall be admitted to the Partnership as
an Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of
the terms and conditions of this Agreement, including, without limitation, the
power of attorney granted in Section 2.4 and 13.1 hereof
<PAGE> 58
and (ii) such other
documents or instruments as may be required in the sole and absolute discretion
of the General Partner in order to effect such Person's admission as an
Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent
of the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded in the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the Partnership
on any day other than the first day of a Partnership Year, then Profits,
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees in accordance with Section
6.3.B.
Section 12.3. AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the books and records of the Partnership and, if necessary, to prepare as soon
as practical an amendment of this Agreement (including an amendment of EXHIBIT
A) and, if required by law, shall prepare and file an amendment to the
Certificate and may for the purposes of amending the Certificate exercise the
power of attorney granted pursuant to Section 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1. DISSOLUTION
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner
<PAGE> 59
shall continue the business of the Partnership. The Partnership shall dissolve,
and its affairs shall be wound up, upon the first to occur of any of the
following ("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the last remaining General Partner, as
defined in the Act, unless within ninety (90) days following such event of
withdrawal, the remaining Partners representing a majority of the Partnership
Units (other than those held by the General Partner) held by such remaining
Partners (the "Consenting Partners") (i) agree in writing to continue the
Partnership and designate a successor General Partner whose Partnership
Interest in the Partnership shall be derived, on an equitable basis, from the
Partnership Interests of all remaining Partners on terms to be determined by
the Consenting Partners and (ii) provide written notice of such agreement and
designation to all other Partners;
C. from and after the date of this Agreement through December 31,
2043, an election to dissolve the Partnership made by the General Partner,
unless any Limited Partner holding at least five percent (5%) of the
Partnership Units objects in writing to such dissolution within thirty (30)
days of receiving written notice of such election from the General Partner;
D. on or after January 1, 2044, an election to dissolve the
Partnership made by the General Partner with the Consent of the Limited
Partners;
E. entry of a decree of judicial dissolution of the Partnership
pursuant to the provision of the Act; or
F. the sale of all or substantially all of the assets and properties
of the Partnership.
For purposes of Section 13.1.B, all Limited Partners agree that the
agreement by the Consenting Partners to continue the Partnership and designate
a successor General Partner shall constitute the agreement of all remaining
Partners "to continue the business of the limited partnership" and "to the
appointment . . . of [an] additional general partner" within the meaning of
<section> 10-801(3) of the Act, to the
<PAGE> 60
same effect as if all remaining Partners
affirmatively consented in writing to such continuation and designation. In
this regard, each Limited Partner hereby constitutes and appoints such
designated successor General Partner, and its authorized officers and
attorneys-in-fact, and each of those acting singly, in each case with full
power of substitution, as its true and lawful agent and attorney-in-fact, with
full power and authority in its name, place and stead to execute, swear to,
seal, acknowledge, deliver, file and record in the appropriate public offices
all certificates, documents and other instruments that such successor deems
appropriate or necessary to evidence the affirmative consent in writing to such
continuation and designation.
The foregoing power of attorney is irrevocable and coupled with an
interest, in recognition of the fact that each of the Partners will be relying
upon the power of the successor General Partner to act as contemplated above,
and it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner and the transfer of all or any portion of such Limited
Partner's Partnership Units and shall extend to such Limited Partner's heirs,
successors, assigns and personal representatives.
Section 13.2. WINDING UP
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Partners. No Partner shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Partnership's business
and affairs. The General Partner or a Person designated by the General Partner
or, in the event there is no remaining General Partner, any Person elected by
holders of a majority of the outstanding Partnership Units held by Limited
Partners (excluding Units that may be held by the General Partner or any of its
Subsidiaries as a Limited Partner) (the General Partner or such other Person
being referred to herein as the "Liquidator") shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take
full account of the Partnership's liabilities and property and the Partnership
property shall be liquidated as promptly as is consistent with obtaining the
fair value thereof, and the proceeds therefrom shall be applied and distributed
in the following order:
<PAGE> 61
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of, and in proportion to,
all of the Partnership's debts and liabilities to the Partners; and
(3) The balance, if any, to the Partners in proportion to their
positive Capital Account balances, after giving effect to all contributions,
distributions, and allocations of Profits and Losses and other items for all
periods.
The General Partner shall not receive any additional compensation
for any services performed pursuant to this Article 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors)
and/or, with the consent of each Partner, distribute to the Partners, in lieu
of cash, as tenants in common and in accordance with the provisions of Section
13.2.A hereof, undivided interests in such Partnership assets as the Liquidator
deems not suitable for liquidation. Any such distributions in kind shall be
made only if, in the good faith judgment of the Liquidator, such distributions
in kind are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as the
Liquidator deems reasonable and equitable and to any agreements governing the
operation of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
<PAGE> 62
Section 13.3. NEGATIVE CAPITAL ACCOUNTS
A. Except as provided in the next sentence and Section 13.3.B, no
Partner shall be liable to the Partnership or to any other Partner for any
deficit or negative balance which may exist in such Partner's Capital Account.
Upon liquidation of an Obligated Partner's interest in the Partnership pursuant
to a liquidation of the Partnership or by means of a distribution to the
Obligated Partner by the Partnership, if any such Obligated Partner has a
deficit balance in its Capital Account (after giving effect to all
contributions, distributions, allocations and adjustments to Capital Accounts
for all periods), each such Obligated Partner shall contribute to the capital
of the Partnership an amount equal to its respective deficit balance; such
obligation to be satisfied by the end of the Partnership Year of liquidation
(or, if later, within ninety (90) days following the liquidation and
dissolution of the Partnership). Such contributions shall be used to make
payments to creditors of the Partnership and such Obligated Partners (i) shall
not be subrogated to the rights of any such creditor against the General
Partner, the Partnership, another Partner or any Person related thereto, and
(ii) hereby waive any right to reimbursement, contribution or similar right to
which such Obligated Partners might otherwise be entitled as a result of the
performance of its obligations under this Agreement.
B. Notwithstanding any other provision of this Agreement, an
Obligated Partner shall cease to be an Obligated Partner upon an exchange of
all of such Obligated Partner's remaining Partnership Units for REIT Shares
(pursuant to the Exchange Agreement) six months after the date of such exchange
unless at the time of, or during the six-month period following, such exchange,
there has been:
(i) An entry of a decree or order for relief in respect of the
Partnership by a court having jurisdiction over a substantial part
of the Partnership's assets, or the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Partnership or of any substantial part of
its property, or ordering the winding up or liquidation of the
Partnership's affairs, in an involuntary case under the
<PAGE> 63
federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law; or
(ii) The commencement against the Partnership of an involuntary
case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law; or
(iii) The commencement by the Partnership of a voluntary case
under the federal bankruptcy laws, as now or hereafter constituted,
or any other applicable federal or state bankruptcy, insolvency or
other similar law, or the consent by it to the entry of an order for
relief in an involuntary case under any such law or the consent by
it to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Partnership or of any substantial part of
its property, or the making by it of a general assignment for the
benefit of creditors, or the failure of the Partnership generally to
pay its debts as such debts become due or the taking of any action
in furtherance of any of the foregoing; or
(iv) A failure by the Partnership to maintain a ratio of Total
Liabilities to Market Value of Total Equity of less than 400%; or
(v) A failure by the Partnership to maintain a ratio of EBITDA
to Debt Service of greater than 110%.
Following the passage of the six-month period described in this
Section 13.3.B, an Obligated Partner shall cease to be an Obligated Partner at
the first time, if any, that all of the conditions set forth in (i) through (v)
above are no longer in existence.
Section 13.4. ACCOUNTING
In the event of the dissolution, liquidation and winding up of the
Partnership, a proper accounting (which shall be certified) shall be made of
the Capital Account of each Partner and of the
<PAGE> 64
Profits or Losses of the Partnership from the date of the last previous
accounting to the date of dissolution. Financial statements presenting
such accounting shall include a report of a certified public accountant
selected by the Liquidator.
Section 13.5. DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Article 13, in the event
the Partnership is liquidated within the meaning of Regulations
<section> 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes and for purposes of
maintaining Capital Accounts, the Partnership shall be deemed to have
distributed the property in kind to the General Partner and Limited Partners,
who shall be deemed to have assumed and taken such property subject to all
Partnership liabilities, all in accordance with their respective Capital
Accounts. Immediately thereafter, the General Partner and Limited Partners
shall be deemed to have recontributed the Partnership property in kind to the
Partnership, which shall be deemed to have assumed and taken such property
subject to all such liabilities.
Section 13.6. RIGHTS OF PARTNERS
Except as otherwise provided in this Agreement, each Partner shall
look solely to the assets of the Partnership for the return of his Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Partner shall have priority over any other Partner as to the
return of his Capital Contributions, distributions, or allocations.
Section 13.7. NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event occurs that
would, but for an election or objection by one or more Partners pursuant to
Section 13.1, result in a dissolution of the Partnership, the General Partner
shall, within 15 days thereafter, provide written notice thereof to each of the
Partners.
<PAGE> 65
Section 13.8. Termination of Partnership and Cancellation
OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership and the
distribution of all cash and property as provided in Section 13.2 hereof, the
Partnership shall be terminated, a certificate of cancellation shall be filed,
and all qualifications of the Partnership as a foreign limited partnership in
any jurisdiction other than the State of Maryland shall be cancelled and such
other actions as may be necessary to terminate the Partnership shall be taken.
Section 13.9. AGREEMENT TO REMAIN IN EFFECT
The provisions of this Agreement shall remain in effect between the
Partners during the period of liquidation.
Section 13.10. WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1. AMENDMENTS
A. Amendments to this Agreement may be proposed by the General
Partner or by Limited Partners holding at least twenty-five percent (25%) or
more of the Partnership Units held by Limited Partners (excluding Partnership
Units that may be held by the General Partner or any of its Subsidiaries as a
Limited Partner). Following such proposal, the General Partner shall submit any
proposed amendment to all of the Limited Partners. The General Partner shall
seek the written vote of the Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than five
(5) Business Days, and failure to respond in such time period shall constitute
a vote which is consistent with the General Partner's recommendation with
respect to the proposal. Except as provided in Section 14.1.B, 14.1.C and
14.1.D, a proposed amendment shall be adopted and be effective as an amendment
hereto if it is approved by the
<PAGE> 66
General Partner and it receives the Consent of
Partners holding a majority of the Partnership Units held by Limited Partners
(excluding Partnership Units that may be held by the General Partner or any of
its Subsidiaries as a Limited Partner).
B. Notwithstanding Section 14.1.A, the General Partner shall have
the power, without the consent of the Limited Partners, to amend this Agreement
as may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or surrender any
right or power granted to the General Partner or any Affiliate of the
General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(3) to reflect a change that is of an inconsequential nature and does
not adversely affect the Limited Partners, or to cure any ambiguity,
correct or supplement any provision in this Agreement not inconsistent
with law or with other provisions, or make other changes with respect to
matters arising under this Agreement that will not be inconsistent with
law or with the provisions of this Agreement; and
(4) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling, or regulation of a federal or
state agency or contained in federal or state law.
The General Partner shall provide 10 Business Days' prior written notice to the
Limited Partners of any action to be taken under this Section 14.1.B.
C. Notwithstanding Sections 14.1.A, 14.1.B and 14.1.D hereof, this
Agreement shall not be amended without the consent of each Partner adversely
affected if such amendment would (i) convert a Limited Partner's interest in
the Partnership into a general partner interest, (ii) modify the limited
liability
<PAGE> 67
of a Limited Partner in a manner adverse to such Limited Partner,
(iii) amend any of Articles 5 and 6, and Sections 7.3, 11.3, 11.4, 13.1 and
13.2 or (iv) amend this Section 14.1.C. Further, no amendment may alter the
restrictions on the General Partner's authority set forth in Section 7.3
without the consent specified in that section.
D. Notwithstanding Sections 14.1.A, 14.1.B and 14.1.C hereof, the
General Partner shall have the power, without the consent of the Limited
Partners (whether or not Obligated Partners), to amend EXHIBIT B hereto for the
purpose of adding, substituting or removing an Obligated Partner or adjusting
the Restoration Amount with respect to any Obligated Partner; provided,
however, EXHIBIT B shall not be amended without the prior written consent of
the Obligated Partner(s) being adversely affected thereby. Notwithstanding the
foregoing sentence, in connection with any liquidating distribution made by an
Entity Obligated Partner to an interest holder who is being allocated a portion
of such Entity Obligated Partner's Restoration Amount, the General Partner
shall also have the power, without the consent of the Limited Partners (whether
or not Obligated Partners), to amend EXHIBIT B hereto for the purpose of (i)
adding such distributee as an additional Obligated Partner with a Restoration
Amount equal to such distributee's allocable share of such Entity Obligated
Partner's Restoration Amount and (ii) making a corresponding reduction in the
Restoration Amount of such Entity Obligated Partner.
Section 14.2. MEETINGS OF THE PARTNERS
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding at least five percent (5%) or more of the Partnership
Units held by Limited Partners (excluding Partnership Units that may be held by
the General Partner or any of its Subsidiaries as a Limited Partner). The call
shall state the nature of the business to be transacted. Notice of any such
meeting shall be given to all Partners not less than seven (7) days nor more
than thirty (30) days prior to the date of such meeting. Partners may vote in
person or by proxy at such meeting. Whenever the vote or consent of Partners
is permitted or required
<PAGE> 68
under this Agreement, such vote or consent may be
given at a meeting of Partners or may be given in accordance with the procedure
prescribed in Section 14.1 hereof.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent is executed on or
before the effective date thereof that sets forth the action to be taken and is
signed by the requisite Partners. Such consent may be in one instrument or in
several instruments, and shall have the same force and effect as a vote of
Partners at a meeting. Such consent shall be filed with the General Partner
and a copy provided to each Limited Partner promptly thereafter. An action so
taken shall be deemed to have been taken at a meeting held on the effective
date so certified.
C. Each Limited Partner may authorize any Person or Persons to act
for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner
or his attorney-in-fact. No proxy shall be valid after the expiration of one
year from the date thereof unless otherwise provided in the proxy. Unless
otherwise indicated in the proxy, every proxy shall be revocable at the
pleasure of the Limited Partner executing it, such revocation to be effective
upon the Partnership's receipt of written notice of such revocation from the
Limited Partner executing such proxy.
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to
such rules for the conduct of the meeting as the General Partner or such other
Person deems appropriate. Without limitation, meetings of Partners may be
conducted in the same manner as meetings of the stockholders of the General
Partner and may be held at the same time, as a part of, meeting of the
stockholders of the General Partner.
<PAGE> 69
ARTICLE 15
GENERAL PROVISIONS
Section 15.1. ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or three (3)
Business Days after being deposited in the United States mail, registered or
certified, postage prepaid, and properly addressed to the Partner or Assignee
at the address set forth in EXHIBIT A or such other address of which the
Partner or Assignee shall notify the General Partner in writing.
Section 15.2. TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no
way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles"
and "Sections" are to Articles and Sections of this Agreement.
Section 15.3. PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4. FURTHER ACTION
The parties shall execute and deliver all documents and take or
refrain from taking action as may be reasonable and necessary or appropriate to
achieve the purposes of the Agreement.
Section 15.5. BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6. WAIVER
<PAGE> 70
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.7. COUNTERPARTS
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto.
Section 15.8. APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Maryland, without regard to the
principles of conflicts of law.
Section 15.9. INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.10. ENTIRE AGREEMENT
This Agreement and all documents and agreements referred to herein
and therein contain the entire understanding and agreement among the Partners
with respect to the subject matter hereof and supersedes the Prior Agreements
and any other prior written or oral understandings or agreements among them
with respect thereto.
<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first written above.
GENERAL PARTNER:
JP Realty, Inc.
By: /s/ G. REX FRAZIER
-------------------
G. Rex Frazier
President
LIMITED PARTNERS:
The Persons whose names are set forth on
EXHIBIT A as Limited Partners as attached
hereto.
By: JP Realty, Inc., as Attorney-in-Fact
By: /s/ G. REX FRAZIER
---------------------
G. Rex Frazier
President
<PAGE> 72
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
Name of Partner Partnership Percentage
Units Interest
------------------- ---------------------
<S> <C> <C>
GENERAL PARTNER
JP Realty, Inc.
35 Century Park-Way
Salt Lake City, Utah 84115 17,640,747 82.74871%
LIMITED PARTNERS
Boise Mall Investment Company, Ltd. 824,411 3.86712%
Brown, Mike 125 0.00059%
Bybee, Terry 320 0.00150%
Cache Valley Mall Partnership, Ltd. 328,813 1.54239%
Chandler, Harry 100 0.00047%
Clauson, Pat 100 0.00047%
Cloward, Burke 35,460 0.16633%
Cordano, Alan 765 0.00359%
Cordano, James 1,531 0.00718%
Curtis, Greg 24 0.00011%
Curtis, Vardell 125 0.00059%
East Ridge Partnership 100 0.00047%
Enslow, Mike 320 0.00150%
Fairfax Holding, LLC 786,226 3.68801%
Frank, Alan 5,486 0.02573%
Frazier, G. Rex 3,680 0.01726%
Frei, Michael 6,817 0.03198%
Gillette, Jerry 100 0.00047%
Hall Investment Company 10,204 0.04786%
Hansen, Kenneth 5,102 0.02393%
JCP Realty, Inc. 350,460 1.64393%
KFC Advertising 5,487 0.02574%
Kelley, Chad 125 0.00059%
Kelley, Paul 25 0.00012%
King American Hospital, Ltd. 63,424 0.29751%
King Provo, Ltd. 64,872 0.30430%
King, Warren P. 6,244 0.02929%
Mendenhall, Paul K. 214 0.00100%
Mulkey, Tom 100 0.00047%
North Plains Development Company, Ltd. 19,033 0.08928%
North Plains Land Company, Ltd. 1,758 0.00825%
Olson, Carl 1,894 0.00888%
Orton, Byron 125 0.00059%
Peterson, Martin G. 692 0.00325%
Pine Ridge Development Company, Ltd. 77,641 0.36420%
Pine Ridge Land Company, Ltd. 5,176 0.02428%
Price, John 200 0.00094%
Price, Steven 350 0.00164%
</TABLE>
<PAGE> EX. A-1
<TABLE>
<S> <C> <C>
Price 800 Company, Ltd. 156,615 0.73465%
Price Commerce, Ltd. 63,423 0.29750%
Price East Bay, Ltd. 37,157 0.17430%
Price Eugene Bailey Company, Ltd. 17,497 0.08207%
Price Fremont Company, Ltd. 166,315 0.78015%
Price Glendale Company, Ltd. 3,935 0.01846%
Price Orem Investment Company, Ltd. 66,747 0.31309%
Price Plaza 800 Company, Ltd. 12,199 0.05722%
Price Riverside Company, Ltd. 10,983 0.05152%
Price Rock Springs Company, Ltd. 11,100 0.05207%
Price Taywin Company, Ltd. 106,381 0.49901%
Priet, Nettie 100 0.00047%
Red Cliff Mall Investment Company 167,379 0.78514%
RMC Mall Corp. 41,518 0.19475%
Roebbelen Engineering 72,000 0.33774%
Souvall, Sam 23,371 0.10963%
Taycor Ltd. 35,462 0.16634%
Tech Park II Company, Ltd. 4,929 0.02312%
Timothy, Jodi 150 0.00070%
Vise, Phil 160 0.00075%
Watcott, Keith 35,460 0.16633%
Watkins, Gary 5,102 0.02393%
Wilcher, Abe 5,306 0.02489%
Wilcher, Lena 10,000 0.04691%
YSP 16,787 0.07874%
------------------- ---------------------
21,318,452 100.00000%
=================== =====================
</TABLE>
EX. A-2
<PAGE> A-2
EXHIBIT B
OBLIGATED PARTNER Restoration Amount
- ----------------------------- ----------------------
EX. B-1
<PAGE> Ex. B-1
SCHEDULE A
TERMS OF 8-3/4% SERIES A CUMULATIVE REDEEMABLE
PREFERRED UNITS
SECTION 1. DEFINITIONS. Capitalized terms that are used herein
shall have the same meanings as set forth in the attached First Amended and
Restated Agreement of Limited Partnership of Price Development Company,
Limited Partnership (the "PARTNERSHIP AGREEMENT") or as otherwise set forth
below:
(a) "AFFILIATE" means, as to any Person, any entity which, directly or
indirectly through one or more intermediaries, controls, is controlled
by or is under common control with such Person.
(b) "CHARTER" means the Articles of Amendment and Restatement of the
Company, dated as of November 19, 1993, as originally filed as an
Articles of Incorporation with the Maryland State Department of
Assessments and Taxation (the "DEPARTMENT") on September 8, 1993, as
amended by a Certificate of Correction on October 22, 1993, as
thereafter amended on October 27, 1993 and by those certain Articles
Supplementary filed with the Department on April 23, 1999, and as
further amended and restated from time to time.
(c) "LIQUIDATION PREFERENCE" means, with respect to the Series A Preferred
Units, the sum, payable in U.S. dollars, of (i) $25.00 per Series A
Preferred Unit, plus (ii) the amount of any accumulated and unpaid
Priority Return (as hereinafter defined) with respect to such unit,
whether or not declared, to the date of payment.
(d) "PARITY PREFERRED UNITS" means any class or series of Partnership
Interests of the Partnership now or hereafter authorized, issued or
outstanding and expressly designated by the Partnership to rank on a
parity with the Series A Preferred Units (as hereinafter defined) with
respect to distributions and rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Partnership.
(e) "PRIORITY RETURN" means an amount, payable in U.S. dollars, equal to 8-
3/4% per annum of the Liquidation Preference per Series A Preferred
Unit, commencing on the date of issuance of such Series A Preferred
Unit, determined on the basis of a 360-day year of twelve 30-day months
(or actual days for any month which is shorter than a full monthly
period), cumulative to the extent not distributed on any Series A
Preferred Unit Distribution Payment Date.
(f) "PTP" means a "publicly traded partnership" within the meaning of
Section 7704 of the Code.
(g) "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, joint venture or other entity of
which a majority of (i) voting power of the voting securities or (ii)
the outstanding equity interests, is owned, directly or indirectly, by
such person.
SECTION 2. DESIGNATION AND NUMBER. Pursuant to Section 4.2 of
the Partnership Agreement, a series of Partnership Units in the Partnership
designated as the "8-3/4% Series A Cumulative Redeemable Preferred Units"
(the "SERIES A PREFERRED UNITS") is hereby established. The number of
Series A Preferred Units shall be 510,000.
SECTION 3. DISTRIBUTIONS. (a) PAYMENT OF DISTRIBUTIONS.
Subject to the rights of holders of Parity Preferred Units as to the
payment of distributions, pursuant to other Partnership Unit Designations
executed under Section 4.2 of the Partnership Agreement, holders of Series
A Preferred Units shall be entitled to receive the Priority Return when, as
and if declared by the Partnership acting
<PAGE> SCH. A-1
through the General Partner. Such distributions shall be cumulative, shall
accrue from the original date of issuance of the Series A Preferred Units and
will be payable(i) quarterly (such quarterly periods for purposes of payment
and accrual will be the quarterly periods ending on the dates specified in
this sentence and not calendar year quarters) in arrears, on March 31, June 30,
September 30, and December 31 of each year commencing on June 30, 1999 and,
(ii)in the event of a redemption of Series A Preferred Units on the redemption
date (each a "SERIES A PREFERRED UNIT DISTRIBUTION PAYMENT DATE"). If any
Series A Preferred Unit Distribution Payment Date is not a Business Day (as
hereinafter defined), then payment of the distribution to be made on such
date will be made on the Business Day immediately preceding such date with
the same force and effect as if made on such date. Distributions on the
Series A Preferred Units will be made to the holders of record of the
Series A Preferred Units on the relevant record dates to be fixed by the
Partnership acting through the General Partner, which record dates shall in
no event exceed 15 Business Days prior to the relevant Series A Preferred
Unit Distribution Payment Date (the "SERIES A PREFERRED UNIT PARTNERSHIP
RECORD DATE").
The term "BUSINESS DAY" means each day, other than a Saturday or a Sunday,
which is not a day on which banking institutions in New York, New York are
authorized or required by law, regulation or executive order to close.
(b) PROHIBITION ON DISTRIBUTION. No distributions on Series A Preferred
Units shall be authorized by the General Partner or paid or set apart
for payment by the Partnership at any such time as the terms and
provisions of any agreement of the Partnership or the General Partner,
including any agreement relating to 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 to the extent
that such authorization or payment shall be restricted or prohibited by
law.
(c) DISTRIBUTIONS CUMULATIVE. Distributions on the Series A Preferred
Units will accrue whether or not the terms and provisions of any
agreement of the Partnership, including any agreement relating to its
indebtedness at any time prohibit the current payment of distributions,
whether or not the Partnership has earnings, whether or not there are
funds legally available for the payment of such distributions and
whether or not such distributions are authorized. Accrued but unpaid
distributions on the Series A Preferred Units will accumulate as of the
Series A Preferred Unit Distribution Payment Date on which they first
become payable. Distributions on account of arrears for any past
distribution periods may be declared and paid at any time, without
reference to a regular Series A Preferred Unit Distribution Payment Date
to holders of record of the Series A Preferred Units on the record date
fixed by the Partnership acting through the General Partner which date
shall not be more than 15 Business Days prior to the payment date.
Accumulated and unpaid distributions will not bear interest.
(d) PRIORITY AS TO DISTRIBUTIONS. (i) So long as any Series A Preferred
Units are outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with
respect to any class or series of Partnership Interest ranking junior as
to the payment of distributions or rights upon a voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership to
the Series A Preferred Units (collectively, "JUNIOR UNITS"), nor shall
any cash or other property be set aside for or applied to the purchase,
redemption or other acquisition for consideration of any Series A
Preferred Units, any Parity Preferred Units or any Junior Units, unless,
in each case, all distributions accumulated on all Series A Preferred
Units and all classes and series of outstanding Parity Preferred Units
have been paid in full. The foregoing sentence shall not prohibit (x)
distributions payable solely in Junior Units, (y) the conversion of
Junior Units or Parity Preferred Units into Partnership Interests
corresponding to any Series A Preferred Units, or (z) the redemption of
Partnership Interests corresponding to any Series A Preferred Stock,
Parity Preferred Stock or Junior Stock to be purchased by the General
Partner pursuant to Article NINTH of the Charter)to
<PAGE> SCH. A-2
preserve the General Partner's status as a real estate investment trust,
provided that such redemption shall be upon the same terms as the
corresponding purchase pursuant to Article NINTH of the Charter.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not irrevocably deposited in trust
for payment) upon the Series A Preferred Units, all distributions
authorized and declared on the Series A Preferred Units and all classes
or series of outstanding Parity Preferred Units shall be authorized and
declared so that the amount of distributions authorized and declared per
Series A Preferred Unit and such other classes or series of Parity
Preferred Units shall in all cases bear to each other the same ratio
that accrued distributions per Series A Preferred Unit and such other
classes or series of Parity Preferred Units (which shall not include any
accumulation in respect of unpaid distributions for prior distribution
periods if such class or series of Parity Preferred Units do not have
cumulative distribution rights) bear to each other.
(e) NO FURTHER RIGHTS. Holders of Series A Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property
or otherwise, in excess of the full cumulative distributions described
herein.
SECTION 4. LIQUIDATION PROCEEDS. (a) Subject to the rights of
holders of Parity Preferred Units with respect to rights upon any voluntary
or involuntary liquidation, dissolution or winding-up of the Partnership,
each holder of Series A Preferred Units shall be entitled to receive out of
the assets of the Partnership legally available for distribution or the
proceeds thereof, after payment or provision for debts and other
liabilities of the Partnership, but before any payment or distributions of
the assets shall be made to holders of Junior Units, an amount equal to
such holder's Liquidation Preference; provided, however, that in no event
shall such amount exceed such holder's Capital Account balance on the date
of distribution. If, upon such voluntary or involuntary liquidation,
dissolution or winding-up, there are insufficient assets to permit full
payment of liquidating distributions to the holders of Series A Preferred
Units and any Parity Preferred Units as to rights upon liquidation,
dissolution or winding-up of the Partnership, all payments of liquidating
distributions on the Series A Preferred Units and such Parity Preferred
Units shall be made so that the payments on the Series A Preferred Units
and such Parity Preferred Unit shall in all cases bear to each other the
same ratio that the respective rights of the Series A Preferred Units and
such other Parity Preferred Units (which shall not include any accumulation
in respect of unpaid distributions for prior distribution periods if such
Parity Preferred Units do not have cumulative distribution rights) upon
liquidation, dissolution or winding-up of the Partnership bear to each
other.
(b) NOTICE. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the
payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be given by
(i) fax and (ii) by first class mail, postage pre-paid, not less than 30
and not more than 60 days prior to the payment date stated therein, to
each record holder of the Series A Preferred Units at the respective
addresses of such holders as the same shall appear on the transfer
records of the Partnership.
(c) NO FURTHER RIGHTS. After payment of the full amount of the Liquidation
Preference to which they are entitled, the holders of Series A Preferred
Units will have no right or claim to any of the remaining assets of the
Partnership.
(d) CONSOLIDATION, MERGER OR CERTAIN OTHER TRANSACTIONS. The voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of
the property or assets of the General Partner to, or the consolidation
or merger or other business combination of the Partnership with or into,
any corporation, trust or other entity (or of any
<PAGE> SCH. A-3
corporation, trust or
other entity with or into the Partnership) shall not be deemed to
constitute a liquidation, dissolution or winding-up of the Partnership.
SECTION 5. OPTIONAL REDEMPTION. (a) RIGHT OF OPTIONAL
REDEMPTION. The Series A Preferred Units may not be redeemed prior to
April 23, 2004. On or after such date, the Partnership shall have the
right to redeem the Series A Preferred Units, in whole (but, not in part),
at any time, upon not less than 30 nor more than 60 days' written notice,
at a redemption price, payable in cash, equal to the Liquidation Preference
(the "SERIES A REDEMPTION PRICE").
(b) LIMITATION ON REDEMPTION. (i) The Series A Redemption Price (other
than the portion thereof consisting of accumulated but unpaid
distributions) will be payable solely out of the sale proceeds of
capital stock of the General Partner, which will be contributed by the
General Partner to the Partnership as additional capital contribution,
or out of the sale of limited partnership interests in the Partnership
and from no other source. For purposes of the preceding sentence,
"capital stock" means any equity securities (including Common Stock and
Preferred Stock (as such terms are defined in the Charter of the General
Partner), shares, participation or other ownership interest (however
designated) and any rights (other than debt securities convertible into
or exchangeable for equity securities) or options to purchase any of the
foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding
Series A Preferred Units unless all accumulated and unpaid distributions
have been paid on all Series A Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.
(c) PROCEDURES FOR REDEMPTION. (i) Notice of redemption will be (A)
faxed, and (B) mailed by the Partnership, by certified mail, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption
date, addressed to the respective holders of record of the Series A
Preferred Units at their respective addresses as they appear on the
records of the Partnership. No failure to give or defect in such notice
shall affect the validity of the proceedings for the redemption of any
Series A Preferred Units except as to the holder to whom such notice was
defective or not given. In addition to any information required by law,
each such notice shall state: (1) the redemption date, (2) the Series A
Redemption Price, (3) the aggregate number of Series A Preferred Units
to be redeemed, (4) the place or places where such Series A Preferred
Units are to be surrendered for payment of the Series A Redemption
Price, (5) that distributions on the Series A Preferred Units to be
redeemed will cease to accumulate on such redemption date and (6) that
payment of the Series A Redemption Price will be made upon presentation
and surrender of such Series A Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of Series A
Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series A Preferred Units
being redeemed funds sufficient to pay the applicable Series A
Redemption Price and will give irrevocable instructions and authority to
pay such Series A Redemption Price to the holders of the Series A
Preferred Units upon surrender of the Series A Preferred Units by such
holders at the place designated in the notice of redemption. On and
after the date of redemption, distributions will cease to accumulate on
the Series A Preferred Units called for redemption, unless the
Partnership defaults in the payment thereof. If any date fixed for
redemption of Series A Preferred Units is not a Business Day, then
payment of the Series A Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if
such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date fixed for redemption. If
payment of the Series A Redemption Price is improperly withheld or
refused and not paid by the Partnership, distributions on such Series A
Preferred Units
<PAGE> SCH. A-4
will continue to accumulate from the original redemption
date to the date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating
the applicable Series A Redemption Price.
SECTION 6. VOTING RIGHTS. (a) GENERAL. Holders of the Series
A Preferred Units will not have any voting rights or right to consent to
any matter requiring the consent or approval of the Limited Partners,
except as set forth in Section 14.2 of the Partnership Agreement and in
this SECTION 6.
(b) CERTAIN VOTING RIGHTS. So long as any Series A Preferred Units remain
outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series A Preferred Units
outstanding at the time: (i) authorize or create, or increase the
authorized or issued amount of, any class or series of Partnership
Interests ranking prior to the Series A Preferred Units with respect to
payment of distributions or rights upon liquidation, dissolution or
winding-up or reclassify any Partnership Interests into any such
Partnership Interest, or create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such
Partnership Interests; (ii) authorize or create, or increase the
authorized or issued amount of any Parity Preferred Units or reclassify
any Partnership Interest into any such Partnership Interest or create,
authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such Partnership Interests but only
to the extent such Parity Preferred Units are issued to an Affiliate of
the Partnership, other than the General Partner to the extent the
issuance of such interests was to allow the General Partner to issue
corresponding preferred stock to persons who are not Affiliates of the
Partnership; or (iii) either (A) exchange shares with, consolidate with,
merge into or with, or convey, transfer or lease its assets
substantially as an entirety to, any corporation or other entity or (B)
amend, alter or repeal the provisions of the Partnership Agreement,
whether by merger, consolidation or otherwise, that would adversely
affect the powers, special rights, preferences, privileges or voting
power of the Series A Preferred Units or the holders thereof; PROVIDED,
HOWEVER, that with respect to the occurrence of a share exchange,
merger, consolidation or a sale or lease of all of the Partnership's
assets as an entirety, so long as (1) the Partnership is the surviving
entity and the Series A Preferred Units remain outstanding with the
terms thereof unchanged, or (2) the resulting, surviving or transferee
entity is a partnership, limited liability company or other pass-through
entity organized under the laws of any state and substitutes the Series
A Preferred Units for other interests in such entity having
substantially the same terms and rights are the Series A Preferred
Units, including with respect to distributions, voting rights and rights
upon liquidation, dissolution or winding-up, then the occurrence of any
such event shall not be deemed to adversely affect such rights,
privileges or voting powers of the holders of the Series A Preferred
Units; and PROVIDED FURTHER that any increase in the amount of
Partnership Interests or the creation or issuance of any other class or
series of Partnership Interests, in each case ranking (y) junior to the
Series A Preferred Units with respect to payment of distributions or the
distribution of assets upon liquidation, dissolution or winding-up, or
(z) on a parity to the Series A Preferred Units with respect to payment
of distributions or the distribution of assets upon liquidation,
dissolution or winding-up, to the extent such Partnership Interest are
not issued to an affiliate of the Partnership, other than the General
Partner to the extent the issuance of such interests was to allow the
General Partner to issue corresponding preferred stock to persons who
are not Affiliates of the Partnership, such issuance shall not be deemed
to materially and adversely affect such rights, preferences privileges
or voting powers. In the event of any conflict between the provisions
of Section 14.2 of the Partnership Agreement and the provisions of this
SECTION 6, the provisions of this SECTION 6 shall control.
SECTION 7. TRANSFER RESTRICTIONS. The Series A Preferred Units
shall be subject to all of the provisions of Article 11 of the Partnership
Agreement. Article 11 is hereby amended by adding a new Section 11.7 to
the end of Article 11 as follows:
<PAGE> SCH. A-5
"11.7 Notwithstanding anything to the contrary contained in Article 11
hereof, (i) a transfer of all or any portion of the Series A Preferred
Units shall not require the consent of the General Partner; (ii) the
transferee of such transfer shall be admitted to the Partnership as a
Limited Partner on the closing date of such transfer; (iii) the Partnership
and the General Partner shall treat such transferee as the absolute owner
of the interest transferred in all respects; and (iv) the General Partner
shall not have the right to require any transferor or transferee of such
Series A Preferred Units to have such Series A Preferred Units redeemed;
provided, that the foregoing shall not apply to (x) a transfer in violation
of Section 11.3C. hereof, (y) a transfer that would create a risk that the
Partnership would fail to qualify for the private placement or lack of
actual trading safe harbor of Notice 88-75 or Treasury Regulation
<section>1.7704-1 and (z) a transfer to any Person that is a competitor (as
reasonably determined by the General Partner) of the General Partner.
SECTION 8. EXCHANGE RIGHTS. (a) RIGHT TO EXCHANGE. (i)
Subject to all cases to the ownership limitations set forth in the Charter,
Series A Preferred Units will be exchangeable in whole (but not in part) at
any time on or after the tenth (10{th}) anniversary of the date of
issuance, at the option of the holders thereof, for authorized but
previously unissued shares of 8-3/4% Series A Cumulative Redeemable
Preferred Stock of the General Partner (the "SERIES A PREFERRED STOCK") at
an exchange rate of one share of Series A Preferred Stock for one Series A
Preferred Unit, subject to adjustment as described below (the "SERIES A
EXCHANGE PRICE"), provided that the Series A Preferred Units will become
exchangeable at any time, in whole (but not in part), at the option of the
holders of Series A Preferred Units for Series A Preferred Stock if (x) at
any time full distributions shall not have been timely made on any Series A
Preferred Unit with respect to six prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in
respect of Series A Preferred Units shall be considered timely made if made
within two Business Days after the applicable Series A Preferred Units
Distribution Payment Date if at the time of such late payment there shall
not be any prior quarterly distribution periods in respect of which full
distributions were not timely made, (y) upon receipt by a holder or holders
of Series A Preferred Units of (1) notice from the General Partner that the
General Partner or a Subsidiary of the General Partner has taken the
position that the Partnership is, or upon the occurrence of a defined event
in the immediate future will be, a PTP and (2) an opinion rendered by an
outside nationally recognized independent counsel familiar with such
matters addressed to a holder or holders of Series A Preferred Units, that
the Partnership is or likely is, or upon the occurrence of a defined event
in the immediate future will be or likely will be, a PTP, or (z) the
holders of the Series A Preferred Units determine and the General Partner
confirms that such holders hold or will hold 20% or more of the profits and
capital interests of the Partnership and (ii) if such notice and opinion
than 20% of the profits and capital interests of the Partnership; PROVIDED,
that (i) in the case of clause (z), the Series A Preferred Units will be
exchangeable only to the extent necessary to reduce the holdings of the
holders of the Series A Preferred Units to less than 20% of the profits and
capital interests of the Partnership and (ii) if such notice and opinion
described in clauses (1) and (2) refers to a defined event, the Series A
Preferred Units will become exchangeable only after the defined event
occurs; PROVIDED FURTHER, that in the event any such exchange would result
from application of clause (y)(2) above, no exchange will be available to
the holders of Series A Preferred Units if, within 15 Business Days of the
date of delivery of the opinion referred to in clause (y)(2) above, the
General Partner delivers to such holders an opinion rendered by an outside
nationally recognized independent counsel familiar with such matters
addressed to the General Partner, that upon the occurrence of such defined
event the Partnership will not or likely will not become a PTP. In
addition to and not in limitation of the foregoing, but subject to the
ownership limitations in the Charter, the Series A Preferred Units may be
exchanged for Series A Preferred Stock, in whole (but not in party), at the
option of any holder prior to the tenth (10th) anniversary of the
issuance date and after the third anniversary thereof if such holder of
Series A Preferred Units shall deliver to the General Partner either (i) a
private letter ruling addressed to such holder of Series A Preferred Units
or (ii) an opinion of independent counsel reasonably acceptable to the
General Partner based on the enactment of temporary or final Treasury
Regulations or the publication of a Revenue Ruling, in either case to the
effect that an
<PAGE> SCH. A-6
exchange of the Series A Preferred Units at such earlier
time would not cause the Series A Preferred Units to be considered "stock
and securities" within the meaning of Section 351(e) of the Code for
purposes of determining whether the holder of such Series A Preferred Units
is an "investment company" under Section 721(b) of the Code if an exchange
is permitted at such earlier date.
(ii) Notwithstanding anything to the contrary set forth in SECTION 8(A)(I),
if an Exchange Notice (as hereinafter defined) has been delivered to the
General Partner, then the General Partner may, at its option, elect to
redeem or cause the Partnership to redeem all (but not a portion) of the
outstanding Series A Preferred Units for cash in an amount equal to the
Liquidation Preference per Series A Preferred Unit. The General Partner
may exercise its option to redeem the Series A Preferred Units for cash
pursuant to this SECTION 8(A)(II) by giving each holder of record of
Series A Preferred Units notice of its election to redeem for cash,
within 15 Business Days after receipt of the Exchange Notice, by (m)
fax, and (n) registered mail, postage paid, at the address of each
holder as it may appear on the records of the Partnership stating (A)
the redemption date, which shall be no later than 60 days following the
receipt of the Exchange Notice, (B) the redemption price, (C) the place
or places where the Series A Preferred Units are to be surrendered for
payment of the redemption price, (D) that distributions on the Series A
Preferred Units will cease to accrue on such redemption date, (E) that
payment of the redemption price will be made upon presentation and
surrender of the Series A Preferred Units and (F) the aggregate number
of Series A Preferred Units to be redeemed.
(iii) If an exchange of all or a portion of Series A Preferred Units
pursuant to SECTION 8(A)(I) would violate the provisions on ownership
limitation of the General Partner set forth in Article NINTH of the
Charter of the General Partner with respect to the Series A Preferred
Stock, the General Partner shall give written notice thereof to each
holder of record of Series A Preferred Units, within 15 Business Days
following receipt of the Exchange Notice, by (m) fax, and (n) registered
mail, postage prepaid, at the address of each such holder set forth in
the records of the Partnership. In such event, each holder of Series A
Preferred Units shall be entitled to exchange, pursuant to the
provisions on the ownership limitation of the General Partner set forth
in such Article NINTH of the Charter of the General Partner and any
Series A Preferred Units not so exchanged (the "EXCESS UNITS") shall be
redeemed by the Partnership for cash in an amount equal to the
Liquidation Preference. The written notice of the General Partner shall
state (A) the number of Excess Units held by such holder, (B) the
redemption price of the Excess Units, (C) the date on which such Excess
Units shall be redeemed, which date shall be no later than 60 days
following the receipt of the Exchange Notice, (D) the place or places
where such Excess Units are to be surrendered for payment of the
Redemption Price, (E) that distributions on the Excess Units will cease
to accrue on such redemption date, and (F) that payment of the
redemption price will be made upon presentation and surrender of such
Excess Units. In the event an exchange would result in Excess Units, as
a condition to such exchange, each holder of such units agrees to
provide representations and covenants reasonably requested by the
General Partner relating to (1) the widely held nature of the interests
in such holder, sufficient to assure the General Partner that the
holder's ownership of stock of the General Partner (without regard to
the limits described above) will not cause any individual to own in
excess of 5.0% of the stock of the General Partner; and (2) to the
extent such holder can so represent and covenant without obtaining
information from its owners, the holder's ownership of Units of the
Partnership and its affiliates.
(iv) The redemption of Series A Preferred Units described in SECTION
8(A)(II) and (III) shall be subject to the provisions of SECTION 5;
provided, however, that the term "redemption price" in such Section
shall be read to mean the Liquidation Preference pre Series A Preferred
Unit being redeemed.
(b) PROCEDURE FOR EXCHANGE. (i) Any exchange shall be exercised pursuant
to a notice of exchange (the "EXCHANGE NOTICE") delivered to the General
Partner by the holder who is exercising such exchange right, by (a) fax
and (b) by certified mail postage prepaid. The exchange of Series A
Preferred Units,
<PAGE> SCH. A-7
or a specified portion thereof, may be effected after
the fifth Business Day following receipt by the General Partner of the
Exchange Notice by delivering certificates, if any, representing such
Series A Preferred Units to be exchanged together with, if applicable,
written notice of exchange and proper assignment of such Series A
Preferred Units to the office of the General Partner maintained for such
purpose. Currently, such office is located at 35 Century Park-Way, Salt
Lake City, Utah 84115. Each exchange will be deemed to have been
effected immediately prior to the close of business on the date on which
such Series A Preferred Units to be exchange (together with all required
documentation) shall have been surrendered and notice shall have been
received by the General Partner as aforesaid and the Exchange Price
shall have been paid. Any Series A Preferred Stock issued pursuant to
this SECTION 8 shall be delivered as shares which are duly authorized,
validly issued, fully paid and nonassessable, free of pledge, lien,
encumbrance or restriction other than those provided in the Charter, the
ByLaws of the General Partner, the Securities Act of 1933, as amended,
and relevant state securities or blue sky laws.
(ii) In the event of an exchange of Series A Preferred Units for shares of
Series A Preferred Stock, an amount equal to the accrued and unpaid
Priority Return, whether or not declared, to the date of exchange on any
Series A Preferred Units tendered for exchange shall (a) accrue on the
shares of the Series A Preferred Stock for which such Series A Preferred
Units are exchanged, and (b) continue to accrue on such Series A
Preferred Units, which shall remain outstanding following such exchange,
with the General Partner as the holder of such Series A Preferred Units.
Notwithstanding anything to the contrary set forth herein, in no event
shall a holder of a Series A Preferred Unit that was validly exchanged
into Series A Preferred Stock pursuant to this section (other than the
General Partner now holding such Series A Preferred Unit), receive a
distribution from the Partnership. if such holder, after the exchange,
is entitled to receive a distribution from the General Partner with
respect to the share of Series A Preferred Stock for which such Series A
Preferred Unit was exchanged or redeemed.
(iii) Fractional shares of Series A Preferred Stock are not to be issued
upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series A Preferred
Stock on the date prior to the exchange date as determined in good faith
by the Board of Directors of the General Partner.
(c) ADJUSTMENT OF EXCHANGE PRICE. (i) The Exchange Price is subject to
adjustment upon certain events, including subdivisions, combinations and
reclassification of the Series A Preferred Stock.
(ii) In case the General Partner shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of the General
Partner's capital stock or sale of all or substantially all of the
General Partner's assets), in each case as a result of which the Series
A Preferred Stock will be converted into the right to receive shares of
capital stock, other securities or other property (including cash or any
combination thereof), each Series A Preferred Unit will thereafter be
exchangeable into the kind of and amount of shares of capital stock and
other securities and property receivable (including cash or any
combination thereof) upon the consummation of such transaction by a
holder of that number of shares of Series A Preferred Stock or fraction
thereof into which one Series A Preferred Unit was exchangeable
immediately prior to such transaction. The General Partner may not
become a party to any such transaction unless the terms thereof are
consistent with the foregoing.
SECTION 9. NO CONVERSION RIGHTS. Except as set forth in SECTION
8, the holders of the Series A Preferred Units shall not have any rights to
convert such units into shares of any other class or series of stock or
into any other securities of, or interest in, the Partnership.
<PAGE> SCH. A-8
SECTION 10. NO SINKING FUND. No sinking fund shall be
established for the retirement or redemption of Series A Preferred Units.
SECTION 11. EXHIBIT A TO PARTNERSHIP AGREEMENT. In order to
duly reflect the issuance of the Series A Preferred Units provided for
herein, the Partnership Agreement is hereby further amended pursuant to
Section 14.1.B. thereof by deleting Exhibit A thereto and replacing Exhibit
A attached hereto therefor.
<PAGE> SCH. A-9
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
The undersigned, being the sole general partner of Price Development
Company, Limited Partnership (the "Partnership"), a limited partnership
formed under the Maryland Revised Uniform Limited Partnership Act and
pursuant to the terms of that certain Second Amended and Restated Agreement
of Limited Partnership, dated July 15, 1999 (the "Partnership Agreement"),
does hereby amend the Partnership Agreement as follows:
Capitalized terms used but not defined in this First Amendment shall
have the same meanings that are ascribed to them in the Partnership
Agreement.
1. EXHIBIT OF OBLIGATED PARTNERS. EXHIBIT B to the Partnership
Agreement is hereby deleted in its entirety and replace by EXHIBIT B hereto
which identifies each Obligated Partner of the Partnership and such
Obligated Partner's respective Restoration Amount.
2. RATIFICATION. Except as expressly modified by this First
Amendment, all of the provisions of the Partnership Agreement are affirmed
and ratified and remain in full force and effect.
Dated: July 21, 1999
JP REALTY, INC.,
as general partner
By: /s/ G. REX FRAZIER
----------------------
Name: G. Rex Frazier
Title: President
<PAGE> 1
EXHIBIT B
LIST OF OBLIGATED PARTNERS
<TABLE>
<CAPTION>
Obligated Partner Restoration Amount{1}
<S> <C> <C>
Boise Mall Investment Co., Ltd.{2} $10,431,500 less 21.32857% of the Guaranteed
Amount (which amount will initially equal
$3,857,332)
Cache Valley Mall Partnership, Ltd. $2,904,771 less the Guaranteed Amount (which
will initially equal $1,074,108)
Curtis, Greg $12,971 less the Guaranteed Amount (excluding
the Allocable Share) (which amount will
initially equal $4,796)
Fairfax Holding, LLC $37,653,048 less the Guaranteed Amount and
Allocable Share (which amount will initially
equal $13,923,110)
Frazier, G. Rex $433,980 less the Guaranteed Amount (excluding
the Allocable Share) (which amount will
initially equal $160,474)
Frei, Michael $196,483 less the Guaranteed Amount (which
amount will initially equal $72,654)
James J. Cordano Jr. Children's Trust $500,000
JCP Realty, Inc. $2,499,998
King American Hospital, Ltd.{3} $146,152 less 50% of the Guaranteed Amount
(which amount will initially equal $54,043)
Price Eastbay, Ltd.{4} $200,959 less the Guaranteed Amount (which
amount will initially equal $74,309)
King, Warren P. $1,251,609 less the Guaranteed Amount (which
will initially equal $462,812)
Mendenhall, Paul K. $20,005 less the Guaranteed Amount (excluding
the Allocable Share) (which amount will
initially equal $7,397)
North Plains Development Company, Ltd. $6,019,636 less the Guaranteed Amount (which
amount will initially equal $2,225,904)
Olson, Carl $360,904 less the Guaranteed Amount (which
amount will initially equal $133,453)
Peterson, Martin G. $357,433 less the Guaranteed Amount (excluding
the Allocable Share) (which amount will
initially equal $132,169)
Pine Ridge Development Co., Ltd. $18,497,363 less the Guaranteed Amount (which
amount will initially equal $6,839,840)
Pine Ridge Land Company, Ltd. $512,354 less the Guaranteed Amount (which
amount will initially equal $189,455)
Price Commerce, Ltd. (fka KP Associates, Ltd.) $146,152 less 50% of the Guaranteed Amount
(which amount will initially equal $54,043)
<PAGE> 2
Price Fremont Company, Ltd. $219,959 less the Guaranteed Amount (which
amount will initially equal $81,335)
Price Glendale Company $4,201,870 less the Guaranteed Amount (which
amount will initially equal $1,553,741)
Price Rock Springs Company, Ltd. $6,403,285 less the Guaranteed Amount (which
amount will initially equal $2,367,767)
John Price $9,326
Red Cliff Mall Inv. Co., Ltd. $1,379,310 less the Guaranteed Amount (which
amount will initially equal $510,033)
</TABLE>
1 The term "Allocable Share" means the portion of the
Guaranteed Amount of a partner that was originally
guaranteed by such partner as a partner of Boise Mall
Development Co., Ltd. and is currently being allocated to
such Obligated Partner as a partner of Boise Mall Investment
Co., Ltd.
2 With respect to Boise Mall Investment Co., Ltd., its Guaranteed Amount
shall include the amount of Price Capital Corp. $95 million
Collateralized Notes due 2001 currently directly guaranteed by its
current partners pursuant to that Limited Guarantee Agreement, dated
January 21, 1994, by and among Boise Mall Development Co., Ltd.,
Continental Bank, N.A., and certain partners of Boise Mall Development
Co., Ltd.
3 With respect to King American Hospital, Ltd., its Guaranteed Amount
shall include the amount of Price Capital Corp. $95 million
Collateralized Notes due 2001 directly guaranteed by KP Associates, Ltd.
pursuant to that Limited Guarantee Agreement, dated January 21, 1994, by
and among KP Associates, Ltd., Continental Bank, N.A., and certain
partners of KP Associates, Ltd.
4 With respect to Price Eastbay, Ltd., its respective Guaranteed Amount
shall include the amount of Price Capital Corp. $95 million
Collateralized Notes due 2001 directly guaranteed by Price Provo, Ltd.
pursuant to that Limited Guarantee Agreement, dated January 21, 1994, by
and amount Price Provo, Ltd. Continental Bank, N. A., and certain
partners of Price Provo, Ltd.
<PAGE> 3
SECOND AMENDMENT
TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRICE DEVELOPMENT COMPANY, LIMITED PARTNERSHIP
THIS SECOND AMENDMENT, dated July 28, 1999 (the "AMENDMENT"), to
the Second Amended and Restated Agreement of Limited Partnership, dated
July 15, 1999 (the "PARTNERSHIP AGREEMENT"), is entered into by JP REALTY,
INC., as general partner (the "GENERAL PARTNER") of PRICE DEVELOPMENT
COMPANY, LIMITED PARTNERSHIP (the "PARTNERSHIP"), for itself and on behalf
of the limited partners of the Partnership, and BELAIR REAL ESTATE
CORPORATION ("Belair") and BELCREST REALTY CORPORATION ("Belcrest").
Capitalized terms used but not otherwise defined in this Amendment shall
have the same meanings ascribed to them as in the Partnership Agreement.
W I T N E S S E T H:
WHEREAS, Section 4.2A of the Partnership Agreement authorizes the
General Partner to cause the Partnership to issue additional Partnership
Units in one or more classes or series, with such rights, preferences,
exchange rights, voting powers and restrictions, limitations as to
distributions, qualifications and terms and conditions as shall be
determined by the General Partner, subject to the provisions of such
section; and
WHEREAS, pursuant to the authority granted to the General Partner
pursuant to Sections 4.2A and 4.2B of the Partnership Agreement, the
General Partner desires to amend the Partnership Agreement (i) to establish
a new class of Partnership Units, the Series B Preferred Units (as
hereinafter defined), and to set forth the rights, preferences, exchange
rights, voting powers and restrictions, limitations as to distributions,
qualifications and terms and conditions of such Series B Preferred Units,
and (ii) to issue the Series B Preferred Units to Belair and Belcrest and
admit Belair and Belcrest as Additional Limited Partners.
NOW, THEREFORE, in consideration of good and valuable
consideration, the receipt and sufficiency of which hereby are
acknowledged, the General Partner hereby amends the Partnership Agreement
as follows:
1. ISSUANCE OF PREFERRED UNITS. Pursuant to Section 4.2A of
the Partnership Agreement, the Partnership hereby designates a new series
for Preferred Units as 8.95% Series B Cumulative Redeemable Preferred Units
(the "SERIES B PREFERRED UNITS"), with a liquidation preference of $25.00
per Series B Preferred Unit, and the Series B Preferred Units shall have
the rights, preferences, exchange rights, voting powers and restrictions,
limitations as to distributions, qualifications and terms and conditions
specified in the Partnership Unit
<PAGE>
Designation attached as SCHEDULE A to this Amendment (which schedule shall
be titled Schedule B when attached to the Partnership Agreement). The
number of Series B Preferred Units shall be 3,800,000.
2. ADMISSION OF LIMITED PARTNERS. In accordance with Section
12.2 of the Partnership Agreement, Belair and Belcrest are hereby admitted
as Additional Limited Partners.
3. SCHEDULE OF PARTNERS. The Schedule of Partners which is set
forth on EXHIBIT A to the Partnership Agreement is hereby deleted in its
entirety and replaced by the Schedule of Partners on EXHIBIT A attached to
this Amendment.
4. RATIFICATION. Except as expressly modified by this
Amendment, all of the provisions of the Partnership Agreement are hereby
affirmed and ratified and remain in full force and effect.
* * *
<PAGE>
IN WITNESS WHEREOF, this Amendment has been duly executed by the
General Partner on behalf of the Partnership and the admitted Limited
Partner as of the day and year first set forth above.
JP REALTY, INC.
By: /s/ G. Rex Frazier
--------------------------
Name: G. Rex Frazier
Title: President
BELCREST REALTY CORPORATION
By: /s/ Thomas E. Faust, Jr.
--------------------------
Name: Thomas E. Faust, Jr.
Title: Vice President
BELAIR REAL ESTATE CORPORATION
By: /s/ Thomas E. Faust, Jr.
--------------------------
Name: Thomas E. Faust, Jr.
Title: Vice President
<PAGE>
SCHEDULE A
TERMS OF 8.95% SERIES B CUMULATIVE REDEEMABLE PREFERRED UNITS
SECTION 1. DEFINITIONS. Capitalized terms that are used herein
shall have the same meaning as set forth in the foregoing Second Amendment
(the "AMENDMENT") to the Second Amended and Restated Agreement of Limited
Partnership of Price Development Company, Limited Partnership (the
"PARTNERSHIP AGREEMENT") or as otherwise set forth below:
(a) "AFFILIATE" means, as to any Person, any entity which, directly
or indirectly through one or more intermediaries, controls, is controlled
by or is under common control with such Person.
(b) "CHARTER" means the Article of Amendment and Restatement of the
Company, dated as of November 19, 1993, as supplemented by those certain
Article Supplementary filed with the Maryland State Department of
Assessments and Taxation (the "DEPARTMENT") on April 23, 1999 and July 28,
1999, and as further amended, supplemented or corrected from time to time.
(c) "PARITY PREFERRED UNITS" means the existing Series A Preferred
Units and any class or series of Partnership Interests of the Partnership
now or hereafter authorized, issued or outstanding and expressly designated
by the Partnership to rank on a parity with the Series B Preferred Units
(as hereinafter defined) with respect to distributions and rights upon
voluntary or involuntary liquidation, winding-up or dissolution of the
Partnership.
(d) "SERIES B PRIORITY RETURN" means an amount, payable in U.S.
dollars, equal to 8.95% per annum of the original capital contribution
($25.00) per Series B Preferred Unit commencing on the date of issuance of
such Series B Preferred Unit, determined on the basis of a 360-day year of
twelve 30-day months and cumulative to the extent not distributed on any
Series B Preferred Unit Distribution Payment Date (as hereinafter defined).
(e) "PTP" means a "publicly traded partnership" within the meaning of
Section 7704 of the Internal Revenue Code of 1986, as amended.
(f) "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, joint venture or other entity of
which a majority of (i) voting power of the voting equity securities or
(ii) the outstanding equity interests, is owned, directly or indirectly, by
such person.
SECTION 2. DESIGNATION AND NUMBER. Pursuant to Section 4.2A of
the Partnership Agreement, the Partnership hereby designated a new series
of Preferred Units as 8.95% Series B Cumulative Redeemable Preferred Units
(the "SERIES B PREFERRED UNITS"), with a liquidation preference of $25.00
per Series B Preferred Unit, and the Series B Preferred Units shall have
the rights, preferences, exchange rights, voting powers and restrictions,
limitations as
<PAGE> A-1
to distributions, qualifications and terms and conditions
set forth in this SCHEDULE A to the Amendment. The number of Series B
Preferred Units shall be 3,800,000.
SECTION 3. DISTRIBUTIONS. (a) PAYMENT OF DISTRIBUTIONS.
Notwithstanding anything to the contrary contained in Section 5.1 of the
Partnership Agreement, but subject to the rights of holders of Parity
Preferred Units as to the payment of distributions, established pursuant to
Section 4.2 of the Partnership Agreement, holders of Series B Preferred
Units shall be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, the Series B Priority
Return. Such distributions shall be cumulative, shall accrue form the
original date of issuance and will be payable (i) quarterly in arrears, on
March 31, June 30, September 30 and December 31 of each year commencing on
September 30, 1999 and (ii) in the event of (A) an exchange for Series B
Preferred Units into Series B Preferred Stock, or (B) a redemption of
Series B Preferred Units, on the exchange date or redemption date, as
applicable (each a "SERIES B PREFERRED UNIT DISTRIBUTION PAYMENT DATE").
The amount of the distribution payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months and, for any period
shorter than a full quarterly period for which distributions are computed,
the amount of the distribution payable will be computed based on the ratio
of the actual number or days elapsed in such period to ninety (90) days.
If any Series B Preferred Unit Distribution Date is not a Business Day (as
hereinafter defined), then payment of the distribution to be made on such
date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date. Distributions
on the Series B Preferred Units will be made to the holders of record of
the Series B Preferred Units on the relevant record dates to be fixed by
the Partnership acting through the General Partner, which record dates
shall in no event exceed 15 Business Days prior to the relevant Series B
Preferred Unit Distribution Payment Date (the "PREFERRED UNIT PARTNERSHIP
RECORD DATE").
The term "Business Day" shall mean each day, other than a Saturday or
a Sunday, which is not a day on which banking institutions in New York, New
York are authorized or required by law, regulation or executive order to
close.
(b) PROHIBITION ON DISTRIBUTION. No distributions on Series B
Preferred Units shall be authorized by the General Partner or paid or set
apart for payment by the Partnership at any such time as the terms and
provisions of any agreement of the Partnership or the General Partner,
including any agreement relating to 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 to the extent that such
authorization or payment shall be restricted or prohibited by law.
(c) DISTRIBUTIONS CUMULATIVE. Notwithstanding the foregoing,
distributions on the Series B Preferred Units will accrue whether or not
the terms and provisions of any agreement of
<PAGE> A-2
the Partnership, including any agreement relating to its indebtedness, at
any time prohibit the current payment of distributions, whether or not the
Partnership has earnings, whether or not there are funds legally available
for the payment of such of such distributions and whether or not such
distributions are authorized. Accrued by unpaid distributions on the
Series B Preferred Units will accumulate as of the Series B Preferred Unit
Distribution Payment Date on which they first become payable.
Distributions on account of arrears for any past distribution periods may
be declared and paid at any time, without reference to a regular Series B
Preferred Unit Distribution Payment Date, to holders of record of the
Series B Preferred Units on the record date fixed by the Partnership acting
through the General Partner which date shall not exceed 15 Business Days
prior to the payment date. Accumulated and unpaid distributions will not
bear interest.
(d) PRIORITY AS TO DISTRIBUTIONS. (i) So long as any Series B
Preferred units are outstanding, no distribution of cash or other property
shall be authorized, declared, paid or set apart for payment on or with
respect to any class or series of Partnership Interest of the Partnership
ranking junior to the Series B Preferred Units as to the payment of
distributions or rights upon a voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership (collectively, "JUNIOR
UNITS"), nor shall any cash or other property be set aside for or applied
to the purchase, redemption or other acquisition for consideration of any
Series B Preferred Units, any Parity Preferred Units or any Junior Units,
unless, in each case, all distributions accumulated on all Series B
Preferred Units and all classes and series or outstanding Parity Preferred
Units have been paid in full. The foregoing sentence will not prohibit (a)
distributions payable solely in Junior Units, (b) the conversion of Junior
Units or Parity Preferred Units into Partnership Interests of the
Partnership ranking junior to the Series B Preferred Units as to
distributions, or (c) the redemption of Partnership Interests corresponding
to any Series B Preferred Stock, Parity Preferred Stock with respect to
distributions or Junior Stock to be purchased by the General Partner
pursuant to Article NINTH of the Charter to preserve the General Partner's
status as a real estate investment trust, provided that such redemption
shall be upon the same terms as the corresponding purchase pursuant to
Article NINTH of the Charter.
(ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not irrevocably deposited in trust
for payment) upon the Series B Preferred Units, all distributions
authorized and declared on the Series B Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and
declared so that the amount of distributions authorized and declared per
Series B Preferred Unit and such other classes or distributions per Series
B Preferred Unit and such other classes or series of Parity Preferred Units
(which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of
Parity Preferred Units do not have cumulative distribution rights) bear to
each other.
<PAGE> A-3
(e) NO FURTHER RIGHTS. Holders of Series B Preferred Units shall not
be entitled to any distributions, whether payable in cash, other property
or otherwise, in excess of the full cumulative distributions described
herein.
SECTION 4. The following paragraph shall be applied in
conjunction with Section 6.2H of the Partnership Agreement:
The allocation of gross income to the Series B Preferred Units
pursuant to Section 6.2H for any Partnership Year shall be
limited to the excess, if any, of Profits over Losses for all
Partnership Years since the issuance of the Series B Preferred
Units (calculated solely for this purpose as is Section 6.2H were
not part of the Partnership Agreement and without regard to
Depreciation). In addition, for purposes of making allocations
to the Series B Preferred Units with respect to Section 6.2H(B),
the amount of gross income to be allocated to a Series B
Preferred Unit (subject to the limitation contained in the prior
sentence) shall equal the portion of the distributions to be made
pursuant to a redemption of such Series B Preferred Unit that
exceeds the capital contribution that was made with respect to
such Series B Preferred Unit.
SECTION 5. LIQUIDATION PROCEEDS. (a) Subject to the rights of
holders of Parity Preferred Units with respect to rights upon any voluntary
or involuntary liquidation, dissolution or winding-up of the Partnership,
each holder of Series B Preferred Units shall be entitled to receive out of
the assets of the Partnership legally available for distribution or the
proceeds thereof, after payment or provision for debts and other
liabilities of the Partnership, but before any payment or distributions of
the assets shall be made to holders of Junior Units, an amount equal to
such holder's original capital contribution plus the cumulative (to the
date of payment) unpaid Series B Priority Return; PROVIDED, HOWEVER, that
in no event shall such amount exceed such holder's Capital Account on the
date of distribution. If, upon such voluntary or involuntary liquidation,
dissolution or winding-up, there are insufficient assets to permit full
payment of liquidating distributions to the holders of Series B Preferred
Units and any Parity Preferred Units as to rights upon liquidation,
dissolution or winding-up of the Partnership, all payments of liquidating
distributions on the Series B Preferred Units and any Parity Preferred
Units shall be made so that the payments on the Series B Preferred Units
and such Parity Preferred Units shall in all cases bear to each other the
same ratio that the respective rights of the Series B Preferred Units and
such other Parity Preferred Units (which shall not include any accumulation
in respect of unpaid distributions for prior distribution periods if such
Parity Preferred Units do not have cumulative distribution rights) upon
liquidation, dissolution or winding-up of the Partnership bear to each
other.
(b) NOTICE. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the
payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be
<PAGE> A-4
given by (i) fax and (ii) by first class mail, postage pre-paid, not less
than 30 and not more than 60 days prior to the payment date stated therein,
to each record holder of the Series B Preferred Units at the respective
addresses of such holders as the same shall appear on the transfer records
of the Partnership.
(c) NO FURTHER RIGHTS. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series
B Preferred Units will have no right or claim to any of the remaining
assets of the Partnership.
(d) CONSOLIDATION, MERGER OR CERTAIN OTHER TRANSACTIONS. The
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares
of stock, securities or other consideration) of all or substantially all of
the property or assets of the General Partner to, or the consolidation or
merger or other business combination of the Partnership with or into, any
corporation, trust, partnership, limited liability company or other entity
(or of any corporation, trust, partnership, limited liability company or
other entity with or into the Partnership) shall not be deemed to
constitute a liquidation, dissolution or winding-up of the Partnership.
SECTION 6. OPTIONAL REDEMPTION. (a) RIGHT OF OPTIONAL
REDEMPTION. The Series B Preferred Units may not be redeemed prior to July
29, 2004. On or after such date, the Partnership shall have the right to
redeem the Series B Preferred Units, in whole or in part, at any time or
from time to time, upon not less than 30 nor more than 60 days' written
notice, at a redemption price, payable in cash, equal to the original
capital contribution of such holder plus the cumulative Series B Priority
Return, whether or not declared, to the redemption date to the extent not
previously distributed (the "Series B Redemption Price"), which such amount
is intended to equal the Capital Account balance of such redeemed Series B
Preferred Unit. If fewer than all of the outstanding Series B Preferred
Units are to be redeemed, the Series B Preferred Units to be redeemed shall
be selected PRO RATA (as nearly as practicable without creating fractional
units).
(b) LIMITATION ON REDEMPTION. (i) The Series B Redemption Price
(other than the portion thereof consisting of accumulated but unpaid
distributions) will be payable solely out of the sale proceeds of capital
stock of the General Partner, which will be contributed by the General
Partner to the Partnership as additional capital contribution, or out of
the sale of limited partner interests in the Partnership and from no other
source. For purposes of the preceding sentence, "capital stock" means any
equity securities (including Common Stock and Preferred Stock (as such
terms are defined in the Charter)), shares, participation or other
ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity securities) or
options to purchase any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the
outstanding Series B Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series B
<PAGE> A-5
Preferred Units for all quarterly distribution periods terminating on or
prior to the date of redemption.
(c) PROCEDURES FOR REDEMPTION. (i) Notice of redemption will be (A)
faxed, and (B) mailed by the Partnership, by certified mail, postage
prepaid, not less than 30 or more than 60 days prior to the redemption
date, addressed to the respective holders of record of the Series B
Preferred Units at their respective addresses as they appear on the records
of the Partnership. No failure to give or defect in such notice shall
affect the validity of the proceeding for the redemption of any Series B
Preferred Units except as to the holder to whom such notice was defective
or not given. In addition to any information required by law, each such
notice shall state: (1) the redemption date, (2) the Series B Redemption
Price, (3) the aggregate number or Series B Preferred Units to be redeemed
and, if fewer than all of the outstanding Series B Preferred Units are to
be redeemed, the number of Series B Preferred Units to be redeemed held by
such holder, which number shall equal such holder's pro rata share (based
on the percentage that such holder's number of Series B Preferred Units
bears to the aggregate number of outstanding Series B Preferred Units) of
the aggregate number of Series B Preferred Units to be redeemed, (4) the
place or places where such Series B Preferred Units are to be surrendered
for payment of the Series B Redemption Price, (5) that distributions on the
Series B Preferred Units to be redeemed will cease to accumulate on such
redemption ate and (6) that payment of the Series B Redemption Price will
be made upon presentation and surrender of such Series B Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect
of Series B Preferred Units (which notice will be irrevocable) then, by
12:00 noon, New York City time, on the redemption date, the Partnership
will deposit irrevocably in trust for the benefit of the Series B Preferred
Units being redeemed funds sufficient to pay the applicable Series B
Redemption Price and will give irrevocable instructions and authority to
pay such Series B Redemption Price to the holders of the Series B Preferred
Units upon surrender of the Series B Preferred Units by such holders at the
place designated in the notice of redemption. If the Series B Preferred
Units are evidence by a certificate and if fewer than all Series B
Preferred Units evidenced by any certificate are being redeemed, a new
certificate shall be issued upon surrender of the certificate evidencing
all Series B Preferred Units, evidencing the unredeemed Series B Preferred
Units without cost to the holder thereof. On and after the date of
redemption, distributions will cease to accumulate on the Series B
Preferred Units or portions thereof called for redemption, unless the
Partnership defaults in the payment thereof. If any date fixed for
redemption of Series B Preferred Units is not a Business Day, then payment
of the Series B Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business
Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date fixed for redemption. If payment of the
Series B Redemption Price is improperly withheld or refused and not paid by
the Partnership, distributions on such Series B Preferred Units will
continue to accumulate from the
<PAGE> A-6
original redemption date to the date of
payment, in which case the actual payment date will be considered the date
fixed for redemption for purpose of calculating the applicable Series B
Redemption Price.
SECTION 7. VOTING RIGHTS. (a) GENERAL. Holders of the Series B
Preferred Units will not have any voting rights or right to consent to any
matter requiring the consent or approval of the Limited Partners, except as
set forth in Section 7.3, 14.1C or 14.2 of the Partnership Agreement and
except as set forth below.
(b) CERTAIN VOTING RIGHTS. So long as any Series B Preferred Units
remain outstanding, the Partnership shall not, without the affirmative vote
of the holders of at least two-thirds of the Series B Preferred Units
outstanding at the time (i) authorize or create, or increase the authorized
or issued amount of, any class or series of Partnership Interests senior to
the Series B Preferred Units with respect to payment of distributions or
rights upon liquidation, dissolution or winding-up or reclassify any
existing Partnership Interests of the Partnership into any such senior
Partnership Interest, or create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such
senior Partnership Interests; (ii) authorize or create, or increase the
authorized or issued amount of any Parity Preferred Units or reclassify any
existing Partnership Interest into any such Partnership Interest or create,
authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such Partnership Interest, but only to
the extent such Parity Preferred Units are issued to an Affiliate of the
Partnership, other than the General Partner to the extent the issuance of
such interest was to allow the General Partner to issue corresponding
preferred stock to persons who are not Affiliates of the Partnership; or
(iii) either (A) consolidate, merge into or with, or convey, transfer or
lease its assets substantially as an entirety to, any corporation or other
entity or (B) amend, alter or repeal the provisions of the Partnership
Agreement, whether by merger, consolidation or otherwise, that would
materially and adversely affect the powers, special rights, preferences,
privileges or voting power of the Series B Preferred Units or the holders
thereof; PROVIDED, HOWEVER, that with respect to the occurrence of a
merger, consolidation or a sale or lease of all of the Partnership's assets
as an entirety, so long as (1) the Partnership is the surviving entity and
the Series B Preferred Units remain outstanding with the terms thereof
unchanged, or (2) the resulting, surviving or transferee entity is a
partnership, limited liability company or other pass-through entity
organized under the laws of any state and substitutes the Series B
Preferred Units for other interests in such entity having substantially the
same terms and rights as the Series B Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation,
dissolution or winding-up, then the occurrence of any such event shall not
be deemed to materially and adversely affect such rights, privileges or
voting powers of the holders of the Series B Preferred Units; and provided
further that any increase in the amount of Partnership Interest or the
creation or issuance of any other class or series of Partnership Interests,
in each case ranking (y) junior to the Series B Preferred Units with
respect to payment of distributions and the distribution of assets upon
liquidation, dissolution or winding-up, or (z) on a parity with the Series
B Preferred Units with respect to payment of distributions and the
<PAGE> A-7
distribution of assets upon liquidation, dissolution or winding-up but only
to the extent such Partnership Interest not issued to an Affiliate of the
Partnership, other than the General Partner to the extent the issuance of
such interests was to allow the General Partner to issue corresponding
preferred stock to persons who are not Affiliates of the Partnership, shall
not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers. In the event of any conflict between the
provisions of Article 14 of the Partnership Agreement and the provisions of
this Section 7, the provisions of the Section 7 shall control.
SECTION 8. TRANSFER RESTRICTIONS. The Series B Preferred Units
shall be subject to the provisions of Article 11 of the Partnership
Agreement. For purposes of the Series B Preferred Units, Article 11 is
hereby supplemented as follows:
"11.7 Notwithstanding anything to the contrary contained in
Article 11 hereof, (i) a transfer of all or any portion of the Series
A Preferred Units or Series B Preferred Units shall not require the
consent of the General Partner; (ii) the transferee of such transfer
shall be admitted to the Partnership as a Limited Partner on the
closing date of such transfer; (iii) the Partnership and the General
Partner shall treat such transferee as the absolute owner of the
interest transferred in all respects; and (iv) the General Partner
shall not have the right to require any transferor or transferee of
such Series A Preferred Units or Series B Preferred Units to have such
Series A Preferred Units or Series B Preferred Units redeemed;
provided, that the foregoing shall not apply to (x) a transfer in
violation of Section 11.3C hereof, (y) a transfer that would create a
risk that the Partnership would fail to qualify for the private
placement or lack of actual trading safe harbor of Notice 88-75 or
Treasury Regulation <section>1.7704-1, and (z) a transfer to any
Person that is a competitor (as reasonably determined by the General
Partner) of the General Partner.
SECTION 9. EXCHANGE RIGHTS (a) RIGHT TO EXCHANGE. (i) Subject
in all cases to the ownership limitations set forth in the Charter, Series B
Preferred Units will be exchangeable in whole or in part at any time on or after
the tenth anniversary of the date of issuance, at the option of the holders
thereof, for authorized but previously unissued shares of 8.95% Series B
Cumulative Redeemable Preferred Stock of the General Partner (the "SERIES B
PREFERRED STOCK") at an exchange rate of one share of Series B Preferred
Stock for one Series B Preferred Unit, subject to adjustment as described below
(the "SERIES B EXCHANGE PRICE"); provided that the Series B Preferred Units
will become exchangeable at any time, in whole or in part, at the option of the
holders of Series B Preferred Units for Series B Preferred Stock if (x) at any
time full distributions shall not have been timely made on any Series B
Preferred Unit with respect to six prior quarterly distribution periods, whether
or not consecutive; PROVIDED, HOWEVER, that a distribution in respect of Series
B Preferred Units shall be considered timely made if made within two Business
Days after the applicable Series B Preferred Unit Distribution Payment Date
if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely
made or (y) upon receipt by a holder or holders of Series B Preferred Units of
(1) notice from the General Partner that the General Partner or a Subsidiary of
the General
<PAGE> A-8
Partner has taken the position that the Partnership is, or upon the
occurrence of a defined event in the immediate future will be, a PTP and (2) an
opinion rendered by an outside nationally recognized independent counsel
familiar with such matters addressed to a holder or holders of Series B
Preferred Units, that the Partnership is or likely is, or upon the occurrence of
a defined event in the immediate future will be or likely will be, a PTP. In
addition, the Series B Preferred Units may be exchanged for Series B Preferred
Stock, in whole or in part, at the option of any holder prior to the
tenth anniversary of the issuance date and after the third anniversary thereof
if such holder of Series B Preferred Units shall deliver to the General
Partner either (i) a private letter ruling addressed to such holder of
Series B Preferred Units or (ii) an opinion of independent counsel
reasonably acceptable to the General Partner based on the enactment of
temporary or final Treasury Regulations or the publication of a Revenue
Ruling, in either case to the effect that an exchange of the Series B
Preferred Units at such earlier time would not cause the Series B Preferred
Units to be considered "stock and securities" within the meaning of Section
351(e) of the Code for purposes of determining whether the holder of such
Series B Preferred Units is an "investment company" under
section 721(b) of the Code if an exchange is permitted at such earlier
date. Furthermore, the Series B Preferred Units may be exchanged in whole
but not in part by any holder thereof which is a real estate investment
trust within the meaning of Sections 856 through 859 of the Code for Series
B Preferred Stock (but only if the exchange in whole may be accomplished
consistently with the ownership limitations set forth under Article NINTH
of the Charter of the General Partner (taking into account exceptions
thereto)) if at any time, (i) the Partnership reasonably determines that
the assets an income of the Partnership for a taxable year after 1999 would
not satisfy the income and assets tests of Section 856 of the Code for such
taxable year if the Partnership were a real estate investment trust within
the meaning of the Code or (ii) any such holder of Series B Preferred Units
shall deliver to the Partnership and the General Partner an opinion of
independent counsel reasonably acceptable to the General Partner to the
effect that, based on the assets and income of the Partnership for a
taxable year after 1999, the Partnership would not satisfy the income and
assets tests of Section 856 of the Code for such taxable year if the
Partnership were a real estate investment trust within the meaning of the
Code and that such failure would create a meaningful risk that a holder of
the Series B Preferred Units would fail to maintain qualification as a real
estate investment trust.
(ii) Notwithstanding anything to the contrary set forth in SECTION
9(A)(I) hereof, if any Exchange Notice (as defined herein) has been
delivered to the General Partner, then the General Partner may, at its
option, elect to redeem or cause the Partnership to redeem all or a portion
of the outstanding Series B Preferred Units for cash in an amount equal to
the original capital contribution per Series B Preferred Unit and all
accrued and unpaid distributions thereon to the date of redemption. The
General Partner may exercise its option to redeem the Series B Preferred
Units for cash pursuant to this SECTION 9(A)(II) hereof by giving each
holder of record of Series B Preferred Units notice of its election to
redeem for cash, within ten Business Days after receipt of the Exchange
Notice, by (m) fax, and (n) registered mail, postage paid, at the address
of each holder as it may appear on the records of the Partnership stating
(A) the redemption date, which
<PAGE> A-9
shall be no later than 60 days following the receipt of the Exchange
Notice, (B) the redemption price, (C) the place or places where the Series
B Preferred Units are to be surrendered for payment of the redemption
price, (D) that distributions on the Series B Preferred Units will cease to
accrue on such redemption date, (E) that payment of the redemption price
will be made upon presentation and surrender of the Series B Preferred
Units and (F) the aggregate number of Series B Preferred Units to be
redeemed, and if fewer than all of the outstanding Series B Preferred Units
are to be redeemed, the number of Series B Preferred Units to be redeemed
held by such holder, which number shall equal such holder's pro rata share
(based on the percentage of the aggregate number or outstanding Series B
Preferred Units the total number of Series B Preferred Units held by such
holder represents) of the aggregate number of Series B Preferred Units
being redeemed.
(iii) If an exchange of all or a portion of Series B Preferred Units
pursuant to SECTION 9 (A)(I) hereof would violate the provisions on
ownership limitation of the General Partner set forth in Article NINTH of
the Charter with respect to the Series B Preferred Stock, the General
Partner shall give written notice thereof to each holder of record of
Series B Preferred Units, within ten Business Days following receipt of the
Exchange Notice, by (m) fax, and (n) registered mail, postage prepaid, at
the address of each such holder set forth in the records of the
Partnership. In such event, each holder of Series B Preferred Units shall
be entitled to exchange, pursuant to the provision of SECTION 9(B) a number
of Series B Preferred Units which would comply with the provisions on the
ownership limitation of the General Partner set forth in such Article NINTH
of the Charter and any Series B Preferred Units not so exchanged (the
"EXCESS UNITS") shall be redeemed by the Partnership for cash in an amount
equal to the original capital contribution per Series B Preferred Unit
being redeemed plus any accrued and unpaid Series B Priority Return,
whether or not declared, to the date of redemption. The written notice of
the General Partner shall state (A) the number of Excess Units held by such
holder, (B) the redemption price of the Excess Units, (C) the date on which
such Excess Units shall be redeemed, which date shall be no later than 60
days following the receipt of the Exchange Notice, (D) the place or places
where such Excess Units are to be surrendered for payment of the Redemption
Price, (E) that distributions on the Excess Units will cease to accrue on
such redemption date, and (F) that payment of the redemption price will be
made upon presentation and surrender of such Excess Units. In the event an
exchange would result in Excess Units, as a condition to such exchange,
each holder of such units agrees to provide representations and covenants
reasonable requested by the General Partner relating to (1) the widely held
nature of the interests in such holder, sufficient to assure the General
Partner that the holder's ownership of stock of the General Partner
(without regard to the limits described above) will not cause any
individual to beneficially own the stock of the General Partner in excess
of the amounts provided in Article NINTH of the Charter (taking into
account the provisions of the Articles Supplementary); and (2) to the
extent such holder can so represent and covenant without obtaining
information from its owners, the holder's ownership of tenants of the
Partnership and its Affiliates.
<PAGE> A-10
(iv) The redemption of Series B Preferred Units described in SECTION 9
(A)(II) and (III) shall be subject to the provisions of SECTION 6(B)(I) and
SECTION 6(C)(II); provided, that the term "redemption price" in such
Section shall be read to mean the original capital contribution per Series
B P referred Unit being redeemed plus all accrued and unpaid distributions
to the redemption date.
(b) PROCEDURE FOR EXCHANGE. (i) Any exchange shall be exercised
pursuant to a notice of exchange (the "EXCHANGE NOTICE") delivered to the
General Partner by the Holder who is exercising such exchange right, by (A)
fax and (B) by certified mail postage prepaid. The exchange of Series B
Preferred Units, or a specified portion thereof, may be effected after the
fifth (5{th}) Business Day following receipt by the General Partner of the
Exchange Notice by delivering certificates, if any, representing such
Series B Preferred Units to be exchanged together with, if applicable,
written notice of exchange and a proper assignment of such Series B
Preferred Units to the office of the General Partner maintained for such
purpose. Currently, such office is 35 Century Park-Way, Salt Lake City,
Utah 84115. Each exchange will be deemed to have been effected immediately
prior to the close of business on the date on which such Series B Preferred
Units to be exchange (together with all required documentation) shall have
been surrendered and notice shall have been received by the General Partner
as aforesaid and the Exchange Price shall have been paid. Any shares of
Series B Preferred Stock issued pursuant to this SECTION 9 shall be
delivered as shares which are duly authorized, validly issued, fully paid
and nonassessable, free of pledge, lien, encumbrance or restriction other
than those provided in the Charter, the Bylaws of the General Partner, the
Securities Act and relevant state securities or blue sky laws.
(ii) In the event of an exchange of Series B Preferred Units for
shares of Series B Preferred Stock, an amount equal to the accrued and
unpaid distributions, whether or not declared, to the date of exchange on
any Series B Preferred Units tendered for exchange shall (A) accrue on the
shares of the Series B Preferred Stock into which such Series B Preferred
Units are exchanged, and (B) continue to accrue on such Series B Preferred
Units, which shall remain outstanding following such exchange, with the
General Partner as the holder of such Series A Preferred Units.
Notwithstanding anything to the contrary set forth herein, in no event
shall a holder of a Series B Preferred Unit that was validly exchanged into
Series B Preferred Stock pursuant to this section (other than the General
Partner no holding such Series B Preferred
Unit), receive a cash distribution from the Partnership, if such holder,
after exchange, is entitled to receive a distribution with respect to the
share of Series B Preferred Stock for which such Series B Preferred Unit
was exchanged or redeemed.
(iii) Fractional shares of Series A Preferred Stock are not to be
issued upon exchange but, in lieu thereof, the General Partner will pay a
cash adjustment based upon the fair market value of the Series B Preferred
Stock on the day prior to the exchange date as determined in good faith by
the Board of Directors of the General Partner.
<PAGE> A-11
(c) ADJUSTMENT OF SERIES B EXCHANGE PRICE. (i) The Series B Exchange
Price is subject to adjustment upon certain events, including, (A)
subdivisions, combinations and reclassification of the Series B Preferred
Stock, and (B) distribution to all holders of Series B Preferred Stock of
evidence of indebtedness of the General partner or assets (including
securities, but excluding dividends and distributions paid in cash out of
equity applicable to Series B Preferred Stock).
(ii) In case the General Partner shall be a party to any
transaction (including, without limitation, a merger, consolidation,
statutory share exchange, tender offer for all or substantially all of the
General Partner's capital stock or sale of all or substantially all of the
General Partner's assets), in each case as a result of which the Series B
Preferred Stock will be converted into the right to receive shares of
capital stock, other securities or other property (including cash or any
combination thereof), each Series B Preferred Unit will thereafter be
exchangeable into the kind and amount of shares of capital stock and other
securities and property receivable (including cash or any combination
thereof) upon the consummation of such transaction by a holder of the
number of shares of Series B Preferred Stock or fraction thereof into which
one Series B Preferred Unit was exchangeable immediately prior to such
transaction. The General Partner may not become a party to any such
transaction unless the terms thereof are consistent with the foregoing.
(d) The exchange rights set forth in the SECTION 9 are provided to
the holders of the Series B Preferred Units in lieu of any other exchange
rights in respect of Partnership Units set forth in the Partnership
Agreement or in the Exchange Agreement. In addition, so long as either
Contributor, or any of their permitted successors or assigns, hold any
Series B Preferred Units, the Company shall not, without the affirmative
vote of the holders of at least two-thirds of the Series B Preferred Units
outstanding at the time: (a) designate or create, or increase the
authorized or issued amount of, any class or series of shares ranking prior
to the Series B Preferred Shares with respect to the payment of
distributions or rights upon liquidation, dissolution or winding-up or
reclassify any authorized shares of the Company into any such shares, or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such shares; (b) designate or create,
or increase the authorized or issued amount of, any Parity Preferred Shares
or reclassify any authorized shares of the Company into any such shares, or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such shares, but only to the extent
that such Parity Preferred Shares are issued to an Affiliate of the
Company; (c) amend, alter or repeal the provisions of the Charter or By-
Laws of the Company, whether by merger, consolidation or otherwise, that
would materially and adversely affect the powers, special rights,
preferences, privileges or voting power of the Series B Preferred Shares or
the holders of the Series B Preferred Shares or the Series B Preferred
Units; PROVIDED, HOWEVER, that any increase in the amount of authorized
preferred shares of beneficial interest of the Company ("PREFERRED SHARES")
or the creation or issuance of any other series or class of Preferred
Shares, or any increase in the amount of authorized shares of each class or
series, in each case ranking either (1) junior to the Series B Preferred
Shares with
<PAGE> A-12
respect to the payment of distributions and the distribution of assets upon
liquidation, dissolution or winding-up, or (2) on a parity with the Series
B Preferred Shares with respect to the payment of distributions or the
distribution of assets upon liquidation, dissolution or winding-up to the
extent such Preferred Shares are not issued to an Affiliate of the Company,
shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
SECTION 10. NO CONVERSION RIGHTS. Except as set forth in Section
9, the holders of the Series B Preferred Units shall not have any rights to
convert such units into shares of any other class or series of stock or
into any other securities of, or interest in, the Partnership.
SECTION 11. NO SINKING FUND. No sinking fund shall be
established for the retirement or redemption of Series B Preferred Units.
SECTION 12. EXHIBIT A TO PARTNERSHIP AGREEMENT. In order to duly
reflect the issuance of the Series B Preferred Units provided for herein,
the Partnership Agreement is hereby further amended by deleting EXHIBIT A
thereto and replacing EXHIBIT A attached hereto therefor.
<PAGE> A-13
Exhibit A to Schedule A
<PAGE>
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
<TABLE>
<CAPTION> Partnership Percentage
Name of Partner Units Interest
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
GENERAL PARTNER
JP Realty, Inc.
35 Century Park-Way
Salt Lake City, Utah 84115 17,640,747 82.74871%
LIMITED PARTNERS
Boise Mall Investment Company, Ltd. 824,411 3.86712%
Brown, Mike 125 0.00059%
Bybee, Terry 320 0.00150%
Cache Valley Mall Partnership, Ltd. 328,813 1.54239%
Chandler, Harry 100 0.00047%
Clauson, Pat 100 0.00047%
Cloward, Burke 35,460 0.16633%
Cordano, Alan 765 0.00359%
Cordano, James 1,531 0.00718%
Curtis, Greg 24 0.00011%
Curtis, Vardell 125 0.00059%
East Ridge Partnership 100 0.00047%
Enslow, Mike 320 0.00150%
Fairfax Holding, LLC 786,226 3.68801%
Frank, Alan 5,486 0.02573%
Frazier, G. Rex 3,680 0.01726%
Frei, Michael 6,817 0.03198%
Gillette, Jerry 100 0.00047%
Hall Investment Company 10,204 0.04786%
Hansen, Kenneth 5,102 0.02393%
JCP Realty, Inc. 350,460 1.64393%
KFC Advertising 5,487 0.02574%
Kelley, Chad 125 0.00059%
Kelley, Paul 25 0.00012%
King American Hospital, Ltd. 63,424 0.29751%
King Provo, Ltd. 64,872 0.30430%
King, Warren P. 6,244 0.02929%
Mendenhall, Paul K. 214 0.00100%
Mulkey, Tom 100 0.00047%
North Plains Development Company, Ltd. 19,033 0.08928%
North Plains Land Company, Ltd. 1,758 0.00825%
Olson, Carl 1,894 0.00888%
Orton, Byron 125 0.00059%
Peterson, Martin G. 692 0.00325%
Pine Ridge Development Company, Ltd. 77,641 0.36420%
Pine Ridge Land Company, Ltd. 5,176 0.02428%
Price, John 200 0.00094%
Price, Steven 350 0.00164%
<PAGE> EX.A-1
<CAPTION>
Partnership Percentage
Name of Partner Units Interest
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Price 800 Company, Ltd. 156,615 0.73465%
Price Commerce, Ltd. 63,423 0.29750%
Price East Bay, Ltd. 37,157 0.17430%
Price Eugene Bailey Company, Ltd. 17,497 0.08207%
Price Fremont Company, Ltd. 166,315 0.78015%
Price Glendale Company, Ltd. 3,935 0.01846%
Price Orem Investment Company, Ltd. 66,747 0.31309%
Price Plaza 800 Company, Ltd. 12,199 0.05722%
Price Riverside Company, Ltd. 10,983 0.05152%
Price Rock Springs Company, Ltd. 11,100 0.05207%
Price Taywin Company, Ltd. 106,381 0.49901%
Priet, Nettie 100 0.00047%
Red Cliff Mall Investment Company 167,379 0.78514%
RMC Mall Corp. 41,518 0.19475%
Roebbelen Engineering 72,000 0.33774%
Souvall, Sam 23,371 0.10963%
Taycor Ltd. 35,462 0.16634%
Tech Park II Company, Ltd. 4,929 0.02312%
Timothy, Jodi 150 0.00070%
Vise, Phil 160 0.00075%
Watcott, Keith 35,460 0.16633%
Watkins, Gary 5,102 0.02393%
Wilcher, Abe 5,306 0.02489%
Wilcher, Lena 10,000 0.04691%
YSP 16,787 0.07874%
Total 21,318,452 100.00000%
SSB Tax Advantaged Exchange Fund I, LLC 510,000 100.00000%{1}
Belcrest Realty Corporation 2,400,000 63.15789%{2}
Belair Real Estate Corporation 1,400,000 36.84211%{2}
3,800,000 100.00000%
</TABLE>
___________________________
1. Represents all of the Series A Preferred Units issued by the Partnership.
2. Represents a percentage of the Series B Preferred Units issued by the
Partnership.
<PAGE> A-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PRICE
DEVELOPMENT COMPANY, LIMITED PARTNERSHIP FORM 10-Q FOR THE PERIOD ENDED
JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> JUN-30-1999 JUN-30-1998
<CASH> $ 8,951 $4,860
<SECURITIES> 0 0
<RECEIVABLES> 0<F1> 0<F1>
<ALLOWANCES> 0<F1> 0<F1>
<INVENTORY> 0 0
<CURRENT-ASSETS> 0<F2> 0<F2>
<PP&E> 0<F1> 0<F1>
<DEPRECIATION> 0<F1> 0<F1>
<TOTAL-ASSETS> 746,466 568,638
<CURRENT-LIABILITIES> 0<F2> 0<F2>
<BONDS> 0 0
0 0
0 0
<COMMON> 2 2
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 746,466 568,638
<SALES> 0 0
<TOTAL-REVENUES> 64,727 48,910
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 33,773<F3> 24,785<F4>
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 14,699 7,796
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 15,328 16,133
<EPS-BASIC> $0.71<F5> $0.76<F5>
<EPS-DILUTED> $0.71<F5> $0.75<F5>
<FN>
<F1>The Company utilizes a condensed balance sheet format for 10-Q reporting.
Amounts are included in Other Assets.
<F2>The financial statements reflect an unclassifed balance sheet due to the
nature of the Company's industry - Real Estate Investment Trust.
<F3>Amount is comprised of $48,472 of expenses less interest expense of $14,699
reflected elsewhere in this Financial Data Schedule.
<F4>Amount is comprised of $32,581 of expenses less interest expense of $7,796
reflected elsewhere in this Financial Data Schedule.
<F5>Amount reflects new standard of FAS 128 for Basic Earnings Per Share and
Diluted Earnings Per Share.
</FN>
</TABLE>
