Exhibit 4.10
Attachment 4
EXHIBIT H
TERMS
OF
SERIES S SPECIAL COMMON UNITS
OF
CBL & ASSOCIATES LIMITED PARTNERSHIP
(the "Operating Partnership")
Pursuant to Article 4.4 of the
Second Amended and Restated Partnership Agreement of
the Operating Partnership
WHEREAS,
Article 4.4 of the Second Amended and Restated Partnership
Agreement of the Operating Partnership (as
amended through July 28, 2004, and as
the same may hereafter be amended as permitted therein and herein, the
"Partnership Agreement") grants CBL
Holdings I, Inc., the general partner of the
Operating Partnership (the "General
Partner"), authority
to cause the Operating
Partnership to issue interests in the Operating
Partnership
to persons other
than the General Partner in one or more classes or series, with such
designations, preferences and relative,
participating, optional or other special
rights, powers and duties as may be
determined
by the General
Partner in its
sole and absolute discretion. (For ease of reference,
capitalized
terms used
herein and not otherwise defined have the meanings assigned to them in the
Partnership Agreement.)
NOW THEREFORE,
the General Partner
hereby designates a
series of priority
units and fixes the designations, powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of
such priority units, as follows:
1. Designation and Amount. The units of such series shall be
designated
"Series S Special Common Units" (the "S-SCUs") and the number of units
constituting such series shall initially be
960,307. The Operating
Partnership
may not issue any additional S-SCUs unless [(i) the issuance is required to
deliver additional consideration as required by the terms of the
Contribution
and Exchange Agreement, dated as of May 21, 2004,
among Donald
Soffer, Rita
Soffer Leeds, Eugene Kessler, Pittsburgh Mall Limited Partnership and
Monroeville Mall Partners, L.P., as the same may be further amended,
supplemented or modified (the "Contribution Agreement") or (ii) ] it has
obtained the prior written consent of the
holders of record of a majority of the
outstanding S-SCUs ("Majority Holders"). The rights and obligations of the
S-SCUs shall be as set forth herein (to the extent not
inconsistent
with the
Partnership Agreement) and in the Partnership Agreement. Nothing in the
foregoing shall be deemed to limit the
right and power of the General Partner to
cause the Operating Partnership to issue securities
otherwise designated to the
fullest extent permitted under the terms of the
Partnership Agreement
and this
Exhibit H.
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2. Distribution
Rights. (a) Holders of S-SCUs shall be entitled to receive,
when, as and if declared by the General
Partner distributions with respect to
the S-SCUs in the manner and to the fullest
extent set forth in the Partnership
Agreement.
(b)
Distributions with
respect to the S-SCUs shall be payable on the dates
designated by the General Partner for the payment of distributions to the
holders of SCUs and Common Units. Any
distribution payable on the S-SCUs for the
quarter in which the S-SCUs are first
issued will be
prorated and
computed on
the basis of a 360-day year consisting of twelve 30-day
months. Distributions
will be payable to holders of record of the
S-SCUs as they appear in the records
of the Operating Partnership at the close of
business on the applicable record
date, which shall be the record date
designated by the
General Partner for the
payment of distributions for such quarter to the holders of SCUs and Common
Units.
(c) At such
time, if any, as there is any distribution shortfall with
respect to the S-SCUs as described in Section 6.2(b)(i) of the Partnership
Agreement, none of the Operating Partnership, the General Partner or the
REIT
will redeem, purchase or otherwise acquire for
any consideration (or any moneys
be paid to or made available for any
sinking fund for the redemption of any such
units) any Common Units or any other units
of interest in the
Partnership that
by their terms rank junior as to distributions to the rights of the S-SCUs
(except by conversion into or exchange for
shares of Common Stock of the REIT or
other units of the Operating Partnership ranking junior to the S-SCUs as to
distributions).
(d) Distributions with respect to the S-SCUs are
intended to qualify
as
permitted distributions of cash that are not
treated as a disguised sale within
the meaning of Treasury Regulation 1.707-4,
and the provisions of this Exhibit H
shall be construed and applied consistent
with such Treasury Regulations.
3. Special
Distribution Upon Liquidation. Upon any voluntary or
involuntary
liquidation, dissolution or winding-up of the affairs of the Operating
Partnership, the holders of S-SCUs shall be entitled to be paid out of the
assets of the Operating Partnership legally available for distribution to
its
unit holders an amount equal to any
distribution
shortfall with respect
to the
S-SCUs described in Section 6.2(b)(i) of
the Partnership
Agreement, before
any
distribution or payment shall be made to holders of Common
Units or any other
series of Partnership Units ranking junior to the S-SCUs or SCUs as to
liquidation rights. In the event that, upon such voluntary or involuntary
liquidation, dissolution or winding-up,
the available
assets of the
Operating
Partnership are insufficient to pay such amount on all
outstanding S-SCUs
and
SCUs, then the holders of the S-SCUs and the SCUs
shall share
ratably in any
such distribution of assets, based on the number of S-SCUs or
SCUs held by each
such holder. Holders of S-SCUs shall be
entitled to written
notice of any such
liquidation. In addition, upon any voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of
the Operating Partnership, after any
such distribution shortfall on account of the S-SCUs
shall have been paid
in
cash, the S-SCUs shall be treated as if
they had been exchanged for Common Units
pursuant to the terms of Paragraph 7(b)
hereof. The
consolidation or
merger of
the Operating Partnership with or into any partnership, limited liability
company, corporation, trust or other entity shall not be
deemed to constitute a
liquidation, dissolution or winding-up of
the Operating Partnership.
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4. Optional
Redemption.
(a) At any time after
the Operating
Partnership
shall have achieved the Distribution
Benchmark,
the Operating
Partnership, at
its option upon not less than thirty (30)
nor more than sixty (60) days' written
notice, may redeem the S-SCUs,
in whole or in part,
on the first Business
Day
following any record date established for
the determination of
parties entitled
to receive any distributions being made to holders of S-SCUs.
Such redemption
shall be made by (i) paying in cash to the holders of S-SCUs with respect to
their S-SCUs being redeemed, any distribution shortfall with respect to the
S-SCUs described in Section 6.2(b)(i) of
the Partnership
Agreement
outstanding
on the date of redemption (whether or not declared) and (ii) issuing to the
holders thereof a number of Common
Units equal to the
Common Unit Amount.
If
fewer than all of the outstanding S-SCUs are to be redeemed,
the S-SCUs to be
redeemed shall be redeemed pro rata (as nearly as may be
practicable
without
creating fractional units) or by lot or by
any other equitable method determined
by the Operating Partnership. Holders of S-SCUs to be redeemed
shall surrender
the certificates evidencing such S-SCUs, if any, at
the place designated in the
Operating Partnership's notice and shall be entitled to the distribution
payments and Common Units described in the second sentence of this Paragraph
4(a) prior to or concurrently with such
surrender. From and after the redemption
date distributions shall cease to be payable with
respect to such S-SCUs, such
S-SCUs shall no longer be deemed
outstanding
and all rights of the
holders of
such units will terminate, except the right
to receive the distribution payments
and Common Units described in the second
sentence of this
Paragraph 4(a).
For
purposes hereof, the term "Distribution
Benchmark" shall mean when the quarterly
distributions paid over a period of twelve
(12) consecutive quarters pursuant to
Sections 6.2(b)(ii) and (iii) of the Partnership Agreement per S-SCU then
outstanding shall have equaled or exceeded
130% of the S-SCU Basic Distribution
Amount.
(b) Notwithstanding the provisions of Paragraph
4(a) above,
unless full
cumulative distributions on all S-SCUs shall
have been or contemporaneously are
paid in cash or a sum sufficient
for the payment
thereof in cash set
apart for
payment for all past distribution periods and the then current distribution
period or portion thereof, no S-SCUs shall be redeemed
unless all
outstanding
units of S-SCUs are simultaneously
redeemed.
(c) Notice of
redemption pursuant to
Paragraph 4(a) above
shall be mailed
by the Operating Partnership by registered mail,
return receipt requested, not
less than thirty (30) nor more than sixty
(60) days prior to the redemption
date, addressed to the respective holders
of record of the S-SCUs to be redeemed
at their respective addresses as they appear on the records of
the Operating
Partnership. Failure to give such notice or
any defect thereto or in the mailing
thereof shall not affect the validity of
the proceedings
for the redemption
of
any S-SCUs. Each notice shall state (i) the redemption date; (ii) the total
number of S-SCUs to be redeemed
and the number of
S-SCUs held by such holder to
be redeemed; (iii) the Common Unit Amount;
(iv) the place or places where S-SCUs
are to be surrendered for payment of the
distribution shortfall
with respect to
the S-SCUs described in Section 6.2(b)(i) of the Partnership Agreement
outstanding thereon and the issuance of a number of Common
Units equal to the
Common Unit Amount; and (v) that distributions on the S-SCUs to be redeemed
shall cease to be payable on such
redemption date.
(d) All
S-SCUs redeemed pursuant to this Paragraph 4 shall be deemed
retired and terminated.
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(e) The S-SCUs
shall have no stated
maturity and shall not be subject to
any sinking fund or mandatory redemption except as otherwise provided in this
Section 4.
(f) As used
herein, the term
"Common Unit Amount" shall mean, with respect
to any number of S-SCUs, the number of Common Units equal to such number of
S-SCUs multiplied by the Common Unit
Conversion Factor; provided, however, that
in the event that the Operating Partnership issues to all holders of Common
Units rights, options, warrants or convertible or exchangeable securities
entitling such holders to subscribe for or
purchase additional
Common Units, or
any other securities or property of the Operating
Partnership
(collectively,
"Common Unit Additional Rights"), other than a right to receive
Common Units
pursuant to a Distribution of Common Units in Lieu of Cash
(as defined
below),
then the Common Unit Amount shall also
include (other than with respect to
any
Common Units or S-SCUs "beneficially owned" by an "Acquiring Person"
(as those
terms are defined in the Company's Rights
Agreement, dated as of April 30, 1999,
as amended through the date hereof and as
it may be further amended from time to
time, and any successor agreement thereof (collectively, the "Rights
Agreement"))), such Common Unit Additional
Rights that a holder
of that number
of Common Units would be entitled to
receive. As used
herein, the term
"Common
Unit Conversion Factor" shall mean 1.0,
provided, that, in the event that the
Operating Partnership (i) makes a distribution to all holders of its Common
Units in Common Units (other than a
distribution of Common
Units pursuant to an
offer to all holders of Common Units and S-SCUs permitting each to elect to
receive a distribution in Common Units in lieu of a cash
distribution
(such a
distribution of Common Units is referred to
herein as a "Distribution of Common
Units in Lieu of Cash")), (ii) subdivides
or splits its outstanding Common Units
(which shall expressly exclude any
Distribution of Common Units in Lieu of Cash,
but which may include any other
distribution of Common Units), or (iii) combines
or reverse splits its outstanding Common Units into a smaller number
of Common
Units (in each case, without making a comparable distribution, subdivision,
split, combination or reverse split with
respect to the S-SCUs), the Common Unit
Conversion Factor in effect immediately preceding such event shall be
adjusted
by multiplying the Common Unit Conversion
Factor by a fraction, the numerator of
which shall be the number of Common Units
issued and outstanding
on the record
date for such distribution, subdivision, split, combination or reverse split
(assuming for such purposes that such distribution, subdivision, split,
combination or reverse split occurred as of
such time), and the
denominator of
which shall be the actual number of Common
Units (determined
without the above
assumption) issued and outstanding on the record date for such
distribution,
subdivision, split, combination or reverse split. Any
adjustment to the Common
Unit Conversion Factor shall become
effective immediately
after the record date
for such event in the case of a
distribution
or the effective date
in the case
of a subdivision, split, combination or
reverse split.
(g) Notwithstanding anything to the contrary in this Section 4, the
redemption date may not be a date prior to
the eighth anniversary of the initial
closing under the Contribution
Agreement.
5. Put
Right.
(a) If an
Original Holder of S-SCUs (as hereinafter defined) shall die on
or before the fifth anniversary of the issuance of the S-SCUs (a
"Put Event"),
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the Successor Holder of such S-SCUs (as
hereinafter
defined) shall have the
option to deliver to the Operating
Partnership, within sixty (60) days from such
date of death (the "Put Period"), a written notice (the "Put Notice") that
requires the Operating Partnership to redeem for the Put
Consideration
all or
part of the S-SCUs held of record by the
Original Holder at the
time of the Put
Event. The Put Consideration for each such S-SCU shall be an
amount, equal to
the sum of (x) the product of the Current
Per Share Market Price per share of
Common Stock and the Common Stock Amount
applicable to such S-SCU, each computed
as of such date of death, plus (y) the lesser of the Closing Amount or the
Redeemable Amount (each as defined below),
provided that in the
event that the
Redeemable Amount is a number less than $0,
the amount of this clause (x) shall
be $0, minus (z) the amount of $3.91 per
S-SCU, which amount
will be reduced by
5% upon each date on which payment of a quarterly
distribution
is made to the
holders of the S-SCUs (prorated for the quarter in which the S-SCUs are
first
issued and computed on the basis of a
360-day year
consisting of twelve
30-day
months). The Put Consideration shall, at the election of the Operating
Partnership, be payable in any combination of cash or shares of Common
Stock,
which Common Stock shall be valued for this
purpose at the Current
Per Share
Market Price as of such date of death. The Closing Amount shall be the
difference between (i) $78.10, divided by the Conversion Factor,
minus (ii) the
Current Per Share Market Price per share of Common Stock as of the date of
issuance of the S-SCUs, but in no case
shall such Current Per Share Market Price
per share of Common Stock be an amount less
than $56.70. The
Redeemable Amount
shall be the difference between (i) $78.10, divided by the Conversion
Factor,
minus (ii) the product of the Current Per
Share Market Price per share of Common
Stock and the Common Stock Amount
applicable to each
S-SCU, each computed as of
such date of death. In addition to and in conjunction with the payment of the
Put Consideration, the holders of the S-SCUs shall be entitled to payment
in
cash of any distribution shortfall with respect to the S-SCUs described in
Section 6.2(b)(i) of the Partnership
Agreement.
Set forth below is an illustration of the
calculation of the Put Consideration.
The calculation assumes that the Current
Per Share Market Price upon the date of
first issuance of the S-SCUs was $56.70 and
that the Current Per Share Market
Price upon the date of death was $70.00.
The Put Consideration for each S-SCU
shall be calculated as follows:
($70.00 x Common Stock Amount (calculated
as of the date of death) plus
----
(the lesser of the Closing Amount or the
Redeemable Amount (each as calculated
below)) minus
-----
($3.91 per S-SCU, which amount will be
reduced by 5% upon each date on which
payment of a quarterly distribution is made
to the holders of the S-SCUs
(prorated for the quarter in which the
S-SCUs are first issued and computed on
the basis of a 360-day year consisting of
twelve 30-day months)) equals the Put
Consideration.
The Closing Amount shall equal: ($78.10/
the Conversion Factor) - $56.70.
The Redeemable Amount shall equal:
($78.10/ the
Conversion Factor) - ($70.00 x
Common Stock Amount (calculated as of the
date of death).
(b) A Put Notice
in the form annexed hereto as Attachment 1 hereto shall be
duly completed, executed and mailed by registered mail, return receipt
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requested, addressed to the Operating Partnership at 200 Hamilton Place
Boulevard, CBL Center, Suite 500,
Chattanooga, Tennessee
37421-6000 Attention:
Chief Executive Officer. A Put Notice once dispatched may not be withdrawn
except with the written consent of the
Operating Partnership. From and after the
dispatch of a Put Notice with respect to any S-SCUs,
all distributions shall
cease to be payable with respect to the S-SCUs,
the S-SCUs shall no
longer be
deemed outstanding and all rights of holders
with respect to the
S-SCUs shall
terminate, except the right to receive the Put Consideration and any other
payments described in Paragraphs 5(a) or
5(c) at the Put Closing.
(c) Within thirty (30) days of receipt of a Put Notice pursuant to
Paragraph 5(b) above, the Operating Partnership shall, by registered mail,
return receipt requested, addressed to the respective
holders of record of the
S-SCUs at their respective addresses as they appear on the records of the
Operating Partnership, deliver a notice (a "Put Response
Notice") setting forth
the date and time (the "Put Closing Date") on which the S-SCUs are to be
surrendered for payment of the Put Consideration and any other payments
described in Paragraph 5(a) above (the "Put Closing") and setting forth with
reasonable specificity (i) the amount and calculation of such payments to be
made, and (ii) the amount of cash or Common Stock to be used to pay the
Put
Consideration (the "Put Stock"). The Put Closing Date shall be a
date not more
than thirty (30) days from the date of receipt of the Put Notice if the
Operating Partnership shall elect to pay the Put Consideration entirely in
shares of Common Stock, and not more than ninety (90) days
from the receipt of
the Put Notice if the Operating Partnership shall elect to pay the Put
Consideration entirely in cash, provided that if payment of the cash Put
Consideration is delayed beyond thirty (30) days from the receipt of the
Put
Notice, it will bear interest at the prime
rate from such date until payment.
(d) The Put
Closing shall take place at the offices of the Operating
Partnership or at such other location set
forth by the Operating
Partnership in
the Put Response Notice. At the Put Closing, the record holders of the
offered
S-SCUs shall surrender the certificates evidencing such S-SCUs, if any, and
otherwise execute such documents reasonably requested by the Operating
Partnership to consummate or evidence such surrender, and the Operating
Partnership shall pay the Put Consideration, including without limitation,
through the delivery of stock certificates or other appropriate means to
evidence any Put Stock, together with any other payments
described in Paragraph
5(a) above
(e) Notwithstanding anything in clause (a) above to the contrary, for
purposes of this Section 5, S-SCUs issued
by the Operating
Partnership to,
and
held of record by, an entity that is not an
Original Holder (a "Record Holder")
shall nevertheless be deemed held of
record by an Original Holder to the extent
that such Original Holder shall, at any time (and from time to
time) not less
than ninety (90) days prior to such
Original Holder's date
of death, have given
written notice to the Operating Partnership
of the S-SCUs held of record by such
Record Holder of which the Original Holder
is the beneficial owner.
(f) For purposes
of this Section 5,
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(i) the term "Original
Holder" shall mean the
persons identified
in
Attachment 2 hereof,
as of the date
hereof, and the number of
S-SCUs beneficially
owned by such Original Holder and the Record
Holder thereof (for
purposes of clause (e) above) are identified
next to such Original Holder's name; and
(ii) the term
"Successor
Holder" shall mean the eastate of the
deceased Original
Holder as well as any successor beneficial
owner (by will or laws of succession) of the S-SCUs of the
deceased Original Holder, provided however, that a Record
Holder
of S-SCUs that was deemed an Original Holder under clause (e)
above with
respect to such S-SCUs on behalf of such
deceased
Original Holder shall
likewise be deemed a
Successor Holder
of
such S-SCUs on behalf of such Successor Holder(s) for purposes
of
this Section 5.
6. Voting
Rights. (a) Holders of the S-SCUs shall
have the voting
rights
set forth herein and in the Partnership
Agreement.
(b) So long as
any S-SCUs remain
outstanding, the
Operating Partnership
shall not, without the affirmative vote or
consent of the holders of two-thirds
of the S-SCUs outstanding at the time,
given in person or by
proxy, either in
writing or at a meeting (such series voting
separately as a class):
(i) undertake,
consent to, or
otherwise participate
in or acquiesce
to any
recapitalization
transaction
(including,
without
limitation, an initial public offering, a merger, consolidation,
other business combination, exchange, self-tender offer for all
or substantially
all of the
Common Units, or sale or other
disposition of
all or substantially all of the Operating
Partnership's assets)
(each of the foregoing
being referred to
herein as a "Recapitalization Transaction") unless in
connection
with such a
Recapitalization
Transaction (x) either
each S-SCU
outstanding prior to
the Recapitalization
Transaction will
(A)
remain
outstanding
following the
consummation
of such
Recapitalization
Transaction without any amendment to the rights
and obligations
of holders of the S-SCUs that is materially
adverse to the holders of S-SCUs (as reasonably determined by
the
Board of Directors of
the Company) or (B) be
converted into or
exchanged for
securities
of the surviving entity having
preferences,
conversion and
other rights, voting powers,
restrictions,
distribution rights
and terms and
conditions of
redemption
thereof materially
