1	The figure in brackets will equal the Guarantor’s proportionate share of the Special Distribution Amount (as defined in the Contribution Agreement).

 

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3

 

4.        Notice.  As a condition to the enforcement of this Agreement, the Guarantor shall have received written notice of any failure by Borrower to pay any Guaranteed Obligations to the Lenders.  Except for the notice required under the preceding sentence, the Guarantor hereby waives notice of acceptance of this Agreement, demand of payment, presentment of this or any instrument, notice of dishonor, protest and notice of protest, or other action taken in reliance hereon and all other demands and notices of any description in connection with this Agreement.  Subject to the last sentence of Section 2, the Guarantor further waives and forgoes all defenses which may be available by virtue of any valuation, moratorium law or other similar law now or hereafter in effect, any right to require the marshalling of assets, and all suretyship defenses generally.

 

5.        Absolute Obligation. Subject to the provisions of Sections 1, 2, 3 and 4, the obligations of the Guarantor hereunder shall be absolute and unconditional and shall not be subject to any reduction, limitation, impairment or termination for any reason, including, without limitation, any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any setoff, counterclaim, deduction, diminution, abatement, suspension, reduction, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations.  Without limiting the generality of the foregoing, subject to the provisions of Sections 1, 2, 3 and 4, the obligations of the Guarantor hereunder shall not be released, discharged, impaired or otherwise affected by any circumstance or condition whatsoever (whether or not the Borrower, any other Borrower Party, the Guarantor, the Agent or any Lender has knowledge thereof) which may or might in any manner or to any extent vary the risk of the Guarantor or otherwise operate as a release or discharge of the Guarantor as a matter of law or equity (other than the indefeasible payment in full of all of the Guaranteed Obligations), including, without limitation:

 

(a)         any amendment, modification, addition, deletion or supplement to or other change to any of the terms of the Loan Documents, or any assignment or transfer of any thereof, or any furnishing, acceptance, surrender, substitution, modification or release of any security for, or guaranty of, the Guaranteed Obligations;

 

(b)         any failure, omission or delay on the part of the Borrower or any other Borrower Party to comply with any term of any of the Loan Documents;

 

(c)         any waiver of the payment, performance or observance of any of the obligations, conditions, covenants or agreements contained in the Loan Documents or any of them or any delay on the part of the Agent or the Lenders to enforce, assert or exercise any right, power or remedy conferred on the Agent or the Lenders in the Loan Documents;

 

(d)         any extension of the time for payment of the principal of or premium (if any) or interest on any of the Guaranteed Obligations, or of the time for performance of any other obligations, covenants or agreements under or arising out of the Loan Documents or any of them, or the extension or the renewal thereof;

 

 

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4

 

(e)         to the extent permitted by applicable law, any voluntary or involuntary bankruptcy, insolvency, reorganization, moratorium, arrangement, adjustment, readjustment, composition, assignment for the benefit of creditors, receivership, conservatorship, custodianship, liquidation, marshaling of assets and liabilities or similar proceedings with respect to the Borrower, any other Borrower Party or the Guarantor or any other Person or any of their respective properties or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding (including, without limitation, any automatic stay incident to any such proceeding);

 

(f)          any limitation, invalidity, irregularity or unenforceability, in whole or in part, limiting the liability or obligation of the Borrower or any other Borrower Party or any security therefor or guarantee thereof or the Agent’s or the Lenders’ recourse to any such security or limiting the Agent’s or the Lenders’ right to a deficiency judgment against the Borrower, any other Borrower Party, the Guarantor or any other Person; and

 

(g)         any other act, omission, occurrence, circumstance, happening or event whatsoever, whether similar or dissimilar to the foregoing, whether foreseen or unforeseen, and any other circumstance which might otherwise constitute a legal or equitable defense, release or discharge (including the release or discharge of the liabilities of a guarantor or surety or which might otherwise limit recourse against the Borrower, any other Borrower Party, the Guarantor or any other Person, whether or not the Borrower, any other Borrower Party, the Guarantor, the Agent or any Lender shall have notice or knowledge of the foregoing).

 

6.        Subrogation.  To the extent that the Guarantor shall have made any payments under this Agreement, the Guarantor shall be subrogated to, and shall acquire, all rights of the Lenders against the Borrower Parties and the LC Collateral with respect to such payments, including without limitation, (a) all rights of subrogation, reimbursement, exoneration, contribution or indemnification, and (b) all rights to participate in any claim or remedy of any Lender or any trustee on behalf of any Lender against any Borrower Party or the LC Collateral, in each case, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower Parties, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right; provided, however, that the Guarantor shall not exercise any right of subrogation, contribution, indemnity or reimbursement or any other rights it may have now or hereafter have, and any and all rights of recourse to any Borrower Party or any of its assets with respect to any payment it makes under this Agreement until (x) all of the Obligations (as defined in the Credit Agreement) (other than contingent indemnification obligations not yet asserted by the Person entitled thereto) shall have been indefeasibly paid, performed or discharged in full in cash, and (y) no Person has any further right to obtain any loans, advances or other extensions of credit under any of the Loan Documents.  If any amount is paid to the Guarantor in violation of the foregoing limitation, then such amount shall be held in trust for the benefit of the Lenders and shall forthwith be paid to the Agent (for the benefit of the Lenders) to reduce the amount of the Guaranteed Obligations, whether matured or unmatured.  Notwithstanding any other provision of this Agreement or applicable law, the Guarantor shall not have, with respect to any payments made by the Guarantor under this Agreement, any right of subrogation, contribution, indemnity, reimbursement or other right whatsoever, whether by contract at law, in equity or otherwise, against, and shall have no recourse whatsoever to, any Borrower Party other than the Borrower and its Subsidiaries; provided, that, (x) nothing in this sentence shall provide the Guarantor with greater rights or recourse with respect to the Borrower or its Subsidiaries than the Guarantor would otherwise have under applicable law, and (y) all such rights and recourse shall subject in all respects to the other provisions of this Section 6.  For the avoidance of doubt, this Agreement shall not limit the ability of the Guarantor or its subsidiaries to ask for, sue, demand, receive and retain payments and other consideration from the Borrower or any other Borrower Party in respect of obligations of such Persons to the Guarantor and/or its subsidiaries which do not arise under this Agreement.

 

 

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5

 

7.        Continuity of Guaranteed Obligations; Bankruptcy or Insolvency.  If all or any part of any payment applied to any Guaranteed Obligation is or must be recovered, rescinded or returned to the Borrower, the Guarantor or any other Person (other than the Lenders) for any reason whatsoever (including, without limitation, bankruptcy or insolvency of any party), such Guaranteed Obligation shall be deemed to have continued in existence and this Agreement shall continue in effect as to such Guaranteed Obligation, all as though such payment had not been made. For the avoidance of doubt, the bankruptcy, insolvency, or dissolution of, or the commencement of any case or proceeding under any bankruptcy, insolvency, or similar law in respect of, the Borrower or any other Borrower Party shall not require the Guarantor to make any payment under this Agreement until all of the conditions in Section 2 and Section 4 have been satisfied (including, without limitation, the exhaustion of all Lender Remedies).

 

8.        No Waiver.  No delay or omission on the part of the Agent or any Lender in exercising any rights hereunder shall operate as a waiver of such rights or any other rights, and no waiver of any right on any one occasion shall result in a waiver of such right on any future occasion or of any other rights; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

 

9.        Representations and Warranties.  The Guarantor represents and warrants that [(a) it is a [________] duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) the execution, delivery and performance by the Guarantor of this Agreement, and the consummation of the transactions contemplated hereby, are within its powers and have been duly authorized by all necessary action]2; (c) this Agreement has been duly executed and delivered by the Guarantor, and constitutes the Guarantor’s legal, valid and binding obligation enforceable in accordance with its terms; (d) the making and performance of this Agreement does not and will not violate the provisions of any applicable law, regulation or order applicable to or binding on the Guarantor, and does not and will not result in the breach of, or constitute a default or require any consent under, any material agreement, instrument, or document to which the Guarantor is a party or by which the Guarantor or any of its property may be bound or affected; (e) all consents, approvals, licenses and authorizations of, and filings and registrations with, any governmental authority or regulatory body or other third party for the execution, delivery and performance of this Guarantee by the Guarantor have been obtained or made and are in full force and effect; and (f) by virtue of the Guarantor’s relationship with the Borrower, the execution, delivery and performance of this Agreement is for the direct benefit of the Guarantor and the Guarantor has received adequate consideration for this Agreement.

 

2	Delete representations (a) and (b) if the guarantor is an individual.

 

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6

 

10.      Enforcement Expenses.  The Guarantor hereby agrees to pay all out-of-pocket costs and expenses of the Agent and each Lender in connection with the enforcement of this Agreement (including, without limitation, the reasonable fees and disbursements of counsel employed by the Agent or any of the Lenders); provided that no payment shall be due and owing under this Section 10 during the pendancy of any good faith dispute between the Guarantor and the Agent or the Lenders regarding the enforcement of this Agreement against the Guarantor and such payment shall be due only if (A) Guarantor agrees to make such payment or (B) a court of competent jurisdiction has determined pursuant to a final non-appealable order that this Agreement may be enforced against the Guarantor.

 

11.      Fraudulent Conveyance.  Notwithstanding any provision of this Agreement to the contrary, it is intended that this Agreement, the Guarantor’s guarantee of the Guaranteed Obligations hereunder and any liens and security interests securing the Guarantor’s obligations under this Agreement, not constitute a Fraudulent Conveyance (as defined below).  Consequently, Guarantor agrees that if this Agreement, the Guarantor’s guarantee of the Guaranteed Obligations hereunder or any liens or security interests securing the Guarantor’s obligations under this Agreement, would, but for the application of this sentence, constitute a Fraudulent Conveyance, this Agreement, such guarantee and each such lien and security interest shall be valid and enforceable only to the maximum extent that would not cause this Agreement, such guarantee or such lien or security interest to constitute a Fraudulent Conveyance, and this Agreement shall automatically be deemed to have been amended accordingly at all relevant times.  For purposes of this Section 11, the term “Fraudulent Conveyance” means a fraudulent conveyance under Section 548 of the Bankruptcy Code (as defined in the Credit Agreement) or a fraudulent conveyance or fraudulent transfer under the provisions of any applicable fraudulent conveyance or fraudulent transfer law or similar law of any state, nation or other governmental unit, as in effect from time to time.

 

12.      Exculpation of Lenders.  The Guarantor acknowledges and agrees, on behalf of itself and each of its Affiliates, that none of J.P. Morgan Chase Bank, N.A., J.P. Morgan Securities Inc., Bank of America, N.A., Bank of America Securities LLC or any of the other Lenders from time-to-time under the Credit Agreement, or any of their respective Affiliates, successors or assigns, or any officer, director, partner, trustee, equity holder, agent, employee, attorney, attorney-in-fact, advisor or controlling Person of any of the foregoing (collectively, the “Lender Parties”) shall have any duty (including any fiduciary duty or any other express or implied duty), liability, obligation or responsibility whatsoever to the Guarantor or any of its Affiliates arising from, in connection with or relating to (i) the Loans and other extensions of credit contemplated by the Credit Agreement and the other Loan Documents (the “Debt Financing”), or (ii) any of the transactions contemplated by this Agreement, the Credit Agreement or any of the other Loan Documents or any agreement, instrument certificate or instrument referred to in the Loan Documents, including, without limitation, any actual or alleged breach, misrepresentation or failure to perform any of their respective duties or obligations (including, but not limited to, any failure to fund or otherwise extend credit) under any Loan Document or any agreement, certificate or instrument related thereto (clauses (i) and (ii), collectively, the “Financing Matters”).  No Lender Party shall be liable to the Guarantor or any of its Affiliates for any action taken or not taken by such Lender Party in connection with any of the Financing Matters; provided, that, for the avoidance of doubt, the foregoing sentence shall not, in and of itself, operate as a waiver of defenses by the Guarantor to enforcement of this Agreement. The Guarantor hereby waives, releases and forever discharges each of the Lender Parties from any and all actions, causes of action, suits, debts, losses, costs, controversies, damages, liabilities, judgments, claims and demands whatsoever, in law or equity or otherwise, whether known or unknown (collectively, “Claims”) directly or indirectly arising out of or relating to any of the Financing Matters, that the Guarantor or any of its Affiliates ever had, now has or hereafter can, shall or may have against any of the Lender Parties, except to the extent arising as a result of (x) a demand for payment hereunder prior to the conditions in Section 2 and Section 4 being satisfied or (y) any act of gross negligence or willful misconduct committed by such Person at any time following the date hereof as determined by a court of competent jurisdiction pursuant to a final non-appealable order.  Furthermore, the Guarantor covenants not to sue any Lender Party in connection with or assert, and agrees to cause his Affiliates not to sue any Lender Party in connection with or assert, any Claims which they or any other party now or may hereafter have in connection with any Financing Matter, except to the extent arising as a result of (x) a demand for payment hereunder prior to the conditions in Section 2 and Section 4 being satisfied or (y) any act of gross negligence or willful misconduct committed by such Person at any time following the date hereof as determined by a court of competent jurisdiction pursuant to a final non-appealable order. Each of the Lender Parties shall be an intended third party beneficiary of this Section 12 and may enforce the terms of this Section 12 as if such Lender Party were a direct party to this Agreement, and this Section 12 may not be amended, supplemented, waived or otherwise modified without the prior written consent of each of JPMorgan Chase Bank, N.A. and Bank of America, N.A.

 

 

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7

 

13.      Miscellaneous.

 

(a)         This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely in New York.

 

(b)         The Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and the Agent hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding shall be heard and determined exclusively in any such New York State court or, to the extent permitted by law, in such federal court.  The Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party (other than the Guarantor) may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.  The Guarantor irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court.  The Guarantor hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

 

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(c)         This Agreement shall inure to the benefit of and be binding upon the Guarantor and its successors and assigns and the Agent, the Lenders and their respective successors and assigns.

 

(d)         This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, between the parties related thereto.

 

(e)         Each reference herein to the Guarantor shall be deemed to include the successors and assigns of the Guarantor, all of whom shall be bound by the provisions of this Agreement; provided, however, that the Guarantor shall not, without obtaining the prior written consent of the Lenders (which consent may be withheld or conditioned in the Lenders’ sole discretion), assign or transfer this Agreement or the Guarantor’s obligations and liabilities under this Agreement, in whole or in part, to any other Person (and any attempted assignment or transfer by Guarantor without such prior written consent shall be null and void). Upon the written request of the Lenders, the Guarantor shall assign this Agreement to any Person who acquires all or substantially all of the assets of Guarantor; provided, that the Lenders shall have no duty or obligation to make such request. Each reference herein to the Lenders shall be deemed to include the successors and assigns of the Lenders under the Credit Agreement; it being understood that this Agreement shall not be for the benefit of, or be assigned to, any refinancing or refunding source with respect to the Guaranteed Obligations (it being acknowledged that an amendment, restatement, waiver or other modification of the terms of the Credit Agreement or other Loan Documents shall not constitute a refinancing or refunding for purposes of this provision) without the prior written consent of the Guarantor, provided, that in no event shall the foregoing prevent or restrict any Lender from making an assignment, selling a participation in, pledging or granting a security interest in or otherwise transferring all or any portion of its interests in the Loans (and its corresponding interest in the guarantee provided for hereunder) under the applicable provisions of Section 15.1 of the Credit Agreement (as in effect on the date hereof, except to the extent the Guarantor consents to any subsequent amendment or other modification to such provisions) or impair any Lender’s rights under this Agreement as a result of any such assignment, participation, pledge, security interest or transfer made in accordance with such provisions.

 

(f)          This Agreement is for the benefit only of the Agent and the Lenders, shall be enforceable by them alone, is not intended to confer upon any third party any rights or remedies hereunder, and shall not be construed as for the benefit of any third party; provided, however, that (i) the Agent shall be permitted, in its sole discretion, to pay or to direct the Guarantor to pay any and all amounts payable pursuant to this Agreement to any Lender or any third party, and (ii) each of the Lender Parties may enforce the provisions of Section 12 of this Agreement.

 

 

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(g)         EACH PARTY HERETO, FOR ITSELF AND ITS AFFILIATES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE ACTIONS OF THE PARTIES HERETO OR THEIR RESPECTIVE AFFILIATES PURSUANT TO THIS AGREEMENT IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF AND THEREOF. THE PARTIES AGREE THAT ANY SUCH ACTION OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

 

14.           Miscellaneous.

 

(a)         This Agreement may not be modified or amended except by an instrument or instruments in writing signed by each of the parties hereto and, with respect to any amendment or modification of Section 11, each of JPMorgan Chase Bank, N.A. and Bank of America, N.A.

 

(b)         All notices and other communications hereunder will be in writing and given by certified or registered mail, return receipt requested, nationally recognized overnight delivery service, such as Federal Express or facsimile (or like transmission) with confirmation of transmission by the transmitting equipment or personal delivery against receipt to the party to whim it is given, in each case, at such party’s address or facsimile number set forth below or such other address or facsimile number as such party may hereafter specify by notice to the other parties hereto given in accordance herewith. Any such notice or other communication shall be deemed to have been given as of the date so personally delivered or transmitted by facsimile or like transmission (with confirmation of receipt), on the next business day when sent by overnight delivery services or five days after the date so mailed if by certified or registered mail:

 

If to the Guarantor:

[____________]

with a copy to:

[____________]

If to the Agent:

 

JPMorgan Chase Bank, N.A., as Agent

277 Park Avenue

New York, NY 10172

Attn:  Marc Costantino

Telecopy:  212-622-8167

 

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(c)           If any term or provision of this Agreement, or the application thereof to any Person or circumstance, shall to any extent be held invalid or unenforceable in any jurisdiction, then (i) as to such jurisdiction, the remainder of this Agreement, or the application of such term or provision to Persons or circumstances other than those as to which such term or provision is held invalid or unenforceable in such jurisdiction, shall not be affected thereby, (ii) the court making such determination shall have the power to reduce the scope, duration, area or applicability of such provision, to delete specific words or phrases, or to replace any invalid or unenforceable provision with a provision that is valid and enforceable and comes closest to expressing the intention of the invalid or unenforceable provision, and (iii) each remaining term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by applicable law. Any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

(d)           This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and will become effective when one or more counterparts have been signed by a party and delivered to the other parties.  Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 14(d), provided that receipt of copies of such counterparts is confirmed.

 

[The next page is the signature page]

 

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IN WITNESS WHEREOF, the Guarantor has executed this Agreement as of the date first above written.

 

[GUARANTOR]
By:
	Name:
	Title:

ACCEPTED AND AGREED TO:
JPMORGAN CHASE BANK, N.A., as Agent
By:
Name:
Title:

 

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EXHIBIT C

NET WORKING CAPITAL LINE ITEMS

 

C-1

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EXHIBIT D

NET OPERATING INCOME LINE ITEMS

 

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EXHIBIT E

FORM OF LIMITED LIABILITY COMPANY OPERATING AGREEMENT

 

THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT of Marco LP Units, LLC, a Delaware limited liability company (the “Company”), is made, entered into and effective as of [l] [l], 2009 (this “Agreement”), by and among LP Units Manager, LLC, a Delaware limited liability company (the “Manager”) and wholly owned subsidiary of Simon Property Group, L.P. (“Parent OP”) and the Persons whose names appear on the signature pages of this Agreement as members of the Company (each, a “Member”, and, collectively, the “Members”).

 

WHEREAS, the Company was formed as a limited liability company pursuant to the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.), as amended (the “Act”) by the filing of the Certificate of Formation of the Company (the “Certificate”) with the Secretary of State of the State of Delaware on December 4, 2009; and

 

WHEREAS, the Company was formed under the laws of the State of Delaware in connection with the closing of the transactions contemplated by the Contribution Agreement for the sole purpose of holding, owning, managing and disposing of the Parent OP Units issued pursuant to the terms of the Contribution Agreement which are being contributed to the Company, subject to the terms and conditions of this Agreement;

 

WHEREAS, the parties hereto desire to provide for the respective rights, obligations and interests of the Members and the Manager to each other and to the Company and the terms and conditions on which the Company will conduct business in this Agreement; and

 

WHEREAS, this Agreement shall apply to and govern the management and operation of the Company from the date hereof and shall bind each and every present and future Manager and Member of the Company.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE 1

DEFINITIONS AND RULES OF CONSTRUCTION

 

1.1.          Certain Definitions.  Unless otherwise indicated, capitalized terms used in this Agreement and not otherwise defined herein shall have the respective meanings ascribed thereto in Annex A hereto, which is hereby incorporated into this Agreement as if set forth in full herein, notwithstanding any contrary or inconsistent definition contained in the Act.

 

1.2.          Other Terms.  Other terms may be defined elsewhere in the text of this Agreement and, unless otherwise indicated, shall have such meaning throughout this Agreement.

 

E-1

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1.3.          Construction; Interpretation.  The term “this Agreement” means this Limited Liability Company Operating Agreement together with all Schedules and exhibits hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof.  The headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.  Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, including, without limitation, the Schedules and exhibits, and not to any particular section, subsection, paragraph, subparagraph or clause contained in this Agreement, (b) masculine gender shall also include the feminine and neutral genders, and vice versa, (c) words importing the singular shall also include the plural, and vice versa and (d) the word “contributed” includes anything that is contributed directly by a Person or anything that is contributed on behalf of, or for the benefit of, such person or is otherwise deemed to have been contributed by such Person pursuant to the Contribution Agreement or any other agreement.

 

ARTICLE 2

ORGANIZATION OF THE COMPANY

 

2.1.          Formation.  The Members hereby acknowledge the formation of the Company as a limited liability company pursuant to the Act by virtue of the filing of the Certificate with the Secretary of State of the State of Delaware.

 

2.2.          Term.  The Company commenced on the date of the filing of the Certificate with the Secretary of State of the State of Delaware.  The Company shall continue until dissolved pursuant to the provisions hereof.

 

2.3.          Name.  The business of the Company shall be conducted under the name “Marco LP Units, LLC”; provided, that such name shall be subject to change, from time to time, by the Members holding a majority of the outstanding Company Units and with the written consent of the Manager, which consent shall not be unreasonably withheld or delayed.

 

2.4.          Principal Place of Business.  The principal place of business of the Company shall be at 225 West Washington Street, Indianapolis, Indiana 46204 or such other place as the Manager shall determine.  The Company may maintain such other office or offices for the transaction of business at such other locations as the Manager may deem advisable.

 

2.5.          Registered Office and Registered Agent.  The street address of the initial registered office of the Company shall be Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 and the Company’s registered agent at such address shall be The Corporation Trust Company.  The Manager may hereafter change the registered agent and registered office and, if necessary, the Company shall amend the Certificate in accordance with the applicable requirements of the Act to reflect such change.

 

 

E-2

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2.7.        Single Purpose Limitations.  Notwithstanding any provision hereof or of any other document governing the formation, management or operation of the Company to the contrary, except to the extent expressly permitted hereunder, the Company shall not, and the Manager shall not cause or permit the Company to, in each case without the consent of the Members holding a majority of the outstanding Company Units:

 

(a)         incur or assume any Liability;

 

(b)         pledge any of its assets for the benefit of any other Person;

 

(c)         consolidate or merge with or into any other Person, convert into any other type of Person or convey or transfer any of its properties or assets;

 

(d)         to the fullest extent permitted by Law, be dissolved, liquidated or terminated; or

 

(e)         agree or otherwise commit to take any of the foregoing actions.

 

2.8.        Limitations on the Company’s Activities.  This Section 2.8 is being adopted in order to comply with certain provisions required in order to qualify the Company as a “special purpose” entity.

 

(a)         The Manager shall cause the Company to do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises, and the Manager also shall cause the Company to:

 

(i)           at all times hold itself out to the public as a legal entity separate from the Manager, the Members and any other Person;

 

(ii)          file its own tax returns, if any, as may be required under applicable Law, and pay any taxes so required to be paid under applicable Law;

 

(iii)         not commingle its assets with assets of any other Person;

 

(iv)        conduct its business in its own name and strictly comply with all organizational formalities to maintain its separate existence;

 

(v)         maintain an arm’s length relationship with any Affiliate upon terms that are commercially reasonable and that are no less favorable to the Company than could be obtained in a comparable arm’s length transaction with an unrelated Person;

 

(vi)        not hold out its credit or assets as being available to satisfy the obligations of others, or Guarantee or otherwise obligate itself with respect to the Debts of any other Person;

 

E-3

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(vii)       except as contemplated hereby, not make any loans or advances to any other Person; provided that it may invest its funds in interest bearing accounts held by any bank that is not its Affiliate;

 

(viii)      observe all limited liability company formalities;

 

(ix)         correct any known misunderstanding regarding its separate identity; and

 

(x)          maintain adequate capital in light of its contemplated business purpose, transactions and liabilities, if any.

 

(b)         The failure of the Company, or the Manager on behalf of the Company, to comply with any of the foregoing covenants or any other covenants contained in this Agreement shall not affect the status of the Company as a separate legal entity or the limited liability of the Members.

 

(c)         Unless approved in writing by the Members holding a majority of the Company Units, the Manager also shall not cause or permit the Company to:

 

(i)           Guarantee any obligation of any Person, including, without limitation, any Affiliate of the Company;

 

(ii)          except to the extent expressly permitted hereunder, enter into any transaction with any Affiliate of the Company;

 

(iii)         engage in any business unrelated to the purpose stated in Section 2.6;

 

(iv)        have any assets other than the Parent OP Units and those related to the purpose stated in Section 2.6;

 

(v)         except to the extent expressly permitted hereunder, incur, create or assume any Debt;

 

(vi)        make or permit to remain outstanding any loan or advance to, or own or acquire any stock or securities of, any Person other than the Parent OP Units and Securities, if any, issuable in respect thereof;

 

(vii)       except to the extent expressly permitted hereunder, execute or enter into any contract or agreement, whether oral or written (other this Agreement);

 

(viii)      hire any employee or adopt, enter into or agree to comply with any other agreement regarding the employment of any Person;

 

(ix)         commence, settle or compromise any Action;

 

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(x)          issue any units or other securities of the Company other than pursuant to Section 5.1(d);

 

(xi)         enter into any joint venture or partnership or other similar agreement or arrangement;

 

(xii)        form, acquire or hold any Subsidiary; or

 

(xiii)       except to the extent expressly permitted hereunder, agree or otherwise commit to take any of the foregoing actions.

 

ARTICLE 3

MEMBERS

 

3.1.        Names.  The name and business or residence address of each Member of the Company are as set forth on Schedule I hereto, which shall be amended or otherwise modified by the Manager to the extent required.

 

3.2.        Action.  Any action permitted or required by applicable Law or this Agreement to be taken at a meeting of the Members may be taken without a meeting if a consent in writing, setting forth the action to be taken, is signed by the Members necessary to approve any action at a meeting if one were called.  Such consent shall have the same force and effect as a vote at a meeting and may be stated as such in any document or instrument filed with the Secretary of State of Delaware, and the execution of such consent shall constitute attendance or presence in person at a meeting of the Members.

 

3.3.        Limited Power and Duties of the Members.  The Members shall have no power to participate in the management of the Company except as expressly authorized by this Agreement or as expressly required by the Act.  Unless expressly and duly authorized in writing to do so by the Manager, no Member, in its capacity as such, shall have any power or authority to bind or act on behalf of the Company in any way, to pledge the Company’s credit or to render the Company liable for any purpose.

 

ARTICLE 4

MANAGEMENT AND OPERATIONS OF THE COMPANY.

 

4.1.        Management of the Company’s Affairs.

 

(a)         The management of the Company shall be vested exclusively in LP Units Manager, LLC, which is hereby appointed as the Manager effective as of the date hereof.  Subject to the terms and conditions of this Agreement, the Manager shall have full and exclusive power and discretion to, and shall, manage the business and affairs of the Company only in accordance with this Agreement.  The Manager shall not resign, may not assign or delegate its responsibilities to any other Person, and shall serve as such until such time, if any, as the Manager is otherwise removed and replaced or the Company is dissolved in accordance with the terms of this Agreement.  The Manager shall devote such time to the affairs of the Company as is reasonably necessary to manage the Company as set forth in this Agreement.  Nothing in this Section 4.1 eliminates, limits or otherwise modifies any of the express terms of this Agreement or any liability, obligation or covenant of any Person hereunder.

 

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(b)         The Manager shall have no authority to take or authorize the taking of any action in contravention of any express term of this Agreement.

 

(c)         No Member or Members shall have any power or authority to remove the Manager for any reason.

 

(d)         No Person dealing with the Company or the Manager shall be required to determine, and any such Person may conclusively assume and rely upon, the authority of the Manager to execute any instrument or make any undertaking on behalf of the Company.  No Person dealing with the Company or the Manager shall be required to determine any facts or circumstances bearing upon the existence of such authority.  Without limitation of the foregoing, any Person dealing with the Company or the Manager is entitled to rely upon a certificate signed by the Manager as to:

 

(i)           the identity of the Members;

 

(ii)          the existence or non-existence of any fact or facts that constitute a condition precedent to acts by the Manager or are in any other manner germane to the affairs of the Company;

 

(iii)         the identity of Persons who are authorized to execute and deliver any instrument or document of or on behalf of the Company; or

 

(iv)        any act or failure to act by the Company or any other matter whatsoever involving the Company or the Members.

 

4.2.        Payment of Expenses.  The Manager shall, on behalf of the Company, pay for any and all costs, fees and expenses incurred or payable by the Company, including, without limitation, (i) any administrative expenses, including, without limitation, fees of accountants, auditors and attorneys, incurred by the Company and (ii) any franchise or similar taxes payable to the Secretary of State of the State of Delaware in order to maintain the good standing of the Company in the State of Delaware.

 

4.3.        Entry into Tax Matters Agreements.  Notwithstanding any other provision of this Agreement to the contrary, the Company is authorized to enter into the DL Tax Matters Agreement and the LVP Tax Matters Agreement and to perform all of the Company’s obligations, and to exercise all of the Company’s rights, pursuant to the DL Tax Matters Agreement and the LVP Tax Matters Agreement.

 

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ARTICLE 5

COMPANY UNITS; CAPITAL CONTRIBUTIONS

 

5.1.        Capital Structure.

 

(a)         The Company is authorized to issue equity interests in the Company designated as “Company Units,” which shall constitute limited liability company interests under the Act (the “Company Units”).  As of the date hereof, the Company has no outstanding Company Units.  Pursuant to the terms of the Contribution Agreement, at the Closing the Company shall issue Company Units and Schedule I hereto shall be revised to reflect such issuance.  The Company Units will have the powers, preferences, rights, qualifications, limitations and restrictions as set forth herein.  Each Company Unit is intended to represent the same rights, powers, and obligations of the Parent OP Unit that will be deemed to be contributed by a Member to the Company (which will be set forth on Schedule I hereto), with the intention that the capital structure will represent, to the maximum extent possible, the same right to receive allocations of income, gain, loss, deduction and credit (for purposes of determining both Capital Accounts and for U.S. federal income tax purposes) and distributions that a Member would possess if the Member directly owned the Parent OP Units to be contributed to the Company.

 

(b)         The name of each Member and the number of Company Units held by each such Member as well as the Parent OP Units to be held by the Company for the benefit of such Member will be set forth on Schedule I hereto, as such schedule may be amended from time to time to reflect, among other things the admission of new Members, additional issuances of Company Units to the Members and transfers of Company Units.

 

(c)         The Company Units will not be certificated and will be represented solely by book-entry.  The Manager shall maintain a list of the holders of Company Units and the Parent OP Units to be contributed by such Member in the same manner as the Parent OP maintains a list of the holders of Parent OP Units.  The Manager shall maintain this list in a manner that shall separately track and identify the Company Units of a Member as corresponding to the Parent OP Units to be contributed by such Member.

 

(d)         In the event of any change in the outstanding number of Parent OP Units by reason of any share dividend, split, reverse split, recapitalization, merger, consolidation or combination by the Parent OP, the number of Company Units to be held by each Member shall be proportionately adjusted such that, to the extent possible, one Company Unit remains the equivalent of one Parent OP Unit without dilution or accretion.

 

5.2.        Capital Contributions.

 

(a)         Except as otherwise expressly provided in this Agreement or the Act, no Manager or Member shall be obligated to make any contribution of capital to the Company or have any liability for the debts and obligations of the Company.  This Section 5.2 is in furtherance of, and not in limitation of, Section 18-303(a) of the Act.

 

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5.3.        Capital Accounts.

 

(a)         A separate account (each a “Capital Account”) shall be established and maintained for each Member, in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv), which shall be increased by (i) the amount of any cash contributed to the Company by such Member (ii) the fair market value of any property contributed to the Company by such Member (as determined by in good faith by the Manager) and (iii) the amount of any income, gain or credit allocated to such Member pursuant to Article 7, and decreased by (i) the amount of any loss or deduction allocated to such Member pursuant to Article 7, (ii) the amount of any cash distributed to such Member and (iii) the fair market value of any asset distributed in kind to such Member (as determined by in good faith by the Manager) including any Parent REIT Shares.  The Manager’s determination of such Capital Accounts shall be binding upon all parties.  The Manager shall have authority to choose from all available tax accounting methodologies.

 

(b)         The Capital Accounts of the Members as of the date of this Agreement are set forth in Schedule I hereto which will be amended upon the Closing to reflect the contribution of the Parent OP Units pursuant to the Contribution Agreement.

 

(c)         Withdrawal of Contributions.  No Member shall be entitled to withdraw any cash or property or other sums from its Capital Account or to receive any distributions from the Company except as expressly provided in this Agreement.  Except as set forth in Article 6, no Member shall have the right to demand to receive any cash or assets for its Company Units or the Parent OP Units contributed by such Member.

 

(d)         No Interest.  No member shall be entitled to interest on any cash or property or other sums from its Capital Account and no such interest shall be accrued.

 

5.4.        Voting Rights.

 

(a)         Except as otherwise expressly provided in this Agreement or the Act, the Company Units shall not have any voting rights.

 

(b)         With respect to any matter put to a vote of holders of Parent OP Units or as to which the consent of the holders of Parent OP Units is sought, the Manager shall vote or provide its consent with respect to all of the Parent OP Units held by the Company in accordance with the vote or consent of a majority of the Parent OP Units not held by the Parent OP General Partner or by the Company voting or providing consent with respect to such matter; provided; however, that any amendments to the Parent OP Agreement requiring the consent of each holder of Parent OP Units shall not be consented to by the Manager unless the Member holding the Company Units consents with respect to the Parent OP Units it would have the right to receive from the Company upon the exercise of the Conversion Right, as defined in Section 6.1(a) below.

 

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ARTICLE 6

CONVERSION OF COMPANY UNITS

 

6.1.        Conversion at the Option of the Members.

 

(a)         Each of the Members is hereby granted the right (the “Conversion Right”) to exchange all or any portion of such Member’s Company Units for the Parent OP Units that such Member contributed to the Company at any time or from time to time, on the terms and subject to the conditions and restrictions contained in this Section 6.1.  The Conversion Right may be exercised by a Member (a “Converting Member”) by delivery to the Manager of both (i) a notice in the form of Annex B hereto (a “Company Unit Exercise Notice”), which notice shall specify the whole number of such Member’s Company Units that are to be exchanged by such Converting Member (the “Converted Units” and (ii) a signed Notice of Conversion in the form attached to the Parent OP Agreement (a copy of which is attached to Annex B for the convenience of the Converting Member) pursuant to which the Converting Member elects to convert the Parent OP Units received in respect of the Converted Units into cash or Parent REIT Shares, as selected by Parent REIT pursuant to Article XI of the Parent OP Agreement.  Once delivered, the Company Unit Exercise Notice and such Notice of Conversion shall be irrevocable.

 

(b)         Promptly after receipt of a Company Unit Exercise Notice, the Manager shall effect, on behalf of the Converting Member, the conversion of each Parent OP Unit that such Member contributed to the Company and has elected to convert pursuant to Section 6.1(a) such that each Converting Member shall receive all or a portion of the Parent OP Units (and any securities issued by Parent OP in respect of such Parent OP Units) such Member contributed to the Company.  Upon receipt of the Parent OP Units pursuant to the preceding sentence of this Section 6.1(b), each Converting Member shall be obligated pursuant to the Notice of Conversion described in Section 6.1(a)(ii) to immediately exercise its rights pursuant to Article XI of the Parent OP Agreement to convert all of its Parent OP Units into Parent REIT Shares or cash (as selected by Parent REIT pursuant to Article XI of the Parent OP Agreement).

 

(c)         The closing of the exchange of the Converted Units and the conversion of the underlying Parent OP Units, which such Member contributed to the Company, shall be held at a location and on a date agreed to by the Manager and the Converting Members, which date shall be no later than the date specified for closing by such Converting Member in the Company Unit Exercise Notice.

 

(d)         At the closing of the exchange of the Converted Units and the conversion of the underlying Parent OP Units, the transfer of Parent OP Units, which such Member contributed to the Company, to the Converting Member shall be accompanied by proper instruments of transfer and assignment and by the delivery of representations and warranties of (A) the Converting Member with respect to its due authority to sell all of the right, title and interest in and to such Converted Units to the Company and with respect to the ownership by such Converting Member of such Converted Units, free and clear of all Liens, and (B) the Company with respect to its due authority to acquire such Converted Units.

 

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6.2.        Redemption at the Option of the Company.

 

(a)         At any time, or from time to time, following the date hereof, the Company shall have the right (the “Redemption Right”) to redeem all, but not less than all, of the outstanding Company Units held by the Members in exchange for the Parent OP Units held by the Company which were contributed by such Members (and any securities issued by Parent OP with respect to such Parent OP Units) on the terms and subject to the conditions and restrictions contained in this Section 6.2.  The Redemption Right may be exercised by the Company upon delivery by the Manager to the Members of a notice in the form of Annex C hereto (a “Redemption Notice”), which notice shall state that all of such Member’s Company Units are to be redeemed by the Company in exchange for such Parent OP Units (the “Redeemed Units”).

 

(b)         Promptly after mailing a Redemption Notice, the Manager shall effect the exchange of the Redeemed Units held by the applicable Member for the Parent OP Units held by the Company which were contributed by such Member (and any securities issued by Parent OP with respect to such Parent OP Units) (the “Redemption Consideration”).

 

(c)         The closing of the redemption of the Redeemed Units shall be held at a location and on a date selected by the Manager, which date (the “Redemption Settlement Date”) shall between ten (10) and thirty (30) days after the date of the Redemption Notice.

 

(d)         At the closing of the redemption of the Redeemed Units, payment of the Redemption Consideration shall be accompanied by proper instruments of transfer and assignment and by the delivery of representations and warranties of (A) each of the Members with respect to its due authority to sell all of the right, title and interest in and to such Member’s Redeemed Units to the Company and with respect to the ownership by such Member of such Redeemed Units, free and clear of all Liens, and (B) the Company with respect to its due authority to acquire such Redeemed Units for the Redemption Consideration.

 

ARTICLE 7

DISTRIBUTIONS AND ALLOCATIONS

 

7.1.        Allocations of Profits and Losses.  Each Member shall be allocated each item of income, gain, loss, deduction or credit allocated by Parent OP with respect to the Parent OP Units that such Member contributed to the Company, as if such Member continued to directly own such Parent OP Units.  The Manager shall allocate any item of income, gain, loss, deduction or credit of the Company not attributable to the Parent OP Units pro rata in accordance with the number of Parent OP Units contributed by each Member.

 

7.2.        Distributions Generally.  Except as set forth in Article 6 and Section 7.3, distributions from the Company to the Members shall be made at such times as the Manager shall determine.

 

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7.3.        Required Distributions.  Subject to Section 7.4, except as set forth in Article 6, (i) all cash dividends and other cash distributions received by the Company with respect to the Parent OP Units contributed by a Member; (ii) all dividends and distributions of securities issued by any Person other than Parent OP received by the Company with respect to the Parent OP Units contributed by a Member; and (iii) all dividends and distributions of securities issued by the Parent OP that are not Parent OP Units (as such term is defined in the Contribution Agreement), in each case, shall be promptly, and in any event within two Business Days of receipt of such dividend or distribution, distributed to the Member that contributed such Parent OP Units as if such Member continued to directly own such Parent OP Units.  For the avoidance of doubt, any Parent OP Units shall be received by the Company in compliance with Section 5.1(d).

 

7.4.        Withholding.   Each Member hereby authorizes the Company to withhold or pay on behalf of or with respect to such Member any amount of federal, state, local or foreign taxes that the Manager determines the Company is required to withhold or pay with respect to any amount distributable or allocable to such Member pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Company pursuant to Code Sections 1441, 1442, 1445, or 1446.  Any amount paid by the Company on behalf of or with respect to a Member will be deemed to have been actually distributed to such Member and paid by such Member to the applicable taxing authority. Nothing in this Section 7.4 shall create any obligation on the Manager to advance funds to the Company or to borrow funds from third parties in order to make payments on account of any liability of the Company under a withholding tax act; provided, however, the Manager may borrow funds for such purpose notwithstanding the limitations imposed on the Manger by Section 3.8.  If the Manager borrows funds from third parties in order to make payments to a taxing authority under this Section 7.4, the Member on whose behalf such taxes are paid will be required to reimburse the Manager for any and all interest payments made on such amount, which shall be repaid through withholding of subsequent distributions to such Member.

 

7.5.        Tax Matters Member.  The Company hereby designates the Manager as the tax matters partner of the Company as provided in the Treasury Regulations pursuant to Section 6231 of the Code (the “Tax Matters Member”).  The Manager shall pay all expenses incurred by it in connection with service as Tax Matters Member.  The Manager shall have all rights permitted to be granted to a tax matters partner.  Each Member shall, if necessary, execute any power of attorney to the Manager in its capacity as Tax Matters Member to fulfill its obligations with respect to tax matters on behalf of the Company.  The Manager shall at all times keep the Members reasonably informed of the commencement and progress of any audit or other proceeding with respect to Taxes and shall permit any Member, at its own expense, to participate in such proceeding.

 

ARTICLE 8

ACCOUNTING AND TAXATION

 

8.1.        Fiscal Year.  The Company shall keep appropriate books and records and the fiscal year of the Company shall commence on January 1 and end on December 31.

 

8.2.        Maintenance of Books and Records.  At all times during the continuance of the Company, the Manager shall keep or cause to be kept, at the principal place of business of the Company referred to in Section 2.4, full and complete books of account.  The books of account shall be maintained in a manner that provides sufficient assurance that:

 

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(a)         transactions of the Company are executed in accordance with the general or specific authorization of the Manager consistent with the provisions of this Agreement; and

 

(b)         transactions of the Company are recorded in such form and manner as will permit preparation of federal, state and local income and franchise tax returns and information returns in accordance with this Agreement and as required by Law, permit preparation of the Company’s financial statements in accordance with GAAP and as otherwise set forth herein and the provisions of the reports required to be provided hereunder, and maintain accountability for the Company’s assets.

 

8.3.        Form W-9.  Each Member shall deliver to the Company at or prior to the Closing, a completed and executed Form W-8 or IRS Form W-9, as applicable, with respect to such Member. Notwithstanding anything to the contrary herein, in the event a Member has not executed and delivered to the Company the required IRS Form W-8 or IRS Form W-9, as applicable, Parent OP, pursuant to the Contribution Agreement, and the Company shall withhold taxes in any amount necessary to comply with applicable Law.

 

8.4.        Partnership Status.  The Members intend that the Company shall be treated as a partnership for U.S. federal income, state and local income tax purposes to the extent such treatment is available, and agree to take such actions as may be necessary to receive and maintain such treatment and refrain from taking any actions inconsistent thereof.

 

8.5.        Records Retention.  The Manager shall, upon reasonable advance notice and during normal business hours, make available to the Members for review and copying, at the Manager’s expense, all books and records of the Company and shall retain such books and records of a period of 3 years following the dissolution of the Company pursuant to Article 10 of this Agreement.

 

ARTICLE 9

TRANSFER OF COMPANY UNITS/ADMISSION OF NEW MEMBERS

 

9.1.        Transfers.  No Member may directly or indirectly, Transfer all or any portion of its Company Units or any of its rights or interests under this Agreement to any Person without the consent of the Manager, which consent may be withheld or granted subject to such conditions as may be determined by the Manager in its sole discretion.

 

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(a)         Notwithstanding the foregoing, but subject to the provisions of Section 9.2 hereof, any Member may at any time, without the consent of the Manager, (i) Transfer all or a portion of its Company Units to an Affiliate of such Member, or (ii) other than LVP OP and Pro-DFJV, Pledge some or all of its Company Units to any Institutional Lender.  Any Transfer to an Affiliate pursuant to clause (i) and any Transfer to a pledgee of Company Units pursuant to clause (ii) may be made without the consent of the Manager but, except as provided in subsequent provisions of this Section 9.1, such transferee or such pledgee shall hold the Company Units so transferred to it (and shall be admitted to the Company as a Member) subject to all the restrictions set forth in this Section 9.1.  It is a condition to any Transfer otherwise permitted under any provision of this Section 9.1 that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Member under this Agreement with respect to such transferred Company Units, as the case may be, arising after the effective date of the Transfer and no such Transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Member are assumed by a successor corporation by operation of law) shall relieve the transferor Member of its obligations under this Agreement prior to the effective date of such Transfer.  Upon any such Transfer or Pledge permitted under this Section 9.1, the transferee or, upon foreclosure on the Company Units, as the case may be, each Institutional Lender which is the pledgee shall be admitted as a Member and shall succeed to all of the rights of the transferor Member under this Agreement in the place and stead of such transferor Member.  Any transferee, whether or not admitted as a Member, shall take subject to the obligations of the transferor hereunder.  No transferee pursuant to a Transfer which is not expressly permitted under this Section 9.1 or is not consented to by the Manager, whether by a voluntary Transfer, by operation of law or otherwise, shall have any rights hereunder, other than the right to receive such portion of the distributions and allocations of profits and losses made by the Company as are allocable to the Company Units, as the case may be, so transferred.

 

9.2.        Restrictions on Transfer.  In addition to any other restrictions on Transfer herein contained, in no event may any Transfer or assignment of a Company Unit by any Member be made (i) to any Person which lacks the legal right, power or capacity to own a Company Unit; (ii) in violation of applicable Law; (iii) if such Transfer would immediately or with the passage of time cause the Parent OP General Partner to fail to comply with the REIT Requirements (as defined in the Parent OP Agreement), such determination to be made assuming that the Parent OP General Partner does comply with the REIT Requirements immediately prior to the proposed Transfer; (iv) if such Transfer would cause the Company to become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in Section 3(14) of ERISA) or a “disqualified person” (as defined in Section 4975(e) of the Code); (v) if such Transfer would, in the opinion of counsel to the Company, cause any portion of the underlying assets of the Company to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations Section 2510.3-101; (vi) if such Transfer would result in a deemed distribution to any Member attributable to a failure to meet the requirements of Regulations Section l.752-2(d)(l), unless such Member consents thereto, (vii) if such Transfer would cause any lender to the Company to hold in excess of ten (10) percent of the Company Units that would, pursuant to the regulations under Section 752 of the Code or any successor provision, cause a loan by such a lender to constitute “Partner Nonrecourse Debt”, (viii) if such Transfer, other than to an Affiliate, is of Company Units the value of which would have been less than $20,000 when issued, (ix) if such Transfer would, in the opinion of counsel to the Company, cause the Company to cease to be classified as a partnership for U.S. federal income tax purposes or (x) if such Transfer is effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704(b) of the Code.  Notwithstanding anything to the contrary in this Agreement, the issuance, sale, transfer or other disposition (whether by merger, consolidation or otherwise) of equity securities of LVP REIT or LVP OP shall not be a “Transfer” for purposes of this Agreement and shall not be subject to any restrictions hereunder.

 

9.3.        Effect of Transfer Not in Accordance with Agreement.  Any Transfer of any direct or indirect interest in the Company in violation of this Article 9 shall be null and void ab initio, and of no force and effect.

 

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ARTICLE 10

DISSOLUTION AND WINDING-UP OF THE COMPANY

 

10.1.      Dissolution.  A dissolution of the Company shall take place upon the first to occur of the following:

 

(a)         the determination of the Manager to dissolve the Company at any time after there are no outstanding Company Units;

 

(b)         the entry of a decree of judicial dissolution pursuant to Section 18-802 of the Act; or

 

(c)         without limitation of clause (a) above, a Dissolution Event or an Insolvency Event occurs with respect to the Manager or a Person that Controls Manager.

 

10.2.      Winding-Up Procedures.  If a dissolution of the Company pursuant to Section 10.1 occurs, subject to the Company’s compliance with its obligation under the other terms and conditions of this Agreement, the Manager shall proceed as promptly as practicable to wind up the affairs of the Company in an orderly and businesslike manner.  A final accounting shall be made by the Manager.  As part of the winding up of the affairs of the Company, the following steps will be taken:

 

(a)         The assets of the Company, other than the Parent OP Units and any Required Distributions, shall be sold except to the extent that some or all of the assets of the Company are retained by the Company for distribution to the Members as hereinafter provided.

 

(b)         The Company shall comply with Section 18-804(b) of the Act.

 

(c)         Distributions of the assets of the Company after a dissolution of the Company shall be conducted as follows:

 

(i)           first, to creditors and Members who are creditors, to the extent otherwise permitted by Law, in satisfaction of liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof) other than liabilities for which reasonable provision for payment has been made and liabilities for distributions to the Members under Section 18-601 of the Act;

 

(ii)          next, to the Members in satisfaction of liabilities (if any) for distributions under Section 18-601 of the Act; and

 

(iii)         finally, to the Members in proportion to their respective Percentage Interests, provided that, to the maximum extent possible, the Company shall distribute to each Member the Parent OP Units contributed to the Company by such Member.

 

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ARTICLE 11

WITHDRAWAL

 

11.1.      Withdrawal.  No Member shall have the right to withdraw from the Company except with the consent of the Manager and upon such terms and conditions as may be specifically agreed upon between the Manager and the withdrawing Member.

 

ARTICLE 12

LIABILITY; EXCULPATION

 

12.1.      Liability of Manager.

 

(a)         The Manager may rely, and shall be protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties.

 

(b)         The Manager may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the opinion of such Persons as to matters that the Manager reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.

 

(c)         The Manager shall not be liable to the Company or any Member for any loss, damage or claim (or any expenses or costs associated therewith) incurred by reason of any act or omission performed or omitted to be performed by the Manager other than as a result of the Manager’s gross negligence or willful misconduct.

 

(d)         The Manager’s obligations to the Company and to the Members are limited to the express obligations described in this Agreement.

 

(e)         The Members acknowledge and agree that the relationship of the Manager to the Company and the Members is, to the maximum extent permissible under the Act, contractual in nature and not fiduciary.  Accordingly, pursuant to Section 18-1101 of the Act, the Members agree that to the maximum extent permissible under the Act, the Manager shall not have any fiduciary or any other similar duties or obligations to any Member or any other Person by virtue of the Manager’s actions in its capacity as such (or, if complete elimination of such duties and obligations is deemed to be not permissible under the Act, then such duties and obligations shall be reduced to the maximum extent permissible).

 

(f)          The provisions of this Section 12.1 are for the benefit of the Manager.  This Section 12.1 may be amended, modified or repealed in the manner set forth in Section 14.6 of this Agreement, but any amendment, modification or repeal of this Section 12.1 or any provision hereof (including as a result of any amendment, modification or repeal of the Act) shall (unless the Manager shall expressly have consented to such amendment, modification or repeal) be prospective only and shall (unless the Manager shall expressly have consented to such amendment, modification or repeal) not in any way affect the limitations on liability under this Section 12.1 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 be asserted.

 

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(g)         The limitations and exculpation afforded by each provision of this Section 12.1 are cumulative and not exclusive. Nothing in this Section 12.1 is intended, or shall be deemed, to permit conduct that would otherwise conduct that, even disregarding the terms hereof otherwise would be actionable by the Company or the Members.

 

12.2.      Liability of the Members.  Except as otherwise required in the Act, the debts, obligations, and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Members shall not be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or participating in the management of the Company.  The failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business or affairs under the Act or this Agreement shall not be grounds for imposing personal liability on the Members for liabilities of the Company.

 

ARTICLE 13

COVENANTS

 

13.1.      No Individual Authority.  Accept as otherwise expressly provided in this Agreement, no Member shall have any authority to act for, or undertake or assume any obligations or responsibility on behalf of the Company.

 

13.2.      Separateness.  The Company shall take all necessary actions to hold itself as an entity separate and distinct from any other person or entity (including Affiliates), including, without limitation, by: maintaining books, records and bank accounts separate and distinct from the books, records and bank accounts of any other person or entity; not commingling any of its assets or liability with the assets or liabilities of any other person or entity; paying its own liabilities and expenses only out of its own funds; not guaranteeing the indebtedness of any other person or entity; holding its assets in it own name; not pledging its assets for the benefit of any other person or entity; using its own letterhead and checks; causing its representatives, employees or agents to hold themselves out to third parties as representatives, employees or agents of the Company; not assuming the obligations of its Affiliates; and not holding out its credit as being available to satisfy the obligations of any other person or entity.

 

13.3.      Indemnification.  Each Member agrees to indemnify and hold harmless the other Members against all claims, demands, losses, damages, liabilities, lawsuits and other proceedings, judgments, awards, costs and expenses (including reasonable attorneys’ fees, disbursements and court costs) to the extent the same arise directly or indirectly from any material inaccuracy in or material breach of any covenant, representation or warranty, as applicable, of such Member made pursuant to this Agreement.

 

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13.4.      Specific Performance.  Each of the Members and the Manager shall be entitled to an injunction or injunctions, without the necessity of posting bond, to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in addition to any other remedy to which such party is entitled at law or in equity.  In furtherance thereof, each Member and the Manager waives (and agrees not to assert) (i) any defense in any action for specific performance that a remedy at law would be adequate, and (ii) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief.

 

ARTICLE 14

MISCELLANEOUS

 

14.1.      Investment Representations.

 

(a)         Each Member acknowledges that it (i) has been given full and complete access to the Company and the Manager in connection with this Agreement and the transactions contemplated hereby, (ii) has had the opportunity to review all documents relevant to its decision to enter into this Agreement, and (iii) has had the opportunity to ask questions of the Company and the Manager concerning its investment in the Company and the transactions contemplated hereby.

 

(b)         Each Member acknowledges that it understands that the Company Units to be acquired by it hereunder will not be registered under the Securities Act in reliance upon the exemption afforded by Section 4(2) thereof for transactions by an issuer not involving any public offering, and will not be registered or qualified under any applicable state securities laws.  Each Member represents that (i) it is acquiring such Company Units for investment only and without any view toward distribution thereof, and it will not sell or otherwise dispose of such Company Units except in accordance with the terms hereof and in compliance with the registration requirements or exemption provisions of any applicable state securities laws, (ii) its economic circumstances are such that it is able to bear all risks of the investment in the Company Units for an indefinite period of time including the risk of a complete loss of its investment in the Company Units and (iii) it has knowledge and experience in financial and business matters sufficient to evaluate the risks of investment in the Company Units.  Each Member further acknowledges and represents that it has made its own independent investigation of the Company and the business conducted and proposed to be conducted by the Company, and that any information relating thereto furnished to the Member was supplied by or on behalf of the Company.

 

14.2.      Entire Agreement.  This Agreement, together with the Annexes and Schedules hereto (and any other agreements expressly contemplated hereby or thereby), constitutes the entire agreement and understanding, and supersedes all other prior agreements and understandings, both written and oral, between Member or its Affiliates or any of them and the Company with respect to the subject matter hereof.

 

14.3.      Governing Law; Jurisdiction.  THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION.  In the event of a direct conflict between the provisions of this Agreement and any mandatory, non-waivable provision of the Act, such provision of the Act shall control to the extent necessary to eliminate such direct conflict.  Nothing in this Agreement shall require any unlawful action or inaction by any Person.

 

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14.4.      Third Party Beneficiaries.  Subject to Section 12.1, (i) this Agreement is for the benefit solely of, and shall inure solely to the benefit of, the Members, the Manager and the Company and (ii) this Agreement is not enforceable by any Person (including any creditor of the Company or of the Members) other than the Members, the Manager and the Company.

 

14.5.      Expenses.  Except as may otherwise be expressly provided herein, the Manager and the Members shall pay their own expenses (including legal, accounting investment banker, broker or finders fees) incident to the negotiation and execution of this Agreement and the performance of its obligations hereunder.

 

14.6.      Waivers and Amendments.  This Agreement may only be amended or modified (including by merger, consolidation or otherwise), and the terms hereof may only be waived, upon the prior written approval of the Manager and the Members holding a majority of the outstanding Company Units; provided that, (a) to the extent any such amendment (or series of amendments) disproportionately affects in any materially adverse manner the rights of any Member relative to the rights of any other Member (taking into account the rights and obligations of such Member prior to giving effect to such amendment), then such amendment shall not be effective against such Member without the prior written consent of such Member and (b) prior to the issuance of Company Units, no amendment, modification or waiver shall be made without the prior written approval of the Manager and the Representative (as defined in the Contribution Agreement).  Except where a specific period for action or inaction is provided herein, no failure on the part of the Manager or a Member to exercise, and no delay on the part of the Manager or a Member in exercising, any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any waiver on the part of the Manager or a Member of any such right, power or privilege, or any single or partial exercise of any such right, power or privilege, preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

 

14.7.      Notices.  All notices, requests, demands, and other communications required or permitted to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be given by certified or registered mail, postage prepaid, or, delivered by hand or by nationally recognized air courier service, directed to the address of such Person set forth below:

 

if to the Company or the Manager, to:

 

  Marco LP Units, LLC

  225 West Washington Street

  Indianapolis, Indiana 46204

Attention:

James M. Barkley

Facsimile:

317.685.7377

 

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with a copy (which copy shall not constitute notice) to:

 

Fried, Frank, Harris, Shriver and Jacobson LLP

One New York Plaza

New York, New York 10004

Tel: 212.859.8980

Attention:

Peter S. Golden

John E. Sorkin

Facsimile:

212.859.4000

 

if to any Member, to such Member at the address set forth on Schedule I hereto:

 

with a copy (which copy shall not constitute notice) to:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019-6064

Attention:

Jeffrey D. Marell

Robert B. Schumer

Facsimile:

212.757.3990

 

Any such notice shall become effective when received (or receipt is refused) by the addressee, provided that any notice or communication that is received (or refused) other than during regular business hours of the recipient shall be deemed to have been given at the opening of business on the next business day of the recipient.  From time to time, any Person may designate a new address for purposes of notice hereunder by notice to such effect to the other Persons identified above.

 

14.8.      Counterparts; Facsimile Signatures.

 

(a)         This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall together constitute one and the same instrument.  It shall not be necessary for any counterpart to bear the signature of all parties hereto.

 

(b)         This Agreement and any amendments hereto, to the extent signed and delivered by facsimile or other electronic means, shall be treated in all manner and respects as an original agreement and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  No signatory to this Agreement shall raise the use of a facsimile machine or other electronic means to deliver a signature or the fact that any signature or agreement was transmitted or communicated through the use of a facsimile machine or other electronic means as a defense to the formation or enforceability of a contract and each such Person forever waives any such defense.

 

14.9.      Successors and Assigns.  Except as otherwise specifically provided in this Agreement, this Agreement shall be binding upon and inure to the benefit of Members and the Company and their respective Successors and Assignees.

 

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14.10.    Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall be ineffective, but such ineffectiveness shall be limited as follows: (i) if such provision is prohibited or unenforceable in such jurisdiction only as to a particular Person or Persons and/or under any particular circumstance or circumstances, such provision shall be ineffective, but only in such jurisdiction and only with respect to such particular Person or Persons and/or under such particular circumstance or circumstances, as the case may be; (ii) without limitation of clause (i), such provision shall in any event be ineffective only as to such jurisdiction and only to the extent of such prohibition or unenforceability, and such prohibition or unenforceability in such jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction; and (iii) without limitation of clauses (i) or (ii), such ineffectiveness shall not invalidate any of the remaining provisions of this Agreement.  Without limitation of the preceding sentence, it is the intent of the parties to this Agreement that in the event that in any court proceeding, such court determines that any provision of this Agreement is prohibited or unenforceable in any jurisdiction (because of the duration or scope (geographic or otherwise) of such provision, or for any other reason) such court shall have the power to, and shall, (x) modify such provision (including without limitation, to the extent applicable, by limiting the duration or scope of such provision and/or the Persons against whom, and/or the circumstances under which, such provision shall be effective in such jurisdiction) for purposes of such proceeding to the minimum extent necessary so that such provision, as so modified, may then be enforced in such proceeding and (y) enforce such provision, as so modified pursuant to clause (x), in such proceeding.  Nothing in this Section 14.10 is intended to, or shall, limit (1) the ability of any party to this Agreement to appeal any court ruling or the effect of any favorable ruling on appeal or (2) the intended effect of Section 14.4.

 

14.11.    Submission to Jurisdiction; Waivers.  Each of the Company, the Manager and each of the Members hereby irrevocably and unconditionally:

 

(a)         (i) agrees that any suit, action or proceeding against it or any of its Affiliates arising out of or relating to or in connection with this Agreement shall be instituted solely in the Chancery Court of the State of Delaware; provided that if (and only after) such courts determine that they lack subject matter jurisdiction over any such legal action, suit or proceeding, such legal action, suit or proceeding shall be brought in the Federal courts of the United States located in the State of Delaware, (ii) consents and submits, for itself and its property, to the jurisdiction of such courts for the purpose of any such suit, action or proceeding instituted against it, and (iii) agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law;

 

(b)         agrees that service of all writs, process and summonses in any suit, action or proceeding pursuant to Section 14.11(a) may be effected by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at its address for notices pursuant to Section 14.7 (with copies to such other Persons as specified therein), such service to become effective thirty (30) days after such mailing, provided that nothing contained in this Section 14.11(b) shall affect the right of any party to serve process in any other manner permitted by Law;

 

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(c)         (i) waives any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any court specified in Section 14.11(a), (ii) waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum, and (iii) agrees not to plead or claim either of the foregoing; and

 

(d)         WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

 

14.12.    Termination of Agreement.  If the Contribution Agreement is terminated in accordance with its terms, this Agreement shall be deemed terminated and of no further force or effect without any liability to any Member or the Manager.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

MANAGER:
LP UNITS MANAGER, LLC
By:
	Name:
	Title:

 

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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date first above written, and by such execution, the undersigned acknowledges that it has fully reviewed this Agreement.

 

MEMBERS:
LIGHTSTONE VALUE PLUS REIT, L.P.
By:
	Name:
	Title:
PRO-DFJV HOLDINGS LLC
By:
	Name:
	Title:
LIGHTSTONE HOLDINGS, LLC
By:
	Name:
	Title:
LIGHTSTONE PRIME, LLC
By:
	Name:
	Title:

 

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BRM, LLC
By:
	Name:
	Title:
LIGHTSTONE REAL PROPERTY VENTURES LIMITED LIABILITY COMPANY
By:
	Name:
	Title:
PR LIGHTSTONE MANAGER, LLC
By:
	Name:
	Title:

 

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ANNEX A

 

Certain Definitions

 

As used in the Agreement, the following terms have the following meanings (terms defined in the singular to include the plural and vice versa and references in this Annex A to sections constitute references to sections of the Agreement unless otherwise expressly indicated):

 

“Accountants” shall mean the independent certified public accountants of the Company.

 

“Act” shall have the meaning set forth in the recitals.

 

“Action” means any claim, action, suit, proceeding, arbitration, mediation, audit, inquiry, or other investigation by or before any Governmental Authority.

 

“Affiliate” shall mean, with respect to any specified Person, (i) any other Person directly or indirectly controlling or controlled by or under common control with such specified Person, (ii) any Person owning or controlling ten percent (10%) or more of the outstanding voting securities, voting equity interests, or beneficial interests of the Person specified, (iii) any officer, director, general partner, managing member, trustee, employee or promoter of the Person specified or any Immediate Family Member of such officer, director, general partner, managing member, trustee, employee or promoter, (iv) any corporation, partnership, limited liability company or trust for which any Person referred to in clause (ii) or (iii) acts in that capacity, or (v) any Person who is an officer, director, general partner, managing member, trustee or holder of ten percent (10%) or more of the outstanding voting securities, voting equity interests or beneficial interests of any Person described in clauses (i) through (iv).

 

“Agreement” shall have the meaning set forth in the preamble.

 

“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks in New York City and Indianapolis, Indiana are open for the general transaction of business.

 

“Capital Account” shall have the meaning set forth in Section 5.3(a).

 

“Certificate” shall have the meaning set forth in the recitals.

 

“Closing” shall mean the closing of the transactions contemplated by the Contribution Agreement.

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

“Company Units” shall have the meaning set forth in Section 5.1.

 

“Company” shall have the meaning set forth in the preamble.

 

“Company Unit Exercise Notice” shall have the meaning set forth in Section 6.1(a).

 

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“Contribution Agreement” shall mean that certain Contribution Agreement, dated as of December 8, 2009, by and among Parent REIT, Parent OP, Marco Capital Acquisition, LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent OP, Lightstone Value Plus REIT, L.P., a Delaware limited partnership, Pro-DFJV Holdings LLC, a Delaware limited liability company, Lightstone Holdings, LLC, a Delaware limited liability company, Lightstone Prime, LLC, a Delaware limited liability company, BRM, LLC, a New Jersey limited liability company, Barceloneta Holding Company, a New Jersey limited liability company, Prime Outlets Acquisition Company LLC, a Delaware limited liability company, and Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland corporation.

 

“control” (including the phrases “controlled by” and “under common control with”) when used with respect to any specified Person shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or interests, by contract or otherwise.

 

“Conversion Right” shall have the meaning set forth in Section 6.1(a).

 

“Converted Units” shall have the meaning set forth in Section 6.1(a).

 

“Converting Member” shall have the meaning set forth in Section 6.1(a).

 

“Debt” of any Person shall mean (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services (excluding trade payables arising in the ordinary course of business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (v) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, or (vi) all indebtedness or obligations of others of the kinds referred to in clauses (i) through (v) above in respect of which such Person has entered into or issued any Guarantee.

 

“Dissolution Event” shall mean, with respect to any specified Person, (i) in the case of a specified Person that is a partnership or limited partnership or a limited liability company, the dissolution and commencement of winding up of such partnership, limited partnership or limited liability company, and (ii) in the case of a specified Person that is a corporation, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter and the expiration of 90 days after the date of notice to the corporation of revocation without a reinstatement of its charter.  For the avoidance of doubt, it is understood and agreed that a statutory conversion of a Person into another form of Person does not constitute a “Dissolution Event.”

 

“DL Tax Matters Agreement” shall have the meaning ascribed to such term in the Contribution Agreement.

 

“GAAP” shall mean United States generally accepted accounting principles as in effect from time to time.

 

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“Governmental Authority” shall mean any United States or non-United States national, federal, state, local, municipal or provincial or international government or any political subdivision of any governmental, regulatory or administrative authority, agency or commission, or judicial or arbitral body.

 

“Guarantee” shall mean, with respect to any particular indebtedness or other obligation, (i) any direct or indirect guarantee thereof by a Person other than the obligor with respect to such indebtedness or other obligation or any transaction or arrangement intended to have the effect of directly or indirectly guaranteeing such indebtedness or other obligation, including without limitation any agreement by a Person other than the obligor with respect to such indebtedness or other obligation (A) to pay or purchase such indebtedness or other obligation or to advance or supply funds for the payment or purchase of such indebtedness or other obligation, (B) to purchase, sell or lease (as lessee or lessor) property of, to purchase or sell services from or to, to supply funds to or in any other manner invest in, the obligor with respect to such indebtedness or other obligation (including any agreement to pay for property or services of the obligor irrespective of whether such property is received or such services are rendered), primarily for the purpose of enabling the obligor to make payment of such indebtedness or other obligation or to assure the holder or other obligee of such indebtedness or other obligation against loss, or (C) otherwise to assure the obligee of such indebtedness or other obligation against loss with respect thereto, or (ii) any grant (or agreement in favor of the obligee of such indebtedness or other obligation to grant such obligee, under any circumstances) by a Person other than the obligor with respect to such indebtedness or other obligation of a security interest in, or other lien on, any property or other interest of such Person, whether or not such other Person has not assumed or become liable for the payment of such indebtedness or other obligation.

 

“Immediate Family Member” shall mean, with respect to any individual, his or her spouse, parents, parents-in-law, grandparents, descendants, nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law, children (whether natural or adopted), children-in-law, stepchildren, grandchildren and grandchildren-in-law.

 

“Insolvency Event” shall mean, with respect to any specified Person, the occurrence of any of the following events:

 

(1)           the specified Person makes an assignment for the benefit of creditors;

 

(2)           the specified Person files a voluntary petition for relief in any Insolvency Proceeding;

 

(3)           the specified Person is adjudged bankrupt or insolvent or there is entered against the specified Person an order for relief in any Insolvency Proceeding;

 

(4)           the specified Person files a petition or answer seeking for the specified Person any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation;

 

(5)           the specified Person seeks, consents to, or acquiesces in the appointment of a trustee, receiver or liquidator of the specified Person or of all or any substantial part of the specified Person’s properties;

 

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(6)           the specified Person files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the specified Person in any proceeding described in clauses (1) through (5);

 

(7)           the specified Person becomes unable to pay its obligations as they become due, or the sum of such specified Person's debts is greater than all of such Person’s property, at a fair valuation; or

 

(8)           within 90 days of any proceeding against the specified Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any Law if the proceeding has not been dismissed, or within 90 days after the appointment of a trustee, receiver or liquidator for the specified Person or all or any substantial part of the specified Person’s properties without the specified Person’s agreement or acquiescence, which appointment is not vacated or stayed, or if the appointment is stayed, for 90 days after the expiration of the stay if the appointment is not vacated.

 

“Insolvency Proceeding” shall mean any proceeding under Title 11 of the United States Code (11 U.S.C. §§101, et seq.) or any proceeding under the statues, laws or regulations of any jurisdiction involving any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief.

 

“Institutional Lender” shall mean a commercial bank or trust company, a savings and loan association or an insurance company.

 

“Law” means any statute, law, ordinance, code, regulation, rule, or other requirement of any Governmental Authority.

 

“Lien” shall mean any liens, security interests, mortgages, deeds of trust, charges, claims, encumbrances, restrictions, pledges, options, rights of first offer or first refusal and any other rights or interests of others of any kind or nature, actual or contingent, or other similar encumbrances of any nature whatsoever.

 

“Liabilities” shall mean any Debt, liability, obligation of any kind or nature (whether accrued or fixed, absolute or contingent or matured or unmatured), loss, damage, cost or expense, including reasonable attorneys’ fees and expenses and disbursements, including those arising under any Law, Action or Order and those arising under any contract.

 

“Lightstone REIT” shall mean Lightstone Value Plus REIT, L.P.

 

“LVP OP” shall mean Lightstone Value Plus REIT, L.P., a Delaware limited partnership.

 

“LVP OP Tax Matters Agreement” shall have the meaning ascribed to such term in the Contribution Agreement.

 

“Manager” shall have the meaning set forth in the preamble.

 

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“Member” shall have the meaning set forth in the preamble.  For the avoidance of any doubt, the Manager shall not be deemed a “Member” for any purpose under this Agreement.

 

“Order” means any decision, judgment, order, writ, injunction, decree, award or determination of any Governmental Authority.

 

“Parent OP” means Simon Property Group, L.P., a Delaware limited partnership.

 

“Parent OP Agreement” means the Eighth Amended and Restated Limited Partnership Agreement of the Parent OP, as amended, modified, supplemented or restated from time to time.

 

“Parent OP General Partner” means Simon Property Group, Inc., a Delaware corporation.

 

“Parent OP Units” shall mean (i) the interests in the Parent OP contributed to the Company pursuant to the Contribution Agreement which entitle the Company to allocations and distributions from Parent OP, and the rights of management, consent, approval, or participation, if any, as provided in the Parent OP Agreement and (ii) any interests in Parent OP issued in respect of a dividend or distribution on (i).

 

“Parent REIT” means Simon Property Group, Inc., a Delaware corporation.

 

“Parent REIT Shares” means the shares of Common Stock, par value $0.0001 per share, of the Parent REIT.

 

“Percentage Interest” means, in the case of any Member, such Member’s portion of all outstanding Company Units, expressed as a percentage, and adjusted from time to time in accordance with this Agreement.

 

“Person” shall mean any individual, corporation, partnership (general or limited), limited liability company, limited liability partnership, firm, joint venture, association, joint-stock company, trust, estate, unincorporated organization, governmental or regulatory body or other entity.

 

“Pledge” shall mean granting of a Lien on any Company Unit.

 

“Pro-DFJV” shall mean Pro-DFJV Holdings LLC, a Delaware limited liability company.

 

“Redeemed Units” shall have the meaning set forth in Section 6.2(a).

 

“Redemption Consideration” shall have the meaning set forth in Section 6.2(b).

 

“Redemption Notice” shall have the meaning set forth in Section 6.2(a).

 

“Redemption Right” shall have the meaning set forth in Section 6.2(a).

 

“Redemption Settlement Date” shall have the meaning set forth in Section 6.2(c).

 

“Required Distribution” shall mean any such securities, dividends or distributions described in subsection (i), (ii) or (iii) of Section 7.3.

 

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“Securities Act” means the United States Securities Act of 1933, as amended.

 

“Subsidiary” shall mean, with respect to any specified Person, each of (i) any other Person not less than a majority of the overall economic equity in which is owned, directly or indirectly through one of more intermediaries, by such specified Person, and (ii) without limitation of clause (i), any other Person who or which, directly or indirectly through one or more intermediaries, is Controlled by such specified Person (it being understood with respect to each of clauses (i) and (ii) that a pledge for collateral security purposes of an equity interest in a Person shall not be deemed to affect the ownership of such equity interest by the pledgor or the Control of such Person so long as such pledgor continues to be entitled, in all material respects, to all the voting power and all the income with respect to such equity interest).

 

“Successor” shall mean, with respect to a Member, any future Member which is a direct or indirect transferee of the Company Units of such Member.

 

“Tax Matters Member” shall have the meaning set forth in Section 7.5

 

“Transfer” means any direct or indirect sale, assignment, alienation, gift, exchange, conveyance, transfer, pledge, encumbrance, hypothecation, granting of a security interest or other disposition or attempted disposition whatsoever, whether voluntary or involuntary of a Member’s Company Units.

 

“Treasury Regulations” shall mean the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Internal revenue Code of 1986, as amended, and all references to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, substitute, proposed or final Treasury Regulations.

 

“$” shall mean lawful currency of the United States of America.

 

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ANNEX B

 

Company Unit Exercise Notice

 

_________, 20___           

 

Marco LP Units, LLC

225 West Washington Street

Indianapolis, Indiana 46204

Attn:

James M. Barkley

 

Re:	Marco LP Units, LLC Conversion Notice

 

Reference is hereby made to that certain Limited Liability Company Operating Agreement of Marco LP Units, LLC (the “Company”), dated as of December [l], 2009 (the “Agreement”).  All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Agreement.

 

This letter constitutes a “Company Unit Exercise Notice” pursuant to Section 6.1(a) of the Agreement.  The undersigned Member hereby elects to exchange ______ of its Company Units for the same number of Parent OP Units (and any securities issued by Parent OP in respect of such Parent OP Units to the extent previously retained by the Company) that such Member contributed to the Company, pursuant to the Contribution Agreement (the “Conversion”).  The Member acknowledges that upon the Conversion, the Member shall be obligated to immediately exercise its right, pursuant to Article XI of the Parent OP Agreement, to convert Parent OP Units into Parent REIT Shares or cash, at the Parent REIT’s election.  The effective date of the Conversion shall be the date hereof, and once delivered this Company Unit Exercise Notice shall be irrevocable.

 

Sincerely,
[MEMBER]
By:
Name:
Title:

Acknowledged and Agreed:
MARCO LP UNITS, LLC
By:
Name:
Title:

 

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EXHIBIT F – FORM OF EXERCISE OF NOTICE

FORM OF EXERCISE NOTICE

 

[Limited Partner], as of [date of exercise], hereby irrevocably (except as set forth in the Agreement referred to below) elects, pursuant to the rights granted to it in Section 11.1 of the Agreement of Limited Partnership of Simon Property Group, L.P. (the “Agreement”) to convert of its Partnership units (as such term is defined in the Agreement) into shares of common stock of Simon Property Group, Inc. or cash, as selected by Simon Property Group, Inc.

 

Limited Partner:
By:
(Printed Name)

 

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ANNEX C

 

Redemption Notice

 

_________, 20__               

 

[MEMBER]
Attn:

 

Re:	Marco LP Units, LLC Redemption Notice

 

Reference is hereby made to that certain Limited Liability Company Operating Agreement of Marco LP Units, LLC (the “Company”), dated as of December [l], 2009 (the “Agreement”).  All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Agreement.

 

This letter constitutes a “Redemption Notice” pursuant to Section 6.2(a) of the Agreement.  The Company hereby elects to redeem all of your Company Units in exchange for the Parent OP Units held by the Company, which you contributed to the Company (and any securities issued by Parent OP in respect of such Parent OP Units, to the extent previously retained by the Company), pursuant to the Contribution Agreement (the “Redemption”).  The Company acknowledges that upon the Redemption, the Manager shall effect the exchange of the Company Units for Parent OP Units, pursuant to Section 6.2 of the Agreement.

 

Sincerely,
LP UNITS MANAGER, LLC
By:
	Name:
	Title:

Acknowledged and Agreed:
[MEMBER]
By:
	Name:
	Title:

 

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SCHEDULE I

 

Members

 

Name and Address	Common Units	Parent OP Units	Property With Respect to Which the Parent Units Have Been Issued	Capital Account Balance as of [l], 2010

 

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EXHIBIT F

FORM OF TAX MATTERS AGREEMENT

 

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TMA for LVP Parties

 

EXHIBIT G

 

FORM OF TAX MATTERS AGREEMENT

 

This TAX MATTERS AGREEMENT (the “Agreement”), dated as of __________________, is made by and among Simon Property Group, Inc., a Delaware corporation (“Parent REIT”), Simon Property Group, L.P., a Delaware limited partnership (“Parent OP”), Marco LP Units, LLC, a Delaware limited liability company (“New Company”), Prime Outlets Acquisition Company LLC, a Delaware limited liability company (the “Company”), Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland corporation (“LVP REIT”), Lightstone Value Plus REIT, L.P., a Delaware limited partnership (“LVP OP”), and Pro-DFJV Holdings LLC, a Delaware limited liability company (“Pro-DFJV”), and solely for purposes of Section 14, Lightstone Prime, LLC, a Delaware limited liability company (“Lightstone”), Lightstone Holdings, LLC, a Delaware limited liability company (“Holdings”), BRM, LLC, a New Jersey limited liability company (“BRM”), Lightstone Real Property Ventures Limited Liability Company, a New Jersey limited liability company (“LRPV”), and David Lichtenstein, an individual with an address at 1985 Cedar Bridge Avenue, Lakewood, New Jersey (“Lichtenstein”).

 

WHEREAS, pursuant to the Contribution Agreement, dated as of the date hereof by and among Parent REIT, Parent OP, Marco Capital Acquisition, LLC, a Delaware limited liability company, Holdings, Lightstone, BRM, and LRPV, the Company, LVP REIT, LVP OP, and Pro-DFJV (the “Contribution Agreement”), Holdings, Lightstone, BRM, LRPV, LVP, and Pro-DFJV have agreed to contribute all of the outstanding membership interests in the Company, and membership interests in each of Ewell Holdings, LLC, a Delaware limited liability company, Mill Run, L.L.C., a New Jersey limited liability company, and PR Barceloneta LLC, a New Jersey limited liability company, to Parent OP (the “Contributions”);

 

WHEREAS, it is intended that the Contributions will be treated as tax-free contributions of property to Parent OP under Section 721(a) of the Internal Revenue Code of 1986, as amended (the “Code”); and

 

WHEREAS, the Parties desire to set forth their rights and responsibilities with respect to certain tax matters arising in connection with the Contributions.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.             Definitions.  All capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Contribution Agreement.

 

“Adjusted Spreadsheet” shall have the meaning set forth in Section 7.

 

“Allocable Share” shall mean, with respect to a given LVP Party, such Person’s economic interest in New Company, expressed as a percentage, as set forth on Schedule D.

 

“Applicable Spreadsheet” shall mean the Preliminary Spreadsheet, the Adjusted Spreadsheet or the Final Spreadsheet, as applicable.

 

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“BRM” shall have the meaning set forth in the recitals.

 

“Built-In Gain” shall mean gain allocable under Section 704(c) of the Code pursuant to Treasury Regulations Section 1.704-1(b)(4)(i) to the LVP Parties (or their Indirect Owners) with respect to the Properties, taking into account any special inside basis of the LVP Parties (or their Indirect Owners) under Section 743(b) of the Code with respect to the Properties.  Such Built-In Gain shall be the amount determined on the Applicable Spreadsheet and thereafter shall be adjusted from time to time pursuant to the principles set forth in the Code and the Regulations thereunder.  Built-In Gain shall be reduced by any Built-In Gain that is recognized for federal income tax purposes prior to or during the Protected Period.

 

“Capital Account” shall have the meaning set forth in the OP Agreement.

 

“Capital Contribution Agreements” shall have the meaning set forth in Section 4(d).

 

“Capital Contribution Obligations” shall have the meaning set forth in Section 4(d).

 

“CMBS Debt” shall mean the indebtedness of the Company and its Subsidiaries set forth on Schedule C (the “Original CMBS Debt”) and any indebtedness incurred in replacement thereof in whole or in part that (i) is secured only by one or more of the Properties and (ii) qualifies as both a “nonrecourse liability” for purposes of Treasury Regulations Section 1.752-1(a)(2) and “qualified nonrecourse financing” for purposes of Section 465(b)(6) of the Code.

 

“Code” shall have the meaning set forth in the recitals.

 

“Company” shall have the meaning set forth in the recitals.

 

“Contribution Agreement” shall have the meaning set forth in the recitals.

 

“Contributions” shall have the meaning set forth in the recitals.

 

“Dispute Firm” shall have the meaning set forth in Section 6(c).

 

“Distributable Amount” means (a) the sum of the Special Distribution Amount plus (b) the amount described in Section 2.6(b) of the Contribution Agreement plus (c) the amount described in Section 2.3(e)(i) of the Contribution Agreement.

 

“Final Spreadsheet” shall have the meaning set forth in Section 7.

 

“General Partner” shall mean the general partner of Parent OP.

 

“Guaranties” shall mean the guaranties of collection by the LVP Parties in respect of the Section 15.28 Loan executed as of the Closing Date, which are substantially in the form attached as Exhibit B.

 

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“Holdings” shall have the meaning set forth in the recitals.

 

“Indirect Owner” means, in the case of a LVP Party that is an entity that is classified as a partnership or disregarded entity for federal income tax purposes, any Person owning an equity interest in such LVP Party and, in the case of any Indirect Owner that itself is an entity that is classified as a partnership or disregarded entity for federal income tax purposes, any Person owning an equity interest in such entity.

 

“Lichtenstein” shall have the meaning set forth in the recitals.

 

"Lichtenstein Parties" shall mean Lightstone Holdings, BRM, Lichtenstein, and LRPV.

 

“LVP Guaranty Failure” shall have the meaning set fort in Section 4(e).

 

“Lightstone” shall have the meaning set forth in the recitals.

 

“LVP REIT” shall have the meaning set forth in the recitals.

 

“LVP Parties” shall mean LVP and Pro-DFJV.

 

“New Company” shall have the meaning set forth in the recitals.

 

“New Company Agreement” shall mean the limited liability company operating agreement of New Company, dated as of the date hereof.

 

“Non-Parent TPA Obligations” shall have the meaning set forth in Section 14.

 

“OP Agreement” shall mean the Eighth Amended and Restated Agreement of Limited Partnership of Parent OP, dated as of May 8. 2008, as it may be amended.

 

“Original CMBS Debt” shall have the meaning set forth the in the definition of CMBS Debt.

 

“Parent OP” shall have the meaning set forth in the recitals.

 

“Parent OP Debt” shall mean debt that is (i) indebtedness for U.S. federal tax purposes, (ii) either (x) indebtedness of Parent OP or (y) indebtedness of an entity that is disregarded as an entity separate from Parent OP for U.S. federal income tax purposes for which Parent OP has provided a full recourse guaranty of payment in respect of the entire principal amount, and (iii) not required to be registered at any time with the Securities and Exchange Commission pursuant to the Securities Act of 1933.

 

“Parent REIT” shall have the meaning set forth in the recitals.

 

“Permitted Transfer” shall have the meaning set forth in Section 2(b).

 

“Preliminary Spreadsheet” shall have the meaning set forth in Section 7.

 

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“Pro-DFJV” shall have the meaning set forth in the recitals.

 

“Properties” shall mean the properties transferred directly or indirectly by LVP and Pro-DFJV pursuant to the Contributions, or any entity in which Parent OP or any of its Subsidiaries subsequently holds a direct or indirect interest as “substituted basis property” as defined in Section 7701(a)(42) of the Code with respect to any of the Properties.

 

“Property” shall mean any one of the Properties.

 

“Protected Period” shall mean the period of time beginning on the Closing Date and ending on the date set forth on Schedule B in respect of each Property.

 

“Refinancing” shall mean debt that is (i) allocable under the rules of Treasury Regulations Section 1.163-8T to payments discharging the Section 15.28 Loan or an earlier Refinancing and (ii) that is owed by Parent OP (or an entity that is disregarded as an entity separate from Parent OP for U.S. federal income tax purposes) to a Person that is not related to any partner of Parent OP for purposes of Treasury Regulations Section 1.752-4(b).

 

“Refinancing Guaranty” shall have the meaning set forth in Section 4(b).

 

“Representative” shall mean Lightstone, acting as agent on behalf of each LVP Party, in its capacity as representative of the LVP Parties.

 

“Restricted Transfer” means any transaction or series of transactions involving the sale, conveyance, exchange, or other transfer of more than 50% of Parent OP’s gross assets, whether in a single transaction or a series of transactions, other than a  transaction entailing a transfer (i) to a Subsidiary of Parent OP, (ii) to a Person other than a Subsidiary of Parent OP for consideration having a fair market value approximately equal to that of the transferred assets, or (iii) in a transaction pursuant to which the full amount of the LVP Parties’ Built-In Gain is recognized, resulting in Parent OP making payment in full to the LVP Parties to the extent required hereunder.

 

“Section 15.28 Loan” shall mean the loan to Parent OP to be made in connection with the Closing pursuant to Section 15.28 of the Credit Agreement dated December 8, 2009 by and among Parent OP, the lenders party thereto, and JP Morgan Chase Bank, N.A., as administrative agent or any Alternate Financing.

 

“Section 752 Gain” shall mean without duplication (x) gain recognized under Section 731(a)(1) of the Code because of a deemed distribution under Section 752(b) of the Code or (y) gain recognized under Section 465(e) of the Code, in either case as a result of a reduction of the amount of liabilities allocable to the LVP Parties for purposes of Section 752 of the Code (including liabilities allocable to the LVP Parties with respect to their interests in New Company).

 

“Taking” shall have the meaning set forth in Section 2(b).

 

“Taxable Disposition” shall have the meaning set forth in Section 2(c).

 

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“Taxable OP Unit Disposition” shall have the meaning set forth in Section 2(c).

 

“Taxable Property Disposition” shall have the meaning set forth in Section 2(a).

 

“TPAs” shall have the meaning set forth in Section 14.

 

“Treasury Regulations” shall mean the income tax regulations promulgated under the Code, as such regulations may be amended from time to time.

 

2.           Restrictions on Dispositions of the Properties.

 

(a)         Subject to Section 2(b), at all times during the Protected Period, neither Parent OP nor any entity in which Parent OP holds a direct or indirect interest will consummate a sale, transfer, exchange, or other disposition of any Property (but excluding any Permitted Transfer), or engage in any other transaction, that would result in the recognition of all or any portion of the Built-In Gain by a LVP Party or its Indirect Owner(s) (a “Taxable Property Disposition”).

 

(b)         Section 2(a) shall not apply to (i) the condemnation or other taking of any Property by a governmental entity or authority in an eminent domain proceeding or otherwise (such event, a “Taking”), or (ii) a transfer of any of the Properties in an involuntary bankruptcy against Parent OP or any entity in which Parent OP holds a direct or indirect interest in any of the Properties (each, a “Permitted Transfer”); provided, however, that in the event that a Taking occurs with respect to a Property, Parent OP and Parent REIT shall use their commercially reasonable efforts to avoid recognition of gain with respect to such Taking by acquiring appropriate replacement property and making any required elections in accordance with Section 1033(a)(2) of the Code and the Regulations promulgated thereunder; provided, however, nothing herein shall be deemed to require that Parent OP, Parent REIT or the General Partner take any action to avoid or prevent a Permitted Transfer.

 

(c)         At all times that the LVP Parties hold direct or indirect interests in Parent OP, and so long as Parent OP or an Affiliate of Parent OP is the Manager, Manager shall not cause New Company to (and New Company shall not) consummate a sale, transfer, exchange, or other disposition of any Parent OP Common Units, or engage in any other transaction that would result in the recognition of all or any portion of the Built-In Gain by a LVP Party or its Indirect Owner(s) (a “Taxable OP Unit Disposition”, and together with a Taxable Property Disposition, a “Taxable Disposition”).

 

(d)         For the avoidance of doubt, a Taxable Disposition shall not include a sale, transfer, exchange, or other disposition of any New Company Units or Parent OP Common Units (including following a pledge of New Company Units or Parent OP Common Units) by a LVP Party (or an Indirect Owner) or any Affiliate thereof.

 

3.           Obligation to Maintain and Allocate Certain Debt.

 

(a)         Parent OP shall maintain the Section 15.28 Loan or the Refinancing with an outstanding principal balance of no less than the Distributable Amount until the fourth anniversary of the Closing Date, and shall not discharge the Section 15.28 Loan (other than through a Refinancing) or the Refinancing prior to such anniversary.

 

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(b)         Parent OP, directly or indirectly, shall maintain the CMBS Debt at all times through the scheduled maturity dates listed on Schedule C, in the principal amounts set forth on Schedule C, as adjusted for regularly scheduled principal payments.

 

(c)         At all times up to and including the scheduled maturity of the Original CMBS Debt, Parent OP shall allocate “excess nonrecourse liabilities” (as described in Treasury Regulations Section 1.752-3(a)(3)) in respect of each Property subject to the CMBS Debt to each LVP Party (through its interest in New Company) up to the amount of such Person’s Allocable Share of the Built-In Gain with respect to each such Property, after taking into allocations described in Treasury Regulations Sections 1.752-3(a)(1) and 1.752-3(a)(2).

 

(d)         The CMBS Debt shall be allocated among the Properties in accordance with Treasury Regulations Section 1.752-3(b).  The allocation of the CMBS Debt among the Properties as of the Closing Date shall be set forth on Schedule F.

 

(e)         All tax returns filed by Parent OP shall report the outstanding principal amount of the Section 15.28 Loan and any Refinancing as a recourse liability allocable solely to the LVP Parties (through their interests in New Company) to the extent of the Guaranties or Refinancing Guaranties for purposes of Section 752 of the Code, except as required by a change in law or a determination under Section 1313 of the Code with respect to a LVP Party after the date hereof.

 

(f)         For federal, state and local tax purposes, the Section 15.28 Loan and any Refinancing with respect to which the LVP Parties provide Refinancing Guaranties shall be Parent OP Debt that satisfies the requirements for treatment as a “nonrecourse liability” for purposes of Treasury Regulations Section 1.752-1(a)(2), and would not constitute “partner nonrecourse debt” or a “partner nonrecourse liability” within the meaning of Treasury Regulations Section 1.704-2(b)(4) in the absence of any Guaranty or Refinancing Guaranty. For avoidance of doubt, any “significant modification” (within the meaning of Treasury Regulations Section 1.1001-3(e)) of the Section 15.28 Loan or a Refinancing occurring as a result of actions by Parent OP or any of its Affiliates shall itself be treated as the incurrence of new indebtedness for purposes of this Agreement and must satisfy the requirements set forth in the previous sentence.

 

4.           Guaranties; Capital Contribution Obligations.

 

(a)         At all times up to and including the maturity of the Section 15.28 Loan, Parent OP shall permit each LVP Party to maintain a Guaranty in an amount at least equal to such Person’s Allocable Share of the Distributable Amount, as determined from time to time.

 

(b)         Each LVP Party shall be given the opportunity to provide a guaranty of collection with respect to any Refinancing that is substantially identical to the Guaranty in all respects including the amount of the guaranty (the “Refinancing Guaranty”) contemporaneously with the consummation of each such Refinancing, and shall be permitted to maintain such Refinancing Guaranty at all times up to and including the maturity of each Refinancing in an amount at least equal to such LVP Party’s Allocable Share of Distributable Amount; provided, that Parent OP shall have no obligation to offer the LVP Parties the opportunity to provide Refinancing Guaranties with respect to any Refinancing consummated after the fourth anniversary of the Closing Date; provided further, at any time after the fourth anniversary of the Closing Date, Parent OP shall be permitted to repay or satisfy, in whole or in part, modify or otherwise take any actions with respect to the 15.28 Loan or any Refinancing without limitation.

 

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(c)         Parent REIT shall not be an obligor with respect to the Section 15.28 Loan or any Refinancing with respect to which the LVP Parties provide Refinancing Guaranties.

 

 

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6.           Indemnification.

 

(a)

 

(i)           In the event that Parent OP or New Company breaches its obligations under Section 2, Parent OP and Parent REIT shall indemnify and hold harmless each LVP Party from and against, and Parent OP and Parent REIT shall  be jointly and severally liable to each LVP Party for (x) the amount of Taxes deemed incurred by such LVP Party with respect to such LVP Party’s Allocable Share of the Built-In Gain that is recognized as a result of such Taxable Disposition and (y) a “gross-up” amount so that, after the hypothetical payment by such LVP Party of all Taxes on amounts received pursuant to this Section 6(a)(i), such LVP Party would retain from such payments hereunder an amount equal to its total deemed income tax liability incurred as a result of the Taxable Disposition and recognition of Built-In Gain.

 

(ii)          In the event that Parent OP breaches its obligations under Section 3 or Section 4, Parent OP and Parent REIT shall indemnify and hold harmless each LVP Party from and against, and Parent OP and Parent REIT shall be jointly and severally liable to each LVP Party for (x) the amount of Taxes deemed incurred by such LVP Party with respect to the Section 752 Gain or other gain recognized by such LVP Party as a result of such breach and (y) a “gross-up” amount so that, after the hypothetical payment by such LVP Party of all Taxes on amounts received pursuant to this Section 6(a)(ii), such LVP Party would retain from such payments hereunder an amount equal to its total deemed income tax liability incurred as a result of such breach and its recognition of Section 752 Gain or other gain.

 

(iii)         In the event that Parent OP breaches its obligations under Section 5, Parent OP and the REIT shall indemnify and hold harmless each LVP Party from and against, and Parent OP and the REIT shall be jointly and severally liable to each LVP Party for (x) the amount of Taxes deemed incurred by such LVP Party as a result of, or in connection with, such breach (taking into account all Taxes imposed with respect to items allocated to the LVP Party as a result of allocations not permitted by Section 5) and (y) a “gross-up” amount so that, after the hypothetical payment by such LVP Party of all Taxes on amounts received pursuant to this Section 6(a)(iii), such LVP Party would retain from such payments hereunder an amount equal to its total deemed income tax liability incurred as a result of such breach.

 

(b)         Notwithstanding anything herein to the contrary, it is the understanding and the intention of the parties hereto that Parent OP and Parent REIT shall have no liability under this Agreement as a result of (i) any actions or failure to take actions prior to the Closing, (ii) any change in Law or interpretation thereof after the date hereof, (iii) the structure and effectuation of the transactions contemplated by this Agreement, the Contribution Agreement or any other Transaction Document or (iv) any action taken by LVP OP or LVP REIT or any LVP Party (or Indirect Owner) or any Affiliate of any of the foregoing (regardless of when such action is taken).

 

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(c)         For purposes of determining the amount of the deemed income Taxes incurred by each LVP Party and the amount of the indemnity under Section 6(a), (i) all income arising from a transaction or event that is taxable at ordinary income rates (including, without limitation, “recapture” under Code Sections 1245 or 1250 and net short-term capital gain) under the applicable provisions of the Code and allocable to a given LVP Party shall be treated as subject to federal, state and local income tax at the then applicable effective tax rate imposed on the income of corporations doing business in New Jersey, determined using the maximum federal rate of tax on ordinary income and the maximum state and local rates of tax on income then in effect in New Jersey and (ii) the benefits of the deductibility of state and local income taxes shall be taken into account.

 

7.           Determination of Built-In Gain.  Prior to Closing, the LVP Parties shall provide to Parent OP, on Schedule A, a spreadsheet (the “Preliminary Spreadsheet”) showing their good faith estimate of the amount of Built-In Gain with respect to the Properties as of the Closing Dating.  Promptly following the determination of the Actual Adjustment, the LVP Parties and Parent OP shall jointly prepare a spreadsheet showing the amount of the Built-In Gain with respect to the Properties as of the Closing Date, prepared on a basis consistent with the Preliminary Spreadsheet and updated to reflect the Actual Adjustment (the “Adjusted Spreadsheet”). Promptly following the disbursement of all amounts from the Escrow Account, the LVP Parties and Parent OP shall jointly prepare a spreadsheet showing the amount of the Built-In Gain with respect to the Properties as of the Closing Date, prepared on a basis consistent with the Adjusted Spreadsheet and updated to reflect the settlement of the Escrow (the “Final Spreadsheet”).

 

8.           Cooperation Regarding Post-Closing Tax Matters.  The LVP Parties agree to, and agree to cause their Affiliates to, cooperate and to provide such information and assistance as may be reasonably requested by Parent OP in connection with any tax reporting or compliance obligations of Parent OP or its Affiliates or any obligations of Parent OP under this Agreement.  Such cooperation shall include the provision of information required for Parent OP to properly prepare and file any U.S. federal or state tax returns or reports relating to the transactions contemplated in the Contribution Agreement or the Properties and any information reasonably relevant to the determination of any potential liability of Parent OP under Section 6.

 

9.           Reporting.

 

(a)         For Federal, state and local income tax purposes, the Contributions and the distribution of the Distributable Amount shall be reported by all parties hereto as follows:

 

(i)           The Contributions shall be treated as nontaxable contributions in exchange for Parent OP Common Units under Section 721(a) of the Code.

 

(ii)          The distribution of the Distributable Amount from the proceeds of the Section 15.28 Loan shall be treated as a nontaxable distribution to a partner pursuant to Section 731 of the Code and Treasury Regulations Section 1.707-5(b), without separate disclosure pursuant to Section 6662(d)(2)(B)(ii) or any other provision of the Code or Treasury Regulations or similar provisions of state and local law, except as required by a change in law after the date hereof; provided that, upon a reasonable request from Parent OP or its accountant, the LVP Parties shall provide (at Parent OP’s expense) to Parent OP, at the LVP Parties’ election, either (i) a letter from a nationally recognized accounting firm or law firm with expertise in U.S. federal income taxation of partnerships addressed to Parent OP or its accountant or (ii) an opinion letter from such a firm, which shall provide that Parent OP or its accountant is entitled to rely on it, in each case providing the required level of comfort to Parent OP or its accountant in order to sign the return or returns.

 

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(iii)         Pursuant to Notice 89-35, 1989-1 C.B. 675, for purposes of applying the interest-tracing rules of Treasury Regulations Section 1.163-8T, the Company shall treat the distribution of the Distributable Amount as being made from the proceeds of the Section 15.28 Loan.

 

10.         No Limitations After Expiration of Term of the Agreement; Sole and Exclusive Remedy; No Representations or Warranties; Limitation on Rights.

 

(a)         After the expiration of the Protected Period with respect to any Property, (i) the restriction set forth in Section 2 with respect to such Property shall be of no force and effect, (ii) neither Parent OP nor the General Partner shall be under any restriction or limitation as to the actions it can take with respect to such Property, whether by reason of fiduciary duty or otherwise, regardless of the tax consequences that such action (or any failure to act) might have for the LVP Parties, and (iii) the Parent OP and the General Partner shall have no duty to consider the tax consequences to LVP Parties of any action (or failure to act) with respect to such Property.

 

(b)         The sole and exclusive remedy of LVP Parties against Parent OP and the General Partner and any affiliates thereof with respect to any breach or alleged or prospective breach of the covenants set forth in Sections 2, 3 or 4 shall be to receive the payment from the Parent OP provided in Section 6 hereof, it being intended by the parties that in no event shall any LVP Party have any right to specific performance or equitable relief with respect to any obligation of Parent OP under this Agreement or with respect to the breach of Section 2 any right to money damages of any nature, consequential or otherwise, for any breach under this Agreement, except for the specific payment provided for in Section 6(a) hereof.

 

(c)         Each of the LVP Parties acknowledges and agrees that none of the Parent OP, General Partner, any Affiliate of Parent OP or Parent REIT, or any employee or officer of any of the foregoing has made or hereby makes any representation or warranty to any LVP Party regarding the federal income tax treatment of Parent OP (other than to the extent set forth in the Contribution Agreement) or the federal income tax consequences of any of the transactions contemplated by the Contribution Agreement, including whether or not the transfer of the Properties to Parent OP as contemplated under the Contribution Agreement will be effective to avoid the recognition by any taxpayer of all or any portion of the gain that otherwise would be required to be recognized for federal income tax purposes upon a fully taxable disposition of the Properties, and in that event the LVP Parties shall bear the cost of all income taxes associated therewith. Each LVP Party further acknowledges and agrees that the transactions contemplated by the Contribution Agreement shall be treated as having occurred outside of this Agreement and, accordingly, are not intended to be, and shall not be, covered by this Agreement.

 

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11.         Provision of Information to the LVP Parties.

 

(a)         At the time Parent OP and any entity in which Parent OP holds a direct or indirect interest enters into an agreement to consummate a Taxable Disposition that, if consummated, would result in the recognition by the LVP Parties of all or any portion of their Built-In Gain, and in any case not less than thirty (30) days prior to consummating such Taxable Disposition, Parent OP shall notify Representative in writing of such proposed Taxable Disposition and all details of the Taxable Disposition that are relevant to the calculation of the indemnities set forth herein including, but not limited to (i) the Property, or portion thereof disposed of, (ii) the amount and nature of the consideration to be received, and (iii) the expected amount of gain (including Built-In Gain) allocable to the LVP Parties (or their Indirect Owners, if applicable) as a result of such Taxable Disposition.  The failure to provide any such written notice shall not affect the amount, if any, of Parent OP’s indemnification obligation.

 

(b)         At the time Parent OP and any entity in which Parent OP holds a direct or indirect interest enters into an agreement to consummate a transaction that, if consummated, would result in the recognition by the LVP Parties of Section 752 Gain, and in any case not less than thirty (30) days prior to consummating such transaction, Parent OP shall notify Representative in writing of such proposed transaction and all details that are relevant to the calculation of the indemnities set forth herein including, but not limited to the expected amount of Section 752 Gain allocable to the LVP Parties (or their Indirect Owners, if applicable) as a result of such transaction.  The failure to provide any such written notice shall not affect the amount, if any, of Parent OP’s indemnification obligation.

 

(c)         Following a request by a LVP Party, Parent OP shall deliver to such LVP Party (or the direct or indirect owner of such LVP Party, if applicable) a good-faith estimate of such Person’s Capital Account and allocation of  Partnership liabilities pursuant to each of  Treasury Regulations Sections 1.752-2(a), 1.752-3(a)(1), (2), and (3).  Parent OP shall have no liability (and its indemnification obligation under this Agreement shall not be affected) if it fails to provide any such good faith estimate or if such estimate is not accurate.

 

12.         Contests.

 

(a)         Nothing in this Agreement shall be construed to prevent the General Partner from contesting in good faith, as the tax matters partner of Parent OP in accordance with the OP Agreement, any claim that, if successful, would result in an indemnity payment pursuant to Section 6.

 

(b)         The LVP Parties shall provide written notice to Parent OP promptly after learning of any audit or other proceeding involving a LVP Party for which Parent OP could have an indemnification obligation under Section 6 (a “Proceeding”).  Failure to provide prompt written notice of a Proceeding shall preclude any indemnity hereunder to the extent Parent OP is materially prejudiced thereby.

 

(i)           Upon receipt of notice of a Proceeding, Parent OP shall either (i) assume the conduct and control of the settlement or defense of such Proceeding, and the LVP Parties shall cooperate with Parent OP in connection therewith (including, for example, signing a power of attorney with respect to such Proceeding) or (ii) advise the LVP Parties that it does not wish to control such Proceeding, in which case Parent OP shall bear all costs and expenses of a nationally recognized law firm retained to represent the LVP Parties in such Proceeding, which counsel shall be reasonably acceptable to Parent OP. In either event, the party not controlling the Proceeding shall be given the right to participate in such Proceeding, at its own expense. So long as Parent OP is reasonably contesting any Proceeding, the LVP Parties (or their Indirect Owners) shall not pay or settle any such Proceeding without the consent of Parent OP, which consent may be withheld in Parent OP’s sole discretion.

 

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(ii)          Subject to Section 12(b)(iii), (a) a final determination under Section 1313 of the Code of the claim underlying the Proceeding shall be binding on Parent OP and the LVP Parties and (b) if the LVP Parties are found liable for the Taxes that were the subject of the Proceeding, and it is determined that such Taxes were caused by Parent OP’s breach of this Agreement, Parent OP shall promptly pay the LVP Parties the amount payable pursuant to Section 6 of this Agreement.

 

(iii)         Notwithstanding the foregoing, if either Parent OP or the LVP Parties disputes the finding with respect to causation, Parent OP shall select a nationally recognized accounting firm or law firm experienced in tax protection matters and reasonably acceptable to Representative (the “Dispute Firm”) to review the indemnification claim and the applicable provisions of this Agreement.  The Dispute Firm shall have fifteen (15) business days (or such additional time as the Dispute Firm determines is reasonably necessary) to review such materials and deliver to Parent OP and Representative its determination of whether any amount is due under this Agreement.  The determination of the Dispute Firm shall be final and binding on the parties to this Agreement, and Parent OP shall promptly pay over to the LVP Parties such amounts determined by the Dispute Firm to be due under this Agreement and the LVP Parties shall have no further recourse against Parent OP for the indemnification claim with respect to which such amounts have been paid.  Parent OP shall bear all costs and expenses of the Dispute Firm; provided, the LVP Parties shall bear such costs if Parent OP is found to have no liability pursuant to this Agreement.

 

(c)         Subject to paragraphs (a) and (b) above, the LVP Parties shall have the right to participate in any audit, claim for refund, or administrative or judicial proceeding involving any asserted Tax liability, refund, or adjustment to the taxable income of any party hereto that could result in disallowance of the tax treatment set forth in Section 9 at its own expense.

 

13.         Transfer of Parent OP’s Assets.  For so long as the LVP Parties hold direct or indirect interests in Parent OP, neither Parent OP nor its Affiliates shall consummate a Restricted Transfer unless the transferee assumes the liabilities and obligations of Parent OP under this Agreement; provided, that Parent OP shall not be released from such liabilities and obligations as a result of such assumption.

 

G-12

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14.         Assumption of Existing Tax Protection Agreements.  Parent OP and Parent REIT shall indemnify and hold harmless LVP OP, LVP REIT, each LVP Party, each Lichtenstein Party, or any of their Affiliates from and against, and Parent OP and Parent REIT shall be jointly and severally liable for all liabilities and obligations arising under the Tax Protection Agreements set forth on Schedule G (such Agreements, the “TPAs”)  solely as a result of Parent OP, Parent REIT or any of their Affiliates (including the Company) taking an action or failing to take an action after the Closing that triggers an indemnification obligation under a TPA (such liabilities and obligations, the “Parent TPA Obligations”).  For the avoidance of doubt, the Parent TPA Obligations shall not include any liabilities or obligations under the TPAs with respect to (a) the structure of the contributions and debt arrangements that are the subject of the TPAs, (b) any transactions occurring prior to the Closing, (c) the structure and effectuation of the transactions contemplated by the Contribution Agreement or any other Transaction Document, (d) any actions taken by any Member of the New Company, LVP OP or LVP REIT (regardless of when such action is taken), or (e) a change in Law or interpretation thereof after the date hereof.  The LVP OP and LVP REIT shall indemnify and hold harmless Parent OP from and against and LVP OP and LVP REIT shall be jointly and severally liable for any liability arising under the TPAs that is not a Parent TPA Obligation (“Non-Parent TPA Obligations”).  The Non-Parent TPA Obligations shall not be subject to any limitations, including without limitation, the limitations on indemnification described in Article 10 of the Contribution Agreement.

 

15.         Termination.  This Agreement shall terminate and shall become void, and there shall be no liability on the part of any party hereto, in the event that the Contribution Agreement shall terminate pursuant to its terms prior to the Closing.

 

16.         Miscellaneous Provisions.

 

(a)         Assignment.  No party shall assign this Agreement or its rights hereunder to any Person without the prior written consent of the other party, which consent such other party may grant or withhold in its sole discretion, and any such assignment undertaken without such consent shall be null and void.

 

(b)         Integration, Waiver.  This Agreement (including the Exhibits hereto) embodies and constitutes the entire understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, understandings, representations and statements, whether oral or written.  Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument signed by the party against whom the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument. No waiver by a party hereto of any failure or refusal by any other party to comply with its obligations hereunder shall be deemed a waiver of any other or subsequent failure or refusal to so comply.

 

(c)         Governing Law.  This Agreement shall be governed by, and construed in accordance with, the law of the State of New York, without regard to principles of conflicts of laws.

 

(d)         Captions Not Binding: Exhibits.  The captions in this Agreement are inserted for reference only and in no way define, describe or limit the scope or intent of this Agreement or of any of the provisions hereof.  All Exhibits attached hereto shall be incorporated by reference as if set out herein in full.

 

(e)         Binding Effect; No Third-Party Beneficiaries.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.  No Person, other than the parties hereto, shall have any rights against Parent OP as a result of this Agreement.  The parties hereto further acknowledge that there are no intended third-party beneficiaries to this Agreement.

 

G-13

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(f)          Severability.  If any term or provision of this Agreement or the application thereof to any persons or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to Persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

 

(g)         Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telegram, facsimile, scanned pages or telex, or by registered or certified mail (postage prepaid, return receipt requested) as follows:

 

To Parent REIT, Parent OP or Parent Sub:

 

Simon Property Group, Inc

225 West Washington Street

Indianapolis, Indiana 46204

Attention:

James M. Barkley

Facsimile:

317-685-7377

with a copy (which copy shall not constitute notice) to:

Fried, Frank, Harris, Shriver and Jacobson LLP

One New York Plaza

New York, New York 10004

Tel: 212.859.8980

Attention:

Peter S. Golden

Alan S. Kaden

Facsimile:

212.859.4000

To the Company (prior to the Closing):

Prime Outlets Acquisition Company LLC

217 East Redwood Street, 20th Floor

Baltimore, MD 21202

Attention:

Kelvin Antill, Esq.

Facsimile:

410.234.0275

with a copy (which shall not constitute notice) to:

Lightstone Prime, LLC

c/o The Lightstone Group

1985 Cedar Bridge Avenue

Lakewood, NJ  08701

Attention:

Joseph E. Teichman, Esq.

Facsimile:

732-612-1444

 

G-14

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and, with a copy (which shall not constitute notice) to:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York  10019-6064

Attention:

Jeffrey D. Marell

Jeffrey B. Samuels

Facsimile:

212-757-3990

To the Representative:

Lightstone Prime, LLC

c/o The Lightstone Group

1985 Cedar Bridge Avenue

Lakewood, NJ  08701

Attention:

Joseph E. Teichman, Esq.

Facsimile:

732-612-1444

with a copy (which shall not constitute notice) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York  10019-6064

Attention:

Jeffrey D. Marell

Jeffrey B. Samuels

Facsimile:

212-757-3990

or to such other address as any party to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

 

(h)         Counterparts.  This Agreement may be executed in counterparts, each of which shall be an original and all of which counterparts taken together shall constitute one and the same agreement. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto except having additional signature pages executed by other parties to this Agreement attached thereto.

 

(i)           Construction.  The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendment or Exhibit hereto.

 

[Remainder of Page Intentionally Left Blank]

 

G-15

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IN WITNESS WHEREOF, EACH PARTY HERETO HAS CAUSED THIS Agreement to be duly executed on its behalf on the date first above written.

 

Simon Property Group, Inc.
By:
	Name:
	Title:
Simon Property Group, L.P.
By:	Simon Property Group, Inc., its general
partner
By:
Name:
Title:
Prime Outlets Acquisition Company LLC
By:
Name:
Title:
Marco LP Units, LLC
By:
Name:
Title:
Lightstone Prime, LLC
By:
	Name:
	Title:
Lightstone Holdings, LLC
By:
	Name:
	Title:

 

[Signature page to LVP Tax Matters Agreement]

 

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Pro-DFJV Holdings LLC
By:
	Name:
	Title:
BRM, LLC
By:
	Name:
	Title:
Lightstone Value Plus Real Estate Investment
	Trust, Inc.
By:
	Name:
	Title:
Lightstone Value Plus REIT, L.P.
By:
	Name:
	Title:
	David Lichtenstein

 

[Signature page to LVP Tax Matters Agreement]

 

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SCHEDULE A

 

ESTIMATE OF BUILT-IN GAIN

 

Property
Calhoun
Naples
Florida City
Gaffney
Grove City
Gulf Coast
Gulfport
Huntley
Lebanon
Jeffersonville
Ohio
Pismo Beach
Pleasant Prairie
Pleasant Prairie II
Queenstown
San Marcos
San Marcos II
Birch Run
Hagerstown
Williamsburg
Mill Run Designer
Mill Run Orlando
Mazel
Barceloneta
St. Augustine		N/A
TOTAL

 

G-Schedules/Exhibits

 

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SCHEDULE B

 

PROTECTED PERIODS

 

Property		End of Protected Period
Ellenton		Eighth anniversary of the Closing
San Marcos		Eighth anniversary of the Closing
Orlando		Eighth anniversary of the Closing
Grove City		Eighth anniversary of the Closing
Jeffersonville		Eighth anniversary of the Closing
Barceloneta		Eighth anniversary of the Closing
Pleasant Prairie I		Sixth anniversary of the Closing
Williamsburg		Sixth anniversary of the Closing
Pleasant Prairie II		Sixth anniversary of the Closing
Williamsburg Mazel		Sixth anniversary of the Closing
Queenstown		Sixth anniversary of the Closing
Lee		Sixth anniversary of the Closing
Hagerstown		Sixth anniversary of the Closing
Calhoun		June 26, 2013
Naples		June 26, 2013
Florida City		June 26, 2013
Gaffney		June 26, 2013
Gulfport		June 26, 2013
Huntley		June 26, 2013
Lebanon		June 26, 2013
Pismo Beach		June 26, 2013
Birch Run		June 26, 2013
St. Augustine		N/A

 

G-Schedules/Exhibits

 

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SCHEDULE C

 

CMBS DEBT

 

Lender		Loan		Property		Amount Outstanding2		Maturity
Wachovia		Megadeal		Ellentown Florida City Grove City Gulfport Huntley Jeffersonville Lebanon Naples San Marcos Pleasant Prairie I		$[619.2 million]		January 11, 2016
Citigroup		2nd Horizon		Pismo Beach Queenstown		$[100.0 million]		November 6, 2016
CIBC		Bridge Portfolio		Calhoun Gaffney Lee		$[113.7 million]		September 1, 2016
Wachovia		Triple Outlet World Loans		Birch Run Hagerstown Williamsburg		$[312.7 million]		April 11, 2016
CIBC		Pleasant Prairie II		Pleasant Prairie II		$[38.1 million]		December 1, 2016
Wachovia		St. Augustine		St. Augustine		$[26.6 million]		April 11, 2016

 

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2         To be updated to reflect amortization to date.

 

G-Schedules/Exhibits

 

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SCHEDULE D

 

ALLOCABLE SHARES

 

LVP Party		Allocable Shares
Lightstone Value Plus REIT, L.P.		[_		]%
Pro-DFJV Holdings, LLC		[_		]%

 

G-Schedules/Exhibits

 

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SCHEDULE E

 

CAPITAL CONTRIBUTION OBLIGATIONS

 

LVP Party		Amount of Capital Contribution Obligation as of the Closing Date
Lightstone Value Plus REIT, L.P.
Pro-DFJV Holdings, LLC

 

G-Schedules/Exhibits

 

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SCHEDULE F

 

INITIAL ALLOCATION OF CMBS DEBT

 

Property		Initial Debt Allocation
Ellenton
San Marcos
Orlando
Grove City
Jeffersonville
Barceloneta
Pleasant Prairie I
Williamsburg
Pleasant Prairie II
Williamsburg Mazel
Queenstown
Lee
Hagerstown
Calhoun
Naples
Florida City
Gaffney
Gulfport
Huntley
Lebanon
Pismo Beach
Birch Run
St. Augustine

 

G-Schedules/Exhibits

 

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SCHEDULE G

 

TAX PROTECTION AGREEMENTS

 

1.

Tax Protection Agreement, dated August 25, 2009, by and between Lightstone Value Plus REIT, L.P. and Central Jersey Holdings II LLC.

 

2.

Tax Protection Agreement, dated August 25, 2009, by and between Lightstone Value Plus REIT, L.P. and JT Prime LLC.

 

3.

Tax Protection Agreement, dated August 25, 2009, by and between Lightstone Value Plus REIT, L.P. and Trac Central Jersey LLC.

 

4.

Tax Protection Agreement, dated June 26, 2008, by and among Lightstone Value Plus REIT, L.P., the Company, and AR Prime Holdings, LLC.

 

5.

Series C Optional Tax Indemnification, attached as Exhibit H to Fourth Amended and Restated Agreement of Limited Partnership of Prime Retail, L.P.

 

6.

Tax Protection Agreement, dated June 26, 2008, by and between Lightstone Value Plus REIT, L.P. and Arbor National CJ, LLC.

 

7.

Tax Protection Agreement, dated June 26, 2008, by and between Lightstone Value Plus REIT, L.P. and Arbor Mill Run JRM LLC.

 

G-Schedules/Exhibits

 

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EXHIBIT A

 

FORM OF CAPITAL CONTRIBUTION AGREEMENT

 

G-Schedules/Exhibits

 

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EXHIBIT B

 

FORM OF GUARANTY OF COLLECTION

 

G-Schedules/Exhibits

 

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Annex A

 

Owner		Percentage Owned in the Other Group Companies
Lightstone Holdings		84.015% interest in Ewell
Pro-DFJV		14.26% interest in Mill Run
BRM		55.199% interest in Mill Run
LVP OP		22.54% interest in Mill Run
LRPV		99% interest in Barceloneta
PR Manager		1% interest in Barceloneta

 

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Annex B

 

Owner		Percentage Owned in the Company
Lightstone Prime			60	%
LVP OP			25	%
Pro-DFJV			15	%

 

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Annex C

 

Description of the St. Augustine Land

 

All that certain lot, piece or parcel of land, with the buildings and improvements thereon erected, situate, lying and being in the City of St. Augustine, County of St. Johns, State of Florida.

 

A part of Section 6, Township 7 South, Range 29 East, St. Johns County, Florida, more particularly described as follows:

 

For a point of reference, commence at the Northeast corner of said Section 6; thence South 02 degrees 02 minutes 27 seconds East along the East line of said Section 6, a distance of 921.41 feet; thence departing said Section line, North 33 degrees 23 minutes 45 seconds West, a distance of 377.94 feet; thence South 56 degrees 36 minutes 15 seconds West, a distance of 994.41 feet; thence South 33 degrees 23 minutes 45 seconds East, a distance of 286.50 feet to the POINT OF BEGINNING;

 

Thence continue South 33 degrees 23 minutes 45 seconds East, a distance of 807.37 feet; thence South 22 degrees 44 minutes 16 seconds East, a distance of 218.65 feet; thence South 33 degrees 23 minutes 45 seconds East, a distance of 83.75 feet to a point on the Northwesterly right of way line of Outlet Centre Drive (a 90 foot private right of way); thence South 56 degrees 36 minutes 15 seconds West along said Northwesterly right of way line, a distance of 307.90 feet to a point on the Northeasterly limited access right of way line of Interstate 95, State Road No. 9 (a varying right of way as now established) and a point on a curve concave Southwesterly having a radius of 5879.58 feet; thence departing said Northwesterly right of way line, Northwesterly along said limited access right of way line and along the arc of said curve, an arc distance of 950.01 feet, said arc being subtended by a chord bearing of North 33 degrees 51 minutes 59 seconds West and a chord distance of 948.98 feet to the point of tangency of said curve; thence North 38 degrees 29 minutes 40 seconds West continuing along said limited access right of way line, a distance of 157.68 feet; thence departing said limited access right of way line, North 56 degrees 36 minutes 15 seconds East, a distance of 370.14 feet to the POINT OF BEGINNING.

 

TOGETHER WITH:

Development Agreement between St. Augustine Associates, Inc., a Florida corporation, as Trustee under Land Trust Agreement for St. Augustine Centre Land Trust dated June 15, 1998 and FOM St. Augustine Limited Partnership recorded July 13, 1998 in Official Records Book 1333, page 416; First Amendment recorded in Official Records Book 2495, page 1207, public records of St. Johns County, Florida.

Declaration of Reciprocal Easements, Rights and Maintenance Covenants for the St. Augustine Centre DRI/PUD, by St. Augustine Associates, Inc., a Florida corporation, as Trustee under Land Trust Agreement for St. Augustine Centre Land Trust dated June 15, 1998 recorded July 13, 1998 in Official Records Book 1333, page 347, public records of St. Johns County, Florida, and First Amendment recorded in Official Records Book 1333, page 384, public records of St. Johns County, Florida.

 

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St. Augustine Centre Road and Utilities Improvements Construction Agreement between St. Augustine Associates, Inc.. a Florida corporation, as Trustee under Land Trust Agreement for St. Augustine Centre Land Trust dated June 15, 1998 and FOM St. Augustine Limited Partnership recorded July 13, 1998 in Official Records Book 1333, page 434, public records of St. Johns County, Florida.

 

Declaration of Drainage Easement by St. Augustine Associates. Inc., a Florida corporation, as Trustee under Land Trust Agreement for St. Augustine Centre Land Trust dated June 15, 1998, recorded July 13. 1998 in Official Records Book 1333, page 388, public records of St. Johns County, Florida.

 

Declaration of Restrictive Covenants and Easement Agreement made by FOM St. Augustine Limited Partnership dated September 23, 1999.

 

NOTE:  Being Parcel No. 087330-0000 of the City of St. Augustine. County of St. Johns.

 

NOTE:  Parcel No. shown for informational purposes only.

 

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Annex D

 

Contributors		Applicable Percentage Interest
Lightstone Holdings			1.140	%
Pro-DFJV			13.750	%
BRM			15.274	%
LVP OP			22.576	%
LRPV			8.231	%
PR Manager			0.083	%
Lightstone Prime			38.946	%
TOTAL			100	%

 

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Annex E

 

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Annex F

 

Company Knowledge Parties

 

1.

Peyton H. Owen, Jr.

 

2.

Donna Brandin

 

3.

Joseph Teichman

 

4.

Robert A. Brvenik

 

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