FOURTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
REGENCY CENTERS, L.P.
(formerly known as Regency Retail Partnership, L.P.)
TABLE OF CONTENTS
Article 1
Defined Terms
Article 2
Organizational Matters
Section 2.1 Organization; Application of Act............................16
Section 2.2 Name........................................................16
Section 2.3 Registered Office and Agent; Principal Office...............16
Section 2.4 Term........................................................16
Article 3
Purpose
Section 3.1 Purpose and Business........................................16
Section 3.2 Powers......................................................17
Article 4
Capital Contributions; Issuance Of Units;
Capital Accounts
Section 4.1 Capital Contributions of the Partners.......................17
Section 4.2 Issuances of Additional Partnership Interests...............19
Section 4.3 No Preemptive Rights........................................21
Section 4.4 Capital Accounts of the Partners............................21
Section 4.5 Issuance of Series A Preferred Units........................22
Article 5
Distributions
Section 5.1 Requirement and Characterization of Distributions...........34
Section 5.2 Amounts Withheld............................................35
Section 5.3 Withholding.................................................35
Section 5.4 Distributions Upon Liquidation..............................37
Article 6
Allocations
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Section 6.1 Allocations of Net Income and Net Loss......................37
Section 6.2 Special Allocation Rules....................................39
Section 6.3 Allocations for Tax Purposes................................40
Article 7
Management And Operations Of Business
Section 7.1 Management..................................................41
Section 7.2 Certificate of Limited Partnership..........................46
Section 7.3 Restriction on General Partner's Authority..................47
Section 7.4 Responsibility for Expenses.................................47
Section 7.5 Outside Activities of the General Partner...................48
Section 7.6 Contracts with Affiliates...................................48
Section 7.7 Indemnification.............................................49
Section 7.8 Liability of the General Partner............................50
Section 7.9 Other Matters Concerning the General Partner................51
Section 7.10 Title to Partnership Assets.................................52
Section 7.11 Reliance by Third Parties...................................52
Section 7.12 Redemption of Units Held by General Partner.................53
Article 8
Rights And Obligations Of Limited Partners
Section 8.1 Limitation of Liability.....................................53
Section 8.2 Management of Business......................................53
Section 8.3 Outside Activities of Limited Partners......................53
Section 8.4 Priority Among Partners.....................................54
Section 8.5 Rights of Limited Partners Relating to the Partnership......54
Section 8.6 Redemption of Units.........................................55
Section 8.7 Regency's Assumption of Right...............................58
Article 9
Books, Records, Accounting And Reports
Section 9.1 Records and Accounting......................................59
Section 9.2 Fiscal Year.................................................59
Section 9.3 Reports.....................................................59
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Article 10
Tax Matters
Section 10.1 Preparation of Tax Returns..................................60
Section 10.2 Tax Elections...............................................60
Section 10.3 Tax Matters Partner.........................................60
Section 10.4 Organizational Expenses.....................................61
Article 11
Transfers And Withdrawals
Section 11.1 Transfer....................................................62
Section 11.2 Transfer of General Partner's Partnership Interests.........62
Section 11.3 Limited Partners' Rights to Transfer........................63
Section 11.4 Substituted Limited Partners................................66
Section 11.5 Assignees...................................................66
Section 11.6 General Provisions..........................................67
Article 12
Admission Of Partners
Section 12.1 Admission of Successor General Partner......................68
Section 12.2 Admission of Additional Limited Partners....................68
Section 12.3 Amendment of Agreement and Certificate......................69
Section 12.4 Representations and Warranties of Additional
Limited Partners.......................................69
Article 13
Dissolution And Liquidation
Section 13.1 Dissolution.................................................69
Section 13.2 Winding Up..................................................70
Section 13.3 Compliance with Timing Requirements of Regulations;
Allowance for Contingent or Unforeseen Liabilities or
Obligations.............................................73
Section 13.4 Deficit Capital Account Restoration.........................73
Section 13.5 Deemed Distribution and Recontribution......................74
Section 13.6 Rights of Limited Partners..................................75
Section 13.7 Notice of Dissolution.......................................75
Section 13.8 Cancellation of Certificate of Limited Partnership..........75
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Section 13.9 Reasonable Time for Winding-Up..............................75
Article 14
Amendment Of Partnership Agreement; Meetings
Section 14.1 Amendments..................................................75
Section 14.2 Meetings of Limited Partners................................79
Article 15
General Provisions
Section 15.1 Addresses and Notice........................................79
Section 15.2 Titles and Captions.........................................80
Section 15.3 Pronouns and Plurals........................................80
Section 15.4 Further Action..............................................80
Section 15.5 Binding Effect..............................................80
Section 15.6 Waiver of Partition.........................................80
Section 15.7 Entire Agreement............................................80
Section 15.8 Remedies Not Exclusive......................................80
Section 15.9 Time........................................................81
Section 15.10 Creditors...................................................81
Section 15.11 Waiver......................................................81
Section 15.12 Execution Counterparts......................................81
Section 15.13 Applicable Law..............................................81
Section 15.14 Invalidity of Provisions....................................81
Article 16
Power Of Attorney
Section 16.1 Power of Attorney...........................................81
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SCHEDULES
Schedule 7.8(b)...Regency's PFIC Obligations
Schedule 8.6(a)...Transfer Restrictions in Regency's Articles of Incorporation
Schedule 13.4(a)..Electing Partners with Deficit Capital Account Make-up
Requirement
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EXHIBITS
Exhibit A.........Partners and Partnership Interests (addresses)
Exhibit B.........Notice of Redemption
Exhibit C.........Security Capital Waiver and Consent Agreement
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FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP
OF
REGENCY CENTERS, L.P.
THIS FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is dated
as of April 1, 2001, by and among Regency Centers Corporation (formerly Regency
Realty Corporation), a Florida corporation, as general partner (the "General
Partner"), and those additional persons who from time to time agree to be bound
by this Agreement as limited partners (the "Limited Partners"), and amends and
restates the Third Amended and Restated Agreement of Limited Partnership of the
Partnership dated as of September 1, 1999.
Background
Limited Partners (the "Original Limited Partners") who formerly were
partners of Branch Properties, L.P. or its affiliates were admitted to the
Partnership on March 7, 1997 pursuant to the Amended and Restated Agreement of
Limited Partnership as of that date (as amended, the "Initial Agreement").
In February 1998, Regency Realty Corporation ("Regency") merged with
Regency Atlanta, Inc., which was then the general partner of the Partnership,
with Regency being the surviving corporation in the merger. Accordingly, Regency
became the General Partner of the Partnership. Regency also caused the merger
into the Partnership of its subsidiary, Regency Centers, Inc., which owned at
least 35 shopping center properties immediately prior to the merger.
In connection with the admission of limited partners upon the Partnership's
acquisition of assets from Midland Development Group, Inc. and its affiliates,
the General Partner amended and restated the Initial Agreement on March 5, 1998
(the "Second Amended Agreement") (i) to provide for admitting Additional Limited
Partners (as defined below) to the Partnership from time to time, (ii) to make
certain changes to the provisions governing the maintenance of Capital Accounts,
and (iii) to delete matters of historical interest.
In connection with the issuance by the Partnership of $80 million Series A
Preferred Units (as defined below) to an institutional investor pursuant to
Section 4.2 hereof, the General Partner and Security Capital (as defined below)
entered into Amendment No. 1 to the Second Amended Agreement on June 25, 1998
(the "Preferred Unit Amendment"). The Preferred Unit Amendment designated the
rights, preferences and limitations of the Series A Preferred Units and was
approved by the holders of a majority of the Original Limited Partnership Units
and the holders of a majority of the Additional Units.
Pursuant to Article XIV and Section 4.2, the Second Amended Agreement, as
amended, was amended and restated on September 1, 1999 (the "Third Amended
Agreement") (i) to reflect the admission of the Series A Preferred Partners (as
defined below), (ii) to incorporate the Preferred Unit Amendment, (iii) to make
certain changes to the allocations of
Net Income and Net Loss, (iv) to authorize the issuance of Preferred Units and
Additional Units from time to time, and (v) to delete matters of historical
interest.
The Third Amended Agreement also contemplated that the General Partner
would eventually contribute, directly or indirectly through nominee agreements,
all its assets to the Partnership, subject to applicable consents of third
parties or in the case of shopping centers securing $51 million of securitized
mortgage debt due November 5, 2000, upon the repayment of such debt, so as to
cause the Partnership to become an "UPREIT".
In connection with their approval of the Third Amended Agreement, pursuant
to Section 14.1(a) and Section 4.2, Original Limited Partners holding 95.3% of
the Original Limited Partnership Interests and Additional Limited Partners
holding 97.0% of the Additional Limited Partnership Interests consented to
amending and restating the Third Amended Agreement, in the event that the
Partnership became an UPREIT, (i) to provide for the Units of all Partners
(other than Preferred Units) to be pari passu with respect to distributions and
to conform the allocations of Net Income and Net Loss to such revised economic
sharing arrangement, and (ii) to authorize the issuance of Units to the General
Partner from time to time, subject to the conditions set forth in Section
4.2(b)(i), in connection with, and as a result of the Partnership becoming an
UPREIT. Because Section 4.2(b) of this Agreement provides for the Units held by
the General Partner to mirror one-for-one the outstanding shares of capital
stock of the General Partner and Section 7.5 prohibits the General Partner from
engaging in business except through or for the account of the Partnership, these
UPREIT amendments insure that Limited Partners (other than Preferred Partners)
cannot receive lower distributions than common shareholders of Regency.
Therefore, these UPREIT amendments do not adversely affect the Limited Partners.
The Third Amended Agreement provided that, at such time as the Partnership
satisfied the UPREIT criteria established in the Third Amended Agreement, the
Third Amended Agreement would be amended and restated by this Fourth Amended and
Restated Agreement ("Fourth Amended Agreement"). One of such criteria consists
of the approval of this Fourth Amended Agreement by those Persons (or their
transferees) who were Limited Partners on the date of adoption of the Third
Amended Agreement but had not then consented to the Third and Fourth Amended
Agreements, so that this Fourth Amended Agreement will have been approved by
unanimous consent of all Persons who were Limited Partners on that date or their
transferees (collectively, the "Preexisting Partners," which term includes any
transferee of a Preexisting Partner) (such unanimous consent requirement may be
reduced, in Regency's discretion, to the consent of Preexisting Partners holding
not less than 85% of the outstanding Units held by the Preexisting Partners).
Since the date of adoption of the Third Amended Agreement, the holders of at
least 95.7%, but not 100%, of the Units held by the Preexisting Partners have
consented to the adoption of this Fourth Amended Agreement. Regency determined
that, and by execution of this Agreement hereby represents and warrants that, on
February 15, 2001, the Partnership satisfied the UPREIT criteria established in
the Third Amended Agreement for this Fourth Amended Agreement to be effective,
and Regency has given written notice to such effect to the Limited Partners and
of the applicability of Section 14.1(g) herein.
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NOW, THEREFORE, the Third Amended Agreement is hereby amended and restated
as follows (matters in italics are agreements with the Original Limited Partners
only).
Article 1
Defined Terms
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it may
be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 4.2 hereof (other than (i) a Preferred
Partner, (ii) the General Partner or (iii) any Affiliate of the General Partner
other than a Property Affiliate) and who is shown as such on the books and
records of the Partnership, including the Persons admitted in connection with
the Partnership's acquisition of assets from Midland Development Group, Inc. and
certain of its affiliated entities.
"Additional Units" means Units issued to an Additional Limited Partner. The
distribution rights of the Additional Units are pari passu with the Original
Limited Partnership Units.
"Adjusted Capital Account" means the Capital Account maintained for each
Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner, the
deficit balance, if any, in such Partner's Adjusted Capital Account as of the
end of the relevant Partnership Year.
"Adjusted Series A Preferred Units" of a Partner means the number of Series
A Preferred Units owned by the Partner multiplied by the quotient obtained by
dividing $50 by $24.25 (the Value of a Share on June 25, 1998).
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Agreement" means this Fourth Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
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"Articles of Incorporation" means the Amended and Restated Articles of
Incorporation of Regency, as filed with the Florida Department of State, as
further amended or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have been
transferred in a manner permitted under this Agreement, but who has not become a
Substituted Limited Partner, and who has the rights set forth in Section 11.5.
"Available Cash" means with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership from whatever
source (excluding the proceeds of any Capital Contribution and excluding
Capital Transaction Proceeds) plus the amount of any reduction (including,
without limitation, a reduction resulting because the General Partner
determines such amounts are no longer necessary) in reserves of the
Partnership, which reserves are referred to in clause (b)(iv) below;
(b) less the sum of the following (except to the extent made with the proceeds
of any Capital Contribution and except to the extent taken into account in
determining Capital Transaction Proceeds):
(i) all interest, principal and other debt payments made during such
period by the Partnership,
(ii) all other cash expenditures (including capital expenditures) made by
the Partnership during such period,
(iii)investments in any entity (including loans made thereto) to the extent
that such investments are not otherwise described in clauses (b)(i) or
(ii), and
(iv) the amount of any increase in reserves established during such period
which the General Partner determines is necessary or appropriate in
its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City, New York are authorized or required by
law to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Section 4.4 hereof.
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"Capital Contribution" means, with respect to any Partner, any cash, cash
equivalents or the value (as set forth by separate agreement) of property which
such Partner contributes or is deemed to contribute to the Partnership pursuant
to Section 4.1, Section 4.2 or Section 4.5 hereof and which shall be treated as
a contribution to the Partnership pursuant to Section 721(a) of the Code.
"Capital Transaction" means a sale, exchange or other disposition (other
than in liquidation of the Partnership) or a financing or refinancing by the
Partnership (which shall not include any loan or financing to the General
Partner as permitted by Section 7.1(a)(iii)) of a Partnership asset or any
portion thereof.
"Capital Transaction Proceeds" means the net cash proceeds of a Capital
Transaction, after deducting all expenses incurred in connection therewith and
after application of any proceeds, at the sole discretion of the General
Partner, toward the payment of any indebtedness of the Partnership whether or
not secured by the property that is the subject of that Capital Transaction, the
purchase, improvement or expansion of Partnership property, or the establishment
of any reserves deemed reasonably necessary by the General Partner, including
reserves for the purchase, improvement or expansion of Partnership property.
"Cash Amount" means an amount of cash arrived at by multiplying (i) the
number of Partnership Units that are the subject of a Notice of Redemption times
(ii) the Unit Adjustment Factor times (iii) the Value on the Valuation Date of a
Share.
"Certificate" means the Certificate of Limited Partnership relating to the
Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.
"Code" means the Internal Revenue Code of 1986, as amended. Any reference
herein to a specific section or sections of the Code shall be deemed to include
a reference to any corresponding provision of future law.
"Common Stock" means the voting Common Stock, $0.01 par value, of Regency.
"Common Units" means the Original Limited Partnership Units, the Additional
Units and any other Partnership Interests in the Partnership hereafter
authorized, issued or outstanding which are entitled to distributions and to
rights upon voluntary or involuntary liquidation, winding-up or dissolution only
out of any assets remaining after all Preferred Units have received the amounts
to which they are entitled.
"Consent" means, except where this Agreement expressly specifies otherwise,
with respect to Limited Partners holding any class of Units (other than Series A
Preferred Units), the written consent or affirmative vote of those Limited
Partners holding a majority of such Units outstanding at the time in question.
The Consent of the Original Limited Partners means the written consent or
affirmative vote of the Original Limited Partners holding a majority of the
Original Limited Partnership Units outstanding at the time in question. Except
where this Agreement expressly specifies otherwise, the Consent of the Limited
Partners means the
5
written consent or affirmative vote of the Limited Partners holding a majority
of the Original Limited Partnership Units and Additional Units outstanding at
the time in question, treating such Units as a single class, and shall exclude
any Partners holding Preferred Units unless this Agreement is amended to
expressly provide for a particular class or series of Preferred Units to vote
together with the holders of Common Units as a single class. "Consent of the
Limited Partners" shall be determined excluding any Units held by the General
Partner or any of its Affiliates other than a Property Affiliate, who shall have
no right to vote on any matter for which the consent of the Limited Partners is
solicited.
"Contribution Agreement" means that certain Contribution Agreement and Plan
of Reorganization, dated as of February 10, 1997, by and among Branch
Properties, L.P., Branch Realty Inc. and Regency.
"Depreciation" means for each Partnership Year or other period, an amount
equal to the federal income tax depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year or other
period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount which bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such year bears to such
beginning adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner, except
that in the case of a zero basis property contributed by an Original Limited
Partner, such property shall be depreciated for book purposes over a period of
not more than ten years.
"Event of Dissolution" has the meaning set forth in Section 13.1.
"Excess Units" has the meaning set forth in Section 4.5(g)(i)(C).
"Exchange Notice" has the meaning set forth in Section 4.5(g)(ii)(A).
"Exchange Price" has the meaning set forth in Section 4.5(g)(i)(A).
"First Closing" has the meaning set forth in the Contribution Agreement.
"General Partner" means Regency Centers Corporation (formerly Regency
Realty Corporation) or its permitted successors as a general partner of the
Partnership.
"General Partner Units" means the Partnership Interest in the Partnership
owned by the General Partner or any Affiliate other than a Property Affiliate
but (i) shall exclude any Series A Preferred Units and any other Preferred Units
issued in compliance with this Agreement and (ii) also shall exclude any other
types of Common Units issued to the General Partner pursuant to Section
4.2(b)(i) which do not mirror the Common Stock. Pursuant to this Fourth Amended
Agreement, all Class B Units (as defined in the Third Amended Agreement) have
been reclassified as General Partner Units.
6
"General Partnership Interest" means a Partnership Interest held by a
General Partner that is a general partnership interest.
"Gross Asset Value" means with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a Partner to
the Partnership shall be the fair market value (exclusive of
liabilities) of such asset, as determined by the General Partner,
unless required to be determined in some other manner herein;
(b) The Gross Asset Values of all Partnership assets shall be adjusted to
equal their respective fair market values (exclusive of liabilities),
as determined by the General Partner, as of the following times: (i)
the acquisition of an additional interest in the Partnership by any
new or existing Partner in exchange for more than a de minimis capital
contribution; (ii) the distribution by the Partnership to a Partner of
more than a de minimis amount of property as consideration for an
interest in the Partnership; and (iii) the liquidation of the
Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
clauses (i) and (ii) above shall be made only if the General Partner
reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners
in the Partnership;
(c) The Gross Asset Value of any Partnership asset distributed to any
Partner shall be adjusted to equal the fair market value (exclusive of
liabilities) of such asset on the date of distribution as determined
by the General Partner; and
(d) The Gross Asset Values of Partnership assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Code Section 734(b) or Code Section 743(b), but
only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall
not be adjusted pursuant to this paragraph (d) to the extent the
General Partner determines that an adjustment pursuant to paragraph
(b) above is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this
paragraph (d).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
paragraphs (a), (b), or (d) above, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset for
purposes of computing profits and losses.
"Immediate Family" means, with respect to any natural Person, such natural
Person's spouse, parents, descendants, nephews, nieces, brothers and sisters and
trusts for the benefit of any of the foregoing.
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"Incapacity" or "Incapacitated" means, (i) as to any individual Partner,
death, total physical disability or entry by a court of competent jurisdiction
adjudicating him incompetent to manage his Person or his estate; (ii) as to any
corporation which is a Partner, the filing of a certificate of dissolution, or
its equivalent, for the corporation or the revocation of its charter; (iii) as
to any partnership which is a Partner, the dissolution and commencement of
winding up of the partnership; (iv) as to any estate which is a Partner, the
distribution by the fiduciary of the estate's entire interest in the
Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when the Partner (a)
makes an assignment for the benefit of creditors, (b) files a voluntary petition
in bankruptcy, (c) is adjudged a bankrupt or insolvent, or has entered against
him an order of relief in any bankruptcy or insolvency proceeding, (d) files a
petition or answer seeking for himself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation, (e) files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against him in
any proceeding of this nature, (f) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the Partner or of all or any
substantial part of his properties, (g) is the debtor in any proceeding seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, which has not been
dismissed within 120 days after the commencement thereof, or (h) is the subject
of a proceeding whereby a trustee, receiver or liquidator is appointed for the
Partner or all or any substantial part of its properties without the Partner's
consent or acquiescence of a trustee, receiver or liquidator, and such
appointment has not been vacated or stayed within 90 days after the appointment
or such appointment is not vacated within 90 days after the expiration of any
such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by reason of
his status as (a) the General Partner, (b) a Limited Partner or (c) a director
or officer of the Partnership or a Partner, and (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) acting in good
faith on behalf of the Partnership as determined by the General Partner in its
good faith judgment other than for any action by such Person involving fraud,
willful misconduct or gross negligence.
"IRS" means the Internal Revenue Service, which administers the internal
revenue laws of the United States.
"Junior Units" has the meaning set forth in Section 4.5(c)(iv).
"Limited Partner" means any Person named as a Limited Partner in Exhibit A
attached hereto, as such Exhibit may be amended from time to time in accordance
with the terms of this Agreement, or any Substituted Limited Partner, Preferred
Partner or Additional Limited Partner, in such Person's capacity as a Limited
Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of a Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Limited Partners and includes any and all benefits to which the
holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the terms
and provisions of this Agreement. A Limited Partnership Interest may be
expressed as a number of Preferred Units, Common Units or General Partner Units
as provided herein.
8
"Liquidating Transaction" means any sale or other disposition of all or
substantially all of the assets of the Partnership following the adoption by the
General Partner of a plan of liquidation for the Partnership.
"Liquidator" has the meaning set forth in Section 13.2.
"Net Income" and "Net Loss" means for any taxable period, an amount equal
to the Partnership's taxable income or loss for such taxable period determined
in accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(a) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain,
loss and deduction shall be made without regard to any election under
Section 754 of the Code which may be made by the Partnership;
provided, that the amounts of any adjustments to the adjusted bases of
the assets of the Partnership made pursuant to Section 734 of the Code
as a result of the distribution of property by the Partnership to a
Partner (to the extent that such adjustments have not previously been
reflected in the Partners' Capital Accounts) shall be reflected in the
Capital Accounts of the Partners in the manner and subject to the
limitations prescribed in Regulations Section 1.704-1(b)(2)(iv)(m).
(b) Any income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Net Income or Net
Loss pursuant to this definition shall be added to such Net Income or
Net Loss.
(c) The computation of all items of income, gain, loss and deduction shall
be made without regard to the fact that items described in Sections
705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable in gross
income or are neither currently deductible nor capitalized for federal
income tax purposes.
(d) Any income, gain or loss attributable to the taxable disposition of
any Partnership property shall be determined as if the adjusted basis
of such property as of such date of disposition were equal in amount
to the Partnership's Gross Asset Value with respect to such property
as of such date.
(e) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal
year.
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(f) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to clause (b) or (c) of the definition thereof, the
amount of any such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing Net
Income and Net Loss.
(g) Any items specially allocated under Section 6.2 and Section 6.3 hereof
shall not be taken into account.
Solely for purposes of allocating Net Income or Net Loss in any Fiscal Year
to the holders of the Series A Preferred Units, items of Net Income and Net
Loss, as the case may be, shall not include Depreciation with respect to
properties (or groupings of properties selected by the General Partner using any
method determined by it to be reasonable) that are "ceiling limited" in respect
of the holders of the Series A Preferred Units. For purposes of the preceding
sentence, Partnership property shall be considered ceiling limited in respect of
a holder of Series A Preferred Units if Depreciation attributable to such
Partnership property which would otherwise be allocable to such Partner, without
regard to this paragraph, exceeded depreciation determined for federal income
tax purposes attributable to such Partnership property which would otherwise be
allocated to such Partner by more than 5%.
"Non-U.S. Person" means with respect to the acquisition, ownership or
transfer of any Partnership Interest or Shares, the direct or indirect
acquisition or ownership thereof by or a transfer that results in the direct or
indirect ownership thereof by any Person who is not (i) a citizen or resident of
the United States, (ii) a partnership or corporation created or organized in the
United States or under the laws of the United States or any state therein
(including the District of Columbia), or (iii) a foreign estate or trust within
the meaning of Section 7701(a)(31) of the Code.
"Nonrecourse Deductions" has the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations Section
1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption, Security Agreement
and Investor Questionnaire substantially in the form of Exhibit B to this
Agreement, as it may be amended from time to time by the General Partner
effective upon written notice to the Limited Partners.
"Original Limited Partner" means the Partners who received Original Limited
Partnership Units distributed by Branch Properties, L.P. to its respective
partners pursuant to the Contribution Agreement. The Original Limited Partners
are listed on Exhibit A attached hereto. The term "Original Limited Partner"
shall also include any permitted transferee of an Original Limited Partner
pursuant to Section 11.3 other than (i) the General Partner or (ii) any
Affiliate of the General Partner other than a Property Affiliate.
"Original Limited Partnership Unit" means a Partnership Unit issued to an
Original Limited Partner. The term "Original Limited Partnership Unit" does not
include or refer to any Preferred Units, Additional Units or General Partner
Units.
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"Parity Preferred Units" means any class or series of Partnership Interests
of the Partnership now or hereafter authorized, issued or outstanding expressly
designated by the Partnership to rank on a parity with Series A Preferred Units
with respect to distributions or rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Partnership, or both, as the
context may require, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per Unit or conversion rights or exchange
rights shall be different from those of the Series A Preferred Units.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations Section
1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined
in accordance with the rules of Regulations Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution and includes any and all benefits to which
the holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the terms
and provisions of this Agreement. A Partnership Interest may be expressed as a
number of Preferred Units, Original Limited Partnership Units, Additional Units,
General Partner Units or any other type of Unit permitted by Section 4.2(b)(i).
"Partnership Minimum Gain" has the meaning set forth in Regulations Section
1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net
increase or decrease in Partnership Minimum Gain, for a Partnership Year shall
be determined in accordance with the rules of Regulations Section 1.704-2(d).
"Partnership Record Date" means the record date established by the General
Partner for the distribution of Available Cash pursuant to Section 5.1 hereof to
Partners holding
11
Common Units, which record date shall be the same as the record date established
by Regency for a dividend to the holders of Common Stock.
"Partnership Year" means the fiscal year of the Partnership, which shall be
the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership as determined by dividing (i) the Adjusted Series A Preferred Units,
Common Units and General Partner Units owned by such Partner by (ii) the total
number of Adjusted Series A Preferred Units, Common Units and General Partner
Units then outstanding and as specified in Exhibit A attached hereto, as such
Exhibit may be amended from time to time in accordance with the terms of this
Agreement.
"Person" means an individual or a corporation, limited liability company,
partnership, trust, unincorporated organization, association or other entity.
"Pledged Units" means any Units pledged by a Limited Partner to the
Partnership or the General Partner, whether pursuant to this Agreement or by
separate agreement.
"Preexisting Partner" has the meaning set forth at the outset of this
Agreement. Preexisting Partner shall not include any Person who is not a
transferee of a Preexisting Partner and who first became a Limited Partner after
September 1, 1999.
"Preferred Partner" means a Partner who holds Preferred Units.
"Preferred Unit Distribution Payment Date" has the meaning set forth in
Section 4.5(c)(i).
"Preferred Unit Partnership Record Date" has the meaning set forth in
Section 4.5(c)(i).
"Preferred Units" means the Series A Preferred Units and any Partnership
Interests in the Partnership hereafter authorized, issued or outstanding from
time to time pursuant to Section 14.1(g)(ii) expressly designated by the
Partnership to rank senior to the Common Units and General Partner Units with
respect to distributions or rights upon voluntary or involuntary liquidation,
winding-up or dissolution of the Partnership, or both.
"Property Affiliate" means a Person, other than any Subsidiary of Regency,
who contributed property in exchange for a Limited Partnership Interest and who
may be deemed an Affiliate of the General Partner, e.g., because such person is
a director of Regency or owns a significant number of Units or shares of Regency
stock.
"Prime Rate" means, on any date, a fluctuating rate of interest per annum
equal to the rate of interest most recently established by Wachovia Bank of
Georgia, N.A. at its Atlanta, Georgia office (or, at the General Partner's
election, another major lender to the Partnership,
12
at the office with which the Partnership deals), as its prime rate of interest
for loans in United States dollars.
"PTP" means a "publicly traded partnership" within the meaning of Section
7704 of the Code.
"Recapture Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 734 or Section 743 of the
Code) upon the disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Recourse Liabilities" has the meaning set forth in Regulations Section
1.752-1(a)(1).
"Redeeming Partner" means a Limited Partner who duly exercised a Redemption
Right.
"Redemption Amount" means the Share Amount or, as determined by the General
Partner in its sole and absolute discretion, the Cash Amount or any combination
of the Share Amount and the Cash Amount.
"Redemption Right" with respect to the Original Limited Partners has the
meaning set forth in Section 8.6(a) hereof and with respect to Additional
Limited Partners means any right granted to such Partners by separate agreement
of the Partnership to redeem such Partners' Limited Partnership Interests for
Common Stock and/or cash.
"Regency" means Regency Centers Corporation (formerly Regency Realty
Corporation), a Florida corporation.
"Regulations" means the Income Tax Regulations, including the Temporary
Regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the Code.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Capital" means Security Capital U.S. Realty, a Luxembourg
corporation, Security Capital Holdings, S.A., a Luxembourg corporation, and
their Affiliates.
"Series A Preferred Partner" means the Limited Partners who received Series
A Preferred Units and also include any permitted transferee of a Series A
Preferred Partner pursuant to Section 11.3 and the General Partner or any
Affiliate of Regency upon exchange or redemption of the Series A Preferred Units
pursuant to Section 4.5.
"Series A Preferred Stock" has the meaning set forth in Section
4.5(g)(i)(A).
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"Series A Preferred Units" means the Partnership Interest in the
Partnership issued pursuant to Section 4.2 and Section 4.5 hereof representing
8.125% Series A Cumulative Redeemable Preferred Units. The term "Series A
Preferred Unit" does not include or refer to any Original Limited Partnership
Units, Additional Units or General Partner Units.
"Series A Priority Return" means an amount equal to 8.125% per annum,
determined on the basis of a 360 day year of twelve 30 day months (or actual
days for any month which is shorter than a full monthly period), cumulative to
the extent not distributed for any given distribution period, of the stated
value of $50 per Series A Preferred Unit, commencing on the date of issuance of
such Series A Preferred Unit.
"Series A Redemption Price" has the meaning set forth in Section 4.5(e)(i).
"Share Amount" means a number of Shares arrived at by multiplying (i) the
number of Partnership Units that are the subject of a Notice of Redemption times
(ii) the Unit Adjustment Factor.
"Shares" means (i) the Common Stock of Regency, and (ii) any securities
issuable with respect to Shares as a result of the application of Section
11.2(b).
"Specified Redemption Date" means the later of (i) 5:00 p.m. Eastern time,
on the date specified by the Redeeming Partner in such Partner's Notice of
Redemption, or (ii) the close of business, Eastern time, on the first Business
Day after the date in clause (i) if such date is not a Business Day, or (iii)
5:00 p.m. Eastern time, on the tenth Business Day after receipt by the General
Partner of a Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.4.
"Transaction" has the meaning set forth in Section 11.2(b).
"Unit," "Limited Partnership Unit" or "Partnership Unit" means the
Partnership Interest in the Partnership to be issued to and held by the Limited
Partners pursuant to Section 4.1, Section 4.2 or Section 4.5. The ownership of
Units may be evidenced by such form of certificate as the General Partner may
determine, in its discretion, and the transfer of the Units evidenced by such
certificates shall be governed by Article 11.
"Unit Adjustment Factor" means initially 1.0; provided that, in order to
prevent dilution of the Redemption Right, in the event that Regency (i) declares
or pays a dividend on its outstanding Common Stock in Common Stock or makes a
distribution to all holders of its outstanding Common Stock in Common Stock,
(ii) subdivides its outstanding Common Stock, or (iii) combines its outstanding
Common Stock into a smaller number of shares, except as
14
provided below, the Unit Adjustment Factor shall be adjusted by multiplying the
Unit Adjustment Factor by a fraction, the numerator of which shall be the number
of Shares issued and outstanding on the record date (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time), and the denominator of which shall be the actual number of Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination. Any adjustment
to the Unit Adjustment Factor shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event. If the General Partner (i) makes a distribution to all holders of
outstanding Units in Units, (ii) subdivides the outstanding Units, or (iii)
combines the outstanding Units into a smaller number of Units at the same time
as a distribution, subdivision or combination, as the case may be, occurs with
respect to the Common Stock, in such manner as to prevent enlargement or
dilution of the right to redeem one Unit for one share of Common Stock, then no
adjustment shall be made to the Unit Adjustment Factor, and such distribution,
subdivision or combination of Units shall take the place of an adjustment to the
Unit Adjustment Factor so as to preserve the one-Share-for-one Unit equivalency
for purposes of any Redemption Right.
"Valuation Date" means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.
"Value" means, with respect to a Share, the average of the daily market
price of the Common Stock for the ten (10) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be: (i) if the Common Stock is listed or admitted to trading on any securities
exchange or the Nasdaq National Market, the closing price, regular way, on such
day, or if no such sale takes place on such day, the average of the closing bid
and asked prices on such day, (ii) if the Common Stock is not listed or admitted
to trading on any securities exchange or the Nasdaq National Market, the last
reported sale price on such day or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or (iii) if the
Common Stock is not listed or admitted to trading on any securities exchange or
the Nasdaq National Market and no such last reported sale price or closing bid
and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reliable quotation source designated
by the General Partner, or if there shall be no bid and asked prices on such
day, the average of the high bid and low asked prices, as so reported, on the
most recent day (not more than 10 days prior to the date in question) for which
prices have been so reported; provided, that if there are no bid and asked
prices reported during the 10 days prior to the date in question, the Value of
the Common Stock shall be determined by Regency's board of directors acting in
good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate.
15
Article 2
Organizational Matters
Section 2.1 Organization; Application of Act.
(a) Organization and Formation of Partnership. The Partnership has been
formed as a limited partnership under the Act. The General Partner is
the sole general partner and the Limited Partners are the sole limited
partners of the Partnership.
(b) Application of Act. The Partnership is a limited partnership pursuant
to the provisions of the Act and upon the terms and conditions set
forth in this Agreement. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by
the Act. No Partner has any interest in any Partnership property, and
the Partnership Interest of each Partner shall be personal property
for all purposes.
Section 2.2 Name. The name of the Partnership is Regency Centers, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall promptly
notify the Limited Partners of such change; provided, that the name of the
Partnership may not be changed to include the name, or any variant thereof, of
any Limited Partner without the written consent of that Limited Partner.
Section 2.3 Registered Office and Agent; Principal Office. The address of
the registered office of the Partnership in the State of Delaware is located at
1013 Centre Road, City of Wilmington, County of New Castle, Delaware 19801, and
the registered agent for service of process on the Partnership in the State of
Delaware at such registered office is Corporation Service Company. The principal
office of the Partnership is 121 W. Forsyth Street, Suite 200, Jacksonville,
Florida 32202, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Florida as
the General Partner deems advisable.
Section 2.4 Term. The term of the Partnership shall commence on the date
hereof and shall continue until December 31, 2097, unless it is dissolved sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.
Article 3
Purpose
Section 3.1 Purpose and Business. The purpose and nature of the business to
be conducted by the Partnership is (i) to conduct any business that may be
lawfully conducted by a
16
limited partnership organized pursuant to the Act and in connection therewith to
sell or otherwise dispose of Partnership assets, (ii) to enter into any
partnership, joint venture or other similar arrangement to engage in any of the
foregoing or the ownership of interests in any entity engaged in any of the
foregoing and (iii) to do anything necessary or incidental to the foregoing
which, in each case, is not in breach of this Agreement; provided, however, that
each of the foregoing clauses (i), (ii), and (iii) shall be limited and
conducted in such a manner as to permit Regency at all times to be classified as
a REIT, unless Regency provides notice to the Partnership that it intends to
cease or has ceased to qualify as a REIT.
Section 3.2 Powers. The Partnership is empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental to or convenient
for the furtherance and accomplishment of the purposes and business described
herein and for the protection and benefit of the Partnership; provided, however,
that the Partnership shall not take, or refrain from taking, any action which,
in the judgment of the General Partner, (i) could adversely affect the ability
of Regency to continue to qualify as a REIT, unless Regency provides notice to
the Partnership that it intends to cease or has ceased to qualify as a REIT,
(ii) could subject Regency to any additional taxes under Section 857 or Section
4981 of the Code or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the General Partner,
Regency or their securities, unless such action (or inaction) shall have been
specifically consented to by the General Partner in writing.
Article 4
Capital Contributions; Issuance Of Units;
Capital Accounts
Section 4.1 Capital Contributions of the Partners.
(a) Initial Capital Contributions of Original Limited Partners. Branch
Properties, L.P. has contributed property to the Partnership which
shall be deemed to have been contributed by its respective partners as
Original Limited Partners. The Original Limited Partners who have not
exercised a Redemption Right with respect to all their Units are set
forth on Exhibit A, together with their respective number of Units and
their respective Percentage Interests. Percentage Interests of the
Original Limited Partners shall be adjusted in Exhibit A from time to
time by the General Partner to the extent permitted by this Agreement
to reflect accurately redemptions, Capital Contributions, the issuance
of Additional Units or General Partner Units, or similar events having
an effect on a Partner's Percentage Interest or number of Units.
(b) Initial Capital Contributions of Additional Limited Partners. Midland
Development Group, Inc. and certain of its affiliated entities and PP
Center Limited have contributed property to the Partnership which
shall be deemed to have been contributed by their respective equity
owners as Additional Limited Partners. Such Additional Limited
Partners who have not exercised a Redemption Right with respect to all
their Units are set forth on Exhibit A, together with their respective
number of Units and their respective Percentage Interests.
17
(c) Capital Contributions by General Partner. The General Partner has
contributed cash or other assets to the Partnership in exchange for
the number of General Partner Units set forth on Exhibit A. The
General Partner also owns the number of General Partner Units set
forth on Exhibit A which were acquired by Regency upon the exchange by
Regency of Shares pursuant to the exercise by former Limited Partners
of Redemption Rights or were issued pursuant to Section 4.2(b).
(d) Capital Contributions of Series A Preferred Partners. The Series A
Preferred Partners have contributed cash to the Partnership in the
amount of $50 per Series A Preferred Unit. The distribution rights for
the Series A Preferred Units shall be senior to the distribution
rights of the Original Limited Partnership Units, the Additional
Units, the General Partner Units and any other Common Units. The
number of Series A Preferred Units issued to the Series A Preferred
Partners is set forth on Exhibit A.
(e) Additional Capital Contributions or Assessments. No Partner shall be
assessed or be required to contribute additional funds or other
property to the Partnership, except for any such amounts which a
Limited Partner may be obligated to repay under Section 5.3 or Section
13.4. Any additional funds required by the Partnership, as determined
by the General Partner in its reasonable business judgment, may, at
the option of the General Partner and without an obligation to do so,
be contributed by the General Partner as additional Capital
Contributions. If and as the General Partner or any other Partner
makes additional Capital Contributions to the Partnership, each such
Partner shall receive Additional Units, General Partner Units or other
Partnership Interests, subject to the provisions of Section 4.2 and
Section 4.5, and such Partner's Capital Account shall be adjusted as
provided in Section 4.4.
(f) Return of Capital Contributions. Except as otherwise expressly
provided herein, the Capital Contribution of each Partner will be
returned to that Partner only in the manner and to the extent provided
in Article 5 and Article 13 hereof, and no Partner may withdraw from
the Partnership or otherwise have any right to demand or receive the
return of its Capital Contribution to the Partnership (as such),
except as specifically provided herein. Under circumstances requiring
a return of any Capital Contribution, no Partner shall have the right
to receive property other than cash, except as specifically provided
herein. No Partner shall be entitled to interest on any Capital
Contribution or Capital Account notwithstanding any disproportion
therein as between the Partners. Except as specifically provided
herein, the General Partner shall not be liable for the return of any
portion of the Capital Contribution of any Limited Partner, and the
return of such Capital Contributions shall be made solely from
Partnership assets.
(g) Liability of Limited Partners. No Limited Partner shall have any
further personal liability to contribute money to, or in respect of,
the liabilities or the obligations of the Partnership, nor shall any
Limited Partner be personally liable for any obligations of the
Partnership, except as otherwise provided in Section 4.1(e) or in
18
the Act. No Limited Partner shall be required to make any contributions to
the capital of the Partnership other than its Capital Contribution.
Section 4.2 Issuances of Additional Partnership Interests.
(a) Limitations. Separate agreements relating to the admission of
Additional Limited Partners set forth the provisions, if any, upon
which any Additional Units shall be issued to Additional Limited
Partners in the form of earn-out or as consideration for additional
assets to be contributed by such Additional Limited Partners to the
Partnership. The General Partner shall cause the earn-out Additional
Units to be issued to the Additional Limited Partners entitled to
receive the same, and shall cause the amendment of this Agreement to
reflect the issuance of any such Additional Units. Subject to the
restrictions set forth in Section 4.2(b) and in Section 4.5(f)(ii),
the General Partner is hereby authorized to cause the Partnership at
any time or from time to time to issue to the Partners or to other
Persons such Partnership Interests in one or more classes, or one or
more series of any such classes, with such designations, preferences
and relative, participating, optional or other special rights, powers
and duties, and for such consideration as shall be determined by the
General Partner in its sole and absolute discretion, subject to
Delaware law, including, without limitation, (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each
such class or series of Partnership Interests, (ii) the right of each
such class or series of Partnership Interests to share in Partnership
distributions, and (iii) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the
Partnership.
(b) Consent Granted by Limited Partners for Certain Issuances.
(i) Issuance of Additional Units to General Partner. As a
condition to the effectiveness of this Fourth Amended
Agreement, the Partnership shall:
(A) issue to the General Partner in exchange for the assets
contributed by it additional Units such that (i) the
total number of General Partner Units held by the
General Partner equals the total number of Shares of
Common Stock then outstanding, and (ii) additional
Limited Partnership Interests are issued in the same
number as, and having designations, preferences and
other rights substantially similar to the designations,
preferences and other rights of other classes of equity
of the General Partner then outstanding, whether
consisting of preferred stock or special common stock;
and
(B) redeem and cancel Units previously issued to the
General Partner if and to the extent necessary in order
that there shall be (i) a one-to-one equivalency
between the number of shares of Common Stock
outstanding and the number of General Partner Units
outstanding, and (ii) (subject to Section 14.1(g)(ii),
if applicable, in the case of the
19
issuance of Preferred Units) a one-to-one equivalency
between the number of shares of other classes of equity
of the General Partner outstanding and the number of
other classes of Units outstanding.
Thereafter, the Partnership may issue Partnership Interests
to the General Partner in the same number and having
designations, preferences and other rights substantially
similar to the designations, preferences and other rights
of, shares issued by the General Partner provided that:
(A) General Partner Units shall be issued to match shares
of Common Stock issued by the General Partner; and
(B) The General Partner shall comply with the following in
connection with any such issuance of Units to the
General Partner:
(1) The General Partner shall have determined in good
faith that the issuance of the matching shares,
and the price thereof, are in the best interests
of the General Partner and the Partnership;
(2) Without limiting clause (1), in the case of the
issuance of shares to employees, directors or
independent contractors of the General Partner or
any Subsidiary at a price less than their fair
market value, the compensation committee of the
General Partner's Board of Directors shall
reasonably determine that such issuance is for the
benefit of the Partnership's business or such
issuance shall be pursuant to an incentive plan
approved by the compensation committee and
adopted by the General Partner;
(3) The General Partner shall contribute the net
proceeds to the Partnership from the issuance of
the matching shares, including assets acquired in
exchange for shares and the exercise price
received upon the exercise of options; and
(4) In the case of the issuance of shares upon the
conversion of convertible securities issued by the
General Partner, the General Partner shall
contribute or shall have previously contributed to
the Partnership the net proceeds from the issuance
of such convertible securities.
The cost of issuance of equity the net proceeds of which are
so contributed by the General Partner to the Partnership
shall be deemed a capital contribution to, and a cost of,
the Partnership.
(c) Certain Issuances in the Nature of Stock Split. Nothing herein
shall prohibit the General Partner from issuing Units pro rata to
the holders of existing Units
20
in lieu of adjusting the Unit Adjustment Factor in connection
with a stock split, stock dividend or similar event with respect
to the Common Stock.
Section 4.3 No Preemptive Rights. No Person shall have any preemptive,
preferential or other similar right with respect to (i) additional Capital
Contributions or loans to the Partnership or (ii) issuance or sale of any
Partnership Interests.
Section 4.4 Capital Accounts of the Partners.
(a) General. The Partnership shall maintain for each Partner a
separate Capital Account in accordance with the rules of
Regulations Section 1.704-1(b)(2)(iv). Such Capital Account shall
be increased by (i) the amount of all Capital Contributions made
by such Partner to the Partnership pursuant to this Agreement,
(ii) all items of Partnership income and gain (including income
and gain exempt from tax) allocated to such Partner pursuant to
Section 6.1 and Section 6.2 of this Agreement, and (iii) the
amount of any Partnership liabilities assumed by such Partner or
which are secured by any property distributed to such Partner,
and decreased by (x) the amount of cash or Gross Asset Value of
all actual and deemed distributions of cash or property made to
such Partner pursuant to this Agreement, (y) all items of
Partnership deduction and loss allocated to such Partner pursuant
to Section 6.1 and Section 6.2 of this Agreement, and (z) the
amount of any liabilities of such Partner assumed by the
Partnership or which are secured by any property contributed by
such Partner to the Partnership. Additional Capital Contributions
shall be deemed to be made by reason of the issuance, and the
Additional Limited Partner's Capital Account shall be adjusted by
an amount equal to the agreed value (as set forth by separate
agreement), of additional Partnership Interests issued to an
Additional Limited Partner pursuant to any earn-out provisions in
the agreement governing such Additional Limited Partner's
admission to the Partnership. Any such additional Capital
Contributions shall be allocated to the items of contributed
property contributed by each such Additional Limited Partner in
proportion to their book values at the time of issuance of the
additional Partnership Interests.
(b) Transfers of Partnership Units. A transferee of a Partnership
Interest shall succeed to a pro rata portion of the Capital
Account of the transferor.
(c) Modification by General Partner. The provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to
comply with Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such
Regulations. In the event the General Partner shall determine
that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are
secured by contributed or distributed property or which are
assumed by the Partnership, the General Partner, or any Limited
Partners), are computed in order to comply with such Regulations,
the General Partner may make such modification without regard to
Article 14 of this Agreement. The General Partner also shall (i)
21
make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and
(ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to
comply with Regulations Section 1.704-1(b).
Section 4.5 Issuance of Series A Preferred Units. Pursuant to authority
granted by Section 4.2 with the Consent of the Original Limited Partners and the
Consent of the Additional Limited Partners, the General Partner caused the
Partnership to establish a series of Partnership Interests representing the
Series A Preferred Units, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties as are set
forth in this Section 4.5. In the event of a conflict between this Section 4.5
and any other provision of this Agreement as to the Series A Preferred Units,
the provisions of this Section 4.5 shall control.
(a) Designation and Number. A series of Partnership Units in the
Partnership designated as the "8.125% Series A Cumulative
Redeemable Preferred Units" is hereby established. The number of
Series A Preferred Units shall be 1,600,000.
(b) Rank. The Series A Preferred Units will, with respect to
distributions or rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Partnership, or
both, rank senior to all classes or series of Partnership
Interests now or hereafter authorized, issued or outstanding,
other than any class or series of equity securities of the
Partnership issued after the issuance of the Series A Preferred
Units and expressly designated in accordance with this Agreement
as ranking on a parity with or senior to the Series A Preferred
Units as to distributions or rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Partnership, or
both.
(c) Distributions.
(i) Payment of Distributions. Subject to the rights of holders
of Parity Preferred Units and any holders of Partnership
Interests issued after the date of issuance of the Series A
Preferred Units in accordance herewith ranking senior to the
Series A Preferred Units as to the payment of distributions,
holders of Series A Preferred Units shall be entitled to
receive, when, as and if declared by the Partnership acting
through the General Partner, out of Available Cash and
Capital Transaction Proceeds, cumulative preferential cash
distributions at the rate per annum of 8.125% of the
original Capital Contribution per Series A Preferred Unit.
Such distributions shall be cumulative, shall accrue from
the original date of issuance and will be payable (A)
quarterly in arrears, on or before March 31, June 30,
September 30 and December 31 of each year commencing on June
30, 1998 and, (B), in the event of (i) an exchange of Series
A Preferred Units into Series A Preferred Stock, or (ii) a
redemption of
22
Series A Preferred Units, on the exchange date or redemption
date, as applicable (each a "Preferred Unit Distribution
Payment Date"). The amount of the distribution payable for
any period will be computed on the basis of a 360-day year
of twelve 30-day months and for any period shorter than a
full quarterly period for which distributions are computed,
the amount of the distribution payable will be computed on
the basis of the actual number of days elapsed in such a
30-day month. If any date on which distributions are to be
made on the Series A Preferred Units is not a Business Day,
then payment of the distribution to be made on such date
will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with
the same force and effect as if made on such date.
Distributions on June 30, 1998 and thereafter on the Series
A Preferred Units will be made to the holders of record of
the Series A Preferred Units on the relevant record dates to
be fixed by the Partnership acting through the General
Partner, which record dates shall be not less than ten (10)
days and not more than thirty (30) Business Days prior to
the relevant Preferred Unit Distribution Payment Date (the
"Preferred Unit Partnership Record Date").
(ii) Limitation on Distributions. No distribution on the Series A
Preferred Units shall be declared or paid or set apart for
payment by the Partnership at such time as the terms and
provisions of any agreement of the Partnership relating to
its indebtedness (other than any agreement with the holder
of Partnership Interests or an Affiliate thereof), prohibits
such declaration, payment or setting apart for payment or
provide, that such declaration, payment or setting apart for
payment would constitute a breach thereof or a default
thereunder, or if such declaration, payment or setting apart
for payment shall be restricted or prohibited by law.
Nothing in this Section 4.5(c)(ii) shall be deemed to modify
or in any manner limit the provisions Section 4.5(c)(iii)
and (iv).
(iii) Distributions Cumulative. Distributions on the Series A
Preferred Units will accrue whether or not the terms and
provisions of any agreement of the Partnership, including
any agreement relating to its indebtedness at any time
prohibit the current payment of distributions, whether or
not the Partnership has earnings, whether or not there are
funds legally available for the payment of such of such
distributions and whether or not such distributions are
authorized. Accrued but unpaid distributions on the Series A
Preferred Units will accumulate as of the Preferred Unit
Distribution Payment Date on which they first become
payable. Distributions on account of arrears for any past
distribution periods may be declared and paid at any time,
without reference to a regular Preferred Unit Distribution
Payment Date to holders of record of the Series A Preferred
Units on the record date fixed by the Partnership acting
through the General Partner which date shall be not less
than
24
ten (10) days and not more than thirty (30) Business Days
prior to the payment date. Accumulated and unpaid
distributions will not bear interest.
(iv) Priority as to Distributions.
(A) So long as any Series A Preferred Units are
outstanding, no distribution of cash or other property
shall be authorized, declared, paid or set apart for
payment on or with respect to any class or series of
Partnership Interests of the Partnership ranking junior
as to the payment of distributions to the Series A
Preferred Units (collectively, "Junior Units"), nor
shall any cash or other property be set aside for or
applied to the purchase, redemption or other
acquisition for consideration of any Series A Preferred
Units, any Parity Preferred Units with respect to
distributions or any Junior Units, unless, in each
case, all distributions accumulated on all Series A
Preferred Units and all classes and series of
outstanding Parity Preferred Units as to payment of
distributions have been paid in full. The foregoing
sentence will not prohibit (a) distributions payable
solely in Junior Units, (b) the conversion of Junior
Units or Parity Preferred Units into Partnership
Interests of the Partnership ranking junior to the
Series A Preferred Units as to distributions, or (c)
the redemption of Partnership Interests corresponding
to any Series A Preferred Stock, Parity Preferred Stock
with respect to distributions or Junior Stock (as such
terms are defined herein or in the Articles of
Incorporation) to be purchased by the General Partner
pursuant to Article 5 of the Articles of Incorporation
to preserve the General Partner's status as a real
estate investment trust, provided that such redemption
shall be upon the same terms as the corresponding
purchase pursuant to Article 5 of the Articles of
Incorporation.
(B) So long as distributions have not been paid in full (or
a sum sufficient for such full payment is not
irrevocably deposited in trust for payment) upon the
Series A Preferred Units, all distributions authorized
and declared on the Series A Preferred Units and all
classes or series of outstanding Parity Preferred Units
with respect to distributions shall be authorized and
declared so that the amount of distributions authorized
and declared per Series A Preferred Unit and such other
classes or series of Parity Preferred Units shall in
all cases bear to each other the same ratio that
accrued distributions per Series A Preferred Unit and
such other classes or series of Parity Preferred Units
(which shall not include any accumulation in respect of
unpaid distributions for prior distribution periods if
such class or series of Parity Preferred Units do not
have cumulative distribution rights) bear to each
other.
24
(v) No Further Rights. Holders of Series A Preferred Units shall
not be entitled to any distributions, whether payable in
cash, other property or otherwise, in excess of the full
cumulative distributions described herein.
(d) Liquidation Preference.
(i) Payment of Liquidating Distributions. Subject to the rights
of holders of Parity Preferred Units with respect to rights
upon any voluntary or involuntary liquidation, dissolution
or winding-up of the Partnership and subject to Partnership
Interests ranking senior to the Series A Preferred Units
with respect to rights upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership,
the holders of Series A Preferred Units shall be entitled to
receive out of the assets of the Partnership legally
available for distribution or the proceeds thereof, after
payment or provision for debts and other liabilities of the
Partnership, but before any payment or distributions of the
assets shall be made to holders of any class or series of
Partnership Interest that ranks junior to the Series A
Preferred Units as to rights upon liquidation, dissolution
or winding-up of the Partnership, an amount equal to the sum
of (i) a liquidation preference equal to their positive
Capital Account balances, determined after taking into
account all Capital Account adjustments for the Partnership
taxable year during which the liquidation occurs (other than
those made as a result of the liquidating distribution set
forth in this Section 4.5(d)(i) and (ii) an amount equal to
any accumulated and unpaid distributions thereon, whether or
not declared, to the date of payment. In the event that,
upon such voluntary or involuntary liquidation, dissolution
or winding-up, there are insufficient assets to permit full
payment of liquidating distributions to the holders of
Series A Preferred Stock and any Parity Preferred Units as
to rights upon liquidation, dissolution or winding-up of the
Partnership, all payments of liquidating distributions on
the Series A Preferred Units and such Parity Preferred Units
shall be made so that the payments on the Series A Preferred
Units and such Parity Preferred Units shall in all cases
bear to each other the same ratio that the respective rights
of the Series A Preferred Unit and such other Parity
Preferred Units (which shall not include any accumulation in
respect of unpaid distributions for prior distribution
periods if such Parity Preferred Units do not have
cumulative distribution rights) upon liquidation,
dissolution or winding-up of the Partnership bear to each
other.
(ii) Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership,
stating the payment date or dates when, and the place or
places where, the amounts distributable in such
circumstances shall be payable, shall be given by (x) fax
and (y) by first class mail, postage pre-paid, not less than
30 and not more that 60 days prior to the payment date
stated therein, to each record holder of the Series A
Preferred Units at the respective addresses of such holders
as the same shall appear on the transfer records of the
Partnership.
25
(iii) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the
holders of Series A Preferred Units will have no right or
claim to any of the remaining assets of the Partnership.
(iv) Consolidation, Merger or Certain Other Transactions. The
voluntary sale, conveyance, lease, exchange or transfer (for
cash, shares of stock, securities or other consideration) of
all or substantially all of the property or assets of the
General Partner to, or the consolidation or merger or other
business combination of the Partnership with or into, any
corporation, trust or other entity (or of any corporation,
trust or other entity with or into the Partnership) shall
not be deemed to constitute a liquidation, dissolution or
winding-up of the Partnership.
(e) Optional Redemption.
(i) Right of Optional Redemption. The Series A Preferred Units
may not be redeemed prior to the fifth anniversary of the
issuance date. On or after such date, the Partnership shall
have the right to redeem the Series A Preferred Units, in
whole or in part, at any time or from time to time, upon not
less than 30 nor more than 60 days' written notice, at a
redemption price, payable in cash, equal to the Capital
Account balance of the holder of Series A Preferred Units
(the "Series A Redemption Price"); provided, however, that
no redemption pursuant to this Section 4.5(e) will be
permitted if the Series A Redemption Price does not equal or
exceed the original Capital Contribution of such holder plus
the cumulative Series A Priority Return, whether or not
declared, to the redemption date to the extent not
previously distributed or distributed on the redemption date
pursuant to Section 4.5(c)(i). If fewer than all of the
outstanding Series A Preferred Units are to be redeemed, the
Series A Preferred Units to be redeemed shall be selected
pro rata (as nearly as practicable without creating
fractional units).
(ii) Limitation on Redemption.
(A) The Series A Redemption Price of the Series A Preferred
Units (other than the portion thereof consisting of
accumulated but unpaid distributions) will be payable
solely out of the sale proceeds of capital stock of the
General Partner, which will be contributed by the
General Partner to the Partnership as additional
capital contribution, or out of the sale of limited
partner interests in the Partnership and from no other
source. For purposes of the preceding sentence,
"capital stock" means any equity securities (including
Common Stock and Preferred Stock (as such terms are
defined in the Articles of Incorporation)), shares,
participation or other ownership interests (however
designated) and any rights (other than debt securities
convertible into or
26
exchangeable for equity securities) or options to
purchase any of the foregoing.
(B) The Partnership may not redeem fewer than all of the
outstanding Series A Preferred Units unless all
accumulated and unpaid distributions have been paid on
all Series A Preferred Units for all quarterly
distribution periods terminating on or prior to the
date of redemption.
(iii) Procedures for Redemption.
(A) Notice of redemption will be (i) faxed, and (ii) mailed by
the Partnership, by certified mail, postage prepaid, not
less than 30 nor more than 60 days prior to the redemption
date, addressed to the respective holders of record of the
Series A Preferred Units at their respective addresses as
they appear on the records of the Partnership. No failure to
give or defect in such notice shall affect the validity of
the proceedings for the redemption of any Series A Preferred
Units except as to the holder to whom such notice was
defective or not given. In addition to any information
required by law, each such notice shall state: (i) the
redemption date, (ii) the Series A Redemption Price, (iii)
the aggregate number of Series A Preferred Units to be
redeemed and if fewer than all of the outstanding Series A
Preferred Units are to be redeemed, the number of Series A
Preferred Units to be redeemed held by such holder, which
number shall equal such holder's pro rata share (based on
the percentage of the aggregate number of outstanding Series
A Preferred Units the total number of Series A Preferred
Units held by such holder represents) of the aggregate
number of Series A Preferred Units to be redeemed, (iv) the
place or places where such Series A Preferred Units are to
be surrendered for payment of the Series A Redemption Price,
(v) that distributions on the Series A Preferred Units to be
redeemed will cease to accumulate on such redemption date
and (vi) that payment of the Series A Redemption Price will
be made upon presentation and surrender of such Series A
Preferred Units.
(B) If the Partnership gives a notice of redemption in respect
of Series A Preferred Units (which notice will be
irrevocable) then, by 12:00 noon, New York City time, on the
redemption date, the Partnership will deposit irrevocably in
trust for the benefit of the Series A Preferred Units being
redeemed funds sufficient to pay the applicable Series A
Redemption Price and will give irrevocable instructions and
authority to pay such Series A Redemption Price to the
holders of the Series A Preferred Units upon surrender of
the Series A Preferred Units by such holders at the place
designated in the notice of redemption. If the Series A
Preferred Units are evidenced by a certificate and if fewer
27
than all Series A Preferred Units evidenced by any
certificate are being redeemed, a new certificate shall be
issued upon surrender of the certificate evidencing all
Series A Preferred Units, evidencing the unredeemed Series A
Preferred Units without cost to the holder thereof. On and
after the date of redemption, distributions will cease to
accumulate on the Series A Preferred Units or portions
thereof called for redemption, unless the Partnership
defaults in the payment thereof. If any date fixed for
redemption of Series A Preferred Units is not a Business
Day, then payment of the Series A Redemption Price payable
on such date will be made on the next succeeding day that is
a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made
on the immediately preceding Business Day, in each case with
the same force and effect as if made on such date fixed for
redemption. If payment of the Series A Redemption Price is
improperly withheld or refused and not paid by the
Partnership, distributions on such Series A Preferred Units
will continue to accumulate from the original redemption
date to the date of payment, in which case the actual
payment date will be considered the date fixed for
redemption for purposes of calculating the applicable Series
A Redemption Price.
(f) Voting Rights.
(i) General. Notwithstanding anything to the contrary contained
in this Agreement, Series A Preferred Partners will not have
any voting rights or right to consent to any matter
requiring the consent or approval of the Limited Partners,
except as otherwise expressly set forth in this Agreement
and except as set forth below.
(ii) Certain Voting Rights. So long as any Series A Preferred
Units remain outstanding, the Partnership shall not, without
the affirmative vote of the holders of at least two-thirds
of the Series A Preferred Units outstanding at the time (A)
authorize or create, or increase the authorized or issued
amount of, any class or series of Partnership Interests
ranking prior to the Series A Preferred Units with respect
to payment of distributions or rights upon liquidation,
dissolution or winding-up or reclassify any Partnership
Interests of the Partnership into any such Partnership
Interest, or create, authorize or issue any obligations or
security convertible into or evidencing the right to
purchase any such Partnership Interests, (B) authorize or
create, or increase the authorized or issued amount of any
Parity Preferred Units or reclassify any Partnership
Interest of the Partnership into any such Partnership
Interest or create, authorize or issue any obligations or
security convertible into or evidencing the right to
purchase any such Partnership Interests but only to the
extent such Parity Preferred Units are issued to an
affiliate of the Partnership, other than (I)
28
Security Capital or (II) the General Partner to the extent
the issuance of such interests was to allow the General
Partner to issue corresponding preferred stock to persons
who are not affiliates of the Partnership or (C) either (I)
consolidate, merge into or with, or convey, transfer or
lease its assets substantially as an entirety to, any
corporation or other entity or (II) amend, alter or repeal
the provisions of this Agreement, whether by merger,
consolidation or otherwise, that would materially and
adversely affect the powers, special rights, preferences,
privileges or voting power of the Series A Preferred Units
or the holders thereof; provided, however, that with respect
to the occurrence of a merger, consolidation or a sale or
lease of all of the Partnership's assets as an entirety, so
long as (a) the Partnership is the surviving entity and the
Series A Preferred Units remain outstanding with the terms
thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability
company or other pass-through entity organized under the
laws of any state and substitutes the Series A Preferred
Units for other interests in such entity having
substantially the same terms and rights as the Series A
Preferred Units, including with respect to distributions,
voting rights and rights upon liquidation, dissolution or
winding-up, then the occurrence of any such event shall not
be deemed to materially and adversely affect such rights,
privileges or voting powers of the holders of the Series A
Preferred Units and no vote of the Series A Preferred Units
shall be required in such case; and provided further that
any increase in the amount of Partnership Interests or the
creation or issuance of any other class or series of
Partnership Interests, in each case ranking (a) junior to
the Series A Preferred Units with respect to payment of
distributions and the distribution of assets upon
liquidation, dissolution or winding-up, or (b) on a parity
to the Series A Preferred Units with respect to payment of
distributions and the distribution of assets upon
liquidation, dissolution or winding-up to the extent such
Partnership Interest are not issued to an affiliate of the
Partnership, other than the General Partner to the extent
the issuance of such interests was to allow the General
Partner to issue corresponding preferred stock to persons
who are not affiliates of the Partnership, shall not be
deemed to materially and adversely affect such rights,
preferences, privileges or voting powers and no vote of the
Series A Preferred Units shall be required in such case.
(g) Exchange Rights.
(i) Right to Exchange.
(A) Series A Preferred Units will be exchangeable in whole
or in part at anytime on or after the tenth anniversary
of the date of issuance, at the option of the holders
thereof, for authorized but previously unissued shares
of 8.125% Series A Cumulative Redeemable Preferred
Stock of Regency (the "Series A Preferred Stock") at an
exchange rate of one share of Series A Preferred Stock
for one Series A Preferred Unit, subject to adjustment
as described below (the "Exchange
29
Price"), provided
that the Series A Preferred Units will become
exchangeable at any time, in whole or in part, at the
option of the holders of Series A Preferred Units for
Series A Preferred Stock if (I) at any time full
distributions shall not have been timely made on any
Series A Preferred Unit with respect to six (6) prior
quarterly distribution periods, whether or not
consecutive, provided, however, that a distribution in
respect of Series A Preferred Units shall be considered
timely made if made within two (2) Business Days after
the applicable Preferred Unit Distribution Payment Date
if at the time of such late payment there shall not be
any prior quarterly distribution periods in respect of
which full distributions were not timely made or (II)
upon receipt by a holder or holders of Series A
Preferred Units of (a) notice from the General Partner
that the General Partner or a Subsidiary of the General
Partner has taken the position that the Partnership is,
or upon the occurrence of a defined event in the
immediate future will be, a PTP and (b) an opinion
rendered by an outside nationally recognized
independent counsel familiar with such matters
addressed to a holder or holders of Series A Preferred
Units, that the Partnership is or likely is, or upon
the occurrence of a defined event in the immediate
future will be or likely will be, a PTP. In addition,
the Series A Preferred Units may be exchanged for
Series A Preferred Stock, in whole or in part, at the
option of any holder prior to the tenth anniversary of
the issuance date and after the third anniversary
thereof if such holder of a Series A Preferred Units
shall deliver to the General Partner either (i) a
private ruling letter addressed to such holder of
Series A Preferred Units or (ii) an opinion of
independent counsel reasonably acceptable to the
General Partner based on the enactment of temporary or
final Regulations or the publication of a Revenue
Ruling, in either case to the effect that an exchange
of the Series A Preferred Units at such earlier time
would not cause the Series A Preferred Units to be
considered "stock and securities" within the meaning of
Section 351(e) of the Code for purposes of determining
whether the holder of such Series A Preferred Units is
an "investment company" under Section 721(b) of the
Code if an exchange is permitted at such earlier date.
Furthermore, the Series A Preferred Units may be
exchanged in whole or in part for Series A Preferred
Stock at any time after the date hereof, if both (x)
the holder thereof concludes based on results or
projected results that there exists (in the reasonable
judgement of the holder) an imminent and substantial
risk that the holder's interest in the Partnership does
or will represent more than 19.5% of the total profits
or capital interests in the Partnership (determined in
accordance with Regulations Section 1.731-2(e)(4)) for
a taxable year, and (y) the holder delivers to the
General Partner an opinion of nationally recognized
independent counsel to the effect that there is an
imminent and substantial risk that the holder's
30
interest in the Partnership does or will represent more
than 19.5% of the total profits or capital interests in
the Partnership (determined in accordance with
Regulations Section 1.731-2(e)(4)) for a taxable year.
(B) Notwithstanding anything to the contrary set forth in
Section 4.5(g)(i)(A), if an Exchange Notice has been
delivered to the General Partner, then the General
Partner may, at its option, elect to redeem or cause
the Partnership to redeem all or a portion of the
outstanding Series A Preferred Units for cash in an
amount equal to the original Capital Contribution per
Series A Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. The
General Partner may exercise its option to redeem the
Series A Preferred Units for cash pursuant to this
Section 4.5(g)(i)(B) by giving each holder of record of
Series A Preferred Units notice of its election to
redeem for cash, within five (5) Business Days after
receipt of the Exchange Notice, by (i) fax, and (ii)
registered mail, postage paid, at the address of each
holder as it may appear on the records of the
Partnership stating (i) the redemption date, which
shall be no later than sixty (60) days following the
receipt of the Exchange Notice, (ii) the redemption
price, (iii) the place or places where the Series A
Preferred Units are to be surrendered for payment of
the redemption price, (iv) that distributions on the
Series A Preferred Units will cease to accrue on such
redemption date; (v) that payment of the redemption
price will be made upon presentation and surrender of
the Series A Preferred Units and (vi) the aggregate
number of Series A Preferred Units to be redeemed, and
if fewer than all of the outstanding Series A Preferred
Units are to be redeemed, the number of Series A Units
to be redeemed held by such holder, which number shall
equal such holder's pro-rata share (based on the
percentage of the aggregate number of outstanding
Series A Preferred Units the total number of Series A
Preferred Units held by such holder represents) of the
aggregate number of Series A Preferred Units being
redeemed.
(C) Upon the occurrence of an event giving rise to exchange
rights pursuant to Section 4.5(g)(i)(A), in the event
an exchange of all or a portion of Series Preferred A
Preferred Units pursuant to Section 4.5(g)(i)(A) would
violate the provisions on ownership limitation of the
General Partner set forth in Article 5 of the Articles
of Incorporation, the General Partner shall give
written notice thereof to each holder of record of
Series A Preferred Units, within five (5) Business Days
following receipt of the Exchange Notice, by (i) fax,
and (ii) registered mail, postage prepaid, at the
address of each such holder set forth in the records of
the Partnership. In such event, each holder of Series A
Preferred Units shall be entitled to exchange, pursuant
to the provision of Section 4.5(g)(ii) a number of
Series A Preferred Units which would comply with the
provisions on the ownership limitation of the General
31
Partner set forth in such Article 5 of the Articles of
Incorporation and any Series A Preferred Units not so
exchanged (the "Excess Units") shall be redeemed by the
Partnership for cash in an amount equal to the original
Capital Contribution per Excess Unit, plus any accrued
and unpaid distributions thereon, whether or not
declared, to the date of redemption. The written notice
of the General Partner shall state (i) the number of
Excess Units held by such holder, (ii) the redemption
price of the Excess Units, (iii) the date on which such
Excess Units shall be redeemed, which date shall be no
later than sixty (60) days following the receipt of the
Exchange Notice, (iv) the place or places where such
Excess Units are to be surrendered for payment of the
Series A Redemption Price, (iv) that distributions on
the Excess Units will cease to accrue on such
redemption date, and (v) that payment of the redemption
price will be made upon presentation and surrender of
such Excess Units. In the event an exchange would
result in Excess Units, as a condition to such
exchange, each holder of such units agrees to provide
representations and covenants reasonably requested by
the General Partner relating to (i) the widely held
nature of the interests in such holder, sufficient to
assure the General Partner that the holder's ownership
of stock of the General Partner (without regard to the
limits described above) will not cause any individual
to own in excess of 9.8% of the stock of the General
Partner; and (ii) to the extent such holder can so
represent and covenant without obtaining information
from its owners, the holder's ownership of tenants of
the Partnership and its affiliates.
(D) The redemption of Series A Preferred Units described in
Section 4.5(g)(i)(B) and (C) shall be subject to the
provisions of Section 4.5(e)(ii)(A) and Section
4.5(e)(iii)(B); provided, however, that for purposes
hereof the term "Series A Redemption Price" in Section
4.5(e)(ii)(A) and Section 4.5(e)(iii)(B) shall be read
to mean the original Capital Contribution per Series A
Preferred Unit being redeemed plus all accrued and
unpaid distributions to the redemption date.
(ii) Procedure for Exchange.
(A) Any exchange shall be exercised pursuant to a notice of
exchange (the "Exchange Notice") delivered to the
General Partner by the holder who is exercising such
exchange right, by (i) fax and (ii) by certified mail
postage prepaid. Upon request of the General Partner,
such holder delivering the Exchange Notice shall
provide to the General Partner in writing such
information as the General Partner may reasonably
request to determine whether any portion of the
exchange by the delivering holder will result in the
violation of the restrictions of Article 5 of the
Articles of Incorporation, including the Ownership
Limit and the Related Tenant Limit. The exchange of
Series A Preferred
32
Units, or a specified portion
thereof, may be effected after the fifth (5th) Business
Days following receipt by the General Partner of the
Exchange Notice and such requested information by
delivering certificates, if any, representing such
Series A Preferred Units to be exchanged together with,
if applicable, written notice of exchange and a proper
assignment of such Series A Preferred Units to the
office of the General Partner maintained for such
purpose. Currently, such office is 121 West Forsyth
Street, Suite 200, Jacksonville, Florida 32202. Each
exchange will be deemed to have been effected
immediately prior to the close of business on the date
on which such Series A Preferred Units to be exchanged
(together with all required documentation) shall have
been surrendered and notice shall have been received by
the General Partner as aforesaid and the Exchange Price
shall have been paid. Any Series A Preferred Stock
issued pursuant to this Section 4.5(g) shall be
delivered as shares which are duly authorized, validly
issued, fully paid and nonassessable, free of pledge,
lien, encumbrance or restriction other than those
provided in the Articles of Incorporation, the Bylaws
of the General Partner, the Securities Act and relevant
state securities or blue sky laws.
(B) In the event of an exchange of Series A Preferred Units
for shares of Series A Preferred Stock, an amount equal
to the accrued and unpaid distributions which are not
paid pursuant to Section 4.5(c)(i) hereof, whether or
not declared, to the date of exchange on any Series A
Preferred Units tendered for exchange shall (i) accrue
and be payable by the General Partner from and after
the date of exchange on the shares of the Series A
Preferred Stock into which such Series A Preferred
Units are exchanged, and (ii) continue to accrue on
such Series A Preferred Units, which shall remain
outstanding following such exchange, with the General
Partner as the holder of such Series A Preferred Units.
Notwithstanding anything to the contrary set forth
herein, in no event shall a holder of a Series A
Preferred Unit that was validly exchanged into Series A
Preferred Stock pursuant to this section (other than
the General Partner now holding such Series A Preferred
Unit), receive a distribution out of Available Cash or
Capital Transaction Proceeds of the Partnership with
respect to any Series A Preferred Units so exchanged.
(C) Fractional shares of Series A Preferred Stock are not
to be issued upon exchange but, in lieu thereof, the
General Partner will pay a cash adjustment based upon
the fair market value of the Series A Preferred Stock
on the day prior to the exchange date as determined in
good faith by the Board of Directors of the General
Partner.
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(iii) Adjustment of Exchange Price.
(A) The Exchange Price is subject to adjustment upon
certain events, including, (i) subdivisions,
combinations and reclassification of the Series A
Preferred Stock, and (ii) distributions to all holders
of Series A Preferred Stock of evidences of
indebtedness of the General Partner or assets
(including securities, but excluding dividends and
distributions paid in cash out of equity applicable to
Series A Preferred Stock).
(B) In case the General Partner shall be a party to any
transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer
for all or substantially all of the General Partner's
capital stock or sale of all or substantially all of
the General Partner's assets), in each case as a result
of which the Series A Preferred Stock will be converted
into the right to receive shares of capital stock,
other securities or other property (including cash or
any combination thereof), each Series A Preferred Unit
will thereafter be exchangeable into the kind and
amount of shares of capital stock and other securities
and property receivable (including cash or any
combination thereof) upon the consummation of such
transaction by a holder of that number of shares of
Series A Preferred Stock or fraction thereof into which
one Series A Preferred Unit was exchangeable
immediately prior to such transaction. The General
Partner may not become a party to any such transaction
unless the terms thereof are consistent with the
foregoing.
(h) No Conversion Rights. The holders of the Series A Preferred
Units shall not have any rights to convert such shares into
shares of any other class or series of stock or into any
other securities of, or interest in, the Partnership.
(i) No Sinking Fund. No sinking fund shall be established for
the retirement or redemption of Series A Preferred Units.
Article 5
Distributions
Section 5.1 Requirement and Characterization of Distributions.
(a) Subject to Section 5.1(b), the General Partner shall:
(i) distribute quarterly an amount equal to 100% of Available Cash
generated by the Partnership during such quarter to the holders
of Original Limited Partnership Units, Additional Units and
General Partner Units, pro rata based on the number of such Units
by each; and
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(ii) distribute Capital Transaction Proceeds received by the
Partnership within 30 days after the date of such Capital
Transaction to the holders of Original Limited Partnership Units,
Additional Units and General Partner Units, pro rata based on the
number of such Units held by each.
Notwithstanding the foregoing, if the General Partner holds Units
that mirror outstanding shares of special common stock of the
General Partner and such shares of special common stock bear a
quarterly dividend per share that is different from the cash
dividend on a share of Common Stock, distributions under this
Section 5.1(a) shall be adjusted as appropriate to pay the
amounts required with respect to such Units, but such Units shall
not be senior as to the other Common Units with respect to
distributions under this Section 5.1(a).
(b) Anything herein to the contrary notwithstanding, no Available Cash or
Capital Transaction Proceeds shall be distributed pursuant to Section
5.1 or any other provision of this Article 5 unless all distributions
accumulated on all Series A Preferred Units pursuant to Section 4.5
have been paid in full and unless all distributions accumulated on any
other outstanding Preferred Units have been paid in full.
Section 5.2 Amounts Withheld. All amounts withheld pursuant to the Code or
any provisions of any state or local tax law and Section 5.3 hereof with respect
to any allocation, payment or distribution to the General Partner, or any
Limited Partners or Assignees shall be promptly paid, solely out of funds of the
Partnership (except as otherwise provided in Section 5.3 in connection with the
exercise by a Limited Partner of a Redemption Right), by the General Partner to
the appropriate taxing authority and treated as amounts distributed to the
General Partner or such Limited Partners or Assignees pursuant to Section 5.1
for all purposes under this Agreement.
Section 5.3 Withholding. Each Limited Partner hereby authorizes the
Partnership to withhold from or pay on behalf of or with respect to such Limited
Partner any amount of federal, state, local, or foreign taxes that the General
Partner determines that the Partnership is required to withhold or pay with
respect to any amount distributable or allocable to such Limited Partner
pursuant to this Agreement or with respect to the exercise by such Limited
Partner of the Redemption Rights set forth in Section 8.6 or in any separate
agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the
Code and Section 48-7-129 of the Official Code of Georgia Annotated. Any amount
paid on behalf of or with respect to a Limited Partner shall constitute a loan
by the Partnership to such Limited Partner, which loan shall be repaid by such
Limited Partner within 15 days after notice from the General Partner that such
payment must be made unless (i) the Partnership withholds such payment from a
distribution which would otherwise be made to the Limited Partner or (ii) the
General Partner determines, in its sole and absolute discretion, that such
payment may be satisfied out of the available funds of the Partnership which
would, but for such payment, be distributed to the Limited Partner. Any amounts
withheld pursuant to the foregoing clauses (i) or (ii) shall be treated as
having been distributed to such Limited Partner and shall be promptly paid,
solely
35
out of funds of the Partnership, by the General Partner to the
appropriate taxing authority. Each Limited Partner hereby unconditionally and
irrevocably grants to the Partnership a security interest in such Limited
Partner's Partnership Interest as to secure such Limited Partner's obligation to
pay to the Partnership any amounts required to be paid pursuant to this Section
5.3 (together with attorney's fees and other costs in enforcing the
Partnership's rights against the collateral). In the event that a Limited
Partner or Redeeming Partner fails to pay any amounts owed to the Partnership
pursuant to this Section 5.3 when due, the General Partner may, in its sole and
absolute discretion, elect to make the payment on behalf of such defaulting
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Partner (including, without limitation,
in the case of a default by other than a Redeeming Partner the right to receive
distributions from the Partnership). Any amounts payable by a Limited Partner or
a Redeeming Partner hereunder shall bear interest at the Prime Rate, plus two
percentage points (but not higher than the maximum lawful rate) from the date
such amount is due (i.e., 15 days after demand) until such amount is paid in
full. In the event that the Partnership or the General Partner is required to
withhold tax with respect to the exercise by a Limited Partner of a Redemption
Right, the Limited Partner exercising the Redemption Right shall make
arrangements with the Partnership or the General Partner, as the case may be, to
provide the funds to the Partnership necessary to effect the required
withholding. In the event that, pursuant to applicable laws and regulations, the
General Partner may withhold a reduced amount pending a determination by
applicable taxing authorities as to whether any additional withholding tax must
subsequently be deposited, the General Partner shall have the right to require
the Redeeming Partner to pledge a first priority security interest in a portion
of the Redemption Amount as collateral for the Redeeming Partner's obligation to
provide the funds necessary to effect any subsequent required holding (together
with attorney's fees and other costs in enforcing the Partnership's rights
against the collateral), in an amount in the case of a Share Amount equal to
Shares having a Value on the date of the pledge equal to 125% of the maximum
possible subsequent required withholding (or 100% of the maximum possible
subsequent required withholding if the Redemption Amount is paid in the form of
the Cash Amount) (the "Withholding Collateral"). The General Partner shall be
entitled to retain possession of the Withholding Collateral until either the
Redeeming Partner provides funds to the General Partner sufficient to make any
subsequent required withholding deposit or the General Partner receives a
determination from the applicable authorities that no subsequent withholding is
required. All dividends, distributions, interest or other income on the
Withholding Collateral while subject to the pledge hereunder shall be paid to
the Redeeming Partner pledging the Withholding Collateral. If the applicable
authorities advise that subsequent withholding is required and the Redeeming
Partner does not deliver the necessary funds to the General Partner within 20
days after receipt of the General Partner's request therefor, the General
Partner shall be entitled to exercise all rights and remedies of a secured party
under the Uniform Commercial Code with respect to the Withholding Collateral.
Each Limited Partner and each Redeeming Partner shall take such actions as the
Partnership or the General Partner shall request in order to perfect or enforce
the security interest created hereunder.
36
Section 5.4 Distributions Upon Liquidation. Notwithstanding anything
contained in Section 5.1 to the contrary, proceeds from a Liquidating
Transaction shall be distributed to the Partners in accordance with Section
13.2.
Article 6
Allocations
Section 6.1 Allocations of Net Income and Net Loss. For purposes of
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership's Net Income and Net Loss shall be allocated
among the Partners for each taxable year (or portion thereof) as provided herein
below.
(a) Net Income. Net Income for any taxable year (or portion thereof) shall
be allocated, after giving effect to the special allocations set forth
in Section 6.2 below, as follows:
(i) First, one hundred percent (100%) to the General Partner in an
amount equal to the excess, if any, of (A) the cumulative Net
Losses allocated to the General Partner pursuant to the last
sentence of Section 6.1(b) and Section 6.1(b)(iv) for all prior
fiscal years, over (B) the cumulative Net Income allocated
pursuant to this Section 6.1(a)(i) for all prior fiscal years;
(ii) Second, one hundred percent (100%) to the Series A Preferred
Partners in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to the Series A Preferred
Partners pursuant to Section 6.1(b)(ii) and Section 6.1(b)(viii)
of the Third Amended Agreement for all prior fiscal years, over
(B) the cumulative Net Income allocated pursuant to this Section
6.1(a)(ii) and Section 6.1(a)(ii) of the Third Amended Agreement
(including any amounts allocated pursuant to Section 6.2(g) of
the Third Amended Agreement which were attributable to Section
6.1(a)(ii) of the Third Amended Agreement) for all prior fiscal
years;
(iii) Third, one hundred percent (100%) to the holders of the Common
Units in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to such Partners for all prior
fiscal years pursuant to Section 6.1(b)(iii) over (B) the
cumulative Net Income allocated pursuant to this Section
6.1(a)(iii) for all prior fiscal years;
(iv) Fourth, one hundred percent (100%) to the Series A Preferred
Partners until the Series A Preferred Partners have been
allocated an amount equal to the excess of the cumulative Series
A Priority Return through the last day of the current fiscal year
(determined without reduction for distributions made to date in
satisfaction thereof) over the cumulative Net Income allocated to
the Series A Preferred Partners pursuant to this Section
6.1(a)(iii), and Section 6.1(a)(v) of the Third Amended Agreement
(including any amounts allocated pursuant to Section 6.2(g) of
the Third Amended Agreement which were
37
attributable to Section 6.1(a)(v) of the Third Amended Agreement)
for all prior periods; and
(v) Thereafter, to the holders of the Common Units and the General
Partner and any other holders of General Partner Units, pro rata
in accordance with the relative number of Units held by each;
provided, however, if the General Partner holds Units that mirror
outstanding shares of special common stock and such shares of
special common stock bear a quarterly dividend per share that is
different from the cash dividend on a share of Common Stock,
allocations of Net Income under this Section 6.1(a)(v) shall be
adjusted as appropriate to allocate amounts to the General
Partner with respect to such Units to mirror the different
quarterly dividend per share.
(b) Net Losses. Net Losses for any taxable year (or portion thereof)
during which Available Cash and Capital Transaction Proceeds are
distributed pursuant to Section 5.1 shall be allocated, after giving
effect to the special allocations set forth in Section 6.2 below, as
follows:
(i) First, one hundred percent (100%) to the holders of the Common
Units and the General Partner in proportion to such Partners'
Adjusted Capital Accounts until the Adjusted Capital Account of
each such Partner has been reduced to zero (for this purpose, any
obligation of such Partner to restore a negative Capital Account
under this Agreement or otherwise recognized under Regulation
Section 1.704-1(b)(2)(ii)(c) shall be disregarded, and any
portion of such Capital Account attributable to Preferred Units
by such Partner shall be disregarded); and
(ii) Second, to the Series A Preferred Partners until their Adjusted
Capital Account balance (determined, solely for purposes of this
Section 6.1(b)(i), without regard to any obligation of a Partner
to restore a negative Capital Account under Section 13.4, has
been reduced to zero); and
(iii) Third, to the holders of the Common Units who have elected to
restore a portion of their negative Capital Accounts under
Section 13.4, in proportion to and to the extent of such amounts;
and
(iv) Thereafter, any remaining Net Loss shall be allocated to the
General Partner.
Notwithstanding the foregoing, Net Losses shall not be allocated to any Limited
Partner pursuant to this Section 6.1(b) to the extent that such allocation would
cause such Limited Partner to have an Adjusted Capital Account Deficit at the
end of such taxable year (or increase any existing Adjusted Capital Account
Deficit). All Net Losses in excess of the limitations set forth in the preceding
sentence of this Section 6.1(b) shall be allocated to the General Partner.
38
(c) Nonrecourse Liabilities. The Partners agree that excess Nonrecourse
Liabilities of the Partnership (within the meaning of Section
1.752-3(a)(3) of the Regulations) will be allocated among the Partners
for purposes of Section 752 of the Code in accordance with their
respective Percentage Interests.
(d) Gains. Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall to the extent
possible, after taking into account other required allocations of gain
pursuant to Section 6.2 below, be characterized as Recapture Income in
the same proportions and to the same extent as such Partners have been
allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income.
Section 6.2 Special Allocation Rules. Notwithstanding any other provision
of this Agreement, the following special allocations shall be made in the
following order:
(a) Minimum Gain Chargeback. Notwithstanding any other provisions of
Article 6, if there is a net decrease in Partnership Minimum Gain
during any Partnership Year, each Partner shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Partner's share of the
net decrease in Partnership Minimum Gain, as determined under
Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items
to be so allocated shall be determined in accordance with Regulations
Section 1.704-2(f)(6). This Section 6.2(a) is intended to comply with
the minimum gain chargeback requirements in Regulations Section
1.704-2(f) and for purposes of this Section 6.2(a) only, each
Partner's Adjusted Capital Account Deficit shall be determined prior
to any other allocations pursuant to Section 6.1 of the Agreement with
respect to such fiscal year and without regard to any decrease in
Partner Minimum Gain during such Partnership Year.
(b) Partner Minimum Gain Chargeback. Notwithstanding any other provision
of Article 6 (except Section 6.2(a) hereof), if there is a net
decrease in Partner Minimum Gain attributable to a Partner Nonrecourse
Debt during any Partnership Year, each Partner who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(5), shall
be specially allocated items of Partnership income and gain for such
year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(5). Allocations
pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant
thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i)(4). This Section 6.2(b)
is intended to comply with the minimum gain chargeback requirement in
such Section of the Regulations and shall be interpreted consistently
therewith. Solely for purposes of this Section 6.2(b), each
39
Partner's Adjusted Capital Account Deficit shall be determined prior
to any other allocations pursuant to Article 6 of this Agreement with
respect to such Partnership Year, other than allocations pursuant to
Section 6.2(a) hereof.
(c) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
or 1.704-1(b)(2)(ii)(d)(6), and after giving effect to the allocations
required under Section 6.2(a) and Section 6.2(b) hereof, such Partner
has an Adjusted Capital Account Deficit, items of Partnership income
and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the
Regulations, its Adjusted Capital Account Deficit created by such
adjustments, allocations or distributions as quickly as possible.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any taxable period
shall be allocated to the Partners in accordance with their respective
Percentage Interests.
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for
any Partnership Year shall be specially allocated to the Partner who
bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(2).
(f) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b)
or 743(b) of the Code is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall
be treated as an item of gain (if the adjustment increases the basis
of the asset) or loss (if the adjustment decreases such basis), and
such item of gain or loss shall be specially allocated to the Partners
in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such Section of the
Regulations.
Section 6.3 Allocations for Tax Purposes.
(a) General. Except as otherwise provided in this Section 6.3, for federal
income tax purposes, each item of income, gain, loss and deduction
shall be allocated among the Partners in the same manner as its
correlative item of "book" income, gain, loss or deduction is
allocated pursuant to Section 6.1 and Section 6.2 of this Agreement.
(b) Other Allocation Rules.
(i) For purposes of determining Net Income, Net Losses, or other
items allocable to any period, Net Income, Net Losses, and any
such other items shall be determined on a daily, monthly, or
other basis, as determined by the
40
General Partner using any permissible method under Section 706 of
the Code and the Regulations thereunder.
(ii) In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Partnership shall,
solely for tax purposes, be allocated among the Partners so as to
take account of any variation between the adjusted basis of such
property to the Partnership for federal income tax purposes and
its initial Gross Asset Value.
(iii) To the extent that the fair market value of a property
contributed to the Partnership by Branch Properties, L.P.
differed from its adjusted tax basis at the time it was
originally contributed to Branch Properties, L.P. (the "Original
Book-Tax Disparity"), the allocation of tax items with respect to
such contributed property shall take into account any remaining
Original Book-Tax Disparity at the time such property is
contributed to the Partnership in a manner consistent with the
principles of Section 704(c) of the Code, using the "traditional
method" under Section 1.704-3(b) of the Regulations, so that the
Limited Partners who originally contributed such property to
Branch Properties, L.P. (or their successors-in-interest) bear
the tax burden (or benefit, if applicable) of the remaining
Original Book-Tax Disparity.
(iv) In the event the Gross Asset Value of any Partnership asset is
adjusted, subsequent allocations of income, gain, loss, and
deductions with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal
income tax purposes and its Gross Asset Value in the same manner
as under Code Section 704(c) and the Regulations thereunder. Any
elections or other decisions relating to Code Section 704(c)
allocations shall be made by the General Partner; provided,
however, that the "traditional method" of making Section 704(c)
allocations without curative allocations described in Section
1.704-3(b) of the Regulations shall be used. Allocations pursuant
to Sections 6.3(b)(ii), (iii) and (iv) hereof are solely for
purposes of federal, state, and local taxes and shall not affect,
or in any way be taken into account in computing, any Partner's
Capital Account or share of Net Income, Net Losses, other items,
or distributions pursuant to any provision of this Agreement.
Article 7
Management And Operations Of Business
Section 7.1 Management.
(a) Powers of General Partner. Except as otherwise expressly provided in
this Agreement, all management powers over the business and affairs of
the Partnership are exclusively vested in the General Partner, and no
Limited Partner shall have any
41
right to participate in or exercise control or management power over
the business and affairs of the Partnership. Notwithstanding anything
to the contrary in this Agreement, the General Partner may not be
removed by the Limited Partners with or without cause. In addition to
the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the General
Partner under any other provision of this Agreement, the General
Partner shall have full power and authority to do all things deemed
necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 hereof
and to effectuate the purposes set forth in Section 3.1 hereof,
including, without limitation:
(i) the making of any expenditures, the lending or borrowing of money
(including, without limitation, borrowing money to permit the
Partnership to make distributions to its Partners in such amounts
as will permit Regency (so long as Regency desires to qualify as
a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Section
4981 of the Code) and to make distributions to its shareholders
sufficient to permit Regency to maintain REIT status), the
assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of
indebtedness (including the securing of same by mortgage, deed of
trust or other lien or encumbrance on the Partnership's assets),
the incurring of any obligations it deems necessary for the
conduct of the activities of the Partnership, and the repayment
(including prepayment) of such indebtedness, liabilities and
obligations;
(ii) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership;
(iii) the acquisition, disposition, conveyance, mortgage, pledge,
encumbrance, hypothecation or exchange of all or any assets of
the Partnership or the merger or other combination of the
Partnership with or into another entity (provided that such
merger or other combination does not result in the Partnership
recognizing taxable gain or loss for federal income tax purposes)
on such terms as the General Partner deems proper (subject to
Section 7.6 in the case of transactions between the Partnership
and the General Partner or any Affiliate), and no approval of the
Limited Partners shall be required for the exercise of such
powers, provided, however, that the General Partner shall use
reasonable efforts to effect all dispositions of the
Partnership's assets that were contributed by the Limited
Partners in accordance with Section 1031 of the Code although,
except as provided in Section 7.1(c) hereof, it shall not be
required to do so;
(iv) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the
terms of this Agreement and on any terms it sees fit, including,
without limitation, the
42
financing of the conduct of the operations of the General
Partner, the Partnership or any of the Partnership's
Subsidiaries, the lending of funds to other Persons (including
Regency or any of the Partnership's Subsidiaries) and the
repayment of obligations of the Partnership and its Subsidiaries
and any other Person in which it has an equity investment and the
making of capital contributions to its Subsidiaries, the holding
of any real, personal and mixed property of the Partnership in
the name of the Partnership or in the name of a nominee or
trustee (subject to Section 7.10), the creation, by grant or
otherwise, of easements or servitudes, and the performance of any
and all acts necessary or appropriate to the operation of the
Partnership assets including, but not limited to, applications
for rezoning, objections to rezoning, constructing, altering,
improving, repairing, renovating, rehabilitating, razing,
demolishing or condemning any improvements or property of the
Partnership;
(v) the negotiation, execution, and performance of any contracts,
conveyances or other instruments (including with Affiliates of
the Partnership to the extent provided in Section 7.6) that the
General Partner considers useful or necessary to the conduct of
the Partnership's operations or the implementation of the General
Partner's powers under this Agreement, including, without
limitation, the execution and delivery of a REIT management
agreement on behalf of or in the name of the Partnership
providing for the day-to-day management and operation of the
Partnership and including, without limitation, the execution and
delivery of leases on behalf of or in the name of the Partnership
(including the lease of Partnership property for any purpose and
without limit as to the term thereof, whether or not such term
(including renewal terms) shall extend beyond the date of
termination of the Partnership and whether or not the portion so
leased is to be occupied by the lessee or, in turn, subleased in
whole or in part to others);
(vi) the opening and closing of bank accounts, the investment of
Partnership funds in securities, certificates of deposit and
other instruments, and the distribution of Partnership cash or
other Partnership assets in accordance with this Agreement;
(vii) the selection and dismissal of employees of the Partnership or
the General Partner (including, without limitation, employees
having titles such as "president," "vice president," "secretary"
and "treasurer"), and the engagement and dismissal of agents,
outside attorneys, accountants, engineers, appraisers,
consultants, contractors and other professionals on behalf of the
General Partner or the Partnership and the determination of their
compensation and other terms of employment or hiring;
(viii) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or
appropriate;
43
(ix) subject to the provisions of Section 4.2 hereof, the formation
of, or acquisition of an interest in, and the contribution of
property to any further limited or general partnerships, joint
ventures or other relationships that it deems desirable
(including, without limitation, the acquisition of interests in,
and the contribution of property to, its Subsidiaries and any
other Person in which it has an equity investment from time to
time) (provided that such transaction does not result in the
Partnership recognizing taxable gain or loss for federal income
tax purposes);
(x) the control of any matters affecting the rights and obligations
of the Partnership, including the conduct of litigation and the
incurring of legal expense and the settlement of claims and
litigation, the submission of any matter to arbitration, and the
indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(xi) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries
or any other Person (including, without limitation, the
contribution or loan of funds by the Partnership to such Persons)
(provided that such action does not result in the Partnership
recognizing taxable gain or loss for federal income tax
purposes);
(xii) the distribution in kind of the Briarcliff Village property
pursuant to Section 13.2(c);
(xiii) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as it may adopt; and
(xiv) the execution, acknowledgment and delivery of any and all
documents and instruments to effectuate any or all of the
foregoing.
(b) No Approval Required for Above Powers. Subject to any other
restriction set forth in this Agreement, each of the Limited Partners
agrees that the General Partner is authorized to execute, deliver and
perform the above-mentioned agreements and transactions on behalf of
the Partnership without any further act, approval or vote of the
Partners, notwithstanding any other provision of this Agreement
(except where the Consent of the Limited Partners or the consent of
the Series A Preferred Partners or of any other class or series of
Partnership Interests is expressly required herein), the Act or any
applicable law, rule or regulation. The execution, delivery or
performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a
breach by the General Partner of any duty that the General Partner may
owe the Partnership or the Limited Partners or any other Persons under
this Agreement or of any duty stated or implied by law or equity.
44
(c) Approval of Sale of Briarcliff Village. Except pursuant to the
dissolution and liquidation of the Partnership in accordance with
Article 13 hereof, the property commonly known as Briarcliff Village
(the "Briarcliff Village Property") shall not be sold by the
Partnership or the General Partner on or before December 19, 2005
(other than in a transaction in which the Partnership recognizes no
taxable gain or loss for federal income purposes) without the approval
of a Majority-in-Interest of the Original Briarcliff Partners (as
defined below) who continue, as of such time, to hold Original Limited
Partnership Units attributable to the contribution of the Briarcliff
Village Property to Branch Properties, L.P. and Branch Properties,
L.P.'s subsequent contribution of the Briarcliff Village Property to
the Partnership (the "Original Briarcliff Partners"). Such approval
right of the Original Briarcliff Partners is personal to the Original
Briarcliff Partners and shall terminate upon the death of an Original
Briarcliff Partner or a sale, assignment, conveyance, or other
transfer by an Original Briarcliff Partner, with respect to that
Partner's Original Limited Partnership Units, and shall not be
exercisable by any successor, transferee or assignee of an Original
Briarcliff Partner. In the event of a like-kind exchange involving the
Briarcliff Village Property by the Partnership, then such approval
right for the benefit of the Original Briarcliff Partners will
continue to be enforceable after such like-kind exchange, but shall
relate to the property (whether real, personal or mixed, tangible or
intangible) acquired by the Partnership in such like-kind exchange.
Nothing herein shall be deemed to require that the Partnership or the
General Partner take any action to avoid or prevent an involuntary
disposition of all or part of said Briarcliff Village pursuant to a
condemnation proceeding or other taking. For purposes of this Section
7.1(c), Majority-In-Interest of the Original Briarcliff Partners shall
mean the Original Briarcliff Partners who hold, in the aggregate, more
than fifty percent (50%) of the Percentage Interests then allocable to
and held by all of the Original Briarcliff Partners with respect to
the Original Limited Partnership Units received by the Original
Briarcliff Partners as a result of the contribution of the Briarcliff
Village Property to Branch Properties, L.P. and Branch Properties,
L.P.'s subsequent contribution of the Briarcliff Village Property to
the Partnership. The Partnership shall not engage in any merger,
consolidation or other business combination with or into another
Person unless the Partnership has entered into an agreement with such
Person in which such Person expressly agrees to be bound by the
provisions of this Section 7.1(c).
(d) Insurance. At all times from and after the date hereof, the General
Partner may cause the Partnership to obtain and maintain casualty,
liability and other insurance on the properties of the Partnership and
liability insurance for the Indemnitees hereunder.
(e) Working Capital and Other Reserves. At all times from and after the
date hereof, the General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as the
General Partner, in its sole and absolute discretion, deems
appropriate and reasonable from time to time. Subject to the proviso
in the last part of Section 3.1, the General Partner also may cause
the Partnership to establish reserves out of cash flow not
constituting Capital Transaction
45
Proceeds as well as out of Capital Transaction Proceeds for the
purpose of purchasing, improving or expanding Partnership property.
(f) No Obligation to Consider Tax Consequences to Limited Partners. Except
as provided in Section 7.1(c) and Section 13.2(c) with respect to
Briarcliff Village, except as provided in Section 7.1(g) with respect
to the sale of the Management Business, and except for the obligation
of the General Partner set forth in Section 7.1(a)(iii) to use
reasonable efforts to effect all dispositions of the Partnership's
assets that were contributed by the Limited Partners in accordance
with Section 1031 of the Code, (i) in exercising its authority under
this Agreement, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any Partner
of any action taken by it, and (ii) the General Partner and the
Partnership shall not have liability to a Limited Partner under any
circumstances as a result of an income tax liability incurred by such
Limited Partner as a result of an action (or inaction) by the General
Partner pursuant to its authority under this Agreement.
(g) Approval of Sale of Management Business. Notwithstanding anything
contained herein to the contrary, the Third Party Management Business
(as defined in the Contribution Agreement) contributed by Branch
Properties, L.P. to the Partnership as part of its initial Capital
Contribution (the "Management Business") shall not be sold by the
Partnership on or before the tenth (10th) anniversary of the First
Closing (other than in a transaction in which the Partnership
recognizes no taxable gain or loss for federal income tax purposes);
provided, however, that the Partnership shall be permitted to
undertake the following transactions: (i) contribution of the
Management Business to a corporation (the "New Management Company") in
which the Partnership owns five percent (5%) of the issued and
outstanding voting common stock and 100% of the issued and outstanding
non-voting preferred stock and in which The Regency Group, Inc., a
Florida corporation, owns ninety-five percent (95%) of the issued and
outstanding voting common stock and in which no other shares of stock
are issued and outstanding following the contribution; (ii) a
distribution by the Partnership of part or all of the stock of the New
Management Company to the General Partner on or after the fifth (5th)
anniversary of the First Closing; or (iii) a sale of part or all of
the stock of the New Management Company if no Original Limited
Partners hold Units which they received on the date of this Agreement
or any Additional Units received by them subsequent to the date of
this Agreement, or with the unanimous written consent of the Original
Limited Partners then holding such Units).
Section 7.2 Certificate of Limited Partnership. To the extent that such
action is determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership as a limited
partnership (or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other jurisdiction
in which the Partnership may elect to do business or own property. Subject to
the terms of Section 8.5(a)(iv) hereof, the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
or any amendment thereto to any Limited Partner.
46
The General Partner shall use all reasonable efforts to cause to be filed such
other certificates or documents as may be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the Limited Partners have limited
liability) in the State of Delaware and any other jurisdiction in which the
Partnership may elect to do business or own property.
Section 7.3 Restriction on General Partner's Authority. Without the consent
of all the Limited Partners, the General Partner may not:
(a) Take any action that would make it impossible to carry on the ordinary
business of the Partnership, except as otherwise provided in this
Agreement;
(b) Possess Partnership property for other than a Partnership purpose;
(c) Admit a Person as a Partner, except as otherwise provided in this
Agreement; or
(d) Perform any act that would subject a Limited Partner to liability as a
general partner.
Section 7.4 Responsibility for Expenses.
(a) No Compensation. Except as provided in this Section 7.4 and elsewhere
in this Agreement (including the provisions of Article 5 and Article 6
regarding distributions, payments, and allocations to which it may be
entitled), the General Partner shall not be compensated for its
services as general partner of the Partnership.
(b) Responsibility for Ownership and Operation Expenses. The Partnership
shall be responsible for and shall pay all expenses relating to the
Partnership's ownership of its assets, and the operation of, or for
the benefit of, the Partnership, and the General Partner shall be
reimbursed on a monthly basis, or such other basis as the General
Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to the Partnership's ownership of its
assets and the operation of, or for the benefit of, the Partnership.
Such reimbursements shall be in addition to any reimbursement to the
General Partner pursuant to Section 10.3(c) and as a result of
indemnification pursuant to Section 7.7. The General Partner shall
determine in good faith the amount of expenses incurred by it relating
to the operation of, or that inure to the benefit of, the Partnership.
In the event that certain expenses are incurred for the benefit of the
Partnership and other Persons (including the General Partner), such
expenses will be allocated to the Partnership and such other Persons
in such a manner as the General Partner deems fair and reasonable.
(c) Responsibility for Organizational Expenses. The Partnership shall be
responsible for and shall pay all expenses incurred relating to the
organization of the Partnership.
47
(d) Partnership Interest Issuance Expenses. The General Partner shall be
reimbursed for all expenses it incurs relating to any issuance of
additional Partnership Interests pursuant to Section 4.2 or Section
4.5 hereof, all of which shall be expenses of the Partnership.
(e) Other Expenses. The Partnership agrees to pay, as costs and expenses
of the Partnership, any reasonable costs and expenses reasonably
incurred by the General Partner which do not specifically relate to
the Partnership's operations but are necessary or desirable in
connection with the General Partner's business or for the benefit of
the General Partner's shareholders, including expenses of employees of
the General Partner that are not specifically allocable to services
provided to the Partnership, directors' fees paid by the General
Partner, the costs of complying with applicable statutes and
regulations (including preparing and filing periodic reports with the
Securities and Exchange Commission) and costs and expenses incurred in
issuing or redeeming shares of the General Partner where the proceeds
of such shares have been contributed to the Partnership. The Limited
Partners expressly acknowledge that the Limited Partners will benefit
by reason of the distribution provisions of Section 5.1, and that the
Limited Partners therefore will benefit indirectly from the
Partnership paying such expenses.
Section 7.5 Outside Activities of the General Partner. The General Partner
shall not directly, or indirectly through any Affiliate, enter into, engage in
or conduct any activity or performing for a fee any service including (without
limiting the generality of the foregoing) engaging in any business dealing with
real property of any type or location, except through or for the account of the
Partnership; provided, however, that to the extent required by the then current
federal income tax law or determined by the General Partner to be in the best
interest of its shareholders under the then current federal income tax law, the
General Partner or any of its Affiliates may hold stock or other interests in
Regency Realty Group, Inc. or its successors.
Section 7.6 Contracts with Affiliates.
(a) General. The General Partner or any of its Affiliates may enter into
transactions or agreements with the Partnership, including
transactions and agreements (i) to sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly
or indirectly, or (ii) for the provision of services to the
Partnership, provided that such transactions or agreements, including
transactions and agreements with Security Capital Investment Research,
Inc. or any of its Affiliates, are on terms that are fair and
reasonable and no less favorable to the Partnership than would be
obtained from an unaffiliated third party in connection therewith. In
entering into such transactions with Affiliates the General Partner
shall not allocate expenses and similar items disproportionately
between the General Partner and the Partnership.
(b) Employee Benefit Plans. The General Partner may propose and adopt on
behalf of the Partnership employee benefit plans funded by the
Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the
48
Partnership or any Affiliate of any of them in respect of services
performed, directly or indirectly, for the benefit of the Partnership,
the General Partner, or any of the Partnership's Subsidiaries.
(c) Conflict Avoidance Agreements. The General Partner is expressly
authorized to enter into, in the name and on behalf of the
Partnership, a right of first opportunity arrangement and other
conflict avoidance agreements with various Affiliates of the
Partnership and the General Partner, on such terms as the General
Partner believes are advisable, subject to the provisions of Section
7.6(a) hereof.
Section 7.7 Indemnification.
(a) General. The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses), judgments,
fines, settlements, and other amounts arising from any and all claims,
demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement in which any Indemnitee may
be involved, or is threatened to be involved, as a party or otherwise,
unless it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding
and constituted willful misconduct or fraud; (ii) the Indemnitee
actually received an improper personal benefit in money, property or
services; or (iii) in the case of any criminal proceeding, the
Indemnitee had reasonable cause to believe that the act or omission
was unlawful. The termination of any proceeding by judgment, order or
settlement does not create a presumption that the Indemnitee did not
meet the requisite standard of conduct set forth in this Section
7.7(a). The termination of any proceeding by conviction or upon a plea
of nolo contendere or its equivalent, or an entry of an order of
probation prior to judgment, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this
Section 7.7(a). Any indemnification pursuant to this Section 7.7 shall
be made only out of the assets of the Partnership.
(b) Advancement of Expenses. Reasonable expenses incurred by an Indemnitee
who is, or is threatened to be made, a party to a proceeding may be
paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith
belief that the standard of conduct necessary for indemnification by
the Partnership as authorized in this Section 7.7 has been met and
(ii) a written undertaking by or on behalf of the Indemnitee to repay
the amount if it shall ultimately be determined that the standard of
conduct has not been met.
(c) No Limitation of Rights. The indemnification provided by this Section
7.7 shall be in addition to any other rights to which an Indemnitee or
any other Person may be entitled under any agreement, pursuant to any
vote of the Partners, as a matter
49
of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity.
(d) Insurance. The Partnership may purchase and maintain insurance, on
behalf of the Indemnitees and such other Persons as the General
Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection
with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
(e) No Personal Liability for Partners. In no event may an Indemnitee
subject any Partner to personal liability by reason of the
indemnification provisions set forth in this Agreement.
(f) Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which
the indemnification applies if the transaction was otherwise permitted
by the terms of this Agreement.
(g) Benefit. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights for the benefit of any other
Persons.
Section 7.8 Liability of the General Partner.
(a) General. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary
damages to the Partnership, any Partners or any Assignees for losses
sustained or liabilities incurred as a result of errors in judgment or
of any act or omission if the General Partner acted in good faith.
(b) No Obligation to Consider Interests of Limited Partners. The Limited
Partners expressly acknowledge that the General Partner is acting on
behalf of the Partnership, the General Partner and Regency's
shareholders collectively, that except as provided in Section 7.1(e)
with respect to the establishment and maintenance of working capital
reserves, except as provided in Section 7.1(f) with respect to tax
consequences, except as expressly provided otherwise in Section
7.1(a)(iv), Section 7.1(a)(ix) and Section 7.1(a)(xi) with respect to
the powers of the General Partner, the General Partner is under no
obligation to consider the separate interests of the Limited Partners
(including, without limitation, the tax consequences to Limited
Partners or Assignees except as expressly provided otherwise in
Section 7.1(f)) in deciding whether to cause the Partnership to take
(or decline to take) any actions which the General Partner has
undertaken in good faith on behalf of the Partnership, and that the
General Partner shall not be liable for monetary damages for losses
sustained, liabilities incurred, or benefits not derived by Limited
Partners in connection with such decisions, provided that the General
Partner has acted in good faith and in accordance with the
50
provisions of this Agreement. For purposes hereof, a Person acting in
a manner which furthers compliance by Regency with the REIT
requirements of the Code, shall be deemed to satisfy the standards of
conduct hereunder. The Limited Partners further expressly acknowledge
that Regency is obligated to cause the Partnership to take (or decline
to take) certain actions in order to assist Security Capital and its
Affiliates in avoiding classification as a passive foreign investment
company within the meaning of Section 1296 of the Code. Such
obligation is set forth on Schedule 7.8(b).
(c) Acts of Agents. Subject to its obligations and duties as General
Partner set forth in Section 7.1(a) hereof, the General Partner may
exercise any of the powers granted to it by this Agreement and perform
any of the duties imposed upon it hereunder either directly or by or
through its agents. The General Partner shall not be responsible for
any misconduct or negligence on the part of any such agent appointed
by it in good faith.
(d) Effect of Amendment. Any amendment, modification or repeal of this
Section 7.8 or any provision hereof shall be prospective only and
shall not in any way affect the limitations on the General Partner's
liability to the Partnership and the Limited Partners under this
Section 7.8 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
Section 7.9 Other Matters Concerning the General Partner.
(a) Reliance on Documents. The General Partner 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 believed
by it to be genuine and to have been signed or presented by the proper
party or parties.
(b) Reliance on Consultants and Advisers. The General Partner 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 and in
accordance with the opinion of such Persons as to matters which such
General Partner 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) Action Through Officers and Attorneys. The General Partner shall have
the right, in respect of any of its powers or obligations hereunder,
to act through any of its duly authorized officers and a duly
appointed attorney or attorneys-in-fact. Each such attorney shall, to
the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and
duty which is permitted or required to be done by the General Partner
hereunder.
51
(d) Actions to Maintain REIT Status or Avoid Taxation of the General
Partner. Notwithstanding any other provisions of this Agreement or the
Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf
of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order (i) to protect
the ability of Regency to continue to qualify as a REIT or (ii) to
avoid Regency incurring any taxes under Section 857 or Section 4981 of
the Code, is expressly authorized under this Agreement and is deemed
approved by all of the Limited Partners.
Section 7.10 Title to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner, individually
or collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
The General Partner hereby declares and warrants that any Partnership assets for
which legal title is held in the name of the General Partner or any nominee or
Affiliate of the General Partner shall be held by the General Partner for the
use and benefit of the Partnership in accordance with the provisions of this
Agreement and any separate nominee agreement; provided, however, that the
General Partner shall use its reasonable best efforts to cause beneficial and
record title to such assets to be vested in the Partnership as soon as
reasonably practicable in light of all the facts and circumstances, including,
but not limited to, third party consents and transfer taxes. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.
Section 7.11 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies which may
be available against such Person to contest, negate or disaffirm any action of
the General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (iii) such certificate, document or instrument was
duly executed and delivered in
52
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
Section 7.12 Redemption of Units Held by General Partner. Whenever the
General Partner redeems any of its shares, the Partnership (i) shall redeem a
matching number of Units (after giving effect to the Unit Adjustment Factor) of
the same type at the same redemption price as that paid by the General Partner
so as to preserve the one-to-one equivalency (after giving effect to the Unit
Adjustment Factor) between outstanding shares of the General Partner and Units
held by the General Partner, and (ii) the Partnership shall reimburse the
General Partner for all costs incurred in connection with the share redemption,
which shall be expenses of the Partnership.
Article 8
Rights And Obligations Of Limited Partners
Section 8.1 Limitation of Liability. The Limited Partners shall have no
liability under this Agreement except as expressly provided in Section 5.3
hereof, or under the Act.
Section 8.2 Management of Business. No Limited Partner or Assignee (other
than the General Partner, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such) shall take part in the
operation, management or control (within the meaning of the Act) of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise bind the Partnership. The
transaction of any such business by the General Partner, any of its Affiliates
or any officer, director, employee, partner, agent or trustee of the General
Partner, the Partnership or any of their Affiliates, in their capacity as such,
shall not affect, impair or eliminate the limitations on the liability of the
Limited Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners. Subject to any
agreements entered into by a Limited Partner or its Affiliates with the General
Partner, the Partnership or a Subsidiary or an Affiliate of any of them, the
following rights shall govern outside activities of Limited Partners: (i) any
Limited Partner and any officer, director, employee, agent, trustee, Affiliate,
partner, beneficiary or shareholder of any such Limited Partner shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and
activities in direct competition with the Partnership, the General Partner or
their Affiliates; (ii) neither the Partnership nor any Partners shall have any
rights by virtue of this Agreement in any business ventures of any Partner or
Assignee; (iii) none of the Partners nor any other Person shall have any rights
by virtue of this Agreement or the partnership relationship established hereby
in any business ventures of any other Person, and such Person shall have no
obligation pursuant to this Agreement to offer any interest in any such business
ventures to the Partnership, any Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Partner or such other Person, could be taken by such Person; (iv) the fact that
a Partner may encounter opportunities to purchase, otherwise acquire, lease,
sell or otherwise
53
dispose of real or personal property and may take advantage of
such opportunities himself or introduce such opportunities to entities in which
it has or has not any interest, shall not subject such Partner to liability to
the Partnership or any of the other Partners on account of the lost opportunity;
and (v) except as otherwise specifically provided herein, nothing contained in
this Agreement shall be deemed to prohibit a Partner or any Affiliate of a
Partner from dealing, or otherwise engaging in business, with Persons
transacting business with the Partnership or from providing services relating to
the purchase, sale, rental, management or operation of real or personal property
(including real estate brokerage services) and receiving compensation therefor,
from any Persons who have transacted business with the Partnership or other
third parties.
Section 8.4 Priority Among Partners. Except to the extent provided by
Section 4.2, Section 4.5, Section 5.1(b), Section 6.2 or Section 6.3 hereof, or
except as otherwise expressly provided in this Agreement, no Partner (Limited or
General) or Assignee shall have priority over any other Partner (Limited or
General) or Assignee either as to the return of Capital Contributions or as to
profits, losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership.
(a) Copies of Business Records. In addition to other rights provided by
this Agreement or by the Act, and except as limited by Section 8.5(c)
hereof, each Limited Partner shall be provided the following without
demand, except as otherwise provided below, at the Partnership's
expense:
(i) promptly after becoming available, a copy of the most recent
annual, quarterly and current reports and proxy statements filed
with the Securities and Exchange Commission by Regency pursuant
to the Securities Exchange Act of 1934, if any;
(ii) promptly after becoming available, a copy of the Partnership's
federal, state and local income tax returns for each Partnership
Year;
(iii) upon written demand and for a purpose reasonably related to such
Limited Partner's interest as a Limited Partner in the
Partnership, a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) a copy of this Agreement and (upon written demand) the
Certificate and all amendments hereto or (upon written demand) to
the Certificate, together with executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate and
all amendments hereto and thereto have been executed; and
(v) upon written demand, true and full information regarding the
amount of cash and a description and statement of any other
property or services
54
contributed by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a
Partner.
(b) Notification of Changes in Unit Adjustment Factor. The General Partner
shall notify each Limited Partner (other than any Partner who does not
have a Redemption Right) in writing of any change made to the Unit
Adjustment Factor within 10 Business Days of the date such change
becomes effective.
(c) Confidential Information. Notwithstanding any other provision of this
Section 8.5, the General Partner may keep confidential from the
Limited Partners, for such period of time as the General Partner
determines in its discretion to be reasonable, any information (i)
relating to the General Partner or any of its Affiliates or the
conduct of their business that the General Partner believes, in its
good faith judgment, the disclosure of which information would
adversely affect a material financing, acquisition, disposition of
assets or securities or other comparable transaction to which the
General Partner or any of its Affiliates is a party, (ii) that the
General Partner believes to be in the nature of trade secrets of
Regency or its Affiliates or (iii) that the Partnership, Regency or
any of their Affiliates is required by law or by agreements with
unaffiliated third parties to keep confidential. Nothing contained in
this Section 8.5(c) shall permit the General Partner to keep
confidential from the Limited Partners any information relating to the
Partnership or its business.
Section 8.6 Redemption of Units. The Redemption Rights of the Original
Limited Partners are set forth in this Section 8.6. Any Redemption Rights
granted to Additional Limited Partners shall be set forth in amendments to this
Agreement or in separate redemption agreements.
(a) Exercise. Subject to the provisions of this Section 8.6, the Original
Limited Partners shall have the right (the "Redemption Right") to
require the Partnership to redeem any Unit held by such Original
Limited Partner in exchange for the Redemption Amount to be paid by
the Partnership. A Redemption Right shall be exercised pursuant to a
Notice of Redemption delivered to the General Partner by the Original
Limited Partner who is exercising the Redemption Right (the "Redeeming
Partner"), which shall be irrevocable except as set forth in this
Section 8.6(a). The redemption shall occur on the Specified Redemption
Date; provided, however, a Specified Redemption Date shall not occur
until such later date as may be specified pursuant to any agreement
with an Original Limited Partner. An Original Limited Partner may
exercise a Redemption Right any time and any number of times. A
Redeeming Partner may not exercise the Redemption Right for less than
1,000 Units or, if such Redeeming Partner holds less than 1,000 Units,
all of the Units held by such Redeeming Partner. If (i) an Original
Limited Partner acquires any Units after the First Closing from
another Original Limited Partner or holds or acquires any Shares
otherwise than pursuant to the exercise of a Redemption Right
hereunder and (ii) the issuance of a Share Amount pursuant to the
exercise of a Redemption Right would violate the provisions of Section
5.2 of the Articles of Incorporation as a result of the
55
ownership of such Shares so acquired by such Original Limited Partner
(the number of Shares in excess of the number of Shares permitted
pursuant to said Section 5.2 is herein referred to as the "Excess
Shares") and (iii) such Original Limited Partner does not revoke or
amend the exercise of such Redemption Right to comply with the
provisions of said Section 5.2 of the Articles of Incorporation within
five days after receipt of written notice from the General Partner
that the redemption would be in violation thereof, then the
Partnership shall pay to such Redeeming Partner, in lieu of the Share
Amount or the Cash Amount attributable to the Excess Shares, the
amount which would be payable to such Redeeming Partner pursuant to
Section 5.3 of the Articles of Incorporation if such Excess Shares
were issued in violation of Section 5.2 of the Articles of
Incorporation and Regency exercised the remedies pursuant to said
Section 5.3 of the Articles of Incorporation. The relevant provisions
of the Articles of Incorporation as presently in effect are attached
hereto as Section 8.6(a). This Section 8.6(a) shall in no way or
manner be construed as limiting the application of the Articles of
Incorporation or constitute any form of waiver or exemption
thereunder.
(b) Payment. The General Partner shall have the right to elect to fund the
Redemption Amount through the issuance of (i) the Share Amount or (ii)
the Cash Amount The Redeeming Partner shall have no right, with
respect to any Unit so redeemed, to receive any distributions paid by
the Partnership after the Specified Redemption Date.
(c) Exceptions for Payment. Notwithstanding anything contained in this
Section 8.6 to the contrary, the following provisions shall apply with
respect to the payment of a Redemption Amount:
(i) If the funding of the Share Amount with respect to the exercise
of a Redemption Right would cause the issuance of the Shares in
connection therewith to violate Article 5.14 of the Articles of
Incorporation of Regency, then the Redeeming Partner shall not
have the right to receive the Share Amount with respect to the
issuance of any Shares resulting in such a violation, and the
balance of any Redemption Amount relating to the exercise of such
Redemption Right shall be paid by a Cash Amount. A Non-U.S.
Person who (i) has signed a Waiver and Consent Agreement in the
form of Exhibit C attached hereto for the benefit of Regency and
Security Capital (the "Security Capital Waiver and Consent") and
(ii) is exercising a Redemption Right (and will receive a Share
Amount) in compliance with the Security Capital Waiver and
Consent, will not be in violation of the provisions of Article
5.14 of the Articles of Incorporation if (x) the aggregate number
of Shares to be issued on such Specified Redemption Date to all
Redeeming Partners who are Non-U.S. Persons is equal to or less
than (y) the aggregate number of Shares to be issued on such
Specified Redemption Date to all Redeeming Partners who are other
than Non-U.S. Persons (the maximum number of Shares which may be
issued to Redeeming Partners on a Specified Redemption Date who
are Non-U.S. Persons in order to satisfy the foregoing
requirement is herein referred to as the "Matching Share
56
Amount"). If more than one Redeeming Partner who is a Non-U.S.
Person exercises a Redemption Right for the same Specified
Redemption Date and if the aggregate Share Amount payable to all
such Redeeming Partners would cause the issuance of Shares to
such Non-U.S. Persons to exceed the Matching Share Amount on such
Specified Redemption Date, then the Matching Share Amount shall
be allocated among such Redeeming Partners who are Non-U.S.
Persons pro rata in proportion to the respective Share Amounts
otherwise payable to such Redeeming Partners, and any balance of
a Redemption Amount payable to any such Redeeming Partner on such
Specified Redemption Date shall be paid by a Cash Amount.
(ii) If the issuance of Shares for a Share Amount to a Redeeming
Partner would be in violation of the Securities Act and
applicable state securities laws then such Redeeming Partner
shall not have the right to receive the Share Amount, and the
Redemption Amount shall be paid by the Cash Amount; provided,
however, the issuance of Shares for a Share Amount shall not
violate the registration requirements of the Securities Act as in
effect on the date hereof if such Shares are issued to an
"accredited investor" as defined in the Securities Act.
(d) [Intentionally omitted.]
(e) Conditions. As a condition to exercising a Redemption Right, each
Redeeming Partner shall execute a Notice of Redemption in the form
attached as Exhibit B and, if a Non-U.S. Person, the Security Capital
Waiver and Consent in the form attached as Exhibit C; and execute such
other documents and take such other actions as the General Partner may
reasonably require, including a Foreign Investment and Real Property
Tax Act ("FIRPTA") or similar state and/or local affidavit (or make
appropriate arrangements for deposit with the General Partner for
payment to the Internal Revenue Service or any state or local
governmental authority of the amount required for the General Partner
to comply with the withholding provisions of such federal, state and
local laws, and if applicable, providing a withholding certificate
evidencing the Redeeming Partner's right to a reduced rate of FIRPTA
withholding). As a further condition to exercising a Redemption Right,
the Units to be redeemed shall be delivered to the Partnership or
Regency, as the case may be, free and clear of all liens, security
interests, deeds of trust, pledges and other encumbrances of any
nature whatsoever (collectively the "Liens"), subject to the
provisions of Section 5.3 hereof. In the event any Lien exists on the
Specified Redemption Date with respect to the Units to be redeemed,
neither the Partnership nor Regency (if Regency assumes the Redemption
Right pursuant to Section 8.7) shall have any obligation to redeem
such Units, unless, in connection therewith, the General Partner has
elected to pay a portion of the Redemption Amount in cash and such
cash is sufficient to discharge such Lien, subject to the provisions
of Section 5.3 hereof. Each Redeeming Partner hereby expressly
authorizes the General Partner to apply such portion of such cash as
may be necessary to discharge such Lien in full.
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(f) [Intentionally Omitted.]
(g) Regency Agreement. Regency agrees (i) to perform Regency's obligations
described in this Section 8.6, (ii) to cause the General Partner to
perform the General Partner's obligations described in this Section
8.6 and (iii) to cause the General Partner to cause the Partnership to
perform the Partnership's obligations described in this Section 8.6.
(h) Additional Rights. In case Regency shall issue rights, options or
warrants to all holders of its Shares entitling them to subscribe for
or purchase Shares or other securities convertible into Shares at a
price per share less than the current per share market price as of the
day before the "ex date" with respect to the issuance or distribution
requiring such computation, each Original Limited Partner holding
Redemption Rights shall be entitled to receive such number of such
rights, options or warrants, as the case may be, as he would have been
entitled to receive had he exercised all of his then existing
Redemption Rights immediately prior to the record date for such
issuance by Regency. The term "ex date" shall mean the first date on
which Shares trade regularly without the right to receive such
issuance or distribution. In case the Shares shall be changed into the
same or a different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification, or otherwise
(other than subdivision or combination of Shares or a stock dividend
described in this definition), then and in each such event the
Original Limited Partners holding Redemption Rights shall have the
right thereafter to exercise their Redemption Rights for the kind and
amount of shares and other securities and property that would have
been received upon such reorganization, reclassification or other
change by holders of the number of Shares with respect to which such
Redemption Rights could have been exercised immediately prior to such
reorganization, reclassification or change.
(i) Distributions. A Redeeming Partner exercising a Redemption Right with
a Specified Redemption Date after a Partnership Record Date and prior
to the payment of the distribution of Available Cash relating to such
Partnership Record Date shall retain the right to receive such
distribution with respect to such Units redeemed on such Specified
Redemption Date.
Section 8.7 Regency's Assumption of Right. Notwithstanding the provisions
of Section 8.6, Regency may, in its sole and absolute discretion, assume
directly and satisfy a Redemption Right by paying to the Redeeming Partner the
Share Amount on the Specified Redemption Date, whereupon Regency shall acquire
the Units offered for redemption by the Redeeming Partner and shall be treated
for all purposes of this Agreement as the owner of such Units, which shall
become General Partner Units. In the event Regency shall exercise its right to
satisfy the Redemption Right in the manner described in the preceding sentence,
the Partnership shall have no obligation to pay any amount to the Redeeming
Partner with respect to such Redeeming Partner's exercise of the Redemption
Right, and each of the Redeeming Partner, the Partnership, the General Partner
and Regency shall treat the transaction between Regency and the Redeeming
Partner as a sale of the Redeeming Partner's Units to Regency for
58
federal income tax purposes. Regency agrees that if the General Partner elects
to pay the Redemption Amount through the payment of the Share Amount, Regency
shall guarantee the General Partner's payment thereof.
Article 9
Books, Records, Accounting And Reports
Section 9.1 Records and Accounting. The General Partner shall keep or cause
to be kept at the principal office of the Partnership appropriate books and
records with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 8.5 or Section 9.3 hereof. Any records maintained by or on behalf of
the Partnership in the regular course of its business may be kept on, or be in
the form of, magnetic tape, photographs, micrographics or any other information
storage device; provided, that the records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books of
the Partnership shall be maintained for financial purposes on an accrual basis
in accordance with generally accepted accounting principles and for tax
reporting purposes on the accrual basis.
Section 9.2 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
Section 9.3 Reports.
(a) Annual Reports. As soon as practicable, but in no event later than the
date when mailed to Regency's shareholders, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the
Partnership Year, an annual report containing financial statements of
the Partnership, or of Regency if such statements are prepared solely
on a consolidated basis with Regency for such Partnership Year,
presented in accordance with generally accepted accounting principles,
such statements to be audited by a nationally recognized firm of
independent public accountants selected by the General Partner.
(b) Quarterly Reports. As soon as practicable, but in no event later than
the date when mailed to Regency's shareholders, the General Partner
shall cause to be mailed to each Limited Partner as of the last day of
the calendar quarter (except the last calendar quarter of each year)
who has asked to be placed on the mailing list for the same, a report
containing unaudited financial statements of the Partnership, or of
Regency if such statements are prepared solely on a consolidated basis
with Regency, and such other information as may be required by
applicable law or regulation, or as the General Partner determines to
be appropriate.
(c) Other. During the pendency of the Redemption Rights, Limited Partners
holding Redemption Rights shall receive in a timely manner all other
communications transmitted from time to time by Regency to its
shareholders.
59
Article 10
Tax Matters
Section 10.1 Preparation of Tax Returns. The General Partner shall arrange
for the preparation and timely filing of all returns of Partnership income,
gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use all reasonable efforts to
furnish, within 90 days of the close of each taxable year, the tax information
reasonably required by Limited Partners for federal and state income tax
reporting purposes.
Section 10.2 Tax Elections. Except as otherwise provided herein, the
General Partner shall, in its sole and absolute discretion, determine whether to
make any available election pursuant to the Code; provided, however, that the
General Partner shall make the election under Section 754 of the Code in
accordance with applicable Regulations thereunder. The General Partner shall
have the right to seek to revoke any such election (including, without
limitation, the election under Section 754 of the Code) upon the General
Partner's determination in its sole and absolute discretion that such revocation
is in the best interests of the Partners.
Section 10.3 Tax Matters Partner.
(a) General. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section
6223(c) of the Code, upon receipt of notice from the IRS of the
beginning of an administrative proceeding with respect to the
Partnership, the tax matters partner shall furnish the IRS with the
name, address and profit interest of each of the Limited Partners;
provided, however, that such information is provided to the
Partnership by the Limited Partners.
(b) Powers. The tax matters partner is authorized, but not required:
(i) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial proceedings being
referred to as "judicial review"), and in the settlement
agreement the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such settlement
agreement shall not bind any Partner (1) who (within the time
prescribed pursuant to the Code and Regulations) files a
statement with the IRS providing that the tax matters partner
shall not have the authority to enter into a settlement agreement
on behalf of such Partner or (2) who is a "notice partner" (as
defined in Section 6231 of the Code) or a member of a "notice
group" (as defined in Section 6223(b)(2) of the Code), and, to
the extent provided by law, the General Partner shall cause each
Limited Partner to be designated a notice partner;
60
(ii) in the event that a notice of a final administrative adjustment
at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is
mailed or otherwise given to the tax matters partner, to seek
judicial review of such final adjustment, including the filing of
a petition for readjustment with the Tax Court or the United
States Claims Court, or the filing of a complaint for refund with
the District Court of the United States for the district in which
the Partnership's principal place of business is located;
(iii) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment with the IRS
at any time and, if any part of such request is not allowed by
the IRS, to file an appropriate pleading (petition, complaint or
other document) for judicial review with respect to such request;
(v) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to
be taken into account by a Partner for tax purposes, or an item
affected by such item; and
(vi) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by
the tax matters partner in connection with any such proceeding, except
to the extent required by law, is a matter in the sole and absolute
discretion of the tax matters partner, and the provisions relating to
indemnification of the General Partner set forth in Section 7.7 of this
Agreement shall be fully applicable to the tax matters partner in its
capacity as such.
(c) Reimbursement. The tax matters partner shall receive no compensation
for its services. All third-party costs and expenses incurred by the
tax matters partner in performing its duties as such (including legal
and accounting fees) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an
accounting firm and a law firm to assist the tax matters partner in
discharging his duties hereunder, so long as the compensation paid by
the Partnership for such services is reasonable.
Section 10.4 Organizational Expenses. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a 60
month period as provided in Section 709 of the Code.
61
Article 11
Transfers And Withdrawals
Section 11.1 Transfer.
(a) Definition. The term "transfer," when used in this Article 11 with
respect to a Partnership Unit, shall be deemed to refer to a
transaction by which the General Partner purports to assign its
General Partnership Interest to another Person or by which a Limited
Partner purports to assign its Limited Partnership Interest to another
Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or
otherwise. The term "transfer" when used in this Article 11 does not
include any redemption of Partnership Units by a Limited Partner.
(b) Requirements. No Partnership Interest shall be transferred, in whole
or in part, except in accordance with the terms and conditions set
forth in this Article 11. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article 11 shall
be null and void.
Section 11.2 Transfer of General Partner's Partnership Interests.
(a) General Partnership Interest. The General Partner may not transfer any
of its General Partnership Interest (other than any transfer to an
Affiliate of the General Partner) or withdraw as General Partner
(other than pursuant to a permitted transfer), other than in
connection with a transaction described in Section 11.2(b). Any
transfer or purported transfer of the General Partner's Partnership
Interest not made in accordance with this Section 11.2 shall be null
and void. Notwithstanding any permitted transfer of its General
Partnership Interest or withdrawal as General Partner hereunder (other
than in connection with a transaction described in Section 11.2(b)),
Regency shall remain subject to Section 8.6 and Section 8.7 of this
Agreement unless such transferee General Partner provides
substantially similar rights to the Limited Partners and Consent of
the Limited Partners is obtained. Nothing contained in this Section
11.2(a) shall entitle the General Partner to withdraw as General
Partner unless a successor General Partner has been appointed and
approved by the Consent of the Limited Partners. Any General Partner
other than Regency admitted to the Partnership by reason of being an
Affiliate of Regency shall be a subsidiary of Regency so long as it is
the General Partner, unless the Consent of the Limited Partners is
obtained.
(b) Transfer in Connection With Reclassification, Recapitalization, or
Business Combination Involving General Partner. Subject to the
provisions of Section 4.5(f), neither the General Partner nor Regency
shall engage in any merger, consolidation or other business
combination or transaction with or into another Person or sale of all
or substantially all of its assets, or any reclassification, or
recapitalization (other than a change in par value, or a change in the
number of shares of Common Stock resulting from a subdivision or
combination as described in the definition of Unit
62
Adjustment Factor) ("Transaction"), unless as a result of the
Transaction such other Person (i) agrees that each Limited Partner who
holds a Redemption Right shall thereafter remain entitled to exchange
each Partnership Unit owned by such Limited Partner (after application
of the Unit Adjustment Factor) for an amount of cash, securities, or
other property equal to the greatest amount of cash, securities or
other property paid to a holder of one Share in consideration of one
Share which a Limited Partner holding a Redemption Right would have
received at any time during the period from and after the date on
which the Transaction is consummated, as if the Limited Partner had
exercised its Redemption Right immediately prior to the Transaction
and received the Share Amount, and (ii) agrees to assume the General
Partner's obligations pursuant to Section 8.6 hereof, provided, that
if, in connection with the Transaction, a purchase, tender or exchange
offer shall have been made to and accepted by the holders of more than
50 percent of the outstanding shares of Common Stock, the holders of
such Partnership Units shall receive the greatest amount of cash,
securities, or other property which a Limited Partner holding a
Redemption Right would have received had it exercised the Redemption
Right and received the Share Amount in redemption of its Partnership
Units immediately prior to the expiration of such purchase, tender or
exchange offer. Prior to consummating any such Transaction, Regency
shall cause appropriate amendments to be made to this Agreement
pursuant to Section 14.1(b) (including the definitions of Shares, Unit
Adjustment Factor and Value) to carry out the intent of the parties
that the rights of the Limited Partners holding Redemption Rights
hereunder shall not be prejudiced as the result of any such
Transaction. Notwithstanding anything contained in this Section
11.2(b) to the contrary, the General Partner shall not engage in a
Transaction that causes the Original Limited Partners to recognize
gain or loss for federal income tax purposes.
(c) Limited Partnership Interests. The General Partner may transfer all or
any portion of its Limited Partnership Interests, or any of the rights
associated with such Limited Partnership Interests, to any party
without the consent of the Partnership or any Partner (regardless of
whether such transfer triggers a termination of the Partnership for
tax purposes under Section 708 of the Code).
(d) Admission of Additional General Partner. Except as provided in Section
11.2(a) and Section 11.2(b), the General Partner may not admit an
additional general partner other than an Affiliate of the General
Partner pursuant to Section 11.2(a).
Section 11.3 Limited Partners' Rights to Transfer.
(a) General. No transfer of a Limited Partnership Interest by a Limited
Partner is permitted without the prior written consent of the General
Partner, which it may withhold in its sole and absolute discretion;
provided, that a Limited Partner may transfer Units without the
consent of the General Partner: (i) to members of the Limited
Partner's Immediate Family or one or more trusts for their benefit
pursuant to applicable laws of descent and distribution, gift or
otherwise; (ii) among its Affiliates; (iii) to a lender, provided that
the Units are not Pledged Units, where such Units are
63
pledged to secure a bona fide obligation of the Limited Partner and
any transfer in accordance with the rights of such lender under the
instruments evidencing such obligation (provided that the General
Partner receives 10 days prior written notice of any transfer under
this clause (a)); (iv) if the Limited Partner is a trust, to the
beneficiaries of the Limited Partner or to another trust (1) that is
either established by the same grantor as the Limited Partner or (2)
whose beneficiaries consist of members of the Immediate Family of the
grantor of the Limited Partner or (3) whose beneficiaries consist of
beneficiaries of the transferor trust or members of their Immediate
Family; (v) if the Limited Partner is an entity, to the direct or
indirect equity holders of the Limited Partner; and (vi) to other
Limited Partners. In order to effect any transfer under this Section
11.3, the Limited Partner must deliver to the General Partner a duly
executed copy of the instrument making such transfer and such
instrument must evidence the written acceptance by the assignee of all
of the terms and conditions of this Agreement, including, where
applicable, the security interest described in Section 5.3, and
represent that such assignment was made in accordance with all
applicable laws and regulations.
(b) Incapacitated Limited Partners. If a Limited Partner is subject to
Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have
all the rights of a Limited Partner, but not more rights than those
enjoyed by other Limited Partners for the purpose of settling or
managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest
in the Partnership. The Incapacity of a Limited Partner, in and of
itself, shall not dissolve or terminate the Partnership.
(c) No Transfers Violating Securities Laws. The General Partner may
prohibit any transfer by a Limited Partner of his Partnership Units
if, in the opinion of legal counsel to the Partnership, such transfer
would require filing of a registration statement under the Securities
Act of 1933 or would otherwise violate any federal or state securities
laws or regulations applicable to the Partnership or the Partnership
Units.
(d) Transfers Resulting in Corporation Status. Regardless of whether the
General Partner is required to provide or has provided its consent
under Section 11.3(a), no transfer by a Limited Partner of his
Partnership Units (or any economic or other interest, right or
attribute therein) may be made to any Person if legal counsel for the
Partnership renders an opinion letter that it creates a substantial
risk that the Partnership would be treated as an association taxable
as a corporation.
(e) Transfers Causing Termination. Regardless of whether the General
Partner is required to provide or has provided its consent under
Section 11.3(a), no transfer of any Partnership Interests other than
the exercise of Redemption Rights shall be effective if such transfer
would, in the opinion of counsel for the Partnership, result in the
termination of the Partnership for federal income tax purposes, in
which event
64
such transfer shall be made effective as of the first fiscal quarter
in which such termination would not occur, if the Partner making such
transfer continues to desire to effect the transfer.
(f) Transfer to Certain Lenders. Notwithstanding anything contained herein
to the contrary, no transfer of any Partnership Units may be made to a
lender to the Partnership or any Person who is related (within the
meaning of Section 1.752-4(b) of the Regulations) to any lender to the
Partnership whose loan constitutes a Nonrecourse Liability, without
the consent of the General Partner, which consent may be given or
withheld by the General Partner in its sole and absolute discretion,
provided, that as a condition to such consent the lender will be
required to enter into an arrangement with the Partnership and the
General Partner to redeem for the Redemption Amount any Partnership
Units in which a security interest is held, simultaneously with the
time at which such lender would be deemed to be a partner in the
Partnership for purposes of allocating liabilities to such lender
under Section 752 of the Code.
(g) Transfers by Limited Partners Requiring 1934 Act Registration.
Regardless of whether the General Partner is required to provide or
has provided its consent under Section 11.3(a), no transfer by a
Limited Partner of his or its Limited Partnership Interest (or any
economic or other interest, right or attribute therein) may be made to
any Person if (i) such transfer would require the Partnership to
register its equity securities under the Securities Exchange Act of
1934 and (ii) the Partnership does not then have any class of equity
securities so registered.
(h) Transfers by Series A Preferred Partners. In addition to the other
restrictions on transfer set forth in this Article 11, which apply to
Series A Preferred Units, no transfer of the Series A Preferred Units
may be made without the consent of the General Partner, which consent
may be given or withheld in its sole and absolute discretion, if such
transfer would result in more than four partners holding all
outstanding Series A Preferred Units within the meaning of Regulation
Section 1.7704-1(h)(3).
(i) Transfers Violating PTP Obligations. Regardless of whether the General
Partner is required to provide or has provided its consent under
Section 11.3(a), unless the provisions of this Section 11.3(i) are
waived in writing by the General Partner, on or before December 31,
2004, no transfer (or purported transfer) by a Limited Partner of his
or its Partnership Units (or any economic or other interest, right or
attribute therein) may be made to any Person, and any such transfer
(or purported transfer) shall be void ab initio, and no Person shall
otherwise become a Partner if (a) legal counsel to the Partnership
renders an opinion letter that such transfer creates a substantial
risk that the Partnership would be treated as a PTP within the meaning
of Section 7704 of the Code or (b) such transfer would cause the
Partnership to have more than 100 Partners within the meaning of
Regulation Section 1.7704-1(h)(3) immediately after such transfer
("Prohibited PTP Transfer"). If a Limited Partner presents any Units
to the General Partner for transfer, the General Partner shall advise
the Limited Partner
65
within ten Business Days after receiving the transfer request if the
purported transfer would constitute a Prohibited Transfer.
Notwithstanding the foregoing, a transfer of Partnership Units which
occurs by operation of law or as a result of a bona fide foreclosure
of a lender's security interest and which would otherwise constitute a
Prohibited PTP Transfer shall result in the mandatory redemption of
such Units for the Share Amount simultaneously with the time at which
the respective transferee would otherwise be deemed a Partner in the
Partnership but for this sentence; provided, however, if the issuance
of the Share Amount pursuant to this sentence would violate the
provisions of Section 5.2 of the Articles of Incorporation, then the
Partnership shall pay the Cash Amount in lieu of the Share Amount in
satisfaction of such mandatory redemption. (For purposes of this
Section 11.3, "Valuation Date" shall mean the date the Partnership
receives notice of the Prohibited PTP Transfer).
Section 11.4 Substituted Limited Partners.
(a) Consent of General Partner Required. The Limited Partner shall have
the right to substitute a transferee as a Limited Partner in his
place, but only if such transferee is a permitted transferee under
Section 11.3, in which event such substitution shall occur if the
Limited Partner so provides. With respect to any other transfers, the
General Partner shall have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this
Section 11.4 as a Substituted Limited Partner, which consent may be
given or withheld by the General Partner in its sole and absolute
discretion. The General Partner's failure or refusal to permit a
transferee of any such interests to become a Substituted Limited
Partner shall not give rise to any cause of action against the
Partnership or any Partner.
(b) Rights and Duties of Substituted Limited Partners. A transferee who
has been admitted as a Substituted Limited Partner in accordance with
this Article 11 shall have all the rights and powers and be subject to
all the restrictions and liabilities of a Limited Partner under this
Agreement.
(c) Amendment of Exhibit A. Upon the admission of a Substituted Limited
Partner, the General Partner shall amend Exhibit A to reflect the
name, address, number of Partnership Units, and Percentage Interest of
such Substituted Limited Partner and to eliminate or adjust, if
necessary, the name, address and interest of the predecessor of such
Substituted Limited Partner.
Section 11.5 Assignees. If a transferee is not admitted as a Substituted
Limited Partner in accordance with Section 11.4(a), such transferee shall be
considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including (if applicable) the right to redeem Units under Section
8.6 or any separate redemption agreement, and the right to receive distributions
from the Partnership and the share of Net Income, Net Losses, gain, loss and
Recapture Income attributable to the Partnership Units assigned to such
transferee, but shall not be deemed to be a holder of Partnership Units for any
other purpose under this Agreement, and
66
shall not be entitled to vote such Partnership Units in any matter presented to
the Limited Partners for a vote (such Partnership Units being deemed to have
been voted on such matter in the same proportion as all Partnership Units of the
same class held by Limited Partners are voted). In the event any such transferee
desires to make a further assignment of any such Partnership Units, such
transferee shall be subject to all the provisions of this Article 11 to the same
extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units.
Section 11.6 General Provisions.
(a) Withdrawal of Limited Partner. No Limited Partner may withdraw from
the Partnership other than as a result of a permitted transfer of all
of such Limited Partner's Partnership Units in accordance with this
Article 11 or pursuant to the redemption of all of his Partnership
Units.
(b) Termination of Status as Limited Partner. Any Limited Partner who
shall transfer all of his Partnership Units in a transfer permitted
pursuant to this Article 11 or pursuant to the redemption of all of
his Partnership Units shall cease to be a Limited Partner.
(c) Timing of Transfers. Transfers pursuant to this Article 11 may only be
made on the first day of a fiscal quarter, unless the General Partner
otherwise agrees, or unless resulting by operation of law.
(d) Allocation When Transfer Occurs. If any Partnership Interest is
transferred during any quarterly segment of the Partnership's fiscal
year in compliance with the provisions of this Article 11 or redeemed
pursuant to Section 8.6, Net Income, Net Losses, each item thereof and
all other items attributable to such interest for such fiscal year
shall be divided and allocated between the transferor Partner and the
transferee Partner by taking into account their varying interests
during the fiscal year in accordance with Section 706(d) of the Code,
using the interim closing of the books method (other than Net Income
or Net Loss attributable to a Capital Transaction, which shall be
allocated as of the Capital Transaction Record Date). Solely for
purposes of making such allocations, each of such items for the
calendar month in which the transfer or redemption occurs shall be
allocated to the Person who is a Partner as of midnight on the last
day of said month. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such transfer
or redemption shall be made to the transferor Partner, and all
distributions of Available Cash thereafter shall be made to the
transferee Partner.
(e) Continued Obligations Following Redemption by Certain Additional
Limited Partners. Anything herein to the contrary notwithstanding, if
an Additional Limited Partner is an Electing Partner (as defined in
Section 13.4), and if such Additional Limited Partner exercises a
Redemption Right with respect to such Additional Limited Partner's
entire Limited Partnership Interest, and the General
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Partner determines in good faith that such Redeeming Partner has
exercised a Redemption Right in order to avoid such Additional Limited
Partner's deficit Capital Account restoration obligations in Section
13.4, the General Partner may require, upon delivery of written notice
to the Redeeming Partner no later than thirty (30) days after the
applicable Specified Redemption Date, that the Redeeming Partner
remain liable to restore his "Hypothetical Negative Capital Account
Balance" if the Partnership adopts a plan of liquidation within three
hundred sixty five (365) days following such applicable Specified
Redemption Date. A Redeeming Partner's Hypothetical Negative Capital
Account Balance is the hypothetical amount such Redeeming Partner
would have had to pay to the Partnership pursuant to his obligations
under Section 13.4 hereof if he had remained as an Additional Limited
Partner until the liquidation of the Partnership.
Article 12
Admission Of Partners
Section 12.1 Admission of Successor General Partner. A successor to all of
the General Partner's General Partnership Interest pursuant to Section 11.2
hereof who is proposed and permitted to be admitted as a successor General
Partner shall be admitted to the Partnership as the General Partner, effective
upon such transfer. Any such transferee shall assume all of the General
Partner's obligations under this Agreement and shall carry on the business of
the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect the
admission.
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Section 12.2 Admission of Additional Limited Partners.
(a) General. A Person who makes a Capital Contribution to the Partnership
in accordance with Section 4.2 of this Agreement shall be admitted to
the Partnership as an Additional Limited Partner upon furnishing to
the General Partner (i) evidence of acceptance in form satisfactory to
the General Partner of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney
granted in Article 16 hereof and (ii) such other documents or
instruments as may be required in the sole and absolute discretion of
the General Partner in order to effect such Person's admission as an
Additional Limited Partner.
(b) Consent of General Partner Required. Notwithstanding anything to the
contrary in this Section 12.2, no Person shall be admitted as an
additional Limited Partner without the consent of the General Partner
(other than a Person to whom a Limited Partner may transfer Units
pursuant to Section 11.3(a) without the consent of the General
Partner), which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as
an additional Limited Partner shall become effective on the date upon
which the name of such Person is recorded on the books and records of
the Partnership, following the consent of the General Partner to such
admission.
Section 12.3 Amendment of Agreement and Certificate. For the admission to
the Partnership of any Partner, the General Partner shall, subject to the
requirements of Section 4.2, take all steps necessary and appropriate under the
Act to amend the records of the Partnership and, if necessary, to prepare as
soon as practical an amendment of this Agreement (including an amendment of
Exhibit A) and, if required by law, shall prepare and file an amendment to the
Certificate and may for this purpose exercise the power of attorney granted
pursuant to Article 16 hereof.
Section 12.4 Representations and Warranties of Additional Limited Partners.
As inducement for their admission to the Partnership, each Additional Limited
Partner hereby represents and warrants that such Limited Partner (a) has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Partnership; (b) has
been given the opportunity to examine all documents and to ask questions of, and
to receive answers from, the General Partner and its representatives concerning
the terms and conditions of the acquisition by it of Units in the Partnership,
and to obtain any additional information which it deems necessary to verify the
accuracy of the information with respect thereto; and (c) understands that there
will be no public market for the Units. Such Additional Limited Partner has
received and carefully reviewed copies of the reports filed by Regency for its
two most recent fiscal years and the interim period to date under the Securities
Exchange Act of 1934 and such additional information concerning Regency, the
Partnership and the transactions contemplated by this Agreement, to the extent
that Regency could acquire such information without unreasonable effort or
expense, as such Additional Limited Partner deems necessary for purposes of
making an investment in the Partnership. The Units in the Partnership acquired
by such Additional Limited Partner are being acquired by such Limited Partner
for its own account for investment and not with a view to, or for resale in
connection with, the public distribution or other disposition thereof. Such
Additional Limited Partner agrees as a condition to the issuance of such Units
in its name that any transfer, sale, assignment, hypothecation, offer or other
disposition of such Units may not be effected except in accordance with the
terms of this Agreement and pursuant to an effective registration statement
under the Securities Act and the rules and regulations promulgated thereunder,
or an exemption therefrom, and in compliance with all other applicable
securities and "blue sky" laws. Each Additional Limited Partner acknowledges
that the Partnership is not required to register any of the Units under the
Securities Act or any other applicable securities or "blue sky" laws. Each such
Additional Limited Partner represents and warrants that it has relied on its own
advisors for advice in connection with structuring the transactions contemplated
by this Agreement and is not relying on the General Partner or its accountants,
attorneys or other advisors with regard to such matters.
Article 13
Dissolution And Liquidation
Section 13.1 Dissolution. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the withdrawal of the General Partner, any successor
General Partner shall continue the business of the Partnership.
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Notwithstanding anything contained herein to the contrary, except as provided
below in this Section 13.1, the General Partner and the Partnership shall not
dissolve the Partnership, adopt a plan of liquidation for the Partnership or
sell all or substantially all of the assets of the Partnership in a Liquidating
Transaction or otherwise without obtaining (i) the Consent of the Original
Limited Partners and (ii) the Consent of the Additional Limited Partners. The
Partnership shall dissolve, and its affairs shall be wound up, upon the first to
occur of any of the following (each an "Event of Dissolution"):
(a) Expiration of Term-- the expiration of its term as provided in Section
2.4 hereof;
(b) Withdrawal of General Partner -- an event of withdrawal of the last
remaining General Partner, as defined in the Act (other than an event
of bankruptcy), unless, within 90 days after the withdrawal, all the
remaining Limited Partners agree in writing to continue the business
of the Partnership and to the appointment, effective as of the date of
withdrawal, of a substitute General Partner;
(c) Judicial Dissolution Decree-- entry of a decree of judicial
dissolution of the Partnership pursuant to the provisions of the Act;
or
(d) Bankruptcy or Insolvency of General Partner -- the last remaining
General Partner shall be Incapacitated by reason of its bankruptcy
unless, within 90 days after the withdrawal, all the remaining Limited
Partners agree in writing to continue the business of the Partnership
and to the appointment, effective as of the date of withdrawal, of a
substitute General Partner.
Section 13.2 Winding Up.
(a) General. The General Partner shall provide written notice to the
Limited Partners of the occurrence of an Event of Dissolution, giving
them at least 20 days in which to exercise any Redemption Right prior
to the distribution of any proceeds from the liquidation of the
Partnership pursuant to this Section 13.2(a). Upon the occurrence of
an Event of Dissolution, the Partnership shall continue solely for the
purposes of winding up its affairs in an orderly manner, liquidating
its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Partnership's
business and affairs. The General Partner (or, in the event there is
no remaining General Partner, any Person elected by a majority in
interest of the Limited Partners (the "Liquidator")) shall be
responsible for overseeing the winding up and dissolution of the
Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property
(subject to Section 13.2(b) and Section 13.2(c)) shall be liquidated
as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom shall be applied and distributed in the
following order:
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(i) First, to the payment and discharge of all of the Partnership's debts
and liabilities to creditors other than the Partners;
(ii) Second, to the payment and discharge of all of the Partnership's debts
and liabilities to the Partners, pro rata in accordance with amounts
owed to each such Partner;
(iii) Third, to the Series A Preferred Partners in accordance with the
provisions of Section 4.5(d); and
(iv) The balance, if any, to the General Partner and Limited Partners in
accordance with their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation for
any services performed pursuant to this Article 13.
(b) Deferred Liquidation. Notwithstanding the provisions of Section 13.2(a)
hereof which require liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, and further subject
to Section 13.2(c) hereof and any separate agreement of the Partnership or
the General Partner with respect to the distribution in kind to Additional
Limited Partners of assets contributed by such Additional Limited Partners
(or assets exchanged for such assets), if prior to or upon dissolution of
the Partnership the Liquidator determines that an immediate sale of part or
all of the Partnership's assets would be impractical or would cause undue
loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets
except those necessary to satisfy liabilities of the Partnership (including
to those Partners as creditors) and/or distribute to the Partners, in lieu
of cash, as tenants in common and in accordance with the provisions of
Section 13.2(a) and Section 13.2(c) hereof and any such separate agreement,
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in
kind are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as
the Liquidator deems reasonable and equitable and to any agreements
governing the operation of such properties at such time. The Liquidator
shall determine the fair market value of any property distributed in kind
using such reasonable method of valuation as it may adopt.
(c) Distribution of Briarcliff Village.
(i) In the event that the Partnership is dissolved in accordance with this
Article 13, the Briarcliff Village Property (as defined in Section
7.1(c)) will be distributed in-kind to the Original Briarcliff
Partners (as defined in Section 7.1(c)) who continue, as of such time,
to hold Original Limited Partnership Units attributable to the
contribution of the Briarcliff Village Property to Branch
71
Properties, L.P. and Branch Properties, L.P.'s subsequent contribution
of the Briarcliff Village Property to the Partnership, with such
Partners to take title to the Briarcliff Village Property in any
manner which they are able to agree among themselves. In the event
that such Partners are to receive the Briarcliff Village Property
pursuant to this Section 13.2(c), then the Briarcliff Village Property
shall have the net value agreed upon by the General Partner and the
Partners receiving an interest in the Briarcliff Village Property, or,
if they cannot agree, then the Briarcliff Village Property shall be
valued in accordance with Section 13.2(d).
(ii) If the net value of the Briarcliff Village Property determined
pursuant to Section 13.2(c)(i) exceeds the amount to which the
Partners receiving the Briarcliff Village Property are entitled
pursuant to this Article 13, then such partners may contribute to the
capital of the Partnership the amount of cash equal to such excess,
pro rata in proportion to the relative number of Units of each such
Partners attributable to the contribution of the Briarcliff Village
Property to Branch Properties, L.P. and Branch Properties, L.P.'s
subsequent contribution of the Briarcliff Village Property to the
Partnership. If such a contribution is not made in full, then Section
13.2(c)(i) shall not apply and the Liquidator shall be entitled to
sell the Briarcliff Village Property in connection with the
dissolution of the Partnership.
(d) Appraisal. In the event that the Briarcliff Village Property is to be
distributed to the Original Briarcliff Partners in liquidation of the
Partnership pursuant to the provisions of this Section 13.1(d), then the
amount of such distribution shall be determined as follows if the net value
thereof has not been agreed on pursuant to Section 13.2(c)(i):
(i) Within twenty (20) days after the determination that the Partnership
shall distribute the Briarcliff Village Property to the Original
Briarcliff Partners, the General Partner and a Majority-In-Interest of
the Original Briarcliff Partners (as defined in Section 7.1(c)) shall
each select an independent, regionally or nationally recognized
appraiser or appraisal group which is experienced in valuing separate
real estate property ("Appraiser"), and the two Appraisers selected by
the parties shall jointly select a third Appraiser. Each party shall
pay the cost of their respective Appraiser and shall split the cost of
the third Appraiser.
(ii) Within sixty (60) days of selection of the third Appraiser, each of
the three Appraisers shall determine the gross fair market value of
the Briarcliff Village Property as of the date of the election to
liquidate the Partnership, calculated based on the net fair market
value of Briarcliff Village (net of the loans encumbering Briarcliff
Village), taking into consideration the terms and relative value of
the loans encumbering Briarcliff Village, the fact that Briarcliff
Village is not being sold and the loans are not being repaid.
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(iii) Upon receipt of the three appraisals determining the gross fair
market value of the Briarcliff Village Property, the two closest gross
fair market values shall be averaged, with such average to constitute
the distribution value of the Briarcliff Village Property.
Section 13.3 Compliance with Timing Requirements of Regulations; Allowance
for Contingent or Unforeseen Liabilities or Obligations. Notwithstanding
anything to the contrary in this Agreement, in the event the Partnership is
"liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
distributions shall be made pursuant to this Article 13 to the General Partner
and Limited Partners who have positive Capital Accounts in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(2) (including any timing requirements
therein). Except as provided in Section 13.4, if any Limited Partner has a
deficit balance in his Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Partnership or to any other Person for any purpose whatsoever. In the sole
and absolute discretion of the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be: (i) distributed to a liquidating
trust established for the benefit of the General Partner and Limited Partners
for the purposes of liquidating Partnership assets, collecting amounts owed to
the Partnership, and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partner arising out of or in
connection with the Partnership (the assets of any such trust shall be
distributed to the General Partner and Limited Partners from time to time, in
the reasonable discretion of the General Partner, in the same proportions as the
amount distributed to such trust by the Partnership would otherwise have been
distributed to the General Partner and Limited Partners pursuant to this
Agreement); or (ii) withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership; provided, that such
withheld amounts shall be distributed to the General Partner and Limited
Partners as soon as practicable.
Section 13.4 Deficit Capital Account Restoration.
(a) Subject to Section 13.4(b), if an Original Limited Partner listed on
Schedule 13.4(a) (who constituted an "Electing Partner" of Branch and
is referred to hereinafter as an "Electing Partner") and any
Additional Limited Partner who elects to be added to such Schedule
(also an "Electing Partner"), on the date of the "liquidation" of his
respective interest in the Partnership (within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g)), has a negative balance in
his Capital Account, then such Electing Partner shall contribute in
cash to the capital of the Partnership the lesser of (i) the maximum
amount (if any such maximum amount is stated) listed beside such
Electing Partner's name on Schedule 13.4(a) or (ii) the amount
required to increase his Capital Account as of such date to zero. Any
such contribution required of a Partner hereunder shall be made on or
before the later of (i) the end of the Partnership fiscal year in
which the interest of such Partner is liquidated or (ii) the ninetieth
(90th) day following the
73
date of such liquidation. Notwithstanding any provision hereof to the
contrary, all amounts so contributed by a partner to the capital of
the Partnership shall, upon the liquidation of the Partnership under
this Article 13, be first paid to any then creditors of the
Partnership, including Partners that are Partnership creditors (in the
order provided in Section 13.2(a)), and any remaining amount shall be
distributed to the other Partners then having positive balances in
their respective Capital Accounts in proportion to such positive
balances.
(b) After the death of an Electing Partner, the executor of the estate of
such an Electing Partner may elect to reduce (or eliminate) the
deficit Capital Account restoration obligation of such an Electing
Partner pursuant to Section 13.4(a). Such election may be made by such
executor by delivering to the General Partner within two hundred
seventy (270) days of the death of such an Electing Partner a written
notice setting forth the maximum deficit balance in his Capital
Account that such executor agrees to restore under Section 13.4(a), if
any. If such executor does not make a timely election pursuant to this
Section 13.4(b) (whether or not the balance in his Capital Account is
negative at such time), then such Electing partner's estate (and the
beneficiaries thereof who receive distribution of Partnership Units
therefrom) shall be deemed to have a deficit Capital Account
restoration obligation as set forth pursuant to the terms of Section
13.4(a).
(c) If the General Partner, on the date of "liquidation" of its interest
in the Partnership, within the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Regulations, has a negative balance in its Capital Account,
then the General Partner shall contribute in cash to the capital of
the Partnership the amount needed to restore its Capital Account
balance to zero. Any such contribution required to be made by the
General Partner shall be made by the General Partner on or before the
later of (i) the end of the Partnership Year in which the General
Partner's interest is liquidated, or (ii) the ninetieth (90th)
calendar day following the date of such liquidation. Notwithstanding
any provision of this Agreement to the contrary, all amounts so
contributed to the capital of the Partnership in accordance with this
Section 13.4 shall upon the liquidation of the Partnership under this
Article 13, be first paid to any then creditors of the Partnership,
including Partners that are Partnership creditors (in the order
provided in Section 13.2(a)), and any remaining amount shall be
distributed to the other Partners then having positive balances in
their respective Capital Accounts in proportion to such positive
balances. Regency unconditionally guarantees the obligation of the
General Partner under this Section 13.4(c) for the benefit of the
Partnership and the other Partners.
Section 13.5 Deemed Distribution and Recontribution. Notwithstanding any
other provision of this Article 13 (but subject to Section 13.3), in the event
the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Event of Dissolution has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have distributed the Property in
kind to the General
74
Partner and Limited Partners, who shall be deemed to have assumed and taken such
property subject to all Partnership liabilities, all in accordance with their
respective Capital Accounts. Immediately thereafter, the General Partner and
Limited Partners shall be deemed to have recontributed the Partnership property
in kind to the Partnership, which shall be deemed to have assumed and taken such
property subject to all such liabilities.
Section 13.6 Rights of Limited Partners. Except as specifically provided in
this Agreement, including Section 7.1(a)(iii), Section 8.6, Section 8.7 and
Section 13.4, each Limited Partner shall look solely to the assets of the
Partnership for the return of his Capital Contribution and shall have no right
or power to demand or receive property other than cash from the Partnership.
Except as specifically provided in this Agreement, including Section 4.5 with
respect to the Series A Preferred Units, no Limited Partner shall have priority
over any other Limited Partner as to the return of his Capital Contributions,
distributions, or allocations.
Section 13.7 Notice of Dissolution. In the event an Event of Dissolution or
an event occurs that would, but for the provisions of Section 13.1, result in a
dissolution of the Partnership, the General Partner shall, within 30 days
thereafter, provide written notice thereof to each of the Partners and to all
other parties with whom the Partnership regularly conducts business (as
determined in the sole and absolute discretion of the General Partner) and shall
publish notice thereof in a newspaper of general circulation in each place in
which the Partnership regularly conducts business (as determined in the sole and
absolute discretion of the General Partner).
Section 13.8 Cancellation of Certificate of Limited Partnership. Upon the
completion of the liquidation of the Partnership as provided in Section 13.2
hereof, the Partnership shall be terminated and the Certificate and all
qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and such other
actions as may be necessary to terminate the Partnership shall be taken.
Section 13.9 Reasonable Time for Winding-Up. A reasonable time shall be
allowed for the orderly winding-up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Section 13.2 hereof,
in order to minimize any losses otherwise attendant upon such winding-up, and
the provisions of this Agreement shall remain in effect between the Partners
during the period of liquidation.
Article 14
Amendment Of Partnership Agreement; Meetings
Section 14.1 Amendments.
(a) General. Amendments to this Agreement may be proposed only by the
General Partner, who shall submit any proposed amendment (other than
an amendment pursuant to Section 14.1(b)) to the Limited Partners. The
General Partner shall seek the written vote of the applicable Partners
on the proposed amendment or shall call a meeting to vote thereon and
to transact any other business that it may deem appropriate. Except as
provided in Section 4.5(f)(ii) and Section 14.1(b), Section 14.1(c),
Section
75
14.1(d), Section 14.1(e) or Section 14.1(f) or except as may be
expressly provided to the contrary elsewhere herein, a proposed
amendment shall be adopted and be effective as an amendment hereto if
it is approved by the General Partner and it receives the Consent of
the Limited Partners.
(b) General Partner's Power to Amend. Notwithstanding Section 14.1(a), the
General Partner shall have the power, without the consent of the
Limited Partners, to amend this Agreement as may be required to
facilitate or implement any of the following purposes:
(i) to add to the obligations of the General Partner or surrender any
right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(ii) to add to or change the name of the Partnership;
(iii) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(iv) to set forth the rights, powers, duties and preferences of the
holders of any additional Partnership Interests issued pursuant
to Section 4.2;
(v) to reflect a change that is of an inconsequential nature and does
not adversely affect the Limited Partners in any material
respect, or to cure any ambiguity, correct or supplement any
provision in this Agreement not inconsistent with law or with
other provisions, or make other changes with respect to matters
arising under this Agreement that will not be inconsistent with
law or with the provisions of this Agreement; and
(vi) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state.
The General Partner will provide 10 days' prior written notice to the
Limited Partners when any action under this Section 14.1(b) is taken.
(c) Consent of Adversely Affected Partner Required. Notwithstanding Section
14.1(a) hereof and subject to Section 4.5(f)(ii) hereof, this Agreement
shall not be amended without the consent of each Partner (other than a
Series A Preferred Partner) adversely affected if such amendment would (i)
convert a Limited Partner's interest in the Partnership into a general
partner's interest, (ii) modify the limited liability of a Limited Partner,
(iii) alter rights of the Partner to receive distributions pursuant to
Article 5 or Article 13, or the allocations specified in Article 6 (except
as permitted pursuant to Section 4.2 or Section 4.4(c) hereof), (iv) alter
or modify the Redemption Right or Redemption Amount as set forth in Section
8.6 and related definitions hereof, or (v) amend Section 4.2(a) (issuances
of additional Partnership
76
Interests), Section 7.1(a)(iii) (Section 1031 exchanges), Section 7.3
(restrictions on General Partner's authority), or (vi) amend this Section
14.1(c).
(d) When Consent of Limited Partnership Interests Required. Notwithstanding
Section 14.1(a) hereof and subject to Section 4.5(f)(ii), the General
Partner shall not amend Section 4.2 (issuances of additional Partnership
Interests), Section 7.6 (contracts with Affiliates) or Section 11.2
(transfer of General Partnership Interest) without the Consent of the
Limited Partners and the General Partner shall not amend this Section
14.1(d) without the unanimous consent of the Limited Partners (other than
Series A Preferred Partners and any other Preferred Partners unless such
other Preferred Partners are expressly granted voting rights under this
Section 14.1(d).
(e) When Consent of Other Limited Partners Required.
(i) Matters Relating to Briarcliff. Notwithstanding Section 14.1(a)
hereof, Section 7.1(c) (sale of Briarcliff Village), Section 13.2(c)
(distribution of Briarcliff Village) and this Section 14.1(e)(i) may
be amended only with the Consent of a Majority in Interest of the
Original Briarcliff Partners (as defined in Section 7.1(c).
(ii) Matters Relating to Other Classes of Partners. Notwithstanding Section
14.1(a) hereof, except as provided in Section 14.1(c) and Section
4.5(f)(ii), any amendment that would adversely affect only a class of
Limited Partners, including the Original Limited Partners, may be
amended with the Consent of such class of Limited Partners.
(f) Security Capital Consent. So long as the Stockholders Agreement referred to
in Schedule 7.8(b) remains in effect, this Agreement shall not be amended,
modified or supplemented, in any such case, without the prior written
consent of Security Capital. Any amendment, modification or supplement
adopted without Security Capital's consent shall be void.
(g) Absence of Unanimous Consent for Fourth Amended Agreement. In the event
that the amendment and restatement of this Agreement in the form of this
Fourth Amended Agreement has been approved with the consent of less than
100% of the Preexisting Partners, then notwithstanding any other provision
in this Agreement to the contrary:
(i) Allocations for Non-Consenting Preexisting Partners. The General
Partner shall continue to, and shall have the authority to, apply the
provisions of Articles V and VI of the Third Amended Agreement to
those Preexisting Partners which have not given their consent to the
adoption of this Fourth Amended Agreement so that they receive the
distributions and allocations of Net Profits and Net Losses (including
income, gain, loss and deductions) which such Limited Partners would
have received had this Fourth Amended Agreement not been approved.
Furthermore, should any non-
77
consenting Preexisting Partner consent to the adoption of this Fourth
Amended Agreement after the effective date of this Fourth Amended
Agreement, then, notwithstanding anything herein to the contrary, the
General Partner shall make such adjustments to the application of
Articles V and VI of this Agreement beginning on the first day of
January after the date of such Limited Partner's consent so that after
these adjustments, such consenting Limited Partner will be treated in
a manner which is substantially equivalent to the treatment which such
Limited Partner would have received had such Limited Partner consented
to the adoption of this Fourth Amended Agreement as of the effective
date of this Fourth Amended Agreement.
(ii) Limitation on Issuance of Preferred Units. Subject to Section
4.5(f)(ii), Preferred Units may be issued to the General Partner
pursuant to Section 4.2(b)(i) or to any Limited Partner only if, as a
result of such issuance and the application of the proceeds therefrom,
the sum of (i) the aggregate liquidation preference of all outstanding
Preferred Units entitled to priority upon liquidation and (ii) the
Partnership's gross sales price of outstanding Preferred Units
entitled to priority only with respect to distributions of Available
Cash would not exceed twenty percent (20%) of the Partnership's book
value before depreciation and amortization as of the end of the
calendar quarter preceding the date of issuance, determined in
accordance with generally accepted accounting principles. Nothing in
this Section 14.1(g)(ii) shall be construed to prohibit the General
Partner from (i) redeeming Series A Preferred Units or other Preferred
Units issued from time to time pursuant to this Section 14.1(g)(ii) to
third parties who are not Affiliates of the General Partner and (ii)
holding and receiving distributions on such Redeemed Preferred Units
where such Units are redeemed in exchange for preferred stock of the
General Partner having designations, preferences and other rights
substantially similar to the designations, preferences and other
rights of the Units so redeemed.
A non-consenting Preexisting Partner may consent in writing at any time
after the adoption of this Fourth Amended Agreement to the provisions
of this Fourth Amended Agreement, by delivering written notice of such
consent to the General Partner in such form as the General Partner may
require, and such consent shall be effective beginning on the first day
of January after the date that the General Partner receives such
consent. Once a consent is delivered hereunder, it may not be revoked.
If all Preexisting Partners consent to this Fourth Amended Agreement,
as promptly as practicable thereafter, the General Partner shall
provide written notice to the Limited Partners of such consent and of
the date(s) on which the provisions of this Section 14.1(g) shall cease
to have any effect. Any Limited Partner that consented to the Third
Amended Agreement shall be deemed to have irrevocably consented to this
Fourth Amended Agreement, such Limited Partner's consent shall be
included for purposes of determining the percentage of Preexisting
Partners who have consented to this Fourth Amended Agreement and no
further consent of such Limited Partner or of any Partner who is not a
Preexisting Partner is required for this Fourth Amended Agreement.
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Section 14.2 Meetings of Limited Partners.
(a) General. Meetings of the Limited Partners may be called only by the
General Partner. Such meeting shall be held at the principal office of
the Partnership, or at such other place as may be designated by the
General Partner. Notice of any such meeting shall be given to all
Limited Partners not less than fifteen days nor more than sixty days
prior to the date of such meeting. The notice shall state the purpose
or purposes of the meeting. Limited Partners may vote in person or by
proxy at such meeting. Whenever the vote or consent of Limited
Partners is permitted or required under this Agreement, such vote or
consent may be given at a meeting of Limited Partners or may be given
in accordance with the procedure prescribed in Section 14.1 hereof.
Except as otherwise expressly provided in this Agreement, including
without limitation Section 4.5(f)(ii), the Consent of the Limited
Partners shall be required.
(b) Actions Without a Meeting. Any action required or permitted to be
taken at a meeting of the Limited Partners may be taken without a
meeting if a written consent setting forth the action so taken is
signed by the Limited Partners holding the number and type of Units
that would be sufficient to approve the action if taken at a meeting.
Such consent may be in one instrument or in several instruments, and
shall have the same force and effect as a vote of such Limited
Partners at a meeting. Such consent shall be filed with the General
Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
(c) Proxy. Each Limited Partner may authorize any Person or Persons to act
for him by proxy on all matters in which a Limited Partner is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited
Partner or his attorney-in-fact. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure
of the Limited Partner executing it.
(d) Conduct of Meeting. Each meeting of Limited Partners shall be
conducted by the General Partner or such other Person as the General
Partner may appoint pursuant to such rules for the conduct of the
meeting as the General Partner or such other Person deems appropriate.
Article 15
General Provisions
Section 15.1 Addresses and Notice. All notices and demands under this
Agreement shall be in writing, and may be either delivered personally (which
shall include deliveries by courier) by U.S. mail or a nationally recognized
overnight courier, by telefax, telex or other wire transmission (with request
for assurance of receipt in a manner appropriate with respect to communications
of that type; provided, that a confirmation copy is concurrently sent by a
nationally recognized express courier for overnight delivery) or mailed, postage
prepaid, by
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certified or registered mail, return receipt requested,
directed to the parties at their respective addresses set forth on Exhibit A
attached hereto, as it may be amended from time to time, and, if to the
Partnership, such notices and demands sent in the aforesaid manner must be
delivered at its principal place of business set forth above. Notices and
demands shall be effective upon receipt. Any party hereto may designate a
different address to which notices and demands shall thereafter be directed by
written notice given in the same manner and directed to the Partnership at its
office hereinabove set forth.
Section 15.2 Titles and Captions. All article or section titles or captions
in this Agreement are for convenience only. They shall not be deemed part of
this Agreement and in no way define, limit, extend or describe the scope or
intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
Section 15.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
Section 15.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns. Section 14.1(f) shall
inure to the benefit of Security Capital.
Section 15.6 Waiver of Partition. The Partners hereby agree that the
Partnership properties are not and will not be suitable for partition.
Accordingly, each of the Partners hereby irrevocably waives any and all rights
(if any) that it may have to maintain any action for partition of any of the
Partnership properties.
Section 15.7 Entire Agreement. This Agreement supersedes any prior
agreements or understandings among the parties with respect to the matters
contained herein and it may not be modified or amended in any manner other than
pursuant to Article 14. Matters (including but not limited to Redemption Rights)
affecting Additional Limited Partners who are admitted to the Partnership from
time to time may be set forth from time to time in separate agreements, provided
that such agreements would not require the consent of any other Limited Partners
if included as part of this Agreement, and in the event of any inconsistency
between this Agreement and any such separate agreement permitted hereunder, the
provisions of the separate agreement shall control.
Section 15.8 Remedies Not Exclusive. Any remedies herein contained for
breaches of obligations hereunder shall not be deemed to be exclusive and shall
not impair the right of any party to exercise any other right or remedy, whether
for damages, injunction or otherwise.
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Section 15.9 Time. Time is of the essence of this Agreement.
Section 15.10 Creditors. None of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of the Partnership.
Section 15.11 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
Section 15.12 Execution Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart.
Section 15.13 Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws and judicial decisions of the State of
Delaware, without regard to the principles of conflicts of law.
Section 15.14 Invalidity of Provisions. If any provision of this Agreement
is or becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
Article 16
Power Of Attorney
Section 16.1 Power of Attorney.
(a) Scope. Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner, any Liquidator, and authorized officers
and attorneys-in-fact of each, and each of those acting singly, in
each case with full power of substitution and resubstitution, as its
true and lawful agent and attorney-in-fact, with full power and
authority in its name, place and stead to:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (1) all certificates, documents and
other instruments (including, without limitation, this Agreement
and the Certificate and all amendments or restatements thereof)
that the General Partner or the Liquidator deems appropriate or
necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability)
in the State of Delaware and in all other jurisdictions in which
the Partnership may conduct business or own property; (2) all
instruments that the General Partner deems appropriate or
81
necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms; (3)
all conveyances and other instruments or documents that the
General Partner deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without limitation, a
certificate of cancellation; (4) all instruments or documents and
all certificates and acknowledgments relating to any mortgage,
pledge, or other form of encumbrance in connection with any loan
or other financing to the General Partner as provided by Section
7.1(a)(iii); (5) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to,
or other events described in, Article 11, Article 12 or Article
13 hereof or the Capital Contribution of any Partner; (6) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of
Partnership Interests; and (7) all financing statements,
continuation statements and similar documents which the General
Partner deems appropriate to perfect and to continue perfection
of the security interest referred to in Section 5.3; and
(ii) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments
appropriate or necessary, to evidence, confirm or ratify any
vote, consent, approval, agreement or other action which is made
or given by the Partners hereunder or is consistent with the
terms of this Agreement or appropriate or necessary, to
effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General
Partner to amend this Agreement except in accordance with Article 14 hereof
or as may be otherwise expressly provided for in this Agreement.
(b) Additional Power of Attorney of Limited Partners. Each Additional Limited
Partner hereby grants to the General Partner and any Liquidator and
authorizes officers and attorneys-in-fact of such Persons, and each of
those acting singly, in each case with full power of substitution and
resubstitution, as its true and lawful agent and attorney-in-fact, with
full power and authority in its name, place and stead to execute and file
in such Additional Limited Partner's name any financing statements,
continuation statements and similar documents and to perform all other acts
which the General Partner deems appropriate to perfect and to continue
perfection of the security interest in any Pledged Units owned by such
Additional Limited Partner.
(c) Irrevocability. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the
fact that each of the Partners will be relying upon the power of the
General Partner and any Liquidator to act as contemplated by this Agreement
in any filing or other action by it on behalf of the Partnership, and it
shall survive and not be affected by the subsequent Incapacity of any
Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Units and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be
bound by any representation made by the
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General Partner, acting in good faith pursuant to such power of attorney;
and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action
of the General Partner, taken in good faith under such power of attorney.
Each Limited Partner or Assignee shall execute and deliver to the General
Partner or the Liquidator, within 15 days after receipt of the General
Partner's request therefor, such further designations, powers of attorney
and other instruments as the General Partner or the Liquidator, as the case
may be, deems necessary to effectuate this Agreement and the purposes of
the Partnership.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
GENERAL PARTNER:
REGENCY CENTERS CORPORATION
By:/s/ Bruce M. Johnson
Name: Bruce M. Johnson
Title: Managing Director
LIMITED PARTNERS
By Regency Centers Corporation,
Attorney-in-Fact for the Limited Partners
By: /s/ Bruce M. Johnson
Name: Bruce M. Johnson
Title: Managing Director
SECURITY CAPITAL U.S. REALTY,
a Luxembourg corporation
By:____________________________________
Name: ______________________________
Title: ______________________________
SECURITY CAPITAL HOLDINGS, S.A.,
a Luxembourg corporation
By:____________________________________
Name: ______________________________
Title: ______________________________
EXHIBITS AND SCHEDULES
[See Exhibits (other than Exhibit E) and Schedules to
Third Amended and Restated Agreement]