THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
REGENCY CENTERS, L.P.
(formerly known as Regency Retail Partnership, L.P.)
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004.197245.1
vi
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..........17
Section 2.4 Term...................................................17
Article 3
Purpose
Section 3.1 Purpose and Business...................................17
Section 3.2 Powers.................................................17
Article 4
Capital Contributions; Issuance Of Units;
Capital Accounts
Section 4.1 Capital Contributions of the Partners..................18
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.......................................36
Section 5.3 Withholding............................................36
Section 5.4 Distributions Upon Liquidation.........................38
Article 6
Allocations
Section 6.1 Allocations of Net Income and Net Loss.................38
Section 6.2 Special Allocation Rules...............................42
Section 6.3 Allocations for Tax Purposes...........................45
Article 7
Management And Operations Of Business
Section 7.1 Management.............................................46
Section 7.2 Certificate of Limited Partnership.....................51
Section 7.3 Restriction on General Partner's Authority.............52
Section 7.4 Responsibility for Expenses............................52
Section 7.5 Outside Activities of the General Partner..............53
Section 7.6 Contracts with Affiliates..............................53
Section 7.7 Indemnification........................................54
Section 7.8 Liability of the General Partner.......................55
Section 7.9 Other Matters Concerning the General Partner...........56
Section 7.10 Title to Partnership Assets............................57
Section 7.11 Reliance by Third Parties..............................57
Article 8
Rights And Obligations Of Limited Partners
Section 8.1 Limitation of Liability................................58
Section 8.2 Management of Business.................................58
Section 8.3 Outside Activities of Limited Partners.................58
Section 8.4 Priority Among Partners................................59
Section 8.5 Rights of Limited Partners Relating
to the Partnership........ ..59
Section 8.6 Redemption of Units....................................60
Section 8.7 Regency's Assumption of Right..........................63
Article 9
Books, Records, Accounting And Reports
Section 9.1 Records and Accounting.................................64
Section 9.2 Fiscal Year............................................64
Section 9.3 Reports................................................64
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Article 10
Tax Matters
Section 10.1 Preparation of Tax Returns.............................65
Section 10.2 Tax Elections..........................................65
Section 10.3 Tax Matters Partner....................................65
Section 10.4 Organizational Expenses................................66
Article 11
Transfers And Withdrawals
Section 11.1 Transfer...............................................67
Section 11.2 Transfer of General Partner's
Partnership Interests. ...67
Section 11.3 Limited Partners' Rights to Transfer...................68
Section 11.4 Substituted Limited Partners...........................71
Section 11.5 Assignees..............................................71
Section 11.6 General Provisions.....................................71
Article 12
Admission Of Partners
Section 12.1 Admission of Successor General Partner.................72
Section 12.2 Admission of Additional Limited Partners...............73
Section 12.3 Amendment of Agreement and Certificate.................73
Section 12.4 Representations and Warranties of
Additional Limited Partners. ..73
Article 13
Dissolution And Liquidation
Section 13.1 Dissolution............................................74
Section 13.2 Winding Up.............................................75
Section 13.3 Compliance with Timing Requirements of Regulations;
Allowance for Contingent orUnforeseen
Liabilities or Obligations............................77
Section 13.4 Deficit Capital Account Restoration....................78
Section 13.5 Deemed Distribution and Recontribution.................79
Section 13.6 Rights of Limited Partners.............................79
Section 13.7 Notice of Dissolution..................................80
Section 13.8 Cancellation of Certificate of Limited Partnership.....80
Section 13.9 Reasonable Time for Winding-Up.........................80
Article 14
Amendment Of Partnership Agreement; Meetings
Section 14.1 Amendments.............................................80
Section 14.2 Meetings of Limited Partners...........................83
Article 15
General Provisions
Section 15.1 Addresses and Notice...................................84
Section 15.2 Titles and Captions....................................85
Section 15.3 Pronouns and Plurals...................................85
Section 15.4 Further Action.........................................85
Section 15.5 Binding Effect.........................................85
Section 15.6 Waiver of Partition....................................85
Section 15.7 Entire Agreement.......................................85
Section 15.8 Remedies Not Exclusive.................................86
Section 15.9 Time...................................................86
Section 15.10 Creditors...........................................86
Section 15.11 Waiver..............................................86
Section 15.12 Execution Counterparts..............................86
Section 15.13 Applicable Law......................................86
Section 15.14 Invalidity of Provisions............................86
Article 16
Power Of Attorney
Section 16.1 Power of Attorney......................................86
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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
Exhibit D.........Class Z Branch Partners and Class Z Midland Partners
Exhibit E Fourth Amended and Restated Agreement of Limited Partnership
of Regency Centers, L.P.
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004.197245.1
83
004.197245.1
THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP
OF
REGENCY CENTERS, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP is dated as of __________, 1999, by and among 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 Second Amended and Restated Agreement of Limited Partnership of the
Partnership dated as of March 5, 1998 (the "Second Amended Agreement"), as
amended by Amendment No. 1 dated as of June 25, 1998.
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 an Amended 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 first admission of Class 2 Unit
holders, 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 of an inconsequential nature to the form of 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 Class 2 Units.
Pursuant to authority granted to the General Partner in
Section 14.1(b)(iv), the General Partner wishes to amend and restate the Second
Amended Agreement, as amended, (i) to reflect the admission of the Series A
Preferred Partners (as defined below), (ii) to incorporate the Preferred Unit
Amendment, and (iii) to delete matters of historical interest that are no longer
relevant.
The General Partner anticipates that it will contribute all or
substantially 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".
Pursuant to Section 14.1(a), a majority in interest of the
Original Limited Partners and a majority in interest of the Additional Limited
Partners have consented to amending and restating the Second Amended Agreement,
as amended, (i) to make certain changes to the allocations of Net Income and Net
Loss and (ii) to approve the form of the Partnership's Fourth Amended and
Restated Agreement of Limited Partnership attached hereto (the "Fourth Amended
Agreement") to be effective upon the Partnership becoming an UPREIT and upon the
unanimous consent of the remaining Limited Partners, subject to Section 14.1(g).
Consent to this Third Amended and Restated Agreement of Limited Partnership
shall be deemed an irrevocable consent to the form of Fourth Amended Agreement.
Pursuant to Section 4.2, a majority in interest of the
Original Limited Partners and a majority in interest of the Additional Limited
Partners have consented to (i) the issuance of Preferred Units from time to
time, subject to the conditions set forth in Section 4.2(b)(i).
NOW, THEREFORE, the Second Amended Agreement shall be 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. As provided in Section 5.2, the distribution rights of the Additional
Units are subordinate to the distribution rights of the Original Limited
Partnership Units but senior to distribution rights of the Class B 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 Third Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time to
time.
"Articles of Incorporation" means the Amended and Restated
Articles of Incorporation of 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 other than a
Capital Contribution made by the General Partner for the purpose of
funding distributions to Limited Partners 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), all of which
shall be paid subject to Section 7.1(h):
(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.
"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.
"Class B Units" means the Partnership Interest in the
Partnership owned by the General Partner or any Affiliate other than a Property
Affiliate but shall exclude any Series A Preferred Units and any other Preferred
Units issued pursuant to Section 4.2(b)(i). As provided in Section 5.1(a) and
Section 5.1(b), the distribution rights of the Class B Units are subordinate to
the distribution rights of the non-Class B Units.
"Class 2 Units" means the Partnership Interests issued in
connection with the Partnership's acquisition of assets from Midland Development
Group, Inc. and certain of its affiliated entities. Pursuant to this Third
Amended and Restated Agreement of Limited Partnership of the Partnership, all
Class 2 Units have been reclassified as Additional Units.
"Class Z Branch Partners" means the Original Limited Partners
listed on Exhibit D, who have failed to consent within 30 days after the Third
Amendment Date to the adoption of this Third Amended Agreement; provided that an
Original Limited Partner who consents to the Third Amended Agreement after such
30 day period, which consent may not be revoked, shall not be deemed a Class Z
Branch Partner effective the first day of January after the date that the
General Partner receives such consent.
"Class Z Midland Partners" means the Additional Limited
Partners listed on Exhibit D, who have failed to consent within 30 days after
the Third Amendment Date to the adoption of this Third Amended Agreement;
provided that an Additional Limited Partner who consents to the Third Amended
Agreement after such 30 day period, which consent may not be revoked, shall not
be deemed a Class Z Midland Partner effective the first day of January after the
date that the General Partner receives such consent.
"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
other than Class B Units 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. Common
Units shall rank senior to the Class B Units as to distributions made pursuant
to Section 5.1(a) or Section 5.1(b).
"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. Except where this Agreement expressly specifies otherwise, 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. Consent
of the Limited Partners means the written consent of the Original Limited
Partners and the Additional Limited Partners holding a majority of the 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.
"Cumulative Unpaid Accrued Return Account" means, with respect
to any Original or Additional Limited Partner, an amount equal to (i) the
interest that would accrue at the Prime Rate plus two percent (2%) on such
Partner's Cumulative Unpaid Priority Distribution Account outstanding from time
to time, less (ii) the cumulative amount of Available Cash and the cumulative
amount of any Capital Transaction Proceeds distributed with respect to the
Limited Partnership Units of such Partner in reduction of such Cumulative Unpaid
Accrued Return Account pursuant to Section 5.1(a)(ii), Section 5.1(a)(v),
Section 5.1(b)(i) and Section 5.1(b)(iii).
"Cumulative Unpaid Priority Distribution Account" means, with
respect to any Original or Additional Limited Partner, an amount equal to (i)
the aggregate of all Priority Distribution Amounts for Limited Partnership Units
held by such Partner, less (ii) the cumulative amount of Available Cash and the
cumulative amount of any Capital Transaction Proceeds distributed with respect
to such Limited Partnership Units of such Partner in reduction of such
Cumulative Unpaid Priority Distribution Account pursuant to Section 5.1(a)(i),
Section 5.1(a)(iii), Section 5.1(a)(iv), Section 5.1(a)(vi), Section 5.1(b)(ii)
and Section 5.1(b)(iv).
"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.
"Fourth Amended Agreement" means the Fourth Amended and
Restated Agreement of Limited Partnership attached hereto as Exhibit E.
"General Partner" means Regency Realty Corporation or its
permitted successors as a general partner of the Partnership.
"General Partnership Interest" means a Partnership Interest
held by a General Partner that is a general partnership interest. A General
Partnership Interest may be expressed as a number of Class B Units.
"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.
"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 Class B Units as
provided herein.
"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.
"Management Business" has the meaning set forth in Section
7.1(g).
"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.
(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 and shall be allocated pursuant to
Section 6.2(g).
(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
Class B Units.
"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 or Class B Units.
"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(a) hereof to Partners holding 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 Class B Units owned by such Partner by (ii) the total
number of Adjusted Series A Preferred Units, Common Units and Class B 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 in Section
14.1(g)(iv) 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 the Third Amendment Date.
"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 4.2(b)(i) expressly designated
by the Partnership to rank senior to the Common Units and Class B 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, at the
office with which the Partnership deals), as its prime rate of interest for
loans in United States dollars.
"Priority Distribution Amount" means with respect to an
Original Limited Partnership Unit or Additional Unit outstanding on a
Partnership Record Date (i) the cash dividend per share of Common Stock
(including any dividend designated by Regency as capital gain pursuant to
Section 857(b)(3)(C) of the Code) declared by Regency on the Partnership Record
Date, multiplied by (ii) the Unit Adjustment Factor in effect on such
Partnership Record Date except that on the first Partnership Record Date that
occurs with respect to an Additional Unit, the General Partner may require that
the Priority Distribution Amount be prorated to the extent that the Unit has not
been outstanding each day since the immediately preceding Partnership Record
Date.
"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 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).
"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 Class B 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.
"Third Amended Agreement" means this Third Amended and
Restated Agreement of Limited Partnership dated as of __________, 1999.
"Third Amendment Date" means __________________, 1999, the
effective date of the Third Amended Agreement.
"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 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.
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 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 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 Class B
Units, or similar events having an effect on a Partner's Percentage Interest.
Any Partnership Interests held by the General Partner or any Affiliate other
than a Property Affiliate (including Partnership Interests acquired under
Section 4.2, Section 8.6 and Section 8.7) shall be Class B Units, other than the
Series A Preferred Units, the issuance of which has been approved by the Limited
Partners pursuant to Section 4.2, and any Preferred Units issued pursuant to
Section 4.2(b)(i).
(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 Percentage Interests.
(c) Capital Contributions by General Partner. The General Partner has
contributed cash or other assets to the Partnership in exchange for the number
of Class B Units set forth on Exhibit A. The General Partner also owns the
number of Class B 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.
(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 and the Class B 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 and such amounts which the
General Partner may be obligated to contribute as provided under Section
7.1(a)(iii). 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, Class B 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. The General Partner
may, but shall not be obligated to, make Capital Contributions for the purpose
of enabling the Partnership to make distributions of Available Cash to Limited
Partners.
(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 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 below 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; provided, however, that so long as there
shall be any Original Limited Partnership Units outstanding, without the Consent
of the Original Limited Partners, (a) any Partnership Interests issued shall be
subordinate to the Original Limited Partnership Units and will not affect the
priority of distributions with respect to the Original Limited Partnership Units
as set forth in Section 5.1 hereof, (b) no Partnership Interests other than
Class B Units shall be issued to the General Partner or any Affiliate of the
General Partner other than a Property Affiliate, and (c) no Partnership
Interests on a parity with the Original Limited Partnership Units shall be
issued to any Person, and provided, further, that without the Consent of the
Additional Limited Partners holding Additional Units, (a) no Partnership
Interests other than Class B Units shall be issued to the General Partner or any
Affiliate of the General Partner other than a Property Affiliate, and (b) except
as provided in Section 6.2(g), no Partnership Interests senior to the Additional
Units shall be issued to any Person.
(b) Consent Granted by Limited Partners for Certain Issuances. Pursuant to
Section 4.2(a), the Consent of Limited Partners holding Original Limited
Partnership Units and the Consent of Limited Partners holding Additional Units
has been obtained for, and no further Consent of the Limited Partners or of any
class of Limited Partners shall be required for, the issuance of additional
Units from time to time as follows:
(i) Issuance of Preferred Units. Subject to Section 4.5(f)(ii), Preferred
Units may be issued to any Limited Partner 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 4.2(b)(i) 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
4.2(b)(i) 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.
(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 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) 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 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 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.
(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.
(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
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 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) 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 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 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 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
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.
(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.
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(a) Subject to Section 5.1(c), the General Partner shall distribute quarterly an
amount equal to 100% of Available Cash generated by the Partnership during such
quarter to the Partners who are Partners on the Partnership Record Date with
respect to such quarter as follows:
(i) First, one hundred percent (100%) to the Original Limited
Partners, pro rata based on the number of Original Limited
Partnership Units held by each such Partner on the applicable
Partnership Record Date, until each has received an amount
equal to the Priority Distribution Amount for the quarter for
each such Unit;
(ii) Next, if any Original Limited Partners have a positive
Cumulative Unpaid Accrued Return Account, one hundred percent
(100%) to such Original Limited Partners, pro rata based on
the relative amounts of their Cumulative Unpaid Accrued Return
Accounts, until each such Cumulative Unpaid Accrued Return
Account reaches zero;
(iii) Next, if any Original Limited Partners have a positive
Cumulative Unpaid Priority Distribution Account, one hundred
percent (100%) to such Original Limited Partners, pro rata
based on the relative amounts of their Cumulative Unpaid
Priority Distribution Accounts, until each such Cumulative
Unpaid Priority Distribution Account reaches zero;
(iv) Next, one hundred percent (100%) to the Additional Limited
Partners, pro rata based on the relative amounts of their
Priority Distribution Amounts, until each has received an
amount equal to the Priority Distribution Amount for the
quarter for each Unit held by such Additional Limited Partner
on the applicable Partnership Record Date;
(v) Next, if any Additional Limited Partners have a positive
Cumulative Unpaid Accrued Return Account, one hundred percent
(100%) to such Additional Limited Partners, pro rata based on
the relative amounts of their Cumulative Unpaid Accrued Return
Accounts, until each such Cumulative Unpaid Accrued Return
Account reaches zero;
(vi) Next, if any Additional Limited Partners have a positive
Cumulative Unpaid Priority Distribution Account, one hundred
percent (100%) to such Additional Limited Partners, pro rata
based on the relative amounts of their Cumulative Unpaid
Priority Distribution Accounts, until each such Cumulative
Unpaid Priority Distribution Account reaches zero; and
(vii) Thereafter, to the General Partner and any other holders of
Class B Units, pro rata in accordance with the relative number
of Class B Units held by each.
(b) Subject to Section 5.1(c), the General Partner shall distribute Capital
Transaction Proceeds received by the Partnership within 30 days after the date
of such Capital Transaction, provided that the General Partner has given the
Limited Partners 20 days' prior written notice of the date for any such
distribution (the "Capital Transaction Record Date"), as follows:
(i) First, if any Original Limited Partners have a positive
Cumulative Unpaid Accrued Return Account, one hundred percent
(100%) to such Original Limited Partners, pro rata based on
the relative amounts of their Cumulative Unpaid Accrued Return
Accounts, until each such Cumulative Unpaid Accrued Return
Account reaches zero;
(ii) Next, if any Original Limited Partners have a positive
Cumulative Unpaid Priority Distribution Account, one hundred
percent (100%) to such Original Limited Partners, pro rata
based on the relative amounts of their Cumulative Unpaid
Priority Distribution Accounts, until each such Cumulative
Unpaid Priority Distribution Account reaches zero;
(iii) Next, if any Additional Limited Partners have a positive
Cumulative Unpaid Accrued Return Account, one hundred percent
(100%) to such Additional Limited Partners, pro rata based on
the relative amounts of their Cumulative Unpaid Accrued Return
Accounts, until each such Cumulative Unpaid Accrued Return
Account reaches zero;
(iv) Next, if any Additional Limited Partners have a positive
Cumulative Unpaid Priority Distribution Account, one hundred
percent (100%) to such Additional Limited Partners, pro rata
based on the relative amounts of their Cumulative Unpaid
Priority Distribution Accounts, until each such Cumulative
Unpaid Priority Distribution Account reaches zero; and
(v) Thereafter, to the General Partner and any other holders of
Class B Units, pro rata in accordance with the relative number
of Class B Units held by each.
(c) Anything herein to the contrary notwithstanding, no Available Cash or
Capital Transaction Proceeds shall be distributed pursuant to Section 5.1(a),
Section 5.1(b) 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 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.
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. After giving effect to the special allocations set forth in
Section 6.2 below, Net Income shall be allocated 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 Section
6.1(b)(ix) and the last sentence of Section 6.1(b) 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)(viii) for all prior fiscal
years, over (B) the cumulative Net Income allocated pursuant
to this Section 6.1(a)(ii), including any amounts allocated
pursuant to Section 6.2(g) which were attributable to this
Section 6.1(a)(ii), for all prior fiscal years;
(iii) Third, one hundred percent (100%) to the Original Limited
Partners in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to such Partners pursuant to
Section 6.1(b)(iv) for all prior fiscal years, over (B) the
cumulative Net Income allocated pursuant to this Section
6.1(a)(iii) for all prior fiscal years, which amount shall be
allocated among such Partners in the same proportions and in
the reverse order as the Net Losses were allocated pursuant to
Section 6.1(b)(iv);
(iv) Fourth, one hundred percent (100%) to the Original Limited
Partners in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to such Partners pursuant to
Section 6.1(b)(iii) for all prior fiscal years, over (B) the
cumulative Net Income allocated pursuant to this Section
6.1(a)(iv) for all prior fiscal years, which amount shall be
allocated among such Partners in the same proportions and in
the reverse order as the Net Losses were allocated pursuant to
Section 6.1(b)(iii);
(v) Fifth, 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)(v), including any amounts allocated
pursuant to Section 6.2(g) which were attributable to this
Section 6.1(a)(v), for all prior periods;
(vi) Sixth, one hundred percent (100%) to the Original Limited Partners
until the cumulative allocations of Net Income to each Original Limited Partner
under this Section 6.1(a)(vi) for the current and all prior fiscal years equal
the cumulative distributions paid to the Original Limited Partner pursuant to
Section 5.1(a)(i) and Section 13.2(a)(iv), provided, however, in the case of
Original Limited Partners other than Class Z Branch Partners, no allocations of
Net Income shall be made under this Section 6.1(a)(vi) to such Limited Partners
with respect to distributions made under Section 5.1(a)(i) and Section
13.2(a)(iv) after the Third Amendment Date;
(vii) Seventh, one hundred percent (100%) to the Original Limited Partners
until the cumulative allocations of Net Income to each Original Limited Partner
under this Section 6.1(a)(vii) for the current and all prior fiscal years equal
the sum of the cumulative amounts credited to such Partner's Cumulative Unpaid
Priority Distribution Account and Cumulative Unpaid Accrued Return Account for
the current and all prior fiscal years, provided, however, in the case of
Original Limited Partners other than Class Z Branch Partners, no allocations of
Net Income shall be made under this Section 6.1(a)(vii) with respect to amounts
credited to such Partners' Cumulative Unpaid Priority Distribution Accounts and
Cumulative Unpaid Accrued Return Accounts after the Third Amendment Date; and
(viii) Eighth, one hundred percent (100%) to the Additional Limited
Partners in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to the Additional Limited
Partners pursuant to Section 6.1(b)(vii) for all prior fiscal
years, over (B) the cumulative Net Income allocated pursuant
to this Section 6.1(a)(viii) for all prior fiscal years, which
amount shall be allocated among the Additional Limited
Partners in the same proportions and in the reverse order as
the Net Losses were allocated pursuant to Section 6.1(b)(vii);
(ix) Ninth, one hundred percent (100%) to the Additional Limited
Partners in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to the Additional Limited
Partners pursuant to Section 6.1(b)(vi) for all prior fiscal
years, over (B) the cumulative Net Income allocated pursuant
to this Section 6.1(a)(ix) for all prior fiscal years, which
amount shall be allocated among such Partners in the same
proportions and in the reverse order as the Net Losses were
allocated pursuant to Section 6.1(b)(vi);
(x) Tenth, one hundred percent (100%) to the Additional Limited Partners
until the cumulative allocations of Net Income to each Additional Limited
Partner under this Section 6.1(a)(x) for the current and all prior fiscal years
equal the cumulative distributions paid to the Additional Limited Partners
pursuant to Section 5.1(a)(iv) and Section 13.2(a)(v), provided, however, in the
case of Additional Limited Partners other than Class Z Midland Partners, no
allocations of Net Income shall be made under this Section 6.1(a)(x) to such
Limited Partners with respect to distributions made under Section 5.1(a)(iv) and
Section 13.2(a)(v) after the Third Amendment Date;
(xi) Eleven, one hundred percent (100%) to the Additional Limited Partners
until the cumulative allocations of Net Income to each Additional Limited
Partner under this Section 6.1(a)(xi) for the current and all prior fiscal years
equal the sum of (A) the cumulative amounts credited to such Partner's
Cumulative Unpaid Priority Distribution Account and Cumulative Unpaid Accrued
Return Account for the current and all prior fiscal years and (B) the cumulative
Net Losses allocated to the Additional Limited Partner pursuant to Section
6.1(b)(v) for all prior fiscal years, provided, however, in the case of
Additional Limited Partners other than Class Z Midland Partners, no allocation
of Net Income shall be made under this Section 6.1(a)(xi) with respect to
amounts credited to such Partners' Cumulative Unpaid Priority Distribution
Accounts and Cumulative Unpaid Accrued Return Accounts after the Third Amendment
Date; and
(xii) Thereafter, to the Original and Additional Limited Partners
other than Class Z Branch Partners or Class Z Midland
Partners, to the General Partner and to any other holders of
Class B Units, pro rata in accordance with the relative
amounts of Available Cash and Capital Transaction Proceeds
distributed to each of them during the taxable year.
(b) Net Losses. After giving effect to the special allocations set forth in
Section 6.2 below, Net Losses shall be allocated as follows:
(i) First, one hundred percent (100%) to the Original and
Additional Limited Partners other than Class Z Branch Partners
or Class Z Midland Partners, to the General Partner and to the
Class B Unit holders in an amount equal to the excess, if any,
of (A) the cumulative Net Income allocated pursuant to Section
6.1(a)(xii) hereof for all prior fiscal years in excess of
distributions of Available Cash to such Partners for which no
corresponding allocation of Net Income had been made (or is
required to be made) under Sections 6.1(a)(i)-(xi) hereof,
over (B) the cumulative Net Losses allocated pursuant to this
Section 6.1(b)(i) for all prior fiscal years;
(ii) Second, to the Original Limited Partners until the cumulative
allocations of Net Losses under this Section 6.1(b)(ii) equal
the excess, if any, of the cumulative allocations of Net
Income under Section 6.1(a)(vii) to such Partners for all
prior fiscal years over the cumulative distributions to such
Partners under Section 5.1(a)(ii) and (iii) and Section
5.1(b)(i) and (ii) for the current and all prior fiscal years
(such allocation being made in proportion to such Partners'
respective excess amounts);
(iii) Third, to the Original Limited Partners with positive Adjusted
Capital Account balances (determined, solely for purposes of
this Section 6.1(b)(iii), without regard to any obligation of
a Partner to restore a negative Capital Account under Section
13.4), in proportion to such balances, until such balances are
reduced to zero;
(iv) Fourth, to the Original Limited Partners in proportion to
their relative Percentage Interests; provided, however, that
to the extent that an allocation under this Section 6.1(b)(iv)
would cause or increase an Adjusted Capital Account Deficit
for such Partner, such Net Loss shall be allocated to those
Original Limited Partners (in proportion to their relative
Percentage Interests) for whom such allocation would not cause
or increase an Adjusted Capital Account Deficit;
(v) Fifth, to the Additional Limited Partners until the cumulative
allocations of Net Losses under this Section 6.1(b)(v) equal
the excess, if any, of the cumulative allocations of Net
Income under Section 6.1(a)(xi) to such Partners for all prior
fiscal years over the cumulative distributions to such
Partners under Section 5.1(a)(v) and (vi) and Section
5.1(b)(iii) and (iv) for the current and all prior fiscal
years (such allocation being made in proportion to such
Partners' respective excess amounts);
(vi) Sixth, to the Additional Limited Partners with positive
Adjusted Capital Accounts balances (determined, solely for
purposes of this Section 6.1(b)(vi), without regard to any
obligation of a Partner to restore a negative Capital Account
under Section 13.4), in proportion to such balances, until
such balances are reduced to zero;
(vii) Seventh, to the Additional Limited Partners in proportion to
their relative Percentage Interests; provided, however, that
to the extent that an allocation under this Section
6.1(b)(vii) would cause or increase an Adjusted Capital
Account Deficit for such Partner, such Net Loss shall be
allocated to those Additional Limited Partners (in proportion
to their relative Percentage Interests) for whom such
allocation would not cause or increase an Adjusted Capital
Account Deficit;
(viii) Eighth, to the Series A Preferred Partners until their
Adjusted Capital Account balance (determined, solely for
purposes of this Section 6.1(b)(viii), without regard to any
obligation of a Partner to restore a negative Capital Account
under Section 13.4), has been reduced to zero; and
(ix) Any remaining Net Loss shall be allocated to the General Partner and any
other holders of Class B Units.
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.
(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 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.
(g) Capital Account Adjustments. Notwithstanding anything herein to the contrary
other than the last sentence of Section 14.1(g), any gain or loss arising from
an adjustment to the Gross Asset Value of any Partnership asset pursuant to
clause (b) or (c) of the definition thereof shall be allocated (i) first, to the
Series A Preferred Partners, but only to the extent that they would have been
allocated such gain pursuant to Section 6.1(a)(ii) or Section 6.1(a)(v) of this
Agreement or such loss pursuant to Section 6.1(b)(viii) of this Agreement, as
applicable, if such gain or loss had been actually realized; and (ii) second,
and subject to Section 6.2(h) hereof, one hundred percent (100%) of the
remainder of such gain or loss to the General Partner and the Additional Limited
Partners pro-rata in accordance with the relative number of Units held by each;
provided, however, that for this purpose, the General Partner shall be treated
as owning all of the outstanding Original Limited Partnership Units in addition
to the actual number of Units which the General Partner holds. An Additional
Limited Partner, at the time of admission to the Partnership, may elect with the
consent of the General Partner to not receive special allocations of any gain or
loss resulting from such adjustments.
(h) Special Adjustments. Notwithstanding anything herein to the contrary, the
following adjustments shall be made to the amount of income, gain, losses and
deductions allocated under Section 6.1 and Section 6.2 of this Agreement and the
amounts distributed to the Partners under Section 13.2(a)(vi):
(i) In the event that (A) a Liquidating Transaction shall occur and (B) the
Original and Additional Limited Partners other than the Class Z Branch Partners
and the Class Z Midland Partners would, after giving effect to all
contributions, distributions and allocations for all periods, receive amounts
under Section 13.2(a)(vi) of this Agreement which are less than they would have
received had they not consented to the Third Amended Agreement, then the General
Partner shall (1) cause to be distributed to each of these Partners out of
amounts otherwise distributable to the General Partner pursuant to Section
13.2(a)(vi) amounts equal to such shortfall amount and (2) cause to be allocated
to each of these Partners out of income (including gross income) or gain
otherwise allocable to the General Partner an amount of income (including gross
income) or gain equal to such deficit amount;
(ii) In the event that (A) any gain or loss arises from an adjustment to
the Gross Asset Value of any Partnership asset pursuant to clause (b) or (c) of
the definition thereof and (B) any such gain or loss would, but for Section
6.2(g), have been allocated to the Original Limited Partners pursuant to
Sections 6.1 and 6.2 hereof (other than Section 6.2(g)) if such gain or loss
were included in the definition of Net Profits and Net Losses, then (1) any gain
or loss which would have been so allocated shall be allocated to the Original
Limited Partners to the fullest extent possible out of gains or losses otherwise
allocable to the General Partner pursuant to Section 6.2(g), or to the extent
the gains or losses otherwise allocable to the General Partner are insufficient
to permit such an allocation, out of the first items of income, gain, loss or
deduction thereafter allocable to the General Partner and (2) in the event that
a Liquidating Transaction shall occur at a time when gain or loss is required to
be allocated to the Original Limited Partners pursuant to this Section
6.2(h)(ii), but which allocation has not been made as of the time of the
liquidating distribution, the General Partner shall, (x) in the case of net
unallocated gain, distribute to the Original Limited Partners out of amounts
otherwise distributable to the General Partner amounts equal to the amounts the
Original Limited Partners would have received under Section 13.2(a)(vi) if the
net unallocated gain had been allocated thereunder or (y) in the case of net
unallocated loss, distribute to the General Partner out of amounts otherwise
distributable to the Original Limited Partners amounts equal to the amounts the
General Partner would have received under Section 13.2(a)(vi) if the net
unallocated loss had been allocated thereunder; and
(iii) In the event that (A) a Liquidating Transaction shall occur and (B)
an Original Limited Partner would, after giving effect to all contributions,
distributions and allocations for all periods, receive amounts under Section
13.2(a)(vi) of this Agreement which are less than they would have received had
the order of subsections 6.1(b)(ii), (iii) and (iv) on the one hand and
subsections 6.1(b)(v), (vi) and (vii) on the other hand been reversed effective
as of the date of the Second Amended Agreement, then the General Partner shall
(1) cause to be distributed to these Partners out of amounts otherwise
distributable to the General Partner under Section 13.2(a)(vi) amounts equal to
such deficit amount and (2) cause to be allocated to these Partners out of
income (including gross income) or gain otherwise allocable to the General
Partner an amount of income (including gross income) or gain equal to such
deficit amount.
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 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.
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(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 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, which powers shall include, without limitation, the
power to pledge any or all of the assets of the Partnership to secure a loan or
other financing to the General Partner (the proceeds of which are not required
to be contributed or loaned to the Partnership), provided, however, that to the
extent that any payment of debt service or closing costs on any such mortgage,
pledge, encumbrance or hypothecation shall result in the Partnership being
unable to pay the maximum amount payable with respect to any distributions to
the Limited Partners pursuant to Section 5.1, then Regency shall cause the
General Partner to make such additional Capital Contributions as are necessary
to enable the Partnership to pay the maximum amount payable with respect to any
distributions to the Limited Partners pursuant to Section 5.1 (provided that the
General Partner shall have no obligation to make such additional Capital
Contributions in an amount exceeding the amount of debt service and closing
costs paid), and provided, further, 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) subject to the provisions of Section 7.1(h) hereof, 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 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;
(ix) subject to the provisions of Section 4.2 and Section 7.1(h)
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) subject to the provisions of Section 7.1(h) hereof, 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 Limited Partner Consent, Original Limited Partner
Consent 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.
(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 provisions of Section 7.1(h) hereof.
(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).
(h) Distributions. Notwithstanding anything contained in this Agreement to the
contrary, the General Partner, acting as a fiduciary, shall use its reasonable
best efforts and act in good faith to operate the Partnership's assets and
manage the Partnership's business, including its indebtedness, so as to produce
sufficient Available Cash and Capital Transaction Proceeds to fund to the
Limited Partners the Priority Distribution Amount on a current basis and any
balance in the Cumulative Unpaid Accrued Return Accounts and Cumulative Unpaid
Priority Distribution Accounts of the Limited Partners pursuant to Section 5.1
hereof.
Nothing in Section 7.1(h) shall require the General Partner to contribute
additional capital to the Partnership.
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. 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;
provided, that the amount of any such reimbursement shall be reduced by any
interest earned by the General Partner with respect to bank accounts or other
instruments held by it as permitted in Section 7.10 and not contributed to 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, subject to the provisions of Section 7.1(h) hereof.
(c) Responsibility for Organizational Expenses. The Partnership shall be
responsible for and shall pay all expenses incurred relating to the organization
of the Partnership.
(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.
Section 7.5 Outside Activities of the General Partner. Nothing contained in this
Agreement shall prevent or prohibit the General Partner or any employee,
officer, director, agent, shareholder or Affiliate of the General Partner from
entering into, engaging in or conducting any other 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,
including, without limitation, property of a type similar to those properties
owned by the Partnership, its Subsidiaries or any other Person in which the
Partnership has an equity investment; acting as a director, officer or employee
of any corporation, as a trustee of any trust, as a general partner of any
partnership, or as an administrative official of any other business entity; or
receiving compensation for services to, or participating in profits derived
from, the investments of any such corporation, trust, partnership or other
entity, regardless of whether such activities are competitive, directly or
indirectly, with the Partnership. Nothing herein shall require the General
Partner or any employee, agent, shareholder or Affiliate thereof to offer any
interest in such activities or any particular opportunity to the Partnership or
any Partner, and neither the Partnership nor any Partner shall have any right by
virtue of this Agreement or the partnership relationship established hereby in
or to such other activities or to the income or proceeds derived therefrom. The
pursuit of such activities, even if competitive with the business of the
Partnership (including, without limitation, causing tenants to transfer from one
of the Partnership's properties to other properties in which the General Partner
has an interest, directly or indirectly, without compensation to the
Partnership, or taking other actions for the benefit of the General Partner or
Affiliates of the General Partner that are detrimental to the Partnership),
shall not be deemed wrongful or improper.
Section 7.6 Contracts with Affiliates.
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(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 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, subject to the
provisions of Section 7.1(h) hereof.
(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) and Section 7.1(h) 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 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.
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(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 provided in Section 7.1(h) with
respect to the generation of funds for distributions and 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)
and Section 7.1(h)) 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 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.
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(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.
(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.
(e) Sales of Assets. In the event that Regency or any of its Affiliates in which
it owns, directly or indirectly, an interest disposes of properties or assets
(other than those properties or assets owned by the Partnership) in transactions
or exchanges which Regency reasonably believes create capital gains to Regency
and a resulting distribution or dividend to Regency's shareholders, the General
Partner shall provide the Original Limited Partners with at least 20 days prior
written notice of the record date for any distribution of the proceeds thereof,
together with relevant information concerning such dividend, including the
amount, to enable the Original Limited Partners to exercise the Redemption Right
prior to said record date.
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; provided, however, that the General Partner shall use its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
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 (including,
without limitation, in connection with any pledge of Partnership assets to
secure a loan or other financing to the General Partner as provided by Section
7.1(a)(iii)) 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 accordance with the terms and provisions of this
Agreement and is binding upon 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 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(a), Section 5.1(b), Section 5.1(c), Section
6.1(a), Section 6.1(b), Section 6.2 or Section 6.3 hereof (with respect to the
respective priority of the Series A and any other Preferred Units and the
Original Limited Partnership Units and the subordination of the Class B Units to
the Original Limited Partners Units and Additional Units), 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.
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(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 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 ownership of such additional Units or 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 Schedule 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 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.
(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
Class B 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 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.
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(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.
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.
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(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;
(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.
Article 11
Transfers And Withdrawals
Section 11.1 Transfer.
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(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.
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(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 7.1(a)(iii), Section 7.9(e), 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 obtaining (i) the Consent of the Original Limited
Partners and (ii) the Consent of the Additional 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 (i) the Consent of the Original Limited Partners and
(ii) the Consent of the Additional 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 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 represented by Class B Units, 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.
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(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 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 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), at any time on or before December 31, 2004, unless the provisions of
this Section 11.3(i) are waived in writing by the General Partner, 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) other than a
transfer to the General Partner or any of its Subsidiaries 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 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.
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(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 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.
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(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 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.
Section 12.2 Admission of Additional Limited Partners.
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(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. 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 the (i) 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.
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(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:
(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);
(iv) Fourth, to the Original Limited Partners, pro rata based on
the number of Original Limited Partnership Units held by such
Partners, until each such Partner has received an amount equal
to the aggregate Priority Distribution Amounts for each
Partnership Record Date (if any) occurring subsequent to the
Event of Dissolution;
(v) Fifth, one hundred percent (100%) to the Additional Limited
Partners, pro rata based on the number of Additional Units
held by such Partners, until each such Partner has received an
amount equal to the aggregate Priority Distribution Amounts
for each Partnership Record Date (if any) occurring subsequent
to the Event of Dissolution; and
(vi) 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.
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(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 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.
(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 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 be distributed in
accordance with Section 13.2(a). 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 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 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 (i) the Consent of the Original
Limited Partners and (ii) the Consent of the Additional 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 Interests),
Section 7.1(a)(iii) (Section 1031 exchanges), Section 7.1(h) (distributions),
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 7.1(h) (distributions), 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) UPREIT Amendment. On the first day of the month immediately after the date
that the General Partner Meets the UPREIT Test (as defined below), this
Agreement shall be automatically amended and restated in the form of the Fourth
Amended Agreement attached hereto as Exhibit E, and such Fourth Amended
Agreement shall govern the Partnership from such date. In its discretion, the
General Partner may defer the effective date of the Fourth Amendment until the
first day of the calendar quarter immediately after the General Partner meets
the UPREIT Test. "Meets the UPREIT Test" means that:
(i) from the most recent date that any distribution has been paid pursuant
to Article 5 until the date on which the test is being applied, one hundred
percent (100%) of the revenues of the General Partner, determined on a
consolidated basis in accordance with generally accepted accounting principles,
are attributable to revenues of the Partnership and its Subsidiaries, including
revenues attributable to the Partnership pursuant to one or more nominee
agreements between the Partnership and Regency and its Subsidiaries in which the
economic benefit and detriment of assets governed by such agreements are
attributed to the Partnership even though record title to such assets is held by
Regency and/or its Subsidiaries which are not also Subsidiaries of the
Partnership but excluding any revenues attributable to outside activities of the
General Partner permitted by Section 7.5 of the Fourth Amended Agreement;
(ii) the General Partner holds (x) the number of Class B Units
equal to the total number of Shares of Common Stock then
outstanding and (y) the number of additional Units equal to
the number 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 the General Partner is
hereby authorized to issue or redeem such Units as are
necessary to effectuate the foregoing;
(iii) on the date on which the test is being applied, no Original
Limited Partner or Additional Limited Partner has a positive
Cumulative Unpaid Accrued Return Account or a positive
Cumulative Unpaid Priority Distribution Account; and
(iv) Persons (or their transferees) who are Limited Partners on the Third
Amendment Date (the "Preexisting Partners," which term includes any transferee
of a Preexisting Partner) have unanimously consented to the Fourth Amended
Agreement attached hereto as Exhibit E; provided, however, that this unanimous
consent requirement may be reduced, in the General Partner's discretion, to the
consent of Preexisting Partners holding not less than eighty-five (85%) of the
outstanding Units held by the Preexisting Partners (excluding any Units acquired
as transferee from a Limited Partner who is not a Preexisting Partner). A
non-consenting Preexisting Partner may consent in writing at any time after the
Third Amendment Date to the provisions of such Fourth Amended Agreement by
delivering written notice of such consent to the General Partner in such form as
the General Partner may require. Once a consent is delivered hereunder, it may
not be revoked. Any Limited Partner that consented to this Third Amended
Agreement shall be deemed to have irrevocably consented to the Fourth Amended
Agreement, such consent shall be included for the purpose of determining the
percentage of Preexisting Partners who have consented thereto and no further
consent of such Limited Partner or of any Partner who is not a Preexisting
Partner is required for the effectiveness of the Fourth Amended Agreement.
Contemporaneously with the adoption of the Fourth Amended Agreement and the
General Partner's most recent contribution of asset(s) to the Partnership, the
Gross Asset Values of all Partnership assets shall be adjusted to equal their
fair market values (exclusive of liabilities), as determined by the General
Partner, and, notwithstanding anything else herein to the contrary, any
resulting unrealized gain or loss shall be allocated first to the Series A
Preferred Partners to the extent required by Section 6.2(g) hereof and
thereafter in a manner which will cause the remaining Partners' Capital Account
balances to be in proportion with the number of Units which each Partner will
own immediately following the time that the Fourth Amended Agreement is adopted.
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 Original Limited Partners and the Consent of the Additional
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 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.
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
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
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.
<PAGE>
004.197245.1
Signature Pages to Regency Centers, L.P. Third Amended and Restated
Agreement of Limited Partnership
85
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
GENERAL PARTNER:
REGENCY REALTY CORPORATION
By:____________________________________
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: ______________________________
ARDEN SQUARE HOLDINGS SARL
By:____________________________________
Name: ______________________________
Title: ______________________________
<PAGE>
BLOSSOM VALLEY HOLDINGS SARL
By:____________________________________
Name: ______________________________
Title: ______________________________
COOPER STREET PLAZA HOLDINGS SARL
By:____________________________________
Name: ______________________________
Title: ______________________________
DALLAS HOLDINGS SARL
By:____________________________________
Name: ______________________________
Title: ______________________________
EL CAMINO HOLDINGS SARL
By:____________________________________
Name: ______________________________
Title: ______________________________
FRIARS MISSION HOLDINGS SARL
By:____________________________________
Name: ______________________________
Title: ______________________________
<PAGE>
004.197245.1
19
004.197245.1
Series B Amendment to Partnership Agreement
Regency Centers, L.P.
Amendment No. 1 to Third Amended and Restated Agreement of
Limited Partnership (the "Partnership Agreement")
Relating to 8.75% Series B Cumulative Redeemable Preferred Units
Section 1. Definitions. Capitalized terms used and not
otherwise defined herein shall have the meaning assigned thereto in the
Partnership Agreement. For purposes of this Amendment, the term "Series B
Limited Partner" means a Limited Partner holding Series B Preferred Units. The
term "Parity Preferred Units" shall be used to refer to Series A Preferred
Units, Series B Preferred Units (as hereafter defined) and 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 or Series B 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. The term "Series B Priority Return" shall
mean, an amount equal to 8.75% 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 $100 per Series B Preferred Unit,
commencing on the date of issuance of such Series B Preferred Unit. The
Partnership Agreement shall be amended to add such definitions, and shall be
further amended to add the following definition: "Priority Returns" means the
Series A Priority Return and the Series B Priority Return or similar amount
payable with respect to any other Parity Preferred Units. The term "Junior
Stock" means any class or series of capital stock of the General Partner ranking
junior as to the payment of distributions or rights upon voluntary or
involuntary liquidation, winding up or dissolution of the General Partner to the
Series B Preferred Stock. The term "PTP" shall mean a "publicly traded
partnership" within the meaning of Section 7704 of the Code (as hereafter
defined). The final Paragraph in the definition of "Net Income" and "Net Loss"
in the Partnership Agreement shall be restated in its entirety as follows:
"Solely for purposes of allocating Net Income or Net Loss in
any Fiscal Year to the holders of the Parity 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 Parity
Preferred Units. For purposes of the preceding sentence,
Partnership property shall be considered ceiling limited in
respect of a holder of Parity 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%."
Section 2. Designation and Number. A series of Partnership
Units in the Partnership designated as the "8.75% Series B Cumulative Redeemable
Preferred Units" (the "Series B Preferred Units") is hereby established. The
number of Series B Preferred Units shall be 850,000.
Section 3. Rank.
----
(a) The Series B 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 B Preferred Units and expressly designated in accordance
with the Partnership Agreement as ranking on a parity with the Series B
Preferred Units as to distributions or rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Partnership, or both. The Series B
Preferred Units are expressly designated as ranking on a parity with the Series
A Preferred Units.
(b) The last sentence of Section 4.1(a) of the Partnership Agreement shall be
amended to read in full as follows (new language is underscored):
Any Partnership Interests held by the General Partner or any
Affiliate other than a Property Affiliate (including
Partnership Interests acquired under Sections 4.2, 8.6 and
8.7) shall be Class B Units, other than Parity Preferred
Units, the issuance of which has been approved by the Limited
Partners pursuant to Section 4.2, and any Preferred Units
issued pursuant to Section 4.2(b)(i).
Section 4. Distributions.
-------------
(a) Payment of Distributions. Subject to the rights of holders of Parity
Preferred Units, holders of Series B 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 8.75% of the original
Capital Contribution per Series B Preferred Unit (the "Original Coupon Rate"; as
it may be adjusted from time to time, the "Coupon Rate"). If (i) on or prior to
January 31, 2000, the Partnership or the General Partner consummates a merger or
consolidation (the "Merger") with another entity (the "Merger Partner") having
an equity market capitalization in excess of $1 billion, and (ii) after the date
of consummation of the Merger and on or before the later of the 180th day
following the first public announcement of the proposed Merger and the 90th day
following the consummation of the Merger (the "Adjustment Period"), either
Moody's or Standard & Poor's (each a "Rating Agency") changes (a "Rating
Change") its unconditional, published rating of the General Partner's preferred
stock (such Agency's "GP Rating"), then, from and after the date of each such
Rating Change by either such Rating Agency during the Adjustment Period, the
Coupon Rate shall be adjusted to equal an amount determined by decreasing (if
the product described below is a positive number) or increasing (if the product
described below is a negative number) the Original Coupon Rate by the product of
(A) the positive number of grade levels of such Rating Agency by which its new
GP Rating exceeds, or the negative number of grade levels of such Rating Agency
by which its new GP Rating is less than, its GP Rating as of September 3, 1999,
multiplied by (B) 12.5 basis points. In the case of each such Rating Change, the
designation of the Series B Preferred Units will change accordingly to reflect
such new Coupon Rate. Promptly after the expiration of the Adjustment Period,
the parties hereto shall execute, acknowledge and deliver or cause to be
executed, acknowledged and delivered all instruments and documents as may be
reasonably necessary or desirable to memorialize the revised Coupon Rate,
including making a corresponding change to the Series B Priority Return. 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 1,
June 1, September 1 and December 1 of each year commencing on December 1, 1999
and (B) in the event of (i) an exchange of Series B Preferred Units into Series
B Preferred Stock, or (ii) a redemption of Series B Preferred Units, on the
exchange date or redemption date, as applicable (each a "Series B Preferred Unit
Distribution Payment Date"). The amount of the distribution payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months
and for any period shorter than a full quarterly period for which distributions
are computed, the amounts of the distribution payable will be computed based on
the ratio of the actual number of days elapsed in period to ninety (90) days. If
any date on which distributions are to be made on the Series B Preferred Units
is not a Business Day (as defined herein), 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
December 31, 1999 and thereafter on the Series B Preferred Units will be made to
the holders of record of the Series B Preferred Units on the relevant record
dates to be fixed by the Partnership acting through the General Partner, which
record dates shall 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 "Series B Preferred Unit Partnership Record Date").
The term "Business Day" shall mean each day, other than a
Saturday or a Sunday, which is not a day on which banking institutions in New
York, New York are authorized or required by law, regulation or executive order
to close.
(b) Distributions Cumulative. Distributions on the Series B Preferred Units will
accrue whether or not the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness, at any time
prohibit the current payment of distributions, whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series B Preferred Units will accumulate
as of the Series B Preferred Unit Distribution Payment Date on which they first
become payable. Distributions on account of arrears for any past distribution
periods may be declared and paid at any time, without reference to a regular
Series B Preferred Unit Distribution Payment Date to holders of records of the
Series B Preferred Units on the record date fixed by the Partnership acting
through the General Partner which date shall be not less than ten (10) days and
not more than thirty (30) Business Days prior to the payment date. Accumulated
and unpaid distributions will not bear interest.
(c) Priority as to Distributions.
-------------------------------------
(i) So long as any Series B Preferred Units are outstanding, no distribution of
cash or other property shall be authorized, declared, paid or set apart for
payment on or with respect to any class or series of Partnership Interests of
the Partnership ranking junior as to the payment of distributions to Parity
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 B Preferred Units, any Parity
Preferred Units with respect to distributions or any Junior Units, unless, in
each case, all distributions accumulated on all Series B 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 B Preferred Units as to distributions, or (c) the
redemption of Partnership Interests corresponding to any Series B Preferred
Stock, Parity Preferred Stock with respect to distributions or Junior Stock to
be purchased by the General Partner pursuant to Article 5 of the Articles of
Incorporation of the General Partner (the "Charter") to preserve the General
Partner's status as a real estate investment trust, provided that such
redemption shall be upon the same terms as the corresponding purchase pursuant
to Article 5 of the Charter.
(ii) So long as distributions have not been paid in full (or a sum sufficient
for such full payment is not irrevocably deposited in trust for payment) upon
the Series B Preferred Units, all distributions authorized and declared on the
Series B Preferred Units and all classes or series of outstanding Parity
Preferred Units with respect to distributions shall be authorized and declared
so that the amount of distributions authorized and declared per Series B
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 B Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such classes or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
(d) No Further Rights. Holders of Series B Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
(e) Section 5.1(c) of the Partnership Agreement shall be amended to read in
full as follows (new language is underscored):
"Anything herein to the contrary notwithstanding, subject to
Section 4(c)(i) of Amendment No. 1 to this Agreement, no
Available Cash or Capital Transaction Proceeds shall be
distributed pursuant to Section 5.1(a), Section 5.1(b) or any
other provisions 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. Allocations.
-----------
(a) Section 6.1(a) and 6.1(b) of the Agreement are hereby deleted and the
following inserted as new Sections 6.1(a) and 6.1(b) in lieu thereof (new
language is underscored):
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. After giving effect to the
special allocations set forth in Section 6.2 below, Net Income
shall be allocated as follows (and for this purpose, the
holders of Class A Units shall be treated as if they were
Original Limited Partners):
(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 Section
6.1(b)(ix) and the last sentence of Section 6.1(b)
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 holders of Parity Preferred Units in an
amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to the holders of
Parity Preferred Units pursuant to Section
6.1(b)(viii) for all prior fiscal years, over (B) the
cumulative Net Income allocated pursuant to this
Section 6.1(a)(ii), including any amounts allocated
pursuant to Section 6.2(g) which were attributable to
this Section 6.1(a)(ii), for all prior fiscal years;
(iii) Third, one hundred percent
(100%) to the Original Limited Partners in an amount
equal to the excess, if any, of (A) the cumulative
Net Losses allocated to such Partners pursuant to
Section 6.1(b)(iv) for all prior fiscal years, over
(B) the cumulative Net Income allocated pursuant to
this Section 6.1(a)(iii) for all prior fiscal years,
which amount shall be allocated among such Partners
in the same proportions and in the reverse order as
the Net Losses were allocated pursuant to Section
6.1(b)(iv);
(iv) Fourth, one hundred percent
(100%) to the Original Limited Partners in an amount
equal to the excess, if any, of (A) the cumulative
Net Losses allocated to such Partners pursuant to
Section 6.1(b)(iii) for all prior fiscal years, over
(B) the cumulative Net Income allocated pursuant to
this Section 6.1(a)(iv) for all prior fiscal years,
which amount shall be allocated among such Partners
in the same proportions and in the reverse order as
the Net Losses were allocated pursuant to Section
6.1(b)(iii);
(v) Fifth, one hundred percent
(100%) to the holders of Parity Preferred Units until
the holders of Parity Preferred Units have been
allocated an amount equal to the excess of their
respective cumulative Priority Returns 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 holders of Parity Preferred Units
pursuant to this Section 6.1(a)(v), including any
amounts allocated pursuant to Section 6.2(g) which
were attributable to this Section 6.1(a)(v), for all
prior periods;
(vi) Sixth, one hundred percent
(100%) to the Original Limited Partners until the
cumulative allocations of Net Income to each Original
Limited Partner under this Section 6.1(a)(vi) for the
current and all prior fiscal years equal the
cumulative distributions paid to the Original Limited
Partner pursuant to Section 5.1(a)(i) and Section
13.2(a)(iv) , provided, however, in the case of
Original Limited Partners other than Class Z Branch
Partners, no allocations of Net Income shall be made
under this Section 6.1(a)(vi) to such Limited
Partners with respect to distributions made under
Section 5.1(a)(i) and Section 13.2(a)(iv) after the
Third Amendment Date;.
(vii) Seventh, one hundred percent
(100%) to the Original Limited Partners until the
cumulative allocations of Net Income to each Original
Limited Partner under this Section 6.1(a)(vii) for
the current and all prior fiscal years equal the sum
of the cumulative amounts credited to such Partner's
Cumulative Unpaid Priority Distribution Account and
Cumulative Unpaid Accrued Return Account for the
current and all prior fiscal years, provided,
however, in the case of Original Limited Partners
other than Class Z Branch Partners, no allocations of
Net Income shall be made under this Section
6.1(a)(vii) with respect to amounts credited to such
Partners' Cumulative Unpaid Priority Distribution
Accounts and Cumulative Unpaid Accrued Return
Accounts after the Third Amendment Date;
(viii) Eighth, one hundred percent
(100%) to the Additional Limited Partners in an
amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to the Additional
Limited Partners pursuant to Section 6.1(b)(vii) for
all prior fiscal years, over (B) the cumulative Net
Income allocated pursuant to this Section
6.1(a)(viii) for all prior fiscal years, which amount
shall be allocated among the Additional Limited
Partners in the same proportions and in the reverse
order as the Net Losses were allocated pursuant to
Section 6.1(b)(vii);
(ix) Ninth, one hundred percent
(100%) to the Additional Limited Partners in an
amount equal to the excess, if any of (A) the
cumulative Net Losses allocated to the Additional
Limited Partners pursuant to Section 6.1(b)(vi) for
all prior fiscal years, over (B) the cumulative Net
Income allocated pursuant to this Section 6.1(a)(ix)
for all prior fiscal years, which amount shall be
allocated among such Partners in the same proportions
and in the reverse order as the Net Losses were
allocated pursuant to Section 6.1(b)(vi);
(x) Tenth, one hundred percent
(100%) to the Additional Limited Partners until the
cumulative allocations of Net Income to each
Additional Limited Partner under this Section
6.1(a)(x) for the current and all prior fiscal years
equal the cumulative distributions paid to the
Additional Limited Partners pursuant to Section
5.1(a)(iv) and Section 13.2(a)(v), provided, however,
in the case of Additional Limited Partners other than
Class Z Midland Partners, no allocations of Net
Income shall be made under this Section 6.1(a)(x) to
such Limited Partners with respect to distributions
made under Section 5.1(a)(iv) and Section 13.2(a)(v)
after the Third Amendment Date;
(xi) Eleventh, one hundred percent
(100%) to the Additional Limited Partners until the
cumulative allocations of Net Income to each
Additional Limited Partner under this Section
6.1(a)(xi) for the current and all prior fiscal years
equal the sum of (A) the cumulative amounts credited
to such Partner's Cumulative Unpaid Priority
Distribution Account and Cumulative Unpaid Accrued
Return Account for the current and all prior fiscal
years and (B) the cumulative Net Losses allocated to
the Additional Limited Partner pursuant to Section
6.1(b)(v) for all prior fiscal years, provided,
however, in the case of Additional Limited Partners
other than Class Z Midland Partners, no allocation of
Net Income shall be made under this Section
6.1(a)(xi) with respect to amounts credited to such
Partners' Cumulative Unpaid Priority Distribution
Accounts and Cumulative Unpaid Accrued Return
Accounts after the Third Amendment Date; and
(xii) Thereafter, to the Original
and Additional Limited Partners other than Class Z
Branch Partners or Class Z Midland Partners, to the
General Partner and to any other holders of Class B
Units, pro rata in accordance with the relative
amounts of Available Cash and Capital Transaction
Proceeds distributed to each of them during the
taxable year.
(b) Net Losses. After giving effect to the special allocations set forth in
Section 6.2 below, Net Losses shall be allocated as follows:
(i) First, one hundred percent
(100%) to the Original and Additional Limited
Partners other than Class Z Branch Partners or Class
Z Midland Partners, to the General Partner and the
Class B Unit holders in an amount equal to the
excess, if any, of (A) the cumulative Net Income
allocated pursuant to Section 6.1(a)(xii) hereof for
all prior fiscal years in excess of distributions of
Available Cash to such Partners for which no
corresponding allocation of Net Income had been made
(or is required to be made) under Sections
6.1(a)(i)-(xi) hereof, over (B) the cumulative Net
Losses allocated pursuant to this Section 6.1(b)(i)
for all prior fiscal years;
(ii) Second, to the Original Limited
Partners until the cumulative allocations of Net
Losses under this Section 6.1(b)(ii) equal the
excess, if any, of the cumulative allocations of Net
Income under Section 6.1(a)(vii) to such Partners for
all prior fiscal years over the cumulative
distributions to such Partners under Section
5.1(a)(ii) and (iii) and Section 5.1(b)(i) and (ii)
for the current and all prior fiscal years (such
allocation being made in proportion to such Partners'
respective excess amounts);
(iii) Third, to the Original Limited
Partners with positive Adjusted Capital Account
balances (determined, solely for purposes of this
Section 6.1(b)(iii), without regard to any obligation
of a Partner to restore a negative Capital Account
under Section 13.4), in proportion to such balances,
until such balances are reduced to zero;
(iv) Fourth, to the Original Limited
Partners in proportion to their relative Percentage
Interests; provided, however, that to the extent that
an allocation under this Section 6.1(b)(iv) would
cause or increase an Adjusted Capital Account Deficit
for such Partner, such Net Loss shall be allocated to
those Original Limited Partners (in proportion to
their relative Percentage Interests) for whom such
allocation would not cause or increase an Adjusted
Capital Account Deficit;
(v) Fifth, to the Additional Limited
Partners until the cumulative allocations of Net
Losses under this Section 6.1(b)(v) equal the excess,
if any, of the cumulative allocations of Net Income
under Section 6.1(a)(xi) to such Partners for all
prior fiscal years over the cumulative distributions
to such Partners under Section 5.1(a)(v) and (vi) and
Section 5.1(b)(iii) and (iv) for the current and all
prior fiscal years (such allocation being made in
proportion to such Partners' respective excess
amounts);
(vi) Sixth, to the Additional
Limited Partners with positive Adjusted Capital
Accounts balances (determined, solely for purposes of
this Section 6.1(b)(vi), without regard to any
obligation of a Partner to restore a negative Capital
Account under Section 13.4), in proportion to such
balances, until such balances are reduced to zero;
(vii) Seventh, to the Additional
Limited Partners in proportion to their relative
Percentage Interests; provided, however, that to the
extent that an allocation under this Section
6.1(b)(vii) would cause or increase an Adjusted
Capital Account Deficit for such Partner, such Net
Loss shall be allocated to those Additional Limited
Partners (in proportion to their relative Percentage
Interests) for whom such allocation would not cause
or increase an Adjusted Capital Account Deficit;
(viii) Eighth, to the holders of
Parity Preferred Units until their respective
Adjusted Capital Account Balance (determined, solely
for purposes of this Section 6.1(b)(viii), without
regard to any obligation of a Partner to restore a
negative Capital Account under Section 13.4), has
been reduced to zero; and
(ix) Any remaining Net Loss shall be
allocated to the General Partner and any other
holders of Class B Units.
Notwithstanding the foregoing, Net Losses shall not be allocated to any
Limited Partner pursuant to this Section 6.1(b)(ix) 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.
(b) Section 6.2(g) of the Agreement is hereby deleted and the following
inserted as new Section 6.2(g) in lieu thereof (new language is underscored):
(g) Capital Account Adjustments.
Notwithstanding anything herein to the contrary other than the
last sentence of Section 14.1(g), any gain or loss arising
from an adjustment to the Gross Asset Value of any Partnership
asset pursuant to clause (b) or (c) of the definition thereof
shall be allocated (i) first, to the holders of the Parity
Preferred Units, but only to the extent that they would have
been allocated such gain pursuant to Section 6.1(a)(ii) or
Section 6.1(a)(v) of this Agreement or such loss pursuant to
Section 6.1(b)(viii) of this Agreement, as applicable, if such
gain or loss had been actually realized; and (ii) second, and
subject to section 6.2(h) hereof, one hundred percent (100%)
of the remainder of such gain or loss to the General Partner
and the Additional Limited Partners (other than holders of
Parity Preferred Units) pro rata in accordance with the
relative number of Units held by each; provided, however, that
for this purpose, the General Partner shall be treated as
owning all of the outstanding Class A Units and all of the
outstanding Original Limited Partnership Units in addition to
the actual number of Units which the General Partner holds. An
Additional Limited Partner (except for holders of Parity
Preferred Units), at the time of admission to the Partnership,
may elect with the consent of the General Partner to not
receive special allocations of any gain or loss resulting from
such adjustments.
Section 6. Liquidation Preference.
----------------------
(a) 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 the holders of Series
B Preferred Units shall be entitled to receive out of the assets of the
Partnership legally available for distribution or the proceeds thereof, after
payment or provision for debts and other liabilities of the Partnership, but
before any payment or distributions of the assets shall be made to holders of
any class or series of Partnership Interest that ranks junior to the Series B
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 6(a)), 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 B 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 B Preferred Units and such Parity Preferred Units shall in all cases
bear to each other the same ratio that the respective rights of the Series B
Preferred 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.
(b) Notice. Written notice of any such voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, stating the payment date or dates
when, and the place or places where, the amounts distributable in such
circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than 30 and not more than 60 days prior
to the payment date stated therein, to each record holder of the Series B
Preferred Units at the respective addresses of such holders as the same shall
appear on the transfer records of the Partnership.
(c) No Further Rights. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series B Preferred
Units will have no right or claim to any of the remaining assets of the
Partnership.
(d) Consolidation, Merger or Certain Other Transactions. The voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property or assets of
the General Partner to, or the consolidation or merger or other business
combination of the Partnership with or into, any corporation, trust 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.
Section 7. Optional Redemption.
-------------------
(a) Right of Optional Redemption. The Series B 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 B Preferred
Units, in whole or in part, at any time or from time to time, upon not less than
30 nor more than 60 days' written notice, at a redemption price, payable in
cash, equal to the Capital Account balance of the holder of Series B Preferred
Units (the "Redemption Price"); provided, however, that no redemption pursuant
to this Section 7 will be permitted if the Redemption Price does not equal or
exceed the original Capital Contribution of such holder plus the cumulative
Series B Priority Return, whether or not declared, to the redemption date to the
extent not previously distributed or distributed on the redemption date pursuant
to Section 4(a). If fewer than all of the outstanding Series B Preferred Units
are to be redeemed, the Series B Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).
(b) Limitation on Redemption.
---------------------------------
(i) The Redemption Price of the Series B 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 Charter)), shares,
participation or other ownership interests (however designated) and any rights
(other than debt securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding Series B
Preferred Units unless all accumulated and unpaid distributions have been paid
on all Series B Preferred Units for all quarterly distribution periods
terminating on or prior to the date of redemption.
(c) Procedures for Redemption.
----------------------------------
(i) Notice of redemption will be (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 B Preferred Units at their respective addresses as they appear on the
records of the Partnership. No failure to give or defect in such notice shall
affect the validity of the proceedings for the redemption of any Series B
Preferred Units except as to the holder to whom such notice was defective or not
given. In addition to any information required by law, each such notice shall
state: (i) the redemption date, (ii) the Redemption Price, (iii) the aggregate
number of Series B Preferred Units to be redeemed and if fewer than all of the
outstanding Series B Preferred Units are to be redeemed, the number of Series B
Preferred Units to be redeemed held by such holder, which number shall equal
such holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series B Preferred Units the total number of Series B Preferred
Units held by such holder represents) of the aggregate number of Series B
Preferred Units to be redeemed, (iv) the place or places where such Series B
Preferred Units are to be surrendered for payment of the Redemption Price, (v)
that distributions on the Series B Preferred Units to be redeemed will cease to
accumulate on such redemption date and (vi) that payment of the Redemption Price
will be made upon presentation and surrender of such Series B Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of Series B
Preferred Units (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Partnership will deposit irrevocably in
trust for the benefit of the Series B Preferred Units being redeemed funds
sufficient to pay the applicable Redemption Price and will give irrevocable
instructions and authority to pay such Redemption Price to the holders of the
Series B Preferred Units upon surrender of the Series B Preferred Units by such
holders at the place designated in the notice of redemption. If the Series B
Preferred Units are evidenced by a certificate and if fewer than all Series B
Preferred Units evidenced any certificate are being redeemed, a new certificate
shall be issued upon surrender of the certificate evidencing all Series B
Preferred Units, evidencing the unredeemed Series B Preferred Units without cost
to the holder thereof. On and after the date of redemption, distributions will
cease to accumulate on the Series B Preferred Units or portions thereof called
for redemption, unless the Partnership defaults in the payment thereof. If any
date fixed for redemption of Series B Preferred Units is not a Business Day,
then payment of the 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 Redemption Price is improperly
withheld or refused and not paid by the Partnership, distributions on such
Series B Preferred Units will continue to accumulate from the 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 Redemption Price.
Section 8. Voting Rights.
-------------
(a) General. Holders of the Series B Preferred Units will not have any voting
rights or right to consent to any matter requiring the consent or approval of
the Limited Partners, except as otherwise expressly set forth in the Partnership
Agreement and except as set forth below.
(b) Certain Voting Rights. So long as any Series B Preferred Units remain
outstanding, the Partnership shall not, without the affirmative vote of the
holders of at least two-thirds of the Series B Preferred Units outstanding at
the time (i) authorize or create, or increase the authorized or issued amount
of, any class or series of Partnership Interests ranking prior to the Series B
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 such Partnership Interest, or create, authorize or issue
any obligations or security convertible into or evidencing the right to purchase
any such Partnership Interest, (ii) 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 (A) Security Capital U.S. Realty, Security Capital
Holdings, S.A. or their affiliates purchasing preferred stock of the same series
on the same terms as non-affiliates or (B) 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 in the same transaction or (iii) either (A) consolidate, merge into
or with, or convey, transfer or lease its assets substantially as an entirety
to, any corporation or other entity or (B) amend, alter or repeal the provisions
of the Partnership Agreement, whether by merger, consolidation or otherwise,
that would materially and adversely affect the powers, special rights,
preferences, privileges or voting power of the Series B Preferred Units or the
holders thereof; provided, however, that with respect to the occurrence of a
merger, consolidation or a sale or lease of all of the Partnership's assets as
an entirety, so long as (a) the Partnership is the surviving entity and the
Series B 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 B Preferred Units for other interests in such
entity having substantially the same terms and rights as the Series B Preferred
Units, including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall not be deemed to materially and adversely affect such rights, privileges
or voting powers of the holders of the Series B Preferred Units and no vote of
the Series B Preferred Units shall be required in such case; and provided
further than 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 B 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 B Preferred Units with respect to
payment of distributions and the distribution of assets upon liquidation,
dissolution or winding-up to the extent such Partnership Interests are not
issued to an affiliate of the Partnership, other than (A) Security Capital U.S.
Realty, Security Capital Holdings, S.A. or their affiliates purchasing
Partnership interests of the same series on the same terms as non-affiliates, or
(B) 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 B Preferred Units shall be required in such case.
In addition to the foregoing, the Partnership will not (x)
enter into any contract, mortgage, loan or other agreement that prohibits or
restricts, or has the effect of prohibiting or restricting, the ability of a
Preferred Partner to exercise its rights set forth herein to effect in full an
exchange or redemption pursuant to Section 10, except with the written consent
of the holders of at least two-thirds of the Series B Preferred Units
outstanding at the time; or (y) amend, alter, or repeal or waive Section 7.5 of
the Fourth Amended Agreement (to the extent in effect) or, until December 31,
2000, Section 11.3(i) of the Partnership Agreement if such amendment, alteration
or waiver adversely affects the holders of Series B Preferred Units without the
affirmative vote of at least two-thirds of the Series B Preferred Units
outstanding at the time.
Notwithstanding anything to the contrary in this Section 8, in
no event shall the General Partner or any of its affiliates have any voting,
consent or approval rights in respect of any Series B Preferred Units it or they
may hold, and any percentage or portion of outstanding Series B Preferred Units
that may be required hereunder for any vote, consent or approval of holders
thereof shall be determined as if all Series B Preferred Units then held by the
General Partner or any of its affiliates were not outstanding.
Section 9. Transfer Restrictions.
---------------------
(a) The Series B Preferred Units shall not be subject to the provisions of
Article 11 of the Partnership Agreement other than Sections 11.1(a), 11.3(b),
11.3(c), 11.3(d), 11.3(e), 11.3(f), 11.3(g), 11.3(i) and 11.6.
(b) No transfer of the Series B 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 B Preferred Units within the meaning of Treasury
Regulation Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation
Section 1.7704-1(h)(3)(ii)); provided, however, that the General Partner's
consent may not be unreasonably withheld if (a) such transfer would not result
in more than four (4) partners holding all outstanding Series B Preferred Units
within the meaning of such Treasury Regulation Sections or (b) the General
Partner is relying on a provision other than Treasury Regulation Section
1.7704-1(h) to avoid classification of Operating Partnership as a PTP. In
addition, no transfer may be made to any person if such transfer would cause the
exchange of the Series B Preferred Units for Series B Preferred Stock, as
provided herein, to be required to be registered under the Securities Act, or
any state securities laws. Notwithstanding anything in this Agreement to the
contrary, the Series B Preferred Units shall be freely transferable to LLC,
which shall upon such transfer be admitted as a Limited Partner hereunder.
Section 10. Exchange Rights.
---------------
(a) Right to Exchange.
--------------------------
(i) Series B 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 8.75% Series B
Cumulative Redeemable Preferred Stock of the General Partner (the "Series B
Preferred Stock") at an exchange rate of one share of Series B Preferred Stock
for one Series B Preferred Unit , subject to adjustment as described below (the
"Exchange Price"), provided that the Series B Preferred Units will become
exchangeable at any time, in whole or in part, at the option of the holders of
Series B Preferred Units for Series B Preferred Stock if (y) at any time full
distributions shall not have been timely made on any Series B Preferred Unit
with respect to six (6) prior quarterly distribution periods, whether or not
consecutive, provided, however, that a distribution in respect of Series B
Preferred Units shall be considered timely made if made within two (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 (z) upon
receipt by a holder or holders of Series B Preferred Units of (A) notice from
the General Partner that the General Partner or a subsidiary of the General
Partner has become aware of facts that will or likely will cause the Partnership
to become 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 B Preferred Units, that the Partnership is or likely is, or upon the
occurrence of a defined event in the immediate future will be or likely will be,
a PTP. In addition, the Series B Preferred Units may be exchanged for Series B
Preferred Stock, in whole or in part, at the option of any holder prior to the
tenth anniversary of the issuance date and after the third anniversary thereof
if such holder of a Series B Preferred Units shall deliver to the General
Partner either (i) a private letter ruling addressed to such holder of Series B
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on the enactment of temporary or final Treasury
Regulations or the publication of a Revenue Ruling, in either case to the effect
that an exchange of the Series B Preferred Units at such earlier time would not
cause the Series B Preferred Units to be considered "stock and securities"
within the meaning of Section 351(e) of the Internal Revenue Code of 1986, as
amended (the "Code") for purposes of determining whether the holder of such
Series B Preferred Units is an "investment company" under Section 721(b) of the
Code if an exchange is permitted at such earlier date. Furthermore, the Series B
Preferred Units may be exchanged in whole or in part for Series B Preferred
Stock at any time after the date hereof, if both (1) the holder thereof
concludes based on results or projected results that there exists (in the
reasonable judgment 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 Treasury Regulations Section 1.731-2(e)(4)) for a taxable year,
and (2) 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 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 Treasury Regulations Section
1.731-2(e)(4)) for a taxable year.
(ii) Notwithstanding anything to the contrary set forth in Section 10(a)(i), if
an Exchange Notice (as defined herein) has been delivered to the General
Partner, then the General Partner may, at its option, elect to redeem or cause
the Partnership to redeem all or a portion of the outstanding Series B preferred
Units for cash in an amount equal to the original Capital Contribution per
Series B Preferred Unit and all accrued and unpaid distributions thereon to the
date of redemption. The General Partner may exercise its option to redeem the
Series B Preferred Units for cash pursuant to this Section 10(a)(ii) by giving
each holder of record of Series B 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 B Preferred Units are to be surrendered for payment of
the redemption price, (iv) that distribution on the Series B 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 B Preferred
Units and (vi) the aggregate number of Series B Preferred Units to be redeemed,
and if fewer than all of the outstanding Series B Preferred Units are to be
redeemed, the number of Series B Preferred Units to be redeemed held by such
holder, which number shall equal such holder's pro-rata share (based on the
percentage of the aggregate number of outstanding Series B Preferred Units the
total number of Series B Preferred Units held by such holder represents) of the
aggregate number of Series B Preferred Units being redeemed.
(iii) Upon the occurrence of an event giving rise to exchange rights pursuant to
Section 10(a)(i), in the event an exchange of all or a portion of Series B
Preferred Units pursuant to Section 10(a)(i) would violate the provisions on
ownership limitation of the General Partner set forth in Article 5 of the
Charter, the General Partner shall give written notice thereof to each holder of
record of Series B 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 B Preferred Units shall be
entitled to exchange, pursuant to the provision of Section 10(b) a number of
Series B Preferred Units which would comply with the provisions on the ownership
limitation of the General Partner set forth in such Article 5 of the Charter and
any Series B Preferred Units not so exchanged (the "Excess Units") shall be
redeemed by the Partnership for cash in an amount equal to the original Capital
Contribution per 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 Redemption
Price, (v) that distributions on the Excess Units will cease to accrue on such
redemption date, and (vi) 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, to the extent such holder can reasonably make such
representation; 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.
To the extent the General Partner would not be able to pay the
cash set forth above in exchange for the Excess Units, and to the extent
consistent with the Charter, the General Partner agrees that it will grant to
the holders of the Series B Preferred Units exceptions to the Beneficial
Ownership Limit and Constructive Ownership Limit set forth in the Series B
Articles Supplementary sufficient to allow such holders to exchange all of their
Series B Preferred Units for Series B Preferred Stock, provided such holders
furnish to the General Partner representations acceptable to the General Partner
in its sole and absolute discretion which assure the General Partner that such
exceptions will not jeopardize the General Partner's tax status as a REIT for
purposes of federal and applicable state law.
Notwithstanding any provision of this Agreement to the
contrary, no Series B Limited Partner shall be entitled to effect an exchange of
Series B Preferred Units for Series B Preferred Stock to the extent that
ownership or right to acquire such shares would cause the Partner or any other
Person or, in the opinion of counsel selected by the General Partner, may cause
the Partner or any other Person, to violate the restrictions on ownership and
transfer of Series B Preferred Stock set forth in the Charter. To the extent any
such attempted exchange for Series B Preferred Stock would be in violation of
the previous sentence, it shall be void ab initio and such Series B Limited
Partner shall not acquire any rights or economic interest in the Series B
Preferred Stock otherwise issuable upon such exchange.
(iv) The redemption of Series B Preferred Units described in Section 10(a)(ii)
and (iii) shall be subject to the provisions of Section 7(b)(i) and Section
7(c)(ii); provided, however, that for purposes hereof the term "Redemption
Price" in Sections 7(b)(i) and 7(c)(ii) shall be read to mean the original
Capital Contribution per Series B Preferred Unit being redeemed plus all accrued
and unpaid distributions to the redemption date.
(b) Procedure for Exchange.
-------------------------------
(i) Any exchange shall be exercised pursuant to a notice of exchange (the
"Exchange Notice") delivered to the General Partner by the holder who is
exercising such exchange right, by (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 Charter, including the Ownership Limit and the
Related Tenant Limit. The exchange of Series B Preferred 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 B
Preferred Units to be exchanged together with, if applicable, written notice of
exchange and a proper assignment of such Series B Preferred Units to the office
of the General Partner maintained for such purpose. Currently, such office is
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 B 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 B Preferred Stock issued pursuant to this
Section 10 shall be delivered as shares which are duly authorized, validly
issued, fully paid and nonassessable, free of pledge, lien, encumbrance or
restriction other than those provided in the Charter, the Bylaws of the General
Partner, the Securities Act and relevant state securities or blue sky laws.
(ii) In the event of an exchange of Series B Preferred Units for shares of
Series B Preferred Stock, an amount equal to the accrued and unpaid
distributions which are not paid pursuant to Section 4(a) hereof, whether or not
declared, to the date of exchange on any Series B 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 B Preferred Stock into which
such Series B Preferred Units are exchanged, and (ii) continue to accrue on such
Series B Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series B Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a holder of a Series B Preferred Unit that was validly exchanged into
Series B Preferred Stock pursuant to this section (other than the General
Partner now holding such Series B Preferred Unit), receive a distribution out of
Available Cash or Capital Transaction Proceeds of the Partnership with respect
to any Series B Preferred Units so exchanged.
(iii) Fractional shares of Series B Preferred Stock are not to be issued upon
exchange but, in lieu thereof, the General Partner will pay a cash adjustment
based upon the fair market value of the Series B Preferred Stock on the day
prior to the exchange date as determined in good faith by the Board of Directors
of the General Partner.
(c) Adjustment of Series B Exchange Price. In case the General Partner shall be
a party to any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer for all or substantially
all of the General Partner's capital stock or sale of all or substantially all
of the General Partner's assets), in each case as a result of which the Series B
Preferred Stock will be converted into the right to receive shares of capital
stock, other securities or other property (including cash or any combination
thereof), each Series B Preferred Unit will thereafter be exchangeable into the
kind and amount of shares of capital stock and other securities and property
receivable (including cash or any combination thereof) upon the consummation of
such transaction by a holder of that number of Series B Preferred Stock or
fraction thereof into which one Series B Preferred Unit was exchangeable
immediately prior to such transaction. The General Partner may not become a
party to any such transaction, whether or not any Series B Preferred Stock are
then outstanding: (i) which does not preserve the existence of the Series B
Preferred Stock with their current rights, preferences and privileges, or (ii)
if the terms thereof are inconsistent with the foregoing. In addition, so long
as a Preferred Partner or any of its permitted successors or assigns holds any
Series B Preferred Units as the case may be, the General Partner shall not,
without the affirmative vote of the holders of at least two-thirds of the Series
B Preferred Units (voting together as a class with any outstanding Series B
Preferred Stock) outstanding at the time: (a) designate or create, or increase
the authorized or issued amount of, any class or series of shares ranking senior
to the Series B Preferred Stock with respect to the payment of distributions or
rights upon liquidation, dissolution or winding-up or reclassify any authorized
shares of the General Partner into any such shares, or create, authorize or
issue any obligations or securities convertible into or evidencing the right to
purchase any such shares; (b) designate or create, or increase the authorized or
issued amount of, any Parity Preferred Stock or reclassify any authorized shares
of the General Partner into any such shares, or create, authorize or issue any
obligations or security convertible into or evidencing the right to purchase any
such shares, but only to the extent that such Parity Preferred Stock are issued
to an Affiliate of the General Partner other than (A) Security Capital U.S.
Realty, Security Capital Holdings, S.A. or their affiliates if issued on the
same terms in the transaction as to non-affiliates, or (B) the General Partner
to the extent the issuance of such interests was to allow the General Partner to
issue corresponding preferred stock in the same transaction to persons who are
not affiliates of the Partnership; (c) amend, alter or repeal the provisions of
the Charter or bylaws of the General Partner, whether by merger, consolidation
or otherwise, that would materially and adversely affect the powers, special
rights, preferences, privileges or voting power of the Series B Preferred Stock
or the holders thereof; provided, however, that any increase in the amount of
authorized Preferred Stock or the creation or issuance of any other series or
class of Preferred Stock, or any increase in the amount of authorized shares of
each class or series, in each case ranking either (1) junior to the Series B
Preferred Stock with respect to the payment of distributions and the
distribution of assets upon liquidation, dissolution or winding-up, or (2) on a
parity with the Series B Preferred Stock with respect to the payment of
distributions and the distribution of assets upon liquidation, dissolution or
winding-up to the extent such Preferred Stock are not issued to an Affiliate of
the Company, 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.
Section 11. No Conversion Rights. The holders of the Series B Preferred
Units shall not have any rights to convert such Partnership Units into any other
class of Partnership Interests or any interest in the Partnership.
Section 12. No Sinking Fund. No sinking fund shall be established for the
retirement or redemption of the Series B Preferred Units.
Section 13. Miscellaneous.
-------------
(a) The terms "Original Limited Partnership Units," "Class B Units," "Class 2
Units," "Class Z Branch Partners," "Class Z Midland Partners" "Additional
Units," "Additional Limited Partners," "Common Units" and "General Partner
Units" and "Percentage Interest" in the Partnership Agreement shall not be
deemed to include the Series B Preferred Units. The terms "Limited Partnership
Interest" and "Partnership Interest" shall be deemed to include the Series B
Preferred Units.
(b) Exhibit A to the Partnership Agreement is hereby amended to include the
Series B Preferred Units as Limited Partnership Interests.
(c) Section 7.1(h) of the Partnership Agreement is hereby amended to
include the Series B Priority Return Amount.
(d) Nothing contained in Section 8.4 or the last sentence of Section 13.6 of the
Partnership Agreement shall be deemed to limit the issuance of, and provisions
applicable to, the Series B Preferred Units.
(e) Notwithstanding anything to the contrary contained in Section 8.6 of the
Partnership Agreement, in no event shall the rights of the holders of the Series
B Preferred Units set forth in Section 10 of this Agreement be subordinate to
the Redemption Rights set forth in Section 8.6 of the Partnership Agreement.
(f) Notwithstanding any other provisions of this Amendment, this Amendment shall
not be amended, and no action may be taken by the General Partner, without the
Consent of each Partner adversely affected if such amendment or action would
alter the redemption or exchange rights as set forth in Sections 7 and 10
hereof, respectively or amend this Section 14(f).
(g) Upon effectiveness of the Fourth Amended Agreement, the Fourth Amended
Agreement shall be amended, to the extent applicable, to incorporate this
Amendment and be consistent herewith.
(h) At such time, and in the event that, the Company authorizes sufficient
additional shares of preferred stock, the holders of a majority in interest of
the Series B Preferred Units and Series B Preferred Stock in the aggregate may
request in writing to the Company that the stated value of the Series B Priority
Return may be reduced to $25, with all reference herein to "$100" to thereafter
be deemed references to "$25," and with appropriate proportionate adjustments to
be made herein, mutatis mutandis, in distributions, liquidation preferences,
shares issuable upon exchange, and otherwise as necessary and appropriate to
preserve the economic value of Series B Preferred Units and the Series B
Preferred Stock, and the Company shall take all reasonable steps necessary and
appropriate to give effect to such request.
<PAGE>
004.197245.1
Series B Amendment to Partnership Agreement
004.197245.1
Series B Amendment to Partnership Agreement
GENERAL PARTNER
Regency Realty Corporation
By:___________________________
Bruce M. Johnson
Its Managing Director and Executive
Vice President
CONTRIBUTOR
TIMES MIRROR COMPANY
By:___________________________
Name:
Title:
SECURITY CAPITAL U.S. REALTY
By:_________________________________
Name:______________________________
Title:_______________________________
SECURITY CAPITAL HOLDINGS S.A.
By:_________________________________
Name:______________________________
Title:_______________________________
ARDEN SQUARE HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
<PAGE>
BLOSSOM VALLEY HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
COOPER STREET PLAZA HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
DALLAS HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
EL CAMINO HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
FRIARS MISSION HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
<PAGE>
Series C Amendment to Partnership Agreement 18
004.197245.1
004.197245.1
Series C Amendment to Partnership Agreement
Regency Centers, L.P.
Amendment No. 2 to Third Amended and Restated Agreement of
Limited Partnership (the "Partnership Agreement")
Relating to 9.0% Series C Cumulative Redeemable Preferred Units
Section 1. Definitions. Capitalized terms used and not
otherwise defined herein shall have the meaning assigned thereto in the
Partnership Agreement. For purposes of this Amendment the term "Series C Limited
Partner" shall mean a Limited Partner holding Series C Preferred Units. The term
"Parity Preferred Units" shall be used to refer to Series A Preferred Units,
Series B Preferred Units, Series C Preferred Units (as hereafter defined) and
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 or Series B 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. The term "Series C
Priority Return" shall mean, an amount equal to 9.0% 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 $100.00
per Series C Preferred Unit, commencing on the date of issuance of such Series C
Preferred Unit. The Partnership Agreement shall be amended to add such
definitions, and shall be further amended to add the following definition:
"Priority Returns" means the Series A Priority Return, the Series B Priority
Return and the Series C Priority Return or similar amount payable with respect
to any other Parity Preferred Units. The term "Junior Stock" means any class or
series of capital stock of the General Partner ranking junior as to the payment
of distributions or rights upon voluntary or involuntary liquidation, winding up
or dissolution of the General Partner to the Series C Preferred Stock or other
Parity Preferred Shares. The term "PTP" shall mean a "publicly traded
partnership" within the meaning of Section 7704 of the Code (as hereafter
defined). The final Paragraph in the definition of "Net Income" and "Net Loss"
in the Partnership Agreement shall be restated in its entirety as follows (new
language is underscored):
"Solely for purposes of allocating Net Income or Net Loss in
any Fiscal Year to the holders of the Parity 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 Parity
Preferred Units. For purposes of the preceding sentence,
Partnership property shall be considered ceiling limited in
respect of a holder of Parity 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%."
Section 2. Designation and Number. A series of Partnership
Units in the Partnership designated as the "9.0% Series C Cumulative Redeemable
Preferred Units" (the "Series C Preferred Units") is hereby established. The
number of Series C Preferred Units shall be 750,000.
Section 3. Rank.
----
(a) The Series C 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 C Preferred Units and expressly designated in accordance
with the Partnership Agreement as ranking on a parity with the Series C
Preferred Units as to distributions or rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Partnership, or both. The Series C
Preferred Units are expressly designated as ranking on a parity with the Series
A Preferred Units and the Series B Preferred Units.
(b) The last sentence of Section 4.1(a) of the Partnership Agreement shall be
amended to read in full as follows (new language is underscored):
Any Partnership Interests held by the General Partner or any
Affiliate other than a Property Affiliate (including
Partnership Interests acquired under Sections 4.2, 8.6 and
8.7) shall be Class B Units, other than Parity Preferred
Units, the issuance of which has been approved by the Limited
Partners pursuant to Section 4.2, and any Preferred Units
issued pursuant to Section 4.2(b)(i).
Section 4. Distributions.
-------------
(a) Payment of Distributions. Subject to the rights of holders of Parity
Preferred Units, holders of Series C Preferred Units shall be entitled to
receive, out of Available Cash and Capital Transaction Proceeds, cumulative
preferential cash distributions at the rate per annum of 9.0% of the original
Capital Contribution per Series C Preferred Unit. Such distributions shall be
cumulative, shall accrue from the original date of issuance and will be payable
in cash when, as and if declared by the Partnership acting through the General
Partner, (A) quarterly in arrears, on or before March 31, June 30, September 30
and December 31 of each year commencing on September 30, 1999 and (B) in the
event of (i) an exchange of Series C Preferred Units into Series C Preferred
Stock, or (ii) a redemption of Series C Preferred Units, on the exchange date or
redemption date, as applicable (each a "Series C 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 amounts of the distribution payable will be computed based on the
ratio of the actual number of days elapsed in the quarterly period to ninety
(90) days. If any date on which distributions are to be made on the Series C
Preferred Units is not a Business Day (as defined herein), then payment of the
distribution to be made on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
Distributions on the Series C Preferred Units will be made to the holders of
record of the Series C 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 "Series C
Preferred Unit Partnership Record Date").
The term "Business Day" shall mean each day, other than a
Saturday or a Sunday, which is not a day on which banking institutions in New
York, New York are authorized or required by law, regulation or executive order
to close.
(b) Distributions Cumulative. Distributions on the Series C Preferred Units will
accrue whether or not the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness at any time
prohibit the current payment of distributions, whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized or
declared. Accrued but unpaid distributions on the Series C Preferred Units will
accumulate as of the Series C Preferred Unit Distribution Payment Date on which
they first become payable. Distributions on account of arrears for any past
distribution periods may be declared and paid at any time, without reference to
a regular Series C Preferred Unit Distribution Payment Date to holders of record
of the Series C Preferred Units on the record date fixed by the Partnership
acting through the General Partner which date shall be not less than ten (10)
days and not more than thirty (30) Business Days prior to the payment date.
Accumulated and unpaid distributions will not bear interest.
(c) Priority as to Distributions.
-------------------------------------
(i) So long as any Series C 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 Parity
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 C Preferred Units, any Parity
Preferred Units with respect to distributions or any Junior Units, unless, in
each case, all distributions accumulated on all Series C 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 C Preferred Units as to distributions, or (c) the
redemption of Partnership Interests corresponding to any Series C Preferred
Stock, Parity Preferred Stock with respect to distributions or Junior Stock to
be purchased by the General Partner pursuant to Article 5 of the Articles of
Incorporation of the General Partner (the "Charter") to preserve the General
Partner's status as a real estate investment trust, provided that such
redemption shall be upon the same terms as the corresponding purchase pursuant
to Article 5 of the Charter.
(ii) So long as distributions have not been paid in full (or a sum sufficient
for such full payment is not irrevocably deposited in trust for payment) upon
the Series C Preferred Units, all distributions authorized and declared on the
Series C 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 C
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 C 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 classes or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
(d) No Further Rights. Holders of Series C 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.
(e) Section 5.1(c) of the Partnership Agreement shall be amended to read in
full as follows (new language is underscored):
"Anything herein to the contrary notwithstanding, subject to
Section 4(d)(i) of Amendment No. 2 to this Agreement, no
Available Cash or Capital Transaction Proceeds shall be
distributed pursuant to Section 5.1(a), Section 5.1(b) or any
other provisions 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 2. Allocations.
-----------
(a) Section 6.1(a) and 6.1(b) of the Agreement are hereby deleted and the
following inserted as new Sections 6.1(a) and 6.1(b) in lieu thereof (new
language is underscored):
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. After giving effect to the special
allocations set forth in Section 6.2 below, Net Income shall
be allocated as follows (and for this purpose, the holders of
Class A Units shall be treated as if they were Original
Limited Partners):
(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 Section 6.1(b)(ix)
and the last sentence of Section 6.1(b) 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 holders of Parity Preferred Units in an amount
equal to the excess, if any, of (A) the cumulative
Net Losses allocated to the holders of Parity
Preferred Units pursuant to Section 6.1(b)(viii) for
all prior fiscal years, over (B) the cumulative Net
Income allocated pursuant to this Section 6.1(a)(ii),
including any amounts allocated pursuant to Section
6.2(g) which were attributable to this Section
6.1(a)(ii), for all prior fiscal years;
(iii) Third, one hundred percent (100%) to
the Original Limited Partners in an amount equal to
the excess, if any, of (A) the cumulative Net Losses
allocated to such Partners pursuant to Section
6.1(b)(iv) for all prior fiscal years, over (B) the
cumulative Net Income allocated pursuant to this
Section 6.1(a)(iii) for all prior fiscal years, which
amount shall be allocated among such Partners in the
same proportions and in the reverse order as the Net
Losses were allocated pursuant to Section 6.1(b)(iv);
(iv) Fourth, one hundred percent (100%) to
the Original Limited Partners in an amount equal to
the excess, if any, of (A) the cumulative Net Losses
allocated to such Partners pursuant to Section
6.1(b)(iii) for all prior fiscal years, over (B) the
cumulative Net Income allocated pursuant to this
Section 6.1(a)(iv) for all prior fiscal years, which
amount shall be allocated among such Partners in the
same proportions and in the reverse order as the Net
Losses were allocated pursuant to Section
6.1(b)(iii);
(v) Fifth, one hundred percent (100%) to the
holders of Parity Preferred Units until the holders
of Parity Preferred Units have been allocated an
amount equal to the excess of their respective
cumulative Priority Returns 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 holders of Parity Preferred Units pursuant to
this Section 6.1(a)(v), including any amounts
allocated pursuant to Section 6.2(g) which were
attributable to this Section 6.1(a)(v), for all prior
periods;
(vi) Sixth, one hundred percent (100%) to
the Original Limited Partners until the cumulative
allocations of Net Income to each Original Limited
Partner under this Section 6.1(a)(vi) for the current
and all prior fiscal years equal the cumulative
distributions paid to the Original Limited Partner
pursuant to Section 5.1(a)(i) and Section 13.2(a)(iv)
, provided, however, in the case of Original Limited
Partners other than Class Z Branch Partners, no
allocations of Net Income shall be made under this
Section 6.1(a)(vi) to such Limited Partners with
respect to distributions made under Section 5.1(a)(i)
and Section 13.2(a)(iv) after the Third Amendment
Date;.
(vii) Seventh, one hundred percent (100%) to
the Original Limited Partners until the cumulative
allocations of Net Income to each Original Limited
Partner under this Section 6.1(a)(vii) for the
current and all prior fiscal years equal the sum of
the cumulative amounts credited to such Partner's
Cumulative Unpaid Priority Distribution Account and
Cumulative Unpaid Accrued Return Account for the
current and all prior fiscal years, provided,
however, in the case of Original Limited Partners
other than Class Z Branch Partners, no allocations of
Net Income shall be made under this Section
6.1(a)(vii) with respect to amounts credited to such
Partners' Cumulative Unpaid Priority Distribution
Accounts and Cumulative Unpaid Accrued Return
Accounts after the Third Amendment Date;
(viii) Eighth, one hundred percent (100%) to
the Additional Limited Partners in an amount equal to
the excess, if any, of (A) the cumulative Net Losses
allocated to the Additional Limited Partners pursuant
to Section 6.1(b)(vii) for all prior fiscal years,
over (B) the cumulative Net Income allocated pursuant
to this Section 6.1(a)(viii) for all prior fiscal
years, which amount shall be allocated among the
Additional Limited Partners in the same proportions
and in the reverse order as the Net Losses were
allocated pursuant to Section 6.1(b)(vii);
(ix) Ninth, one hundred percent (100%) to
the Additional Limited Partners in an amount equal to
the excess, if any of (A) the cumulative Net Losses
allocated to the Additional Limited Partners pursuant
to Section 6.1(b)(vi) for all prior fiscal years,
over (B) the cumulative Net Income allocated pursuant
to this Section 6.1(a)(ix) for all prior fiscal
years, which amount shall be allocated among such
Partners in the same proportions and in the reverse
order as the Net Losses were allocated pursuant to
Section 6.1(b)(vi);
(x) Tenth, one hundred percent (100%) to the
Additional Limited Partners until the cumulative
allocations of Net Income to each Additional Limited
Partner under this Section 6.1(a)(x) for the current
and all prior fiscal years equal the cumulative
distributions paid to the Additional Limited Partners
pursuant to Section 5.1(a)(iv) and Section
13.2(a)(v), provided, however, in the case of
Additional Limited Partners other than Class Z
Midland Partners, no allocations of Net Income shall
be made under this Section 6.1(a)(x) to such Limited
Partners with respect to distributions made under
Section 5.1(a)(iv) and Section 13.2(a)(v) after the
Third Amendment Date;
(xi) Eleventh, one hundred percent (100%) to
the Additional Limited Partners until the cumulative
allocations of Net Income to each Additional Limited
Partner under this Section 6.1(a)(xi) for the current
and all prior fiscal years equal the sum of (A) the
cumulative amounts credited to such Partner's
Cumulative Unpaid Priority Distribution Account and
Cumulative Unpaid Accrued Return Account for the
current and all prior fiscal years and (B) the
cumulative Net Losses allocated to the Additional
Limited Partner pursuant to Section 6.1(b)(v) for all
prior fiscal years, provided, however, in the case of
Additional Limited Partners other than Class Z
Midland Partners, no allocation of Net Income shall
be made under this Section 6.1(a)(xi) with respect to
amounts credited to such Partners' Cumulative Unpaid
Priority Distribution Accounts and Cumulative Unpaid
Accrued Return Accounts after the Third Amendment
Date; and
(xii) Thereafter, to the Original and
Additional Limited Partners other than Class Z Branch
Partners or Class Z Midland Partners, to the General
Partner and to any other holders of Class B Units,
pro rata in accordance with the relative amounts of
Available Cash and Capital Transaction Proceeds
distributed to each of them during the taxable year.
(b) Net Losses. After giving effect to the special allocations set forth in
Section 6.2 below, Net Losses shall be allocated as follows:
(i) First, one hundred percent (100%) to the
Original and Additional Limited Partners other than
Class Z Branch Partners or Class Z Midland Partners,
to the General Partner and the Class B Unit holders
in an amount equal to the excess, if any, of (A) the
cumulative Net Income allocated pursuant to Section
6.1(a)(xii) hereof for all prior fiscal years in
excess of distributions of Available Cash to such
Partners for which no corresponding allocation of Net
Income had been made (or is required to be made)
under Sections 6.1(a)(i)-(xi) hereof, over (B) the
cumulative Net Losses allocated pursuant to this
Section 6.1(b)(i) for all prior fiscal years;
(ii) Second, to the Original Limited
Partners until the cumulative allocations of Net
Losses under this Section 6.1(b)(ii) equal the
excess, if any, of the cumulative allocations of Net
Income under Section 6.1(a)(vii) to such Partners for
all prior fiscal years over the cumulative
distributions to such Partners under Section
5.1(a)(ii) and (iii) and Section 5.1(b)(i) and (ii)
for the current and all prior fiscal years (such
allocation being made in proportion to such Partners'
respective excess amounts);
(iii) Third, to the Original Limited
Partners with positive Adjusted Capital Account
balances (determined, solely for purposes of this
Section 6.1(b)(iii), without regard to any obligation
of a Partner to restore a negative Capital Account
under Section 13.4), in proportion to such balances,
until such balances are reduced to zero;
(iv) Fourth, to the Original Limited
Partners in proportion to their relative Percentage
Interests; provided, however, that to the extent that
an allocation under this Section 6.1(b)(iv) would
cause or increase an Adjusted Capital Account Deficit
for such Partner, such Net Loss shall be allocated to
those Original Limited Partners (in proportion to
their relative Percentage Interests) for whom such
allocation would not cause or increase an Adjusted
Capital Account Deficit;
(v) Fifth, to the Additional Limited
Partners until the cumulative allocations of Net
Losses under this Section 6.1(b)(v) equal the excess,
if any, of the cumulative allocations of Net Income
under Section 6.1(a)(xi) to such Partners for all
prior fiscal years over the cumulative distributions
to such Partners under Section 5.1(a)(v) and (vi) and
Section 5.1(b)(iii) and (iv) for the current and all
prior fiscal years (such allocation being made in
proportion to such Partners' respective excess
amounts);
(vi) Sixth, to the Additional Limited
Partners with positive Adjusted Capital Accounts
balances (determined, solely for purposes of this
Section 6.1(b)(vi), without regard to any obligation
of a Partner to restore a negative Capital Account
under Section 13.4), in proportion to such balances,
until such balances are reduced to zero;
(vii) Seventh, to the Additional Limited
Partners in proportion to their relative Percentage
Interests; provided, however, that to the extent that
an allocation under this Section 6.1(b)(vii) would
cause or increase an Adjusted Capital Account Deficit
for such Partner, such Net Loss shall be allocated to
those Additional Limited Partners (in proportion to
their relative Percentage Interests) for whom such
allocation would not cause or increase an Adjusted
Capital Account Deficit;
(viii) Eighth, to the holders of Parity
Preferred Units until their respective Adjusted
Capital Account Balance (determined, solely for
purposes of this Section 6.1(b)(viii), without regard
to any obligation of a Partner to restore a negative
Capital Account under Section 13.4), has been reduced
to zero; and
(ix) Any remaining Net Loss shall be
allocated to the General Partner and any other
holders of Class B Units.
Notwithstanding the foregoing, Net Losses shall not be
allocated to any Limited Partner pursuant to this Section 6.1(b)(ix) 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.
(b) Section 6.2(g) of the Agreement is hereby deleted and the following
inserted as new Section 6.2(g) in lieu thereof (new language is underscored):
(g) Capital Account Adjustments. Notwithstanding
anything herein to the contrary other than the last sentence
of Section 14.1(g), any gain or loss arising from an
adjustment to the Gross Asset Value of any Partnership asset
pursuant to clause (b) or (c) of the definition thereof shall
be allocated (i) first, to the holders of the Parity Preferred
Units, but only to the extent that they would have been
allocated such gain pursuant to Section 6.1(a)(ii) or Section
6.1(a)(v) of this Agreement or such loss pursuant to Section
6.1(b)(viii) of this Agreement, as applicable, if such gain or
loss had been actually realized; and (ii) second, and subject
to Section 6.2(h) hereof, one hundred percent (100%) of the
remainder of such gain or loss to the General Partner and the
Additional Limited Partners (other than holders of Parity
Preferred Units) pro rata in accordance with the relative
number of Units held by each; provided, however, that for this
purpose, the General Partner shall be treated as owning all of
the outstanding Class A Units and all of the outstanding
Original Limited Partnership Units in addition to the actual
number of Units which the General Partner holds. An Additional
Limited Partner (except for holders of Parity Preferred
Units), at the time of admission to the Partnership, may elect
with the consent of the General Partner to not receive special
allocations of any gain or loss resulting from such
adjustments.
Section 3. Liquidation Preference.
----------------------
(a) 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 C Preferred Units with
respect to rights upon any voluntary or involuntary liquidation, dissolution or
winding up of the Partnership, the holders of Series C 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 C Preferred Units as to rights upon
liquidation, dissolution or winding-up of the Partnership, an amount equal to 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, including the
allocation of Net Income or Net Loss (and any specially allocated items)
computed after adjusting the Gross Asset Values of the Partnership's assets
immediately prior to any such liquidation if failure to make such adjustment to
the Gross Asset Values would have an adverse economic impact the Series C
Preferred Units (other than those made as a result of the liquidating
distribution set forth in this Section 6(a)). 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 C Preferred Units and any Parity Preferred Units as to rights
upon liquidation, dissolution or winding-up of the Partnership, all payments of
liquidating distributions on the Series C 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 C 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.
(b) Notice. Written notice of any such voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, stating the payment date or dates
when, and the place or places where, the amounts distributable in such
circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than 30 and not more than 60 days prior
to the payment date stated therein, to each record holder of the Series C
Preferred Units at the respective addresses of such holders as the same shall
appear on the transfer records of the Partnership.
(c) No Further Rights. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series C Preferred
Units will have no right or claim to any of the remaining assets of the
Partnership.
(d) Consolidation, Merger or Certain Other Transactions. The voluntary sale,
conveyance, lease, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property or assets of
the General Partner to, or the consolidation or merger or other business
combination of the Partnership with or into, any corporation, trust or other
entity (or of any corporation, trust or other entity with or into the
Partnership) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Partnership.
Section 4. Optional Redemption.
-------------------
(a) Right of Optional Redemption. The Series C 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 C 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 C Preferred
Units (the "Redemption Price"); provided, however, that no redemption pursuant
to this Section 7 will be permitted if such Redemption Price does not equal or
exceed the original Capital Contribution of such holder plus the cumulative
Series C 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(a). If fewer than all of the outstanding Series C Preferred Units
are to be redeemed, the Series C Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).
(b) Limitation on Redemption.
---------------------------------
(i) The Redemption Price of the Series C 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 an additional
capital contribution, or out of the sale of limited partner interests in the
Partnership and from no other source. For purposes of the preceding sentence,
"capital stock" means any equity securities (including Common Stock and
Preferred Stock (as such terms are defined in the Charter)), shares,
participation or other ownership interests (however designated) and any rights
(other than debt securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding Series C
Preferred Units unless all accumulated and unpaid distributions have been paid
on all Series C Preferred Units for all quarterly distribution periods
terminating on or prior to the date of redemption.
(c) Procedures for Redemption.
----------------------------------
(i) Notice of redemption will be (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 C 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 C
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 Redemption Price, (iii) the aggregate
number of Series C Preferred Units to be redeemed and if fewer than all of the
outstanding Series C Preferred Units are to be redeemed, the number of Series C
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 C Preferred Units the total number of Series C Preferred
Units held by such holder represents) of the aggregate number of Series C
Preferred Units to be redeemed, (iv) the place or places where such Series C
Preferred Units are to be surrendered for payment of the Redemption Price, (v)
that distributions on the Series C Preferred Units to be redeemed will cease to
accumulate on such redemption date and (vi) that payment of the Redemption Price
will be made upon presentation and surrender of such Series C Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of Series C
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 C Preferred Units being redeemed funds
sufficient to pay the applicable Redemption Price and will give irrevocable
instructions and authority to pay such Redemption Price to the holders of the
Series C Preferred Units upon surrender of the Series C Preferred Units by such
holders at the place designated in the notice of redemption. If the Series C
Preferred Units are evidenced by a certificate and if fewer than all Series C
Preferred Units evidenced by any certificate are being redeemed, a new
certificate shall be issued upon surrender of the certificate evidencing all
Series C Preferred Units, evidencing the unredeemed Series C Preferred Units
without cost to the holder thereof. On and after the date of redemption,
distributions will cease to accumulate on the Series C Preferred Units or
portions thereof called for redemption, unless the Partnership defaults in the
payment thereof. If any date fixed for redemption of Series C Preferred Units is
not a Business Day, then payment of the 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 Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series C 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 Redemption Price.
Section 5. Voting Rights.
-------------
(a) General. Holders of the Series C Preferred Units will not have any voting
rights or right to consent to any matter requiring the consent or approval of
the Limited Partners, except as otherwise expressly set forth in the Partnership
Agreement and except as set forth below.
(b) Certain Voting Rights. So long as any Series C Preferred Units remain
outstanding, the Partnership shall not, without the affirmative vote of the
holders of at least two-thirds of the Series C Preferred Units outstanding at
the time (i) authorize or create, or increase the authorized or issued amount
of, any class or series of Partnership Interests ranking prior to the Series C
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 such Partnership Interest, or create, authorize or issue
any obligations or security convertible into or evidencing the right to purchase
any such Partnership Interest, (ii) 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 (A) Security Capital U.S. Realty, Security Capital
Holdings, S.A. or their affiliates or (B) the General Partner to the extent the
issuance of such interests was to allow the General Partner to issue
corresponding preferred stock to persons who are not affiliates of the
Partnership or (iii) either (A) consolidate, merge into or with, or convey,
transfer or lease its assets substantially as an entirety to, any corporation or
other entity or (B) amend, alter or repeal the provisions of the Partnership
Agreement (including without limitation this Amendment No. 2 to Third Amended
and Restated Agreement of Limited Partnership), whether by merger, consolidation
or otherwise, in each case in a manner that would materially and adversely
affect the powers, special rights, preferences, privileges or voting power of
the Series C 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 C 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 C Preferred
Units for other interests in such entity having substantially the same terms and
rights as the Series C Preferred Units, including with respect to distributions,
redemptions, transfers, 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 C Preferred Units and no vote of the Series C Preferred
Units shall be required in such case; and provided further than 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 C 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 C Preferred Units with respect to payment of distributions
and the distribution of assets upon liquidation, dissolution or winding-up to
the extent such Partnership Interests are not issued to an affiliate of the
Partnership, other than (A) Security Capital U.S. Realty, Security Capital
Holdings, S.A. or their affiliates or (B) 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 C Preferred
Units shall be required in such case.
Section 6. Transfer Restrictions.
---------------------
(a) The Series C Preferred Units shall be subject to the provisions of
Article 11 of the Partnership Agreement.
(b) No transfer of the Series C 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 C Preferred Units within the meaning of Treasury
Regulation Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation
Section 1.7704-1(h)(3)(ii)); provided, however, that the General Partner's
consent may not be unreasonably withheld if (a) such transfer would not result
in more than four (4) partners holding all outstanding Series C Preferred Units
within the meaning of such Treasury Regulation Sections or (b) the General
Partner is relying on a provision other than Treasury Regulation Section
1.7704-1(h) to avoid classification of Operating Partnership as a PTP. In
addition, no transfer may be made to any person if such transfer would cause the
exchange of the Series C Preferred Units for Series C Preferred Shares, as
provided herein, to be required to be registered under the Securities Act, or
any state securities laws.
Section 7. Exchange Rights.
---------------
(a) Right to Exchange.
--------------------------
(i) Series C 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 9.0% Series C
Cumulative Redeemable Preferred Stock of the General Partner (the "Series C
Preferred Stock") at an exchange rate of one share of Series C Preferred Stock
for one Series C Preferred Unit, subject to adjustment as described below (the
"Exchange Price"), provided that the Series C Preferred Units will become
exchangeable at any time, in whole or in part, at the option of the holders of
Series C Preferred Units for Series C Preferred Stock if (y) at any time full
distributions shall not have been timely made on any Series C Preferred Unit
with respect to six (6) prior quarterly distribution periods, whether or not
consecutive, provided, however, that a distribution in respect of Series C
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 (z) upon
receipt by a holder or holders of Series C Preferred Units of (A) notice from
the General Partner that the General Partner or a subsidiary of the General
Partner has become aware of facts that will or likely will cause the Partnership
to become 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 C 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 C Preferred Units may be exchanged for Series C
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 C Preferred Units shall deliver to the General
Partner either (i) a private ruling letter addressed to such holder of Series C
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on the enactment of temporary or final Treasury
Regulations or the publication of a Revenue Ruling, in either case to the effect
that an exchange of the Series C Preferred Units at such earlier time would not
cause the Series C Preferred Units to be considered "stock and securities"
within the meaning of Section 351(e) of the Internal Revenue Code of 1986, as
amended (the "Code") for purposes of determining whether the holder of such
Series C 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 C
Preferred Units may be exchanged in whole or in part for Series C Preferred
Shares at any time after the date hereof, if both (1) the holder thereof
concludes based on results or projected results that there exists (in the
reasonable judgment of the holder) a material 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 Treasury
Regulations Section 1.731-2(e)(4)) for a taxable year, and (2) the holder
delivers to the General Partner an opinion of nationally recognized independent
counsel to the effect that there is a material 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 Treasury
Regulations Section 1.731(e)(4)) for a taxable year. In addition, Series C
Preferred Units, if the holder thereof so determines, may be exchanged in whole
or in part for Series C Preferred Stock at any time after the date hereof, if
(1) the holder concludes (in the reasonable judgment of the holder) that less
than 90% of the gross income of the Partnership for any taxable year will or
likely will constitute "qualifying income" within the meaning of Section 7704(d)
of the Code and (2) the holder delivers to the General Partner an opinion of
nationally recognized independent counsel to the effect that less than 90% of
the gross income of the Partnership for a taxable year will or likely will
constitute "qualifying income" within the meaning of Section 7704(d) of the
Code.
(ii) Notwithstanding anything to the contrary set forth in Section 10(a)(i), if
an Exchange Notice (as defined herein) has been delivered to the General
Partner, then the General Partner may, at its option, elect to redeem or cause
the Partnership to redeem all or a portion of the outstanding Series C Preferred
Units for cash in an amount equal to the holder's positive Capital Account
balance as apportioned with respect to such redeemed Units, determined after
adjusting the holder's Capital Account for its allocable share of the
Partnership's Net Income or Net Loss (and specially allocated items) up to the
redemption date computed after adjusting the Gross Asset Values of the
Partnership's assets immediately prior to such redemption if failure to make
such adjustment to Gross Asset Values would have an adverse economic impact the
Series C Preferred Units. The General Partner may exercise its option to redeem
the Series C Preferred Units for cash pursuant to this Section 10(a)(ii) by
giving each holder of record of Series C 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 C Preferred Units are to be surrendered for payment of
the redemption price, (iv) that distribution on the Series C 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 C Preferred
Units and (vi) the aggregate number of Series C Preferred Units to be redeemed,
and if fewer than all of the outstanding Series C Preferred Units are to be
redeemed, the number of Series C 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 C Preferred Units the
total number of Series C Preferred Units held by such holder represents) of the
aggregate number of Series C Preferred Units being redeemed.
(iii) Upon the occurrence of an event giving rise to exchange rights pursuant to
Section 10(a)(i), in the event an exchange of all or a portion of Series C
Preferred Units pursuant to Section 10(a)(i) would violate the ownership
limitation provisions of the General Partner set forth in Article 5 of the
Charter, the General Partner shall give written notice thereof to each holder of
record of Series C 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 C Preferred Units shall be
entitled to exchange, pursuant to the provisions of Section 10(b) a number of
Series C Preferred Units which would comply with the ownership limitation
provisions of the General Partner set forth in such Article 5 of the Charter and
any Series C 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 Redemption
Price, (v) that distributions on the Excess Units will cease to accrue on such
redemption date, and (vi) 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, to the extent such holder can reasonably make such
representation; 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.
Notwithstanding any provision of this Agreement to the
contrary, no Series C Limited Partner shall be entitled to effect an exchange of
Series C Preferred Units for Series C Preferred Stock to the extent that
ownership or right to acquire such shares would cause the Partner or any other
Person or, in the opinion of counsel selected by the General Partner, may cause
the Partner or any other Person, to violate the restrictions on ownership and
transfer of Series C Preferred Stock set forth in the Charter. To the extent any
such attempted exchange for Series C Preferred Stock would be in violation of
the previous sentence, it shall be void ab initio and such Series C Limited
Partner shall not acquire any rights or economic interest in the Series C
Preferred Stock otherwise issuable upon such exchange.
(iv) The redemption of Series C Preferred Units described in Section 10(a)(ii)
and (iii) shall be subject to the provisions of Section 7(b)(i) and Section
7(c)(ii); provided, however, that for purposes hereof the term "Redemption
Price" in Sections 7(b)(i) and 7(c)(ii) shall be read to mean the original
Capital Contribution per Series C Preferred Unit being redeemed plus all accrued
and unpaid distributions to the redemption date.
(b) Procedure for Exchange.
-------------------------------
(i) Any exchange shall be exercised pursuant to a notice of exchange (the
"Exchange Notice") delivered to the General Partner by the holder who is
exercising such exchange right, by (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 Charter, including the Ownership Limit and the
Related Tenant Limit. The exchange of Series C Preferred Units, or a specified
portion thereof, may be effected after the fifth (5th) Business Day following
receipt by the General Partner of the Exchange Notice and such requested
information by delivering certificates, if any, representing such Series C
Preferred Units to be exchanged together with, if applicable, written notice of
exchange and a proper assignment of such Series C 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 C 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 C Preferred Shares issued pursuant to this
Section 10 shall be delivered as shares which are duly authorized, validly
issued, fully paid and nonassessable, free of pledge, lien, encumbrance or
restriction other than those provided in the Charter, the Bylaws of the General
Partner, the Securities Act and relevant state securities or blue sky laws.
(ii) In the event of an exchange of Series C Preferred Units for shares of
Series C Preferred Stock, an amount equal to the accrued and unpaid
distributions which are not paid pursuant to Section 4(a) hereof, whether or not
declared, to the date of exchange on any Series C 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 C Preferred Stock into which
such Series C Preferred Units are exchanged, and (ii) continue to accrue on such
Series C Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series C Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a holder of a Series C Preferred Unit that was validly exchanged into
Series C Preferred Stock pursuant to this section (other than the General
Partner now holding such Series C Preferred Unit), receive a distribution out of
Available Cash or Capital Transaction Proceeds of the Partnership with respect
to any Series C Preferred Units so exchanged.
(iii) Fractional shares of Series C 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 C Preferred Stock on the day
prior to the exchange date as determined in good faith by the Board of Directors
of the General Partner.
(c) Adjustment of Series C Exchange Price. 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 C
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 C 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 Series C Preferred Stock or
fraction thereof into which one Series C Preferred Unit was exchangeable
immediately prior to such transaction. The General Partner may not become a
party to any such transaction unless the terms thereof are consistent with the
foregoing.
Section 8. No Conversion Rights. The holders of the Series C
Preferred Units shall not have any rights to convert such Partnership Units into
any other class of Partnership Interests or any other interest in the
Partnership.
Section 9. No Sinking Fund. No sinking fund shall be established for the
retirement or redemption of the Series C Preferred Units.
Section 10. Miscellaneous.
-------------
(a) The terms "Original Limited Partnership Units," "Class B Units," "Class 2
Units," "Class Z Branch Partners," "Class Z Midland Partners," "Additional
Limited Partners," "Common Units," "General Partner Units" and "Percentage
Interest" in the Partnership Agreement shall not be deemed to include the Series
C Preferred Units. The terms "Limited Partnership Interest" and "Partnership
Interest" shall be deemed to include the Series C Preferred Units.
(b) Exhibit A to the Partnership Agreement is hereby amended to include the
Series C Preferred Units as Limited Partnership Interests.
(c) Section 7.1(h) of the Partnership Agreement is hereby amended to
include the Series C Priority Return Amount.
(d) Nothing contained in Section 8.4 or the last sentence of Section 13.6 of the
Partnership Agreement shall be deemed to limit the issuance of, and provisions
applicable to, the Series C Preferred Units.
(e) Notwithstanding anything to the contrary contained in Section 8.6 of the
Partnership Agreement, in no event shall the rights of the holders of the Series
C Preferred Units set forth in Section 10 of this Agreement be subordinate to
the Redemption Rights set forth in Section 8.6 of the Partnership Agreement.
(f) All references to Section 4.5(f) and Section 4.5(f)(ii) shall be deemed to
include a reference to Section 8 and Section 8(b) hereof, respectively.
(g) Simultaneously with the effectiveness of the Fourth Amended Agreement, this
Amendment No. 2 to the Partnership Agreement shall be deemed Amendment No. 2 to
the Fourth Amended Agreement, mutatis mutandis, and the Series C Preferred Units
shall continue to be outstanding upon the terms and conditions set forth herein.
(h) This Amendment may be executed in one or more counterparts, all of
which shall constitute one and the same agreement.
<PAGE>
004.197245.1
Series C Amendment to Partnership Agreement
004.197245.1
Series C Amendment to Partnership Agreement
GENERAL PARTNER
Regency Realty Corporation
By:___________________________
Bruce M. Johnson
Its Managing Director and Executive
Vice President
CONTRIBUTOR
GOLDMAN SACHS 1999 EXCHANGE PLACE FUND, L.P.
By: Goldman Sachs Management Partners, L.P., as its general
partner
By: Goldman Sachs Management, Inc., as its general partner
By: ___________________________
Name: Elizabeth C. Groves
Title: Vice President
SECURITY CAPITAL U.S. REALTY
By:_________________________________
Name:______________________________
Title:_______________________________
SECURITY CAPITAL HOLDINGS S.A.
By:_________________________________
Name:______________________________
Title:_______________________________
ARDEN SQUARE HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
BLOSSOM VALLEY HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
COOPER STREET PLAZA HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
DALLAS HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
EL CAMINO HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
FRIARS MISSION HOLDINGS SARL
By:_________________________________
Name:______________________________
Title:_______________________________
<PAGE>
2
004.197245.1
NYDOCS03/486233 5
004.197245.1
Series C Amendment to Partnership Agreement
Regency Centers, L.P.
Amendment No. 3 to Third Amended and Restated Agreement of
Limited Partnership
Relating to 9.125% Series D Cumulative Redeemable Preferred Units
This Amendment No. 3 (this "Amendment") to the Third Amended
and Restated Agreement of Limited Partnership, dated as of September 1, 1999 (as
amended through the date hereof, the "Partnership Agreement"), of Regency
Centers, L.P., a Delaware limited partnership (the "Partnership"), is made as of
the 29th day of September, 1999 by Regency Realty Corporation, Inc., a Florida
corporation, as general partner (the "General Partner"), and the undersigned
Limited Partners that are being admitted to the Partnership on the date hereof.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the General Partner and the Limited Partners desire
to amend the Partnership Agreement to create a class of Preferred Units and to
set forth the rights, powers, duties and preferences of such Preferred Units.
NOW THEREFORE, pursuant to the authority contained in Section
4.2(b) of the Partnership Agreement, the General Partner hereby amends the
Partnership Agreement as follows:
A. Defined Terms. Capitalized terms used in this Amendment and not
otherwise defined herein shall have the meaning assigned thereto in the
Partnership Agreement.
B. Amendments. Effective as of the date hereof, the Partnership Agreement
is hereby amended as follows:
Section 1. Amendments to Article 1 - Defined Terms.
---------------------------------------
(a) New Definitions
The following terms are hereby added to Article 1 in their correct
alphabetical order"
"Series D Excess Units" has the meaning set forth in Section
4.8(g)(i)(C).
"Series D Exchange Notice" has the meaning set forth in
Section 4.8(g)(ii)(A).
"Series D Exchange Price" has the meaning set forth in Section
4.8(g)(i)(A).
"Series D Preferred Partner" means the Limited Partners who
received Series D Preferred Units and also include any permitted transferee of a
Series D Preferred Partner pursuant to Section 11.3 and the General Partner or
any Affiliate of Regency upon exchange or redemption of the Series D Preferred
Units pursuant to Section 4.8.
<PAGE>
21
NYDOCS03/486233 5
"Series D Preferred Stock" has the meaning set forth in
Section 4.8(g)(i)(A).
"Series D Preferred Units" means the Partnership Interest in
the Partnership issued pursuant to Section 4.2 and Section 4.8 hereof
representing 9.125% Series D Cumulative Redeemable Preferred Units. The term
"Series D Preferred Unit" does not include or refer to any Original Limited
Partnership Units, Additional Units or Class B Units.
"Series D Preferred Unit Distribution Payment Date" has the
meaning set forth in Section 4.8(c)(i).
"Series D Preferred Unit Partnership Record Date" has the
meaning set forth in Section 4.8(c)(i).
"Series D Priority Return" means an amount equal to 9.125% 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 $100 per Series D Preferred Unit, commencing on the date of
issuance of such Series D Preferred Unit.
"Series D Redemption Price" has the meaning set forth in
Section 4.8(e)(i).
(b) Amendment to Existing Definitions
(i) All references in Article I and elsewhere in the
Partnership Agreement to: "Excess Units", "Exchange Notice", "Exchange Price",
"Preferred Unit Distribution Payment Date", "Preferred Unit Partnership Record
Date" and "Priority Return" shall be deemed references to "Series A Excess
Units", "Series A Exchange Notice", "Series A Exchange Price", "Series A
Preferred Unit Distribution Payment Date", "Series A Preferred Unit Partnership
Record Date" and "Series A Priority Return" respectively.
(ii) The definition of "Percentage Interest" is hereby amended
by deleting the words "Adjusted Series A Preferred Units" each time such words
appear in said definition.
(iii) The definition of "Adjusted Series A Preferred Units" is
hereby deleted.
Section 2. Section 4.1 - Capital Contributions of Series A Preferred
Partners and Series D Preferred Partners.
Section 4.1(d) of the Partnership Agreement is hereby deleted and the
following inserted in lieu thereof:
<PAGE>
"(d) (i) 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 Common Units, the Class 2 Units and the Class B Units. The number of
Series A Preferred Units issued to the Series A Preferred Partners is set forth
on Exhibit A. (ii) The Series D Preferred Partners have contributed cash to the
Partnership in the amount of $100 per Series D Preferred Unit. The distribution
rights for the Series D Preferred Units shall be senior to the distribution
rights of the Original Limited Partnership Units, the Additional Units, Common
Units, the Class 2 Units and the Class B Units . The number of Series D
Preferred Units issued to the Series D Preferred Partners is set forth on
Exhibit A."
Section 3. Section 4.2 - Issuance of Additional Partnership Interests.
(a) Section 4.2(a) is hereby amended by inserting the words
"and Section 4.8(f)(ii)" after the reference to "Section 4.5 (f)(ii)" in the
third sentence thereof.
(b) Section 4.2(b)(i) is hereby amended by inserting the words
"and Section 4.8(f)(ii)" after the reference to "Section 4.5 (f)(ii)" in the
first line thereof.
Section 4. Section 4.5
(a) Section 4.5(c)(i) is hereby amended by (i) inserting the
parenthetical "(such quarterly periods to be the quarterly periods ending on the
dates specified in this sentence)" after the first reference to "quarterly" in
clause (A) in the second sentence thereof; and (ii) deleting the words "computed
on the basis of the actual number of days elapsed in such a 30-day month" in the
third sentence thereof and inserting "computed on the basis of the ratio of the
actual number of days elapsed in such quarterly period to ninety (90) days"
therefor.
(b) Section 4.5(c)(iv)(A) is hereby amended by deleting it in its entirety
and inserting the following in lieu thereof:
<PAGE>
"(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 Junior Units as to
distributions, 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 as 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 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
Junior Units, or (c) the redemption of Partnership Interests
corresponding to any Series A Preferred Stock, Parity
Preferred Stock or Junior Stock to be purchased by the General
Partner pursuant to Article 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."
(c) Section 4.5(d)(i) is hereby amended by (A) deleting the
words "and (ii) an amount equal to any accumulated and unpaid distributions
thereon, whether or not declared, to the date of payment" from the end of the
first sentence and deleting the reference to "(i)" after the words "an amount
equal to the sum of" in that sentence and (B) inserting the words "(including
all accumulated and unpaid distributions, whether or not declared, to the date
of payment to the extent not previously credited to such Capital Account
balances)" after the words "Capital Account balances" in the former clause (i)
thereof.
(d) Section 4.5(f)(ii) is hereby amended by inserting the
words "if issued upon arm's length terms in the good faith determination of the
board of directors of the General Partner" after the words "Security Capital" in
clause (B)(I) thereof.
(e) The last sentence of Section 4.5(g)(i)(A) is hereby deleted and the
following inserted in lieu thereof:
"Furthermore, the Series A Preferred Units may be exchanged in whole
but not in part by any holder thereof which is a real estate investment
trust within the meaning of Sections 856 through 859 of the Code for
Series A Preferred Stock (but only if the exchange in whole may be
accomplished consistently with the ownership limitations set forth
under Article 5 of the Articles of Incorporation (taking into account
exceptions thereto)) if at any time (i) the Partnership reasonably
determines that the assets and income of the Partnership for a taxable
year after 1999 would not satisfy the income and assets tests of
Section 856 of the Code for such taxable year if the Partnership were a
real estate investment trust within the meaning of the Code or (ii) any
such holder of Series A Preferred Units shall deliver to the
Partnership and the General Partner an opinion of independent counsel
reasonably acceptable to the General Partner to the effect that, based
on the assets and income of the Partnership for a taxable year after
1999, the Partnership would not satisfy the income and assets tests of
Section 856 of the Code for such taxable year if the Partnership were a
real estate investment trust within the meaning of the Code and that
such failure would create a meaningful risk that a holder of the Series
A Preferred Units would fail to maintain qualification as a real estate
investment trust.
(f) The following Section 4.5(g)(iii)(C) is hereby added to the Partnership
Agreement:
<PAGE>
(C) So long as a Preferred Partner or any of its permitted successors
or assigns holds any Series A Preferred Units as the case may be, the
General Partner shall not, without the affirmative vote of the holders
of at least two-thirds of the Series A Preferred Units (excluding any
Series A Preferred Units surrendered to the General Partner in exchange
for Series A Preferred Stock) and Series A Preferred Stock (voting
together as a class based on the number of shares into which such
Series A Preferred Units are then convertible) outstanding at the time:
(a) designate or create, or increase the authorized or issued amount
of, any class or series of shares ranking senior to the Series A
Preferred Stock with respect to the payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any
authorized shares of the General Partner into any such shares, or
create, authorize or issue any obligations or securities convertible
into or evidencing the right to purchase any such shares; (b) designate
or create, or increase the authorized or issued amount of, any Parity
Preferred Stock or reclassify any authorized shares of the General
Partner into any such shares, or create, authorize or issue any
obligations or security convertible into or evidencing the right to
purchase any such shares, but only to the extent that such Parity
Preferred Stock are issued to an Affiliate of the General Partner other
than (A) Security Capital U.S. Realty, Security Capital Holdings, S.A.
or their affiliates (if issued on arm's length terms in the good faith
determination of the board of directors of the General Partner), or (B)
the General Partner to the extent the issuance of such interests was to
allow the General Partner to issue corresponding preferred stock in the
same transaction to persons who are not affiliates of the Partnership;
(c) amend, alter or repeal the provisions of the Charter or bylaws of
the General Partner, 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 Stock
or the holders thereof; provided, however, that any increase in the
amount of authorized Preferred Stock or the creation or issuance of any
other series or class of Preferred Stock, or any increase in the amount
of authorized shares of each class or series, in each case ranking
either (1) junior to the Series A Preferred Stock with respect to the
payment of distributions or the distribution of assets upon
liquidation, dissolution or winding-up, or (2) on a parity with the
Series A Preferred Stock with respect to the payment of distributions
or the distribution of assets upon liquidation, dissolution or
winding-up to the extent such Preferred Stock are not issued to an
Affiliate of the General Partner (other than Security Capital U.S.
Realty, Security Capital Holdings, S.A. or their affiliates if issued
on arm's length terms in the good faith determination of the board of
directors of the General Partner), or (B) 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."
Section 5. Section 4.8 - Series D Preferred Units
The Partnership Agreement is hereby amended by inserting the
following as a new Section 4.8:
"Section 4.8 Issuance of Series D Preferred Units.
(a) Designation and Number. A series of Partnership Units in
the Partnership designated as the "9.125%" Series D Cumulative Redeemable
Preferred Units (the "Series D Preferred Units") is hereby established. The
number of Series D Preferred Units shall be 500,000.
<PAGE>
NYDOCS03/486233 6
(b) Rank.
The Series D Preferred Units will, with respect to
distributions and rights upon voluntary or involuntary liquidation, winding-up
or dissolution of the Partnership, rank senior to all classes or series of
Partnership Interests now or hereafter authorized, issued or outstanding, other
than the Series A Preferred Units, Series B Preferred Units and Series C
Preferred Units and any class or series of equity securities of the Partnership
issued after the issuance of the Series D Preferred Units and expressly
designated in accordance with the Partnership Agreement as ranking on a parity
with or senior to the Series D Preferred Units as to distributions or rights
upon voluntary or involuntary liquidation, winding-up or dissolution of the
Partnership. The Series D Preferred Units are expressly designated as ranking on
a parity with the Series A Preferred Units, the Series B Preferred Units and the
Series C Preferred Units as to both distributions and rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership.
(c) Distributions.
<PAGE>
(i) Payment of Distributions. Subject to the rights of holders
of Parity Preferred Units and any holders of Partnership Interests issued after
the date hereof in accordance herewith ranking senior to the Series D Preferred
Units as to the payment of distributions, holders of Series D 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
9.125% of the original Capital Contribution per Series D Preferred Unit. Such
distributions shall be cumulative, shall accrue from the original date of
issuance and will be payable (A) quarterly (such quarterly periods to be the
quarterly periods ending on the dates set forth in this sentence) in arrears, on
or before March 31, June 30, September 30 and December 31 of each year,
commencing on December 31, 1999 (with the first such payment to include the
amount accrued from the period commencing September 29, 1999 and ending December
31, 1999) and, (B) in the event of (i) an exchange of Series D Preferred Units
into Series D Preferred Stock, or (ii) a redemption of Series D Preferred Units,
on the exchange date or redemption date, as applicable (each a "Series D
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 ratio of the actual number of days elapsed in such
period to ninety (90) days. If any date on which distributions are to be made on
the Series D Preferred Units is not a Business Day (as defined herein), 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 December 31, 1999 and thereafter will be made to
the holders of record of the Series D 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 "Series D Preferred Unit Partnership Record Date").
(ii) Limitation on Distributions. No distribution on the
Series D 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(c)(ii) shall be deemed to modify or in any manner limit the provisions
of Sections 4.8(c)(iii) or 4.8(c)(iv).
(iii) Distributions Cumulative. Distributions on the Series D
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 D
Preferred Units will accumulate as of the Series D Preferred Unit Distribution
Payment Date on which they first become payable. Distributions on account of
arrears for any past distribution periods may be declared and paid at any time,
without reference to a regular Series D Preferred Unit Distribution Payment Date
to holders of record of the Series D Preferred Units on the record date fixed by
the Partnership acting through the General Partner which date shall be not less
than 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 D 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 Junior Units with
respect to distributions, 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 D Preferred
Units, any Parity Preferred Units with respect to
distributions or any Junior Units, unless, in each case, all
distributions accumulated on all Series D Preferred Units and
all classes and series of outstanding Parity Preferred Units
as to the payment of distributions have been paid in full.
Without limiting Section 4.8(f)(ii), the foregoing sentence
will not prohibit (a) distributions payable solely in Junior
Units, (b) the conversion of Junior Units or Parity Preferred
Units into Junior Units, or (c) the redemption of Partnership
Interests corresponding to any Series D Preferred Stock,
Parity Preferred Stock or Junior Stock 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.
<PAGE>
(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 D
Preferred Units, all distributions authorized and declared on
the Series D Preferred Units and all classes or series of
outstanding Parity Preferred Units as to distributions shall
be authorized and declared so that the amount of distributions
authorized and declared per Series D 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 D 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.
(v) No Further Rights. Holders of Series D 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 D
Preferred Units with respect to rights upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, the holders of Series
D 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 D
Preferred Units as to rights upon liquidation, dissolution or winding-up of the
Partnership, an amount equal to the sum of a liquidation preference equal to
their positive Capital Account balances (including, without limitation, any
accumulated and unpaid distributions, whether or not declared, to the date of
payment to the extent not previously credited to such 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 4.8(d)(i)).
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 D 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 D
Preferred Units and such Parity Preferred Units shall be made so that the
payments on the Series D 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 D 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.
<PAGE>
(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 (i) fax
and (ii) 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 D Preferred Units at the respective addresses of such holders as the
same shall appear on the transfer records of the Partnership.
(iii) No Further Rights. After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of Series
D 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 D 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 D
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 D
Preferred Units (the "Series D Redemption Price"); provided, however, that no
redemption pursuant to this Section 4.8(e)(i) will be permitted if the Series D
Redemption Price does not equal or exceed the original Capital Contribution of
such holder plus the cumulative Series D 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 4.8(c)(i). If fewer than
all of the outstanding Series D Preferred Units are to be redeemed, the Series D
Preferred Units to be redeemed shall be selected pro rata (as nearly as
practicable without creating fractional units).
(ii) Limitation on Redemption.
<PAGE>
(A) The Series D Redemption Price (other than the
portion thereof consisting of accumulated but unpaid
distributions) will be payable solely out of the sale proceeds
of capital stock of the General Partner, which will be
contributed by the General Partner to the Partnership as
additional capital contribution, or out of the sale of limited
partner interests in the Partnership and from no other source.
For purposes of the preceding sentence, "capital stock" means
any equity securities (including Common Stock and Preferred
Stock (as such terms are defined in the Articles of
Incorporation)), shares, participation or other ownership
interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing.
(B) The Partnership may not redeem fewer than all of
the outstanding Series D Preferred Units unless all
accumulated and unpaid distributions have been paid on all
Series D 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 D 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 D 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 D Redemption Price, (iii) the aggregate number of
Series D Preferred Units to be redeemed and if fewer than all
of the outstanding Series D Preferred Units are to be
redeemed, the number of Series D 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 D Preferred Units the
total number of Series D Preferred Units held by such holder
represents) of the aggregate number of Series D Preferred
Units to be redeemed, (iv) the place or places where such
Series D Preferred Units are to be surrendered for payment of
the Series D Redemption Price, (v) that distributions on the
Series D Preferred Units to be redeemed will cease to
accumulate on such redemption date and (vi) that payment of
the Series D Redemption Price will be made upon presentation
and surrender of such Series D Preferred Units.
<PAGE>
(B) If the Partnership gives a notice of redemption
in respect of Series D 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 D Preferred Units being
redeemed funds sufficient to pay the applicable Series D
Redemption Price and will give irrevocable instructions and
authority to pay such Series D Redemption Price to the holders
of the Series D Preferred Units upon surrender of the Series D
Preferred Units by such holders at the place designated in the
notice of redemption. If the Series D Preferred Units are
evidenced by a certificate and if fewer than all Series D
Preferred Units evidenced by any certificate are being
redeemed, a new certificate shall be issued upon surrender of
the certificate evidencing all Series D Preferred Units,
evidencing the unredeemed Series D Preferred Units without
cost to the holder thereof. On and after the date of
redemption, distributions will cease to accumulate on the
Series D Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment
thereof. If any date fixed for redemption of Series D
Preferred Units is not a Business Day, then payment of the
Series D 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 D Redemption Price is improperly withheld or refused
and not paid by the Partnership, distributions on such Series
D 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 D
Redemption Price.
(f) Voting Rights.
(i) General. Holders of the Series D Preferred Units will not
have any voting rights or right to consent to any matter requiring the consent
or approval of the Limited Partners, except as otherwise expressly set forth in
the Partnership Agreement and except as set forth below.
<PAGE>
(ii) Certain Voting Rights. So long as any Series D Preferred
Units remain outstanding, the Partnership shall not, without the affirmative
vote of the holders of at least two-thirds of the Series D Preferred Units
outstanding at the time (i) authorize or create, or increase the authorized or
issued amount of, any class or series of Partnership Interests ranking prior to
the Series D Preferred Units with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or create, authorize or issue any
obligations or security convertible into or evidencing the right to purchase any
such Partnership Interests, (ii) authorize or create, or increase the authorized
or issued amount of any Parity Preferred Units or reclassify any Partnership
Interest 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
(A) Security Capital U.S. Realty, Security Capital Holdings, S.A. or their
affiliates (if issued upon arm's length terms in the good faith determination of
the board of directors of the General Partner) or (B) the General Partner to the
extent the issuance of such interests was to allow the General Partner to issue
corresponding preferred stock to persons who are not affiliates of the
Partnership or (iii) either (A) consolidate, merge into or with, or convey,
transfer or lease its assets substantially as an entirety to, any corporation or
other entity or (B) amend, alter or repeal the provisions of the Partnership
Agreement, whether by merger, consolidation or otherwise, that would materially
and adversely affect the powers, special rights, preferences, privileges or
voting power of the Series D 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 D 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 D Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series D 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 D Preferred Units and no vote of the Series D 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 D Preferred Units with respect to payment of distributions or the
distribution of assets upon liquidation, dissolution or winding-up, or (b) on a
parity to the Series D Preferred Units with respect to payment of distributions
or the distribution of assets upon liquidation, dissolution or winding-up to the
extent such Partnership Interest are not issued to an affiliate of the
Partnership, other than the General Partner to the extent the issuance of such
interests was to allow the General Partner to issue corresponding preferred
stock to persons who are not affiliates of the Partnership, shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers and no vote of the Series D Preferred Units shall be required in
such case.
(g) Exchange Rights.
(i) Right to Exchange.
-----------------
<PAGE>
(A) Series D 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 9.125% Series
D Cumulative Redeemable Preferred Stock of the General Partner
(the "Series D Preferred Stock") at an exchange rate of one
share of Series D Preferred Stock for one Series D Preferred
Unit, subject to adjustment as described below (the "Series D
Exchange Price"), provided that the Series D Preferred Units
will become exchangeable at any time, in whole or in part, at
the option of the holders of Series D Preferred Units for
Series D Preferred Stock if (y) at any time full distributions
shall not have been made on the applicable Series D Preferred
Unit Distribution Payment Date on any Series D Preferred Unit
with respect to six (6) prior quarterly distribution periods,
whether or not consecutive, provided, however, that a
distribution in respect of Series D Preferred Units shall be
considered timely made if made within two (2) Business Days
after the applicable Series D 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 made more than two (2) Business
Days after the applicable Series D Preferred Unit Distribution
Payment Date or (z) upon receipt by a holder or holders of
Series D 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 D
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 D
Preferred Units may be exchanged for Series D 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 D Preferred
Units shall deliver to the General Partner either (i) a
private ruling letter addressed to such holder of Series D
Preferred Units or (ii) an opinion of independent counsel
reasonably acceptable to the General Partner based on the
enactment of temporary or final Treasury Regulations or the
publication of a Revenue Ruling, in either case to the effect
that an exchange of the Series D Preferred Units at such
earlier time would not cause the Series D 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 D 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 D
Preferred Units may be exchanged in whole but not in part by
any holder thereof which is a real estate investment trust
within the meaning of Sections 856 through 859 of the Code for
Series D Preferred Stock (but only if the exchange in whole
may be accomplished consistently with the ownership
limitations set forth under Article 5 of the Articles of
Incorporation (taking into account exceptions thereto) if at
any time (i) the Partnership reasonably determines that the
assets and income of the Partnership for a taxable year after
1999 would not satisfy the income and assets tests of Section
856 of the Code for such taxable year if the Partnership were
a real estate investment trust within the meaning of the Code
or (ii) any such holder of Series D Preferred Units shall
deliver to the Partnership and the General Partner an opinion
of independent counsel reasonably acceptable to the General
Partner to the effect that, based on the assets and income of
the Partnership for a taxable year after 1999, the Partnership
would not satisfy the income and assets tests of Section 856
of the Code for such taxable year if the Partnership were a
real estate investment trust within the meaning of the Code
and that such failure would create a meaningful risk that a
holder of the Series D Preferred Units would fail to maintain
qualification as a real estate investment trust.
<PAGE>
(B) Notwithstanding anything to the contrary set
forth in Section 4.8(G)(i)(A), if an Series D Exchange Notice
(as defined herein) has been delivered to the General Partner,
then the General Partner may, at its option, elect to redeem
or cause the Partnership to redeem all or a portion of the
outstanding Series D Preferred Units for cash in an amount
equal to the original Capital Contribution per Series D
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 D Preferred Units for
cash pursuant to this Section 4.8(g)(i)(B) by giving each
holder of record of Series D Preferred Units notice of its
election to redeem for cash, within five (5) Business Days
after receipt of the Series D 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 Series D Exchange
Notice, (ii) the redemption price, (iii) the place or places
where the Series D Preferred Units are to be surrendered for
payment of the redemption price, (iv) that distributions on
the Series D 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 D
Preferred Units and (vi) the aggregate number of Series D
Preferred Units to be redeemed, and if fewer than all of the
outstanding Series D Preferred Units are to be redeemed, the
number of Series D 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 D Preferred Units the total number of
Series D Preferred Units held by such holder represents) of
the aggregate number of Series D Preferred Units being
redeemed.
(C) Upon the occurrence of an event giving rise to
exchange rights pursuant to Section 4.8(g)(i)(A), in the event
an exchange of all or a portion of Series D Preferred Units
pursuant to Section 4.8(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 D Preferred Units, within five (5) Business
Days following receipt of the Series D 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 D Preferred
Units shall be entitled to exchange, pursuant to the provision
of Section 4.8(g)(ii) a number of Series D Preferred Units
which would comply with the provisions on the ownership
limitation of the General Partner set forth in such Article 5
of the Articles of Incorporation and any Series D Preferred
Units not so exchanged (the "Series D Excess Units") shall be
redeemed by the Partnership for cash in an amount equal to the
original Capital Contribution per Series D 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 Series D Excess
Units held by such holder, (ii) the redemption price of the
Series D Excess Units, (iii) the date on which such Series D
Excess Units shall be redeemed, which date shall be no later
than sixty (60) days following the receipt of the Series D
Exchange Notice, (iv) the place or places where such Series D
Excess Units are to be surrendered for payment of the Series D
Redemption Price, (iv) that distributions on the Series D
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 Series D Excess Units. In
the event an exchange would result in Series D 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.
<PAGE>
(D) The redemption of Series D Preferred Units
described in Section 4.8(g)(i)(B) and (C) shall be subject to
the provisions of Section 4.8(e)(ii)(A) and Section
4.8(e)(iii)(B); provided, however, that for purposes hereof
the term "Redemption Price" in Sections 4.8(e)(ii)(A) and
4.8(e)(iii)(B) shall be read to mean the original Capital
Contribution per Series D 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 "Series D 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 Series D 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 D Preferred
Units, or a specified portion thereof, may be effected after
the fifth (5th) Business Days following receipt by the General
Partner of the Series D Exchange Notice and such requested
information by delivering certificates, if any, representing
such Series D Preferred Units to be exchanged together with,
if applicable, written notice of exchange and a proper
assignment of such Series D 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 D 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 Series D Exchange
Price shall have been paid. Any Series D Preferred Stock
issued pursuant to this Section 4.8(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.
<PAGE>
(B) In the event of an exchange of Series D Preferred
Units for shares of Series D Preferred Stock, an amount equal
to the accrued and unpaid distributions which are not paid
pursuant to Section 4(a) hereof, whether or not declared, to
the date of exchange on any Series D 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 D Preferred Stock into which such Series D
Preferred Units are exchanged, and (ii) continue to accrue on
such Series D Preferred Units, which shall remain outstanding
following such exchange, with the General Partner as the
holder of such Series D Preferred Units. Notwithstanding
anything to the contrary set forth herein, in no event shall a
holder of a Series D Preferred Unit that was validly exchanged
into Series D Preferred Stock pursuant to this section (other
than the General Partner now holding such Series D Preferred
Unit), receive a distribution out of Available Cash or Capital
Transaction Proceeds of the Partnership with respect to any
Series D Preferred Units so exchanged.
(C) Fractional shares of Series D 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 D Preferred Stock on the day prior
to the exchange date as determined in good faith by the Board
of Directors of the General Partner.
(iii) Adjustment of Exchange Price.
(A) The Series D Exchange Price is subject to
adjustment upon certain events, including, (i) subdivisions,
combinations and reclassification of the Series D Preferred
Stock, and (ii) distributions to all holders of Series D
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 D 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 D
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 D
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 D Preferred Stock or
fraction thereof into which one Series D 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.
<PAGE>
NYDOCS03/486233 6
(C) So long as a Preferred Partner or any of its
permitted successors or assigns holds any Series D Preferred
Units as the case may be, the General Partner shall not,
without the affirmative vote of the holders of at least
two-thirds of the Series D Preferred Units (excluding any
Series D Preferred Units surrendered to the General Partner in
exchange for Series D Preferred Stock) and Series D Preferred
Stock (voting together as a class on the basis of number of
shares into which Series D Preferred Units are exchangeable)
outstanding at the time: (a) designate or create, or increase
the authorized or issued amount of, any class or series of
shares ranking senior to the Series D Preferred Stock with
respect to the payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any
authorized shares of the General Partner into any such shares,
or create, authorize or issue any obligations or securities
convertible into or evidencing the right to purchase any such
shares; (b) designate or create, or increase the authorized or
issued amount of, any Parity Preferred Stock or reclassify any
authorized shares of the General Partner into any such shares,
or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any such
shares, but only to the extent that such Parity Preferred
Stock are issued to an Affiliate of the General Partner other
than (A) Security Capital U.S. Realty, Security Capital
Holdings, S.A. or their affiliates (if issued on arm's length
terms in the good faith determination of the board of
directors of the General Partner), or (B) the General Partner
to the extent the issuance of such interests was to allow the
General Partner to issue corresponding preferred stock in the
same transaction to persons who are not affiliates of the
Partnership; (c) amend, alter or repeal the provisions of the
Charter or bylaws of the General Partner, whether by merger,
consolidation or otherwise, that would materially and
adversely affect the powers, special rights, preferences,
privileges or voting power of the Series D Preferred Stock or
the holders thereof; provided, however, that any increase in
the amount of authorized Preferred Stock or the creation or
issuance of any other series or class of Preferred Stock, or
any increase in the amount of authorized shares of each class
or series, in each case ranking either (1) junior to the
Series D Preferred Stock with respect to the payment of
distributions or the distribution of assets upon liquidation,
dissolution or winding-up, or (2) on a parity with the Series
D Preferred Stock with respect to the payment of distributions
or the distribution of assets upon liquidation, dissolution or
winding-up to the extent such Preferred Stock are not issued
to an Affiliate of the General Partner (other than Security
Capital U.S. Realty, Security Capital Holdings, S.A. or their
affiliates if issued on arm's length terms in the good faith
determination of the board of directors of the General
Partner), or (B) 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.
(h) No Conversion Rights. The holders of the Series D
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 D Preferred Units."
Section 6. Article 7 - Management and Operating of Business.
------------------------------------------------
Section 7.1(h) is hereby amended by inserting the words "Series A Priority
Return, Series D Priority Return and" before the words "Priority Distribution
Amount" therein.
<PAGE>
Section 7. Article 8 - Rights and Obligations of Limited Partners.
------------------------------------------------------
Section 8.4 is hereby amended by (i) inserting the words "Section 4.8,"
after the words "Section 4.5," therein and (ii) inserting the words "Preferred
Units" after the words "Series A" therein.
Section 8. Article 11 - Transfers and Withdrawals.
(a) Section 11.2(b) is hereby amended by inserting the words
"and Section 4.8(f)" after the words "4.5(f)" in the first sentence thereof.
(b) The Series A Preferred Partners and Series D Preferred
Partners may, subject to Sections 11.3(b)-(j), assign their Units to any Person,
and any such assignee shall be admitted as a Substituted Limited Partner.
(c) Section 11.3(h) is hereby amended by adding the following at the end of
the section:
"; provided, however, that the General Partner shall not
unreasonably withhold its consent to a waiver of the
limitations set forth in this Section 11.3(h) if the
Partnership is (1) relying on a provision other than Treasury
Regulation Section 1.7704-1(h) to avoid classification of
Partnership as a PTP or (2) a PTP."
(d) The following is inserted as a new Section 11.3(j):
"(j) Transfers by Series D Preferred Partners. In addition to
the other restrictions on transfer set forth in this Article
11, which apply to Series D Preferred Units, no transfer of
the Series D 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 D Preferred Units within the meaning of Regulation
Section 1.7704-1(h)(3) "; provided, however, that the General
Partner shall not unreasonably withhold its consent to a
waiver of the limitations set forth in this Section 11.3(j) if
the Partnership is (1) relying on a provision other than
Treasury Regulation Section 1.7704-1(h) to avoid
classification of Partnership as a PTP or (2) a PTP."
Section 9. Article 12 - Admission of Partners.
<PAGE>
Section 12.2(a) and 12.4 are hereby amended by deleting all
references therein to "Additional Limited Partners" and inserting the words
"additional Limited Partners" therefor.
<PAGE>
Section 10. Article 13 - Dissolution and Liquidation.
(a) The first reference to "Additional Limited Partners" in
the first paragraph of Section 13.1 is hereby deleted and the words "additional
Limited Partners" are hereby inserted in lieu thereof.
(b) Clause (iii) of Section 13.2(a) is hereby deleted and the following
inserted in lieu thereof:
"(iii) Third, one hundred percent (100%) to the Series A
Preferred Partners in accordance with the provisions of
Section 4.5(d) and to the Series D Preferred Partners in
accordance with the provisions of Section 4.8(d)."
(c) The words "and Section 4.8 with respect to the Series D
Preferred Units" is hereby inserted after the words "Section 4.5 with respect to
the Series A Preferred Units" in Section 13.6.
Section 11. Article 14 - Amendment of Partnership Agreement; Meetings.
---------------------------------------------------------
(a) Sections 14.1(a), 14.1(c) and 14.1(d) are hereby amended
by inserting the words "and 4.8(f)(ii)" after each reference to "4.5(f)(ii)"
therein.
(b) Section 14.1(c) is hereby amended by replacing the words
"Series A Preferred Partner" with the words "holder of Parity Preferred Units."
(c) The last paragraph of Section 14.1(g) is hereby amended by
replacing the words "Series A Preferred Partners" with the words "holders of
Parity Preferred Units."
Section 12. Miscellaneous.
(a) Notwithstanding anything to the contrary contained in
Section 8.6 of the Partnership Agreement, in no event shall the rights of the
holders of the Series D Preferred Units set forth in Section 5 of this Amendment
be subordinate to the Redemption Rights set forth in Section 8.6 of the
Partnership Agreement.
(b) The Partnership and the General Partner represent and
warrant that the issuance of the Series D Preferred Units pursuant to this
Amendment is permitted pursuant to Section 4.2(b)(i).
<PAGE>
(c) The Partnership and General Partner (i) represent and
warrant that, except as disclosed on Schedule 1 attached hereto, no Redemption
Rights contemplated in Section 8.6 require the Partnership or General Partner to
pay cash in lieu of the Share Amount in exchange for Units (other than at the
election of the Partnership or General Partner) and (ii) covenant and agree not
to grant, without the consent of the Series A Preferred Partners and Series D
Preferred Partners, any Redemption Rights requiring the Partnership or General
Partner to pay cash in lieu of the Share Amount in exchange for Units (other
than at the election of the Partnership or General Partner) except (i)
redemption rights assumed by Partnership or General Partner in connection with
the acquisition of an existing operating partnership and (ii) redemption rights
as to less than 5% of the Common Units arising from a tender offer by the
Partnership intended to reduce the number of partners of the Partnership, unless
(i) the cash used to effectuate any such cash redemption is raised from the
issuance of Common Stock of the General Partner issued for such purpose or (ii)
the Partnership shall allow the holders of the Series A Preferred Units and
Series D Preferred Units to redeem their Units for the Series A Redemption Price
and Series D Redemption Price, respectively, immediately prior to the time of
such other redemption.
Section 13. Fourth Amended and Restated Agreement of Limited Partnership.
------------------------------------------------------------
The form of Fourth Amended and Restated Agreement of Limited
Partnership (the "Restated Form") attached to the Partnership Agreement is
hereby amended to conform to the amendments set forth in this Amendment, all of
which shall be deemed incorporated in said Fourth Amended and Restated Agreement
of Limited Partnership (the "Restated Agreement") upon the effectiveness thereof
(with such conforming changes as may be necessary to give substantive effect
thereto). Additionally, the Restated Agreement Form and, upon its effectiveness,
the Restated Agreement are hereby amended as follows:
(a) Section 4.2(b)(i)(A) is hereby amended by inserting the words "subject
to Sections 4.5(f)(ii) and 4.8(f)(ii)," at the beginning of clause (ii);
(b) Section 4.2(b)(i)(B) is hereby amended by inserting the words "and
Sections 4.5(f)(ii) and 4.8(f)(ii) after the reference to "Section 14.1(g)(ii)"
in clause (ii);
(c) Section 13.4(c) is hereby amended by inserting the words
"subject to the priorities set forth in Section 13.2(a)" after the word
"balances" at the end of the next to last sentence thereof; and
(d) Section 14.1(g) is hereby amended by inserting the following at the end
thereof:
"Nothing contained in Section 14(g) shall be deemed to modify
or affect the rights, preferences and priorities of the Series
A Preferred Partners and Series D Preferred Partners as to
distributions and allocations."
<PAGE>
Section 14. Reaffirmation. Except as modified herein, all terms and
conditions of the Partnership Agreement shall remain in full force and effect,
which terms and conditions the General Partner hereby ratifies and affirms.
<PAGE>
NYDOCS03/486233 5
Signature Page to Partnership Agreement Amendment
IN WITNESS WHEREOF, this Amendment has been executed as of the
date first above written.
GENERAL PARTNER
Regency Realty Corporation
By:
Name:
Title:
BELAIR REAL ESTATE CORPORATION
By:
Name:
Title:
BELCREST REALTY CORPORATION
By:
Name:
Title:
