AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
REGENCY RETAIL PARTNERSHIP, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Regency
Retail Partnership, L.P. (the "Partnership") is entered into this 7th day of
March, 1997 by and among Regency Atlanta, Inc., a Georgia corporation, as the
General Partner (the "General Partner") and the Persons whose names are set
forth on Exhibit A as attached hereto, as the Limited Partners, together with
any other Persons who become Partners in the Partnership as provided herein;
WHEREAS, the Partnership has been formed as a limited partnership under
the Revised Uniform Limited Partnership Act of the State of Delaware, and the
Partners wish to amend and restate this Agreement to set forth their respective
rights and duties relating to the Partnership on the terms as provided herein;
WHEREAS, Regency Atlanta, Inc. has been admitted as a new General Partner,
Branch Properties, Ltd. has withdrawn as the initial general partner and been
admitted as the Original Limited Partner (as hereinafter defined), and Branch
Retail Corporation has withdrawn as the initial limited partner;
WHEREAS, the Partners have entered into the Contribution Agreement (as
hereafter defined) pursuant to which, among other things, the parties agreed to
establish the Partnership;
WHEREAS, the Partnership has acquired certain properties prior to the
admission of Regency Atlanta, Inc. as General Partner;
WHEREAS, pursuant to the Contribution Agreement the parties have agreed to
contribute additional assets to the Partnership;
WHEREAS, Branch Properties, Ltd. intends to distribute the Units (as
hereafter defined) that it receives pursuant to the Contribution Agreement to
its respective partners, who shall upon such distribution constitute Original
Limited Partners (as hereafter defined) in place of Branch Properties, Ltd.;
NOW, THEREFORE, in consideration of the premises, the mutual promises
and agreements herein made, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the General Partner
and the Limited Partners hereby agree as follows:
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 and who is shown as such on
the books and records of the Partnership.
"Additional Unit" means a Unit issued to an Original Limited Partner
(but not to any holder of a Class A Unit) at a Subsequent Closing pursuant to
the Contribution Agreement.
"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 Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 4.4 hereof.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Agreed Value" means (i) in the case of any Contributed Property, (a)
the Agreed Value of such property at the time of its contribution to the
Partnership as set forth by separate letter agreement or (b) if there is no such
letter agreement, the 704(c) Value of such property or other consideration,
reduced by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed; and (ii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the regulations
thereunder.
"Agreement" means this 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.
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Section 4.4 and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
"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 Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1 or 4.2 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 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; provided, however,
that if the Partnership obtains financing for Partnership properties for which
no permanent financing has previously been obtained, the proceeds of such
financing shall not be deemed to be Capital Transaction Proceeds if and to the
extent that the General Partner determines to reinvest such proceeds in
additional and existing real property investments of the Partnership.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property (or in the case of an
Adjusted Property, the fair market value of such property at the time of its
latest adjustment under Section 4.4(d)) reduced (but not below zero) by all
Depreciation with respect to such property charged to the Partners' Capital
Accounts and (ii) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time to
time in accordance with Section 4.4 hereof, and to reflect changes, additions or
other adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"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.
"Charter Amendment" means the proposed amendment to Regency's Articles
of Incorporation in the form attached as Exhibit 5.4 to the Contribution
Agreement.
"Class A Units" means the Partnership Interest in the Partnership
issued pursuant to Section 4.2 hereof which has the same rights as the Original
Limited Partnership Units (including the right to vote together with the
Original Limited Partners as a class, to receive distributions pursuant to
Article 5 and to receive allocations pursuant to Article 6), except (i) the
holder of such a Class A Unit shall not have the right to receive Additional
Units hereunder and (ii) the Redemption Rights with respect to Class A Units
shall be subordinate as set forth in Sections 8.6(a), 8.6(c)(i) and 8.6(c)(ii)
hereof.
"Class B Units" means the Partnership Interest in the Partnership owned
by a Partner (including the General Partner, Regency or any Affiliate of
Regency), other than an Original Limited Partner and the holders of Class A
Units. As provided in Sections 5.1(a) and 5.1(b), the distribution rights for
the Class B Units are subordinate to the distribution rights for the Units and
Class A Units.
"Closing Date" has the meaning set forth in the Contribution Agreement.
"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.
"Consent" means with respect to Limited Partners holding any class of
Units, the written consent of those Limited Partners holding a majority of such
Units at the time in question. Consent of the Original
Limited Partners means the written consent of Original Limited Partners holding
a majority of the Original Limited Partnership Units outstanding at the time in
question.
"Contributed Property" means each property or other asset (but
excluding cash), in such form as may be permitted by the Act contributed or
deemed contributed to the Partnership. Once the Carrying Value of a Contributed
Property is adjusted pursuant to Section 4.4(d) hereof, such property shall no
longer constitute a Contributed Property for purposes of Section 4.4(d) hereof,
but shall be deemed an Adjusted Property for such purposes.
"Contribution Agreement" means that certain Contribution Agreement and
Plan of Reorganization, dated as of February 10, 1997, by and among Branch
Properties, Ltd., Branch Realty Inc. and Regency.
"Cumulative Unpaid Accrued Return Account" means, with respect to any
Original 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 Original Limited
Partnership Units of such Partner in reduction of such Cumulative Unpaid Accrued
Return Account pursuant to Sections 5.1(a)(ii) and 5.1(b)(i).
"Cumulative Unpaid Priority Distribution Account" means, with respect
to any Original Limited Partner an amount equal to (i) the aggregate of all
Priority Distribution Amounts for Original 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 Original Limited Partnership Units of such Partner in reduction of such
Cumulative Unpaid Priority Distribution Account pursuant to Sections 5.1(a)(i),
5.1(a)(iii) and 5.1(b)(ii).
"Debt" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for money borrowed or for the deferred purchase
price of property or services, which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services; (ii) all amounts owed by such Person
to banks or other Persons in respect of reimbursement obligations under letters
of credit, surety bonds and other similar instruments guaranteeing payment or
other performance of obligations by such Person; (iii) all indebtedness for
money borrowed or for the deferred purchase price of property or services
secured by any lien on any property owned by such Person, to the extent
attributable to such Person's interest in such property, even though such Person
has not assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person which, in accordance with generally accepted
accounting principles, should be capitalized.
"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 Carrying 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 Carrying 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 Carrying Value
using any reasonable method selected by the General Partner, except that in the
case of a zero basis Contributed Property, 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.
"First Closing" has the meaning set forth in the Contribution Agreement.
"First Redemption Date" means the earlier of (i) 5:00 p.m. Eastern time
on the first (1st) Business Day after the Shareholder Approval Date or (ii) 5:00
p.m. Eastern time on the first (1st) Business Day after the first (1st)
anniversary of the First Closing.
"General Partner" means Regency Atlanta, Inc. [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.
"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.
"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
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 Partnership Units, Class A 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 Carrying 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 Carrying Value of any Partnership asset
is adjusted pursuant to Section 4.4(c) hereof, the amount of any such
adjustment shall be taken into account as gain or loss from the
disposition of such asset.
(g) Any items specially allocated under Sections 6.2 and
6.3 hereof shall not be taken into account.
"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.
"Option Date" means the four hundred twentieth (420th) day after the
date of the First Closing.
"Original Limited Partner" means Branch Properties, Ltd. and, following
the distribution of the Units it receives to its respective partners pursuant to
the Contribution Agreement, those persons who receive such Units pursuant
thereto. 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 the General
Partner, Regency or any Affiliate of Regency.
"Original Limited Partnership Unit" means a Partnership Unit (including
any Additional Units) issued to an Original Limited Partner.
"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 Partnership Units, Class A 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
hereof, which record date shall be the same as the record date established by
Regency for a dividend to the holders of Common Stock. No Partnership Record
Date shall occur until after the First Closing.
"Partnership Unit" or "Unit" means the Partnership Interest in the
Partnership to be issued to and held by the Original Limited Partners pursuant
to Sections 4.1 and 4.2. The number of Units to be issued to each Original
Limited Partner at the First Closing is set forth on Exhibit A attached hereto.
As provided in the Contribution Agreement, Additional Units may be issued to the
Original Limited Partners after the First Closing, as more particularly set
forth in the Contribution Agreement. The terms "Partnership Unit" or "Unit"
includes the initial Units issued at the First Closing and any Additional Units
issued after the First Closing to the Original Limited Partners. Exhibit A shall
be amended from time to time to reflect the issuance of any Additional Units.
The terms "Partnership Unit" and "Unit" do not include or refer to any Class A
Units or Class B Units.
"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 Partnership Units , Class A Units
and Class B Units owned by such Partner by (ii) the total number of Partnership
Units, Class A 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" has the meaning set forth in Section 8.6(f).
"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 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.
"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 pursuant to Section 8.6.
"Redemption Amount" means the Share Amount or, as determined by the
General Partner in its sole and absolute discretion after the Option Date, the
Cash Amount or any combination of the Share Amount and the Cash Amount. As
provided in Section 8.6(b), in the event a Specified Redemption Date occurs on
or before the Option Date, then the General Partner shall be required to cause
the Partnership to issue the Share Amount (and not the Cash Amount) in
satisfaction of the Redemption Amount, except as otherwise provided in Section
8.6(c).
"Redemption Right" has the meaning set forth in Section 8.6(a) hereof.
"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.
"704(c) Value" of any Contributed Property means the fair market value
of such property or other consideration at the time of contribution as
determined by the General Partner in its discretion using such reasonable method
of valuation as it may adopt. The General Partner shall use such method as it
deems reasonable and appropriate in its sole and absolute discretion to allocate
the aggregate of the 704(c) Value of
Contributed Properties received in a single or integrated transaction among each
separate property on a basis proportional to its fair market value.
"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.
"Shareholder Approval Date" means the date that the shareholders of
Regency approve (i) the transactions contemplated by the Contribution Agreement
as required by Rule 312.03(c) of the New York Stock Exchange Listed Company
Manual and (ii) the Charter Amendment, as described in Section 5.4 of the
Contribution Agreement.
"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.
"Subsequent Closing" has the meaning set forth in the Contribution
Agreement.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Transaction" has the meaning set forth in Section 11.2(b).
"Unit 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, 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.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Section 4.4 hereof) as of
such date, over (ii) the Carrying Value of such property (prior to any
adjustment to be made pursuant to Section 4.4 hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment to be made pursuant to Section
4.4 hereof) as of such date, over (ii) the fair market value of such property
(as determined under Section 4.4 hereof) as of such date.
"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 initial
general and limited partners have withdrawn from the Partnership and
the General Partner and the Limited Partners do hereby amend and
restate this Agreement to provide for the continuation of the
Partnership according to all of the terms and provisions of this
Agreement and otherwise in accordance with 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 Retail
Partnership, Ltd. 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," "Ltd.," "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 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
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 ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, 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. At the time of the
execution of this Agreement, Branch Properties, Ltd. shall make or
shall have made the Capital Contributions set forth in Exhibit A to
this Agreement, and such Capital Contributions shall be deemed to have
been made by its respective partners as Original Limited Partners, in
the respective amounts set forth in Exhibit A. The Original Limited
Partners shall own Partnership Units in the amounts set forth in
Exhibit A and shall have a Percentage Interest in the Partnership as
set forth in Exhibit A, which Percentage Interest 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 Partnership Units, Class A
Units or Class B Units, or similar events having an effect on a
Partner's Percentage Interest. The number of Units shall be increased
and the Percentage Interests adjusted in the event that and each time
that a Subsequent Closing occurs. Any Partnership Interests held by the
General Partner, Regency or any Affiliate (including Partnership
Interests acquired under Sections 4.2, 8.6 and 8.7) shall be Class B
Units.
(b) 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 Class A Units, Class B Units or other Partnership Interests,
subject to the provisions of Section 4.2 and such Partner's Capital
Account shall be adjusted as provided in Section 4.4.
(c) 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.
(d) 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(b) 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. The
Contribution Agreement sets forth the provisions upon which Additional Units
shall be issued to the Original Limited Partners. The General Partner and
Regency shall cause the Additional Units to be issued to the Original Limited
Partners as set forth in the Contribution Agreement and to amend this Agreement
to reflect the issuance of any such Additional Units. Subject to the
restrictions set forth below, 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 additional Class B Units or other 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, except as provided below with respect to
Class A Units, (b) no Partnership Interests other than Class B Units shall be
issued to the General Partner, Regency or any Affiliate of Regency or the
General Partner, and (c) no Partnership Interests on a parity with the Original
Limited Partnership Units shall be issued to any Person, except as provided
below with respect to Class A Units. No later than six months after the First
Closing, the General Partner shall have the right, without the Consent of the
Original Limited Partners, to issue up to 250,000 Class A Units in exchange for
the contribution to the Partnership of certain interests and rights in either or
both of the properties generally known as Peartree Village and Roswell Village
(or cash), with such number of Class A Units being computed by dividing the
agreed net contribution value of such contributed interests and rights (or cash)
by $22-1/8.
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 and (ii) all items of
Partnership income and gain (including income and gain exempt from tax)
allocated to such Partner pursuant to Sections 6.1 and 6.2 of this
Agreement, and decreased by (x) the amount of cash or Agreed Value of
all actual and deemed distributions of cash or property made to such
Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss allocated to such Partner pursuant to Sections 6.1
and 6.2 of this Agreement. Upon the issuance of any Additional Units to
an Original Limited Partner, the aggregate Agreed Value of
the Contributed Property contributed by such Partner to the Partnership
shall be increased by the value of such Additional Units (which is
agreed to be $22-1/8 per Additional Unit), and such increase shall be
allocated among the items of Contributed Property contributed by such
Partner in proportion to their then book values. The increase in the
Agreed Value of such Contributed Property shall be credited to such
Partner's Capital Account under this Section 4.4(a).
(b) Transfers of Partnership Units. A transferee of a
Partnership Unit, Class A Unit, Class B Unit or other Partnership
Interest shall succeed to a pro rata portion of the Capital Account of
the transferor; provided, however, that, if the transfer causes a
termination of the Partnership under Section 708(b)(1)(B) of the Code,
the Partnership's properties shall be deemed to have been transferred
in accordance with Regulations Section 1.708-1 and appropriate
adjustments resulting from such deemed transfers shall be made
hereunder.
(c) Unrealized Gains and Losses.
(i) Consistent with the provisions of Regulations
Section 1.704-1(b)(2)(iv)(f), and as provided in Section
4.4(c)(ii) , the Carrying Values of all Partnership assets
shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership
property, as of the times of the adjustments provided in
Section 4.4(c)(ii) hereof, as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale of each
such property and allocated pursuant to Section 6.1 of the
Agreement.
(ii) Such adjustments shall be made as of the
following times: (i) immediately prior to 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) immediately prior to 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) immediately prior to the
liquidation of the Partnership or the General Partner's
interest in the Partnership within the meaning of Regulations
Section 1.704-l(b)(2)(ii)(g); provided, however, that
adjustments pursuant to clauses (i) and (ii) above shall be
made only if the General Partner determines such adjustments
are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership.
(iii) In accordance with Regulations Section
1.704-1(b)(2)(iv)(e), the Carrying Value of Partnership assets
distributed in kind shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as of the time any such asset is
distributed.
(iv) In determining such Unrealized Gain or
Unrealized Loss the aggregate cash amount and fair market
value of all Partnership assets (including cash or cash
equivalents) shall be determined by the General Partner using
such reasonable method of valuation as it may adopt, or in the
case of a liquidating distribution pursuant to Article 13 of
this Agreement, be determined and allocated by the Liquidator
using such reasonable methods of valuation as it may adopt.
The General Partner, or the Liquidator, as the case may be,
shall allocate such aggregate value among the assets of the
Partnership (in such manner as it determines to arrive at fair
market value for individual properties).
(d) 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).
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions.
(a) 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 (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 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; and
(iv) 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) 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, as follows (and for this purpose, the holders of Class A
Units shall be treated as if they were Original Limited Partners):
(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; and
(iii) 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.
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, including, without
limitation, any taxes required to be withheld or paid by the Partnership
pursuant to Section 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 in the State of Georgia 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 (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)(v) 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
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)(ii) for all prior fiscal years, which
amount shall be allocated among the Partners in the same
proportions and in the reverse order as the Net Losses were
allocated pursuant to Section 6.1(b)(iv);
(iii) Third, one hundred percent (100%) to the
Partners in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to the 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)(iii) for all prior fiscal years, which amount shall be
allocated among the Partners in the same proportions and in
the reverse order as the Net Losses were allocated pursuant to
Section 6.1(b)(iii);
(iv) Fourth, 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)(iv) 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)(iii);
(v) Fifth, 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)(v) 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; and
(vi) 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) Net Losses. After giving effect to the special allocations
set forth in Section 6.2 below, Net Losses 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 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)(vi) hereof for all prior fiscal
years, 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 Loss under this Section
6.1(b)(ii) equal the excess, if any, of the cumulative
allocations of Net Income under Section 6.1(a)(v) 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 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; and
(v) Any remaining Net Loss shall be allocated
solely to the General Partner.
Notwithstanding the foregoing, Net Losses shall not be allocated to any Limited
Partner pursuant to this Section 6.1(b) to the extent that such allocation would
cause such Limited Partner to have an Adjusted Capital Account Deficit at the
end of such taxable year (or increase any existing Adjusted Capital Account
Deficit). All Net Losses in excess of the limitations set forth in the preceding
sentence of this Section 6.1(b) shall be allocated to the General Partner.
(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 the 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 Sections 6.2(a) and 6.2(b)
hereof, such Partner has an Adjusted Capital Account Deficit, items of
Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit
created by such adjustments, allocations or distributions as quickly as
possible.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any taxable period
shall be allocated to the Partners in accordance with their respective
Percentage Interests.
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the
Partner who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(2).
(f) Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Section
734(b) or 743(b) of the Code is required, pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts
shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis),
and such item of gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the
Regulations.
Section 6.3 Allocations for Tax Purposes.
(a) General. Except as otherwise provided in this Section 6.3,
for federal income tax purposes, each item of income, gain, loss and
deduction shall be allocated among the Partners in the same manner as
its correlative item of "book" income, gain, loss or deduction is
allocated pursuant to Sections 6.1 and 6.2 of this Agreement.
(b) To Eliminate Book-Tax Disparities. In an attempt to
eliminate Book-Tax Disparities attributable to a Contributed Property
or Adjusted Property, items of income, gain, loss, and deduction shall
be allocated for federal income tax purposes among the Partners as
follows:
(i) To the extent that the fair market value of a
Contributed Property differed from its adjusted tax basis at
the time it was originally contributed to Branch Properties,
Ltd. (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 Original Limited Partners who
originally contributed such property to Branch Properties,
Ltd. (or their successors-in-interest) bear the tax burden (or
benefit, if applicable) of the remaining Original Book-Tax
Disparity;
(ii) In the case of a Contributed Property, such
items attributable thereto shall be allocated, subject to
Section 6.3(b)(i), among the Partners consistent with the
principles of Section 704(c) of the Code that takes into
account the variation between the 704(c) Value of such
property and its adjusted tax basis at the time of the
contribution;
(iii) In the case of an Adjusted Property, such items
shall (A) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss
attributable to such property (prior to any adjustments in the
Carrying Value of such property under Section 4.4 hereof) and
(B) second, in the event such property was originally a
Contributed Property, be allocated among the Partners
consistent with Section 6.3(b)(ii); and
(iv) All other items of income, gain, loss and
deduction shall be allocated among the Partners in the same
manner as their correlative item of "book" gain or loss is
allocated pursuant to Sections 6.1 and 6.2 of this Agreement.
(c) Power of General Partner to Elect Method. The General
Partner shall elect the traditional method without curative allocations
to be used by the Partnership in eliminating Book-Tax Disparities under
Section 704(c) of the Code and the Regulations thereunder and such
election shall be binding on all Partners.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management.
(a) Powers of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and
affairs of the Partnership are exclusively vested in the General
Partner, and no Limited Partner shall have any 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 Original 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 Original 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 Original
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 Sections 4.2 and
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 or Original Limited Partner
Consent 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, Ltd. and Branch
Properties, Ltd.'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, Ltd. and Branch Properties, Ltd.'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 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 Sections 7.1(c) and 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 Original 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, Ltd. 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 (but excluding the holders of
any Class A 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 Original 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 Original Limited Partners
pursuant to Section 5.1 hereof.
(i) Designated Properties. 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 acquire, develop, lease and operate the Designated Properties (as
defined in the Contribution Agreement) in a manner to maximize the
Annualized NOI (as defined in the Contribution Agreement) for the
Designated Properties.
Nothing in Sections 7.1(h) or 7.1(i) 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 Articles 5
and 6 regarding distributions, payments, and allocations to which it
may be entitled), the General Partner shall not be compensated for its
services as general partner of the Partnership.
(b) 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. 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 and Regency
shall be reimbursed for all expenses either incurs relating to any issuance of
additional Partnership Interests pursuant to Section 4.2 hereof.
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.
(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 Sections
7.6(a) and 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.
(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, Regency 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 Sections 7.1(a)(iv), 7.1(a)(ix) and 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 Sections 7.1(f) and 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 U.S. Realty,
a Luxembourg corporation, Security Capital Holdings, S.A., a Luxembourg
corporation, and their Affiliates ("Security Capital") in avoiding
classification as a passive foreign investment company within the
meaning of Section 1296 of the Code. Such obligation is set forth on
Schedule 7.8(b).
(c) Acts of Agents. Subject to its obligations and duties as
General Partner set forth in Section 7.1(a) hereof, the General Partner
may exercise any of the powers granted to it by this Agreement and
perform any of the duties imposed upon it hereunder either directly or
by or through its agents. The General Partner shall not be responsible
for any misconduct or negligence on the part of any such agent
appointed by it in good faith.
(d) Effect of Amendment. Any amendment, modification or repeal
of this Section 7.8 or any provision hereof shall be prospective only
and shall not in any way affect the limitations on the General
Partner's liability to the Partnership and the Limited Partners under
this Section 7.8 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
Section 7.9 Other Matters Concerning the General Partner.
(a) Reliance on Documents. The General Partner may rely and
shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture, or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(b) Reliance on Consultants and Advisers. The General Partner
may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers
selected by it, and any act taken or omitted to be taken in reliance
upon and in accordance with the opinion of such Persons as to matters
which such General Partner reasonably believes to be within such
Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance
with such opinion.
(c) Action Through Officers and Attorneys. The General Partner
shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers and a
duly appointed attorney or attorneys-in-fact. Each such attorney shall,
to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and
duty which is permitted or required to be done by the General Partner
hereunder.
(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 the General Partner or 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 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 Limited Partners to exercise the Redemption
Right prior to said record date. Regency shall not sell any material
portion of its assets after the First Closing and prior to the
thirtieth (30th) day after the First Redemption Date in a manner which
would create a material amount of capital gains to Regency and a
resulting distribution or dividend to Regency shareholders.
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, Regency 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
Sections 4.2, 5.1(a), 5.1(b), 6.1, 6.2 or 6.3 hereof (with respect to the
priority of the Original Limited Partner Units over the Class B Units), or
otherwise expressly provided in this Agreement, no Partner (Limited or General)
or Assignee shall have priority over any other Partner (Limited or General) or
Assignee either as to the return of Capital Contributions or as to profits,
losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership.
(a) Copies of Business Records. In addition to other rights
provided by this Agreement or by the Act, and except as limited by
Section 8.5(c) hereof, each Limited Partner shall be provided the
following without demand, except as otherwise provided below, at the
Partnership's expense:
(i) promptly after becoming available, a copy of the
most recent annual, quarterly and current reports and proxy
statements filed with the Securities and Exchange Commission
by Regency pursuant to the Securities Exchange Act of 1934, if
any;
(ii) promptly after becoming available, a copy
of the Partnership's federal, state and local income tax
returns for each Partnership Year;
(iii) upon written demand and for a purpose
reasonably related to such Limited Partner's interest as a
Limited Partner in the Partnership, a current list of the name
and last known business, residence or mailing address of each
Partner;
(iv) a copy of this Agreement and the Certificate and
all amendments hereto and thereto, 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 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, Regency or any of
their 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, Regency or any of their 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
(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 on or after the First Redemption Date (or such later
date as may be specified pursuant to any agreement with an Original
Limited Partner); and provided further that a holder of Class A Units
shall not exercise a Redemption Right until as of the first Subsequent
Closing. An Original Limited Partner may exercise a Redemption Right
any time after the date hereof with an effective Specified Redemption
Date as of a date on or after the First Redemption Date and any number
of times; provided, however, that a holder of Class A Units shall not
exercise a Redemption Right until as of the first Subsequent Closing. 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; provided, however, in the event a
Specified Redemption Date occurs on or before the Option Date, then the
General Partner shall be required to cause the Partnership to issue the
Share Amount (and not the Cash Amount) in satisfaction of the
Redemption Amount, except as otherwise provided in Section 8.6(c)
below. 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 Shareholder Approval Date has not occurred
on or before a Specified Redemption Date and if such Specified
Redemption Date is on or before the Option Date, then a
Redeeming Partner (other than the holders of Class A Units)
shall have the right to receive the Share Amount only with
respect to such number of Shares, when added to any Shares
previously received by such Redeeming Partner pursuant to the
exercise of Redemption Rights, as will equal the Maximum
Aggregate Shares issuable to such Redeeming Partner prior to
the Shareholder Approval Date as described on Schedule
8.6(c)(i), and the balance of any Redemption Amount shall be
paid by the Partnership to the Redeeming Partner as a Cash
Amount.
(ii) 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. Upon the effectiveness
of the Charter Amendment amending Article 5.14 of the Charter,
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. If the holders
of any Class A Units who are Non-U.S. Persons are exercising
Redemption Rights on a Specified Redemption Date and the
aggregate Share Amount issuable to all Non-U.S. Persons on
such Specified Redemption Date exceeds the Matching Share
Amount, then the Shares otherwise issuable to the holders of
Class A Units shall be reduced first, pro rata by those
holders whose Class A Units were issued in exchange for
interests in Roswell Village, and next, pro rata by those
holders whose Class A Units were issued in exchange for cash
and interests in Peartree Village until such aggregate Share
Amount equals the Matching Share Amount, and the holders of
such Class A Units shall receive the Cash Amount for any
balance of the Redemption Amount due such holders of the Class
A Units.
(iii) 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) Additional Units. Each Original Limited Partner has the
right to receive certain Additional Units pursuant to the provisions of
the Contribution Agreement. If a Redeeming Partner exercises a
Redemption Right on one or more occasions with respect to Units issued
at the First Closing ("Initial Redeemed Units"), then such Redeeming
Partner shall be deemed to have exercised a Redemption Right with
respect to the corresponding percentage of Additional Units issuable
with respect to such Initial Redeemed Units, based on the number of
Initial Redeemed Units being redeemed as a percentage of the total
number of Units issued to the Redeeming Partner at the First Closing
(the "Redemption Percentage"), all as provided in the Contribution
Agreement. In such event, Regency shall assume the obligation to pay
the Redemption Amount with respect to any such Additional Units issued
with respect to the Initial Redeemed Units, and if a Share Amount has
been funded to a Redeeming Partner with respect to the Initial Redeemed
Units, then Regency shall be required to pay the Share Amount for a
number of Additional Units equal to the corresponding Redemption
Percentage multiplied by the Additional Units issuable to such Original
Limited Partner, subject, however, to the restrictions set forth in
Section 8.6(a) and 8.6(c) above.
(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 Sections 5.3
and 8.6(f) 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 8.6(d) or 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
Sections 5.3 and 8.6(f) 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) Security Interest. Additional Units issued on the First
Earn-Out Closing Date (as defined in the Contribution Agreement)
pursuant to Section 2.3.2 of the Contribution Agreement may be required
to be pledged to Regency and the Partnership pursuant to Article 15 of
the Contribution Agreement (the "Pledged Units"). In the event a
Redeeming Partner exercises a Redemption Right with respect to Pledged
Units, or in the event a Redeeming Partner has previously exercised a
Redemption Right with respect to Units and the corresponding Additional
Units to be redeemed are Pledged Units, as described in Section 8.6(d)
above, then such Redeeming Partner, as a condition to the receipt of
the Redemption Amount with respect to such Pledged Units, shall be
required to pledge and grant to Regency and the Partnership a first
priority security interest in any and all Shares and/or cash delivered
in payment of the Redemption Amount with respect to such Pledged Units
and shall be required to consent to Regency holding such Shares and/or
cash as "Collateral" under Article 15 of the Contribution Agreement;
provided, however, if a Cash Amount is to be paid to the Redeeming
Partner with respect to such Pledged Units, then such Redeeming Partner
shall have the right to substitute a letter of credit for such Cash
Amount as provided in Section 15.7.2(e) of the Contribution Agreement.
(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 it shall assume the General
Partner's obligation to pay the Redemption Amount by the payment of the Share
Amount through the Option Date, and Regency further 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 Sections 8.5 or 9.3 hereof. Any records maintained by or on behalf of the
Partnership in the regular course of its business may be kept on, or be in the
form of, magnetic tape, photographs, micrographics or any other information
storage device; provided, that the records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books of
the Partnership shall be maintained for financial purposes on an accrual basis
in accordance with generally accepted accounting principles and for tax
reporting purposes on the accrual basis.
Section 9.2 Fiscal Year. The fiscal year of the Partnership
shall be the calendar year.
Section 9.3 Reports.
(a) Annual Reports. As soon as practicable, but in no event
later than the date when mailed to Regency's shareholders, the General
Partner shall cause to be mailed to each Limited Partner as of the
close of the Partnership Year, an annual report containing financial
statements of the Partnership, or of Regency if such statements are
prepared solely on a consolidated basis with Regency for such
Partnership Year, presented in accordance with generally accepted
accounting principles, such statements to be audited by a nationally
recognized firm of independent public accountants selected by the
General Partner.
(b) Quarterly Reports. As soon as practicable, but in no event
later than the date when mailed to Regency's shareholders, the General
Partner shall cause to be mailed to each Limited Partner as of the last
day of the calendar quarter (except the last calendar quarter of each
year) who has asked to be placed on the mailing list for the same, a
report containing unaudited financial statements of the Partnership, or
of Regency if such statements are prepared solely on a consolidated
basis with Regency, and such other information as may be required by
applicable law or regulation, or as the General Partner determines to
be appropriate.
(c) Other. During the pendency of the Redemption Rights, the
Original Limited Partners 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.
(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.
(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 an Original Limited
Partner (or a holder of Class A Units) pursuant to Section 8.6 or any
acquisition of Partnership Units from a Limited Partner by the General
Partner pursuant to the Reorganization (as defined in the Contribution
Agreement).
(b) Requirements. No Partnership Interest shall be
transferred, in whole or in part, except in accordance with the terms
and conditions set forth in this Article 11. Any transfer or purported
transfer of a Partnership Interest not made in accordance with this
Article 11 shall be null and void.
Section 11.2 Transfer of General Partner's Partnership Interests.
(a) General Partnership Interest. The General Partner may not
transfer any of its General Partnership Interest (other than any
transfer to an Affiliate of the General Partner) or withdraw as General
Partner (other than pursuant to a permitted transfer), other than in
connection with a transaction described in Section 11.2(b). Any
transfer or purported transfer of the General Partner's Partnership
Interest not made in accordance with this Section 11.2 shall be null
and void. Notwithstanding any permitted transfer of its General
Partnership Interest or withdrawal as General Partner hereunder (other
than in connection with a transaction described in Section 11.2(b)),
Regency shall remain subject to Sections 7.1(a)(iii), 7.9(e), 8.6 and
8.7 of this Agreement unless such transferee General Partner provides
substantially similar rights to the Limited Partners and Limited
Partner Consent is obtained. Nothing contained in this Section 11.2(a)
shall entitle the General Partner to withdraw as General Partner unless
a successor General Partner has been appointed and approved by the
Original Limited Partners. Regency Atlanta, Inc. shall be a subsidiary
of Regency so long as Regency Atlanta, Inc. is the General Partner,
unless the Consent of the Original Limited Partners is obtained.
(b) Transfer in Connection With Reclassification,
Recapitalization, or Business Combination Involving General Partner.
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
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 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
Partnership Units shall receive the greatest amount of cash,
securities, or other property which a Limited Partner 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 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 Partnership 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
Sections 11.2(a) and 11.2(b), the General Partner may not admit an
additional general partner other than an Affiliate of the General Partner
pursuant to Section 11.2(a).
Section 11.3 Limited Partners' Rights to Transfer.
(a) General. No transfer of a Limited Partnership Interest by
a Limited Partner is permitted without the prior written consent of the
General Partner, which it may withhold in its sole and absolute
discretion; provided, that a Limited Partner may transfer Units without
the consent of the General Partner: (i) to members of the Limited
Partner's Immediate Family or one or more trusts for their benefit
pursuant to applicable laws of descent and distribution, gift or
otherwise; (ii) among its Affiliates; (iii) to a lender, provided that
the Units are not Pledged Units, where such Units are 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 Sections 5.3 and 8.6(f),
and represent that such assignment was made in accordance with all
applicable laws and regulations. For a period of one year following the
First Closing, each Original Limited Partner agrees not (A) to request
the General Partner to consent to any transfer of Units requiring the
consent of the General Partner or (B) to transfer any economic or other
interest, right or attribute therein except to a Person to whom such
Partner may transfer Units without the consent of the General Partner.
(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 Non-Recourse
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.
Section 11.4 Substituted Limited Partners.
(a) Consent of General Partner Required. The Limited Partner
shall have the right to substitute a transferee as a Limited Partner in
his place, but only if such transferee is a permitted transferee under
Section 11.3, in which event such substitution shall occur if the
Limited Partner so provides. With respect to any other transfers, the
General Partner shall have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this
Section 11.4 as a Substituted Limited Partner, which consent may be
given or withheld by the General Partner in its sole and absolute
discretion. The General Partner's failure or refusal to permit a
transferee of any such interests to become a Substituted Limited
Partner shall not give rise to any cause of action against the
Partnership or any Partner.
(b) Rights and Duties of Substituted Limited Partners. A
transferee who has been admitted as a Substituted Limited Partner in
accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited
Partner under this Agreement.
(c) Amendment of Exhibit A. Upon the admission of a
Substituted Limited Partner, the General Partner shall amend Exhibit A
to reflect the name, address, number of Partnership Units, and
Percentage Interest of such Substituted Limited Partner and to
eliminate or adjust, if necessary, the name, address and interest of
the predecessor of such Substituted Limited Partner.
Section 11.5 Assignees. If a transferee is not admitted as a
Substituted Limited Partner in accordance with Section 11.4(a), such transferee
shall be considered an Assignee for purposes of this Agreement. An Assignee
shall be entitled to all the rights of an assignee of a limited partnership
interest under the Act, including the right to redeem Units under Section 8.6,
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 held
by Limited Partners are voted). In the event any such transferee desires to make
a further assignment of any such Partnership Units, such transferee shall be
subject to all the provisions of this Article 11 to the same extent and in the
same manner as any Limited Partner desiring to make an assignment of Partnership
Units.
Section 11.6 General Provisions.
(a) Withdrawal of Limited Partner. No Limited Partner may
withdraw from the Partnership other than as a result of a permitted
transfer of all of such Limited Partner's Partnership Units in
accordance with this Article 11 or pursuant to the redemption of all of
his Partnership Units under Section 8.6.
(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 under Section 8.6 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.
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.
(a) General. After the admission to the Partnership of the
Original Limited Partners on the date hereof, a Person who makes a
Capital Contribution to the Partnership in accordance with Section 4.2
of this Agreement 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.
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 Consent of the Original 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 Original 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 Original Limited Partners agree in writing to continue the
business of the Partnership and to the appointment, effective as of the
date of withdrawal, of a substitute General Partner.
Section 13.2 Winding Up.
(a) General. The General Partner shall provide written notice
to the Limited Partners of the occurrence of an Event of Dissolution,
giving them at least 20 days in which to exercise their 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 Sections 13.2(b) and 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, one hundred percent (100%) 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; and
(iv) The balance, if any, to the General Partner and
Limited Partners in accordance with their Capital Accounts,
after giving effect to all contributions, distributions, and
allocations for all periods.
The General Partner shall not receive any additional compensation for
any services performed pursuant to this Article 13.
(b) Deferred Liquidation. Notwithstanding the provisions of
Section 13.2(a) hereof which require liquidation of the assets of the
Partnership, but subject to the order of priorities set forth therein,
and further subject to Section 13.2(c) hereof, 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, undivided interests in such
Partnership assets as the Liquidator deems not suitable for
liquidation. Any such distributions in kind shall be made only if, in
the good faith judgment of the Liquidator, such distributions in kind
are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The
Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may
adopt.
(c) Distribution of Briarcliff Village.
(i) In the event that the Partnership is dissolved in
accordance with this Article 13, the Briarcliff Village
Property (as defined in Section 7.1(c)) will be distributed
in-kind to the Original Briarcliff Partners (as defined in
Section 7.1(c)) who continue, as of such time, to hold
Original Limited Partnership Units attributable to the
contribution of the Briarcliff Village Property to Branch
Properties, Ltd. and Branch Properties, Ltd.'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, Ltd. and Branch Properties,
Ltd.'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 13.2, 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
Original 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"), 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 Sections 7.1(a)(iii), 8.6, 8.7 and 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, 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 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 14.1(b), 14.1(c), 14.1(d) or 14.1(e), 14.1(f), a
proposed amendment shall be adopted and be effective as an amendment
hereto if it is approved by the General Partner and it receives the
Consent of the Original 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, this Agreement shall not be
amended without the consent of each Partner adversely affected if such
amendment would (i) convert a Limited Partner's interest in the
Partnership into a general partner's interest, (ii) modify the limited
liability of a Limited Partner, (iii) alter rights of the Partner to
receive distributions pursuant to Articles 5 or 13, or the allocations
specified in Article 6 (except as permitted pursuant to Sections 4.2 or
4.4(d) 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 Sections 4.2 (issuances of additional Partnership Interests),
7.1(a)(iii), (Section 1031 exchanges), 7.1(h) (distributions), 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, the General Partner shall not
amend Sections 4.2 (issuances of additional Partnership Interests),
7.1(h) (distributions), 7.6 (contracts with Affiliates) or 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.
(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), 13.2(c) (distribution of Briarcliff Village) and
this Section 14.1(e), 14.1(f)(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), any amendment that would
adversely affect only a class of Limited Partners other than 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.
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, the consent of holders
of a majority of the Percentage Interests of the Original Limited
Partners (other than Units held by the General Partner, Regency or any
Affiliate of Regency) shall control.
(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 a majority of the Percentage Interests of the
Original Limited Partners (other than Units held by the General
Partner, Regency or any Affiliate of Regency) (or such other percentage
as is expressly required by this Agreement). Such consent may be in one
instrument or in several instruments, and shall have the same force and
effect as a vote of a majority of the Percentage Interests of the
Original Limited Partners (other than Units held by the General
Partner, Regency or any Affiliate of Regency)(or such other percentage
as is expressly required by this Agreement). 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 constitutes the entire
agreement among the parties with respect to the matters contained herein; it
supersedes any prior agreements or understandings among them with respect to the
matters contained herein and it may not be modified or amended in any manner
other than pursuant to Article 14.
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,
12 or 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 Original Limited Partners.
Each Original 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 Original 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 the
Pledged Units referred to in Section 8.6(f).
(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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
REGENCY ATLANTA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
REGENCY REALTY CORPORATION,
Sections 7.1(a)(iii), 7.9(e), 8.6, 8.7, 11.2(b) and
13.4(c) only
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
ORIGINAL LIMITED PARTNER:
BRANCH PROPERTIES, Ltd.
By: Branch Realty, Inc., General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Executive Vice President and Secretary
OTHER ORIGINAL LIMITED PARTNERS
OPPORTUNITY CAPITAL PARTNERS II LIMITED
PARTNERSHIP, a Maryland limited partnership
By: Opportunity Capital Corporation, a Maryland
corporation, its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
Vice President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇, attorney-in-fact for each of the Original
Limited Partners (other than Branch Properties, Ltd. and
Opportunity Capital Partners II Limited Partnership) listed
on Exhibit A.)
EXHIBIT A
PARTNERS, CONTRIBUTIONS, UNITS AND
PARTNERSHIP INTERESTS
[TO BE ATTACHED]
▇-▇
▇-▇
▇
▇▇▇▇▇▇▇▇ 7.8(b)
REGENCY'S PFIC OBLIGATIONS
SCHEDULE 8.6(a)
TRANSFER RESTRICTIONS IN REGENCY'S
ARTICLES OF INCORPORATION
SCHEDULE 8.6(c)(i)
MAXIMUM AGGREGATE SHARES ISSUABLE TO THE ORIGINAL
LIMITED PARTNERS PRIOR TO THE SHAREHOLDER APPROVAL DATE
SCHEDULE 13.4(a)
ELECTING PARTNERS WITH DEFICIT
CAPITAL ACCOUNT MAKE-UP REQUIREMENT
[to be completed prior to execution]