United States
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
(Mark One)
[X] For the quarterly period ended June 30, 1998
-or-
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________ to ________
Commission File Number 1-12298
REGENCY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Florida 59-3191743
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
(Address of principal executive offices) (Zip Code)
(904) 356-7000
(Registrant's telephone number, including area code)
Unchanged
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No[ ]
(Applicable only to Corporate Registrants)
As of August 14, 1998, there were 25,464,383 shares outstanding of the
Registrant's common stock.
REGENCY REALTY CORPORATION
Consolidated Balance Sheets
June 30, 1998 and December 31, 1997
1998 1997
---- ----
(unaudited)
Assets
Real estate investments, at cost:
Land $ 229,481,678 177,245,784
Buildings and improvements 820,869,554 622,555,583
Construction in progress - development for investment 9,947,030 13,427,370
Construction in progress - development for sale 21,186,446 20,173,039
------------- ----------
1,081,484,708 833,401,776
Less: accumulated depreciation 46,160,048 40,795,801
-------------- ----------
1,035,324,660 792,605,975
Investments in real estate partnerships 22,401,368 999,730
-------------- -----------
Net real estate investments 1,057,726,028 793,605,705
Cash and cash equivalents 12,732,702 16,586,094
Tenant receivables, net of allowance for
uncollectible accounts of $2,057,749
and $1,162,570 at June 30, 1998
and December 31, 1997, respectively 10,684,242 9,546,584
Deferred costs, less accumulated amortization
of $4,219,427 and $3,842,914 at June 30, 1998
and December 31, 1997, respectively 4,496,876 4,252,991
Other assets 7,458,208 2,857,217
-------------- ----------
$ 1,093,098,056 826,848,591
============= ===========
Liabilities and Stockholders' Equity
Liabilities:
Mortgage loans payable 317,796,022 229,919,242
Acquisition and development line of credit 89,731,185 48,131,185
Accounts payable and other liabilities 17,064,007 11,597,232
Tenants' security and escrow deposits 2,762,506 2,319,941
------------ -----------
Total liabilities 427,353,720 291,967,600
------------ -----------
Redeemable preferred units 78,800,000 -
Redeemable operating partnership units 26,912,106 13,777,156
Limited partners' interest in consolidated partnerships 7,520,049 7,477,182
---------- -----------
113,232,155 21,254,338
Stockholders' equity
Common stock $.01 par value per share:
150,000,000 shares authorized; 25,422,870
and 23,992,037 shares issued and outstanding
at June 30, 1998 and December 31, 1997, respectively 254,229 239,920
Special common stock - 10,000,000 shares authorized:
Class B $.01 par value per share, 2,500,000
shares issued and outstanding 25,000 25,000
Additional paid in capital 577,140,482 535,498,878
Distributions in excess of net income (14,501,931) (20,494,893)
Stock loans
(10,405,599) (1,642,252)
------------ -----------
Total stockholders' equity 552,512,181 513,626,653
-------------- -----------
Commitments and contingencies
$ 1,093,098,056 826,848,591
============= ===========
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION
Consolidated Statements of Operations
For the Three Months ended June 30, 1998 and 1997
(unaudited)
1998 1997
---- -----
Revenues:
Minimum rent $ 25,405,644 18,061,032
Percentage rent 558,514 637,339
Recoveries from tenants 5,817,685 3,890,704
Management, leasing and brokerage fees 2,902,262 2,046,334
Equity in income of investments in
real estate partnerships 145,425 (9,654)
---------- ----------
Total revenues 34,829,530 24,625,755
---------- ----------
Operating expenses:
Depreciation and amortization 5,928,251 4,231,170
Operating and maintenance 4,355,499 3,505,909
General and administrative 3,829,341 2,995,008
Real estate taxes 2,999,053 1,778,745
--------- ---------
Total operating expenses 17,112,144 12,510,832
---------- ----------
Interest expense (income):
Interest expense 7,658,571 6,484,343
Interest income (631,179) (280,335)
--------- ---------
Net interest expense 7,027,392 6,204,008
--------- ---------
Income before minority interests and sale
of real estate investments 10,689,994 5,910,915
---------- ---------
Minority interest of redeemable partnership units (297,500) (969,731)
Minority interest of limited partners (103,009) (214,406)
Gain on sale of real estate investments 508,678 -
--------- ---------
Net income for common stockholders $ 10,798,163 4,726,778
========== ==========
Net income per share:
Basic $ .38 .26
========= ===========
Diluted $ .38 .26
========= ===========
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION
Consolidated Statements of Operations
For the Six Months ended June 30, 1998 and 1997
(unaudited)
1998 1997
---- -----
Revenues:
Minimum rent $ 47,660,793 30,560,604
Percentage rent 1,661,861 1,107,937
Recoveries from tenants 10,638,415 6,985,904
Management, leasing and brokerage fees 5,406,368 3,687,525
Equity in income (loss) of investments in
real estate partnerships 146,411 17,137
---------- ----------
Total revenues 65,513,848 42,359,107
---------- ----------
Operating expenses:
Depreciation and amortization 11,384,555 7,074,670
Operating and maintenance 8,471,901 5,988,690
General and administrative 7,262,449 5,216,014
Real estate taxes 5,787,804 3,598,834
---------- ----------
Total operating expenses 32,906,709 21,878,208
---------- ----------
Interest expense (income):
Interest expense 12,873,370 10,221,374
Interest income (966,383) (452,602)
---------- ----------
Net interest expense 11,906,987 9,768,772
------------ ---------
Income before minority interests and sale
of real estate investments 20,700,152 10,712,127
---------- ----------
Minority interest of redeemable partnership units (891,824) (1,603,436)
Minority interest of limited partners (200,159) (345,142)
Gain on sale of real estate investments 10,746,097 -
---------- ----------
Net income for common stockholders $ 30,354,266 8,763,549
========== ==========
Net income per share:
Basic $ 1.11 .51
========== ==========
Diluted $ 1.06 .51
========== ==========
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1998 and 1997
(unaudited)
1998 1997
---- ----
Cash flows from operating activities:
Net income $ 30,354,266 8,763,550
Adjustments to reconcile net income to net
Cash provided by operating activities:
Depreciation and amortization 11,384,555 7,074,670
Deferred financing cost and debt premium amortization 46,002 441,004
Minority interest of redeemable partnership units 891,824 1,603,436
Minority interest of limited partners 200,159 345,142
Equity in income of investments in
real estate partnerships (146,411) (17,137)
Gain on sale of real estate investments (10,746,097) -
Changes in assets and liabilities:
Tenant receivables (676,428) 2,186,499
Deferred leasing commissions (554,373) (273,695)
Other assets (5,917,878) (447,802)
Tenants' security deposits 442,565 245,481
Accounts payable and other liabilities 7,406,975 5,011,309
------------ ----------
Net cash provided by operating activities 32,685,159 24,932,457
------------- ----------
Cash flows from investing activities:
Acquisition and development of real estate (120,592,104) (115,441,611)
Investment in real estate partnerships (21,276,350) -
Capital improvements (2,842,069) (1,451,400)
Construction in progress for sale, net of reimbursement (1,013,407) (8,248,018)
Proceeds from sale of real estate investments 30,662,197 -
Distributions received from real
Estate partnership investments 21,123 -
--------------- ------------
Net cash used in investing activities (115,040,610) (125,141,029)
--------------- ------------
Cash flows from financing activities:
Net proceeds from common stock issuance 9,685,435 68,275,213
Proceeds from issuance of redeemable partnership units 7,667 2,255,140
Distributions to redeemable partnership unit holders (897,817) (1,442,196)
Distributions to limited partners
In consolidated partnerships (157,292) (24,232)
Dividends paid to stockholders (24,361,304) (12,253,317)
Proceeds from issuance of redeemable preferred units, net 78,800,000 -
Proceeds from acquisition and
Development line of credit, net 41,600,000 37,630,000
Proceeds from mortgage loans payable 7,345,000 15,148,753
Repayments of mortgage loans payable (32,903,271) (3,751,167)
Deferred financing costs (616,359) (510,471)
--------------- ------------
Net cash provided by financing activities 78,502,059 105,327,723
--------------- ------------
Net (decrease) increase in cash and cash equivalents (3,853,392) 5,119,151
Cash and cash equivalents at beginning of period 16,586,094 8,293,229
-------------- -----------
Cash and cash equivalents at end of period $ 12,732,702 13,412,380
============= ==========
REGENCY REALTY CORPORATION
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1998 and 1997
(unaudited)
-continued-
1998 1997
---- ----
Supplemental disclosure of non cash transactions:
Mortgage loans assumed from sellers of real estate at fair value $ 113,945,176 135,802,817
=========== ===========
Redeemable operating partnership units and
common stock issued to sellers of real estate $ 33,938,977 94,769,706
========== ===========
See accompanying notes to consolidated financial statements.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
June 30, 1998
1. Summary of Significant Accounting Policies
(a) Organization and Principles of Consolidation
Regency Realty Corporation (the Company) was formed for the
purpose of managing, leasing, brokering, acquiring, and developing
shopping centers. The Company also provides management, leasing,
brokerage and development services for real estate not owned by
the Company.
The accompanying interim unaudited financial statements (the
"Financial Statements") include the accounts of the Company, its
wholly owned qualified REIT subsidiaries, and its majority owned
subsidiaries and partnerships. All significant intercompany
balances and transactions have been eliminated in the consolidated
financial statements. The Company owns approximately 95% of the
outstanding units of Regency Centers, L.P., ("RCLP" or the
"Partnership" formally known as Regency Retail Partnership, L.P.)
and partnership interests ranging from 51% to 93% in four majority
owned real estate partnerships (the "Majority Partnerships"). The
equity interests of third parties held in RCLP and the Majority
Partnerships are included in the consolidated financial statements
as redeemable operating partnership units, redeemable preferred
units and limited partners' interests in consolidated
partnerships, respectively. The Company is a qualified real estate
investment trust ("REIT") which began operations in 1993.
The Financial Statements have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission, and
reflect all adjustments which are of a normal recurring nature,
and in the opinion of management, are necessary to properly state
the results of operations and financial position. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management
believes that the disclosures are adequate to make the information
presented not misleading. The Financial Statements should be read
in conjunction with the financial statements and notes thereto
included in the Company's December 31, 1997 Form 10-K filed with
the Securities and Exchange Commission.
(b) Statement of Financial Accounting Standards No. 130
The Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("FAS 130"), which is effective for fiscal
years beginning after December 15, 1997. FAS 130 establishes
standards for reporting total comprehensive income in financial
statements, and requires that Companies explain the differences
between total comprehensive income and net income. Management has
adopted this statement in 1998. No differences between total
comprehensive income and net income existed in the interim
financial statements reported at June 30, 1998 and 1997.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
June 30, 1998
1. Summary of Significant Accounting Policies (continued)
(c) Statement of Financial Accounting Standards No. 131
The FASB issued Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related
Information" ("FAS 131"), which is effective for fiscal years
beginning after December 15, 1997. FAS 131 establishes standards
for the way that public business enterprises report information
about operating segments in annual financial statements and
requires that those enterprises report selected information about
operating segments in interim financial reports. Management does
not believe that FAS 131 will effect its current disclosures.
(d) Emerging Issues Task Force Issue 97-11
Effective March 19, 1998, the Emerging Issues Task Force (EITF)
ruled in Issue 97-11, "Accounting for Internal Costs Relating to
Real Estate Property Acquisitions", that only internal costs of
identifying and acquiring non-operating properties that are
directly identifiable with the acquired properties should be
capitalized, and that all internal costs associated with
identifying and acquiring operating properties should be expensed
as incurred. The Company had previously capitalized direct costs
associated with the acquisition of operating properties as a cost
of the real estate. The Company has adopted EITF 97-11 effective
March 19, 1998. During 1997, the Company capitalized approximately
$1.5 million of internal costs related to acquiring operating
properties. Through the effective date of EITF 97-11, the Company
has capitalized $474,000 of internal acquisition costs. For the
remainder of 1998, the Company expects to incur $1.1 million of
internal costs related to acquiring operating properties which
will be expensed.
(e) Emerging Issues Task Force Issue 98-9
On May 22, 1998, the EITF reached a consensus on Issue 98-9
"Accounting for Contingent Rent in Interim Financial Periods". The
EITF has stated that lessors should defer recognition of
contingent rental income that is based on meeting specified
targets until those specified targets are met and not ratably
throughout the year. The Company has previously recognized
contingent rental income (i.e. percentage rent) ratably over the
year based on the historical trends of its tenants. The Company
has adopted Issue 98-9 prospectively and has ceased the
recognition of contingent rents until such time as its tenants
have achieved its specified target. The Company believes this will
effect the interim period in which percentage rent is recognized,
however it will not have a material impact on the annual
recognition of percentage rent.
(f) Reclassifications
Certain reclassifications have been made to the 1997 amounts to
conform to classifications adopted in 1998.
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
June 30, 1998
2. Acquisitions of Shopping Centers
During the first six months of 1998, the Company acquired 24 shopping
centers for approximately $239.2 million (the "1998 Acquisitions"). In
January, 1998, the Company entered into an agreement to acquire the
shopping centers from various entities comprising the Midland Group
("Midland") consisting of 21 shopping centers plus a development pipeline
of 11 shopping centers. Of the 32 centers to be acquired or developed, 31
are anchored by Kroger, or its affiliate. Eight of the shopping centers
included in the development pipeline will be owned through a joint
venture in which the Company will own less than a 50% interest upon
completion of construction (the "JV Properties"). The Company's
investment in the properties acquired from Midland is $180.3 million at
June 30, 1998. As of June 30, 1998, the Company has acquired all but one
of the shopping centers and all the JV Properties. During 1998, 1999 and
2000, including all payments made to date, the Company will pay
approximately $213 million (including costs to be incurred on properties
currently under construction) for the 32 properties, and in addition may
pay contingent consideration of $23 million for the properties through
the issuance of units of RCLP, the payment of cash and the assumption of
debt.
In March, 1997, the Company acquired 26 shopping centers from Branch
Properties ("Branch") for $232.4 million. Additional Units and shares of
common stock may be issued after the first, second and third
anniversaries of the closing with Branch (each an "Earn-Out Closing"),
based on the performance of the properties acquired. The formula for the
earn-out provides for calculating any increases in value on a
property-by-property basis, based on any increases in net income for the
properties acquired, as of February 15 of the year of calculation. The
earn-out is limited to 721,997 Units at the first Earn-Out Closing and
1,020,061 Units for all Earn-Out Closings (including the first Earn-Out
Closing). During March, 1998, the Company issued 721,997 Units and shares
valued at $18.2 million to the partners of Branch.
3. Mortgage Loans Payable and Unsecured Line of Credit
The Company's outstanding debt at June 30, 1998 and December 31, 1997
consists of the following:
1998 1997
---- ----
Mortgage Loans Payable:
Fixed rate secured loans $283,350,997 199,078,264
Variable rate secured loans 12,679,515 30,840,978
Fixed rate unsecured loans 21,765,510 -
Unsecured line of credit 89,731,185 48,131,185
---------- ------------
Total $407,527,207 278,050,427
============ ===========
During March, 1998, the Company modified the terms of its unsecured line
of credit (the "Line") by increasing the commitment to $300 million,
reducing the interest rate, and incorporating a competitive bid facility
of up to $150 million of the commitment amount. Maximum availability
under the Line is subject to a pool of unencumbered assets which cannot
have an aggregate value less than 175% of the amount of the Company's
outstanding unsecured liabilities. The Line matures in May 2000, but may
be extended annually for one year periods. Borrowings under the Line bear
interest at a variable rate based of LIBOR plus a specified spread,
(.875% currently), which is dependent on the Company's investment grade
rating. The Company's ratings are currently Baa2 from Moody's Investor
Service, BBB from Duff and Phelps, and BBB- from Standard and Poors. The
Company is required to comply with certain financial covenants consistent
with this type of
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
June 30, 1998
3. Mortgage Loans Payable and Unsecured Line of Credit (continued)
unsecured financing. The Line is used primarily to finance the
acquisition and development of real estate, but is available for general
working capital purposes.
On June 29, 1998, the Company through RCLP, issued $80 million of 8.125%
Series A Cumulative Redeemable Preferred Units to an institutional
investor in a private placement. The issuance involved the sale of 1.6
million Preferred Units by RCLP for $50.00 per unit. The Preferred Units,
which may be called by the Partnership at par on or after June 25, 2003,
have no stated maturity or mandatory redemption, and pay a cumulative,
quarterly dividend at an annualized rate of 8.125%. The Preferred Units
are not convertible into common stock of the Company. The net proceeds of
the offering were used to reduce the Company's bank line of credit.
On July 17, 1998 the Company through RCLP, completed a $100 million
private offering of senior term notes at an effective interest rate of
7.17%. The Notes were priced at 162.5 basis points over the current yield
for seven year US Treasury Bonds. The net proceeds of the offering were
used to repay borrowings under the line of credit.
Mortgage loans are secured by certain real estate properties, but
generally may be prepaid subject to a prepayment of a yield-maintenance
premium. Unconsolidated partnerships and joint ventures had mortgage
loans payable of $62,727,120 at June 30, 1998, and the Company's share of
these loans was $25,447,514. Mortgage loans are generally due in monthly
installments of interest and principal and mature over various terms
through 2018. Variable interest rates on mortgage loans are currently
based on LIBOR plus a spread in a range of 125 basis points to 150 basis
points. Fixed interest rates on mortgage loans range from 7.04% to 9.8%.
During the first six months of 1998, the Company assumed mortgage loans
with a face value of $107,892,774 related to the acquisition of shopping
centers. The Company has recorded the loans at fair value which created
debt premiums of $6,052,402 related to assumed debt based upon the above
market interest rates of the debt instruments. Debt premiums are being
amortized over the terms of the related debt instruments.
As of June 30, 1998, scheduled principal repayments on mortgage loans
payable and the unsecured line of credit were as follows:
1998 $ 8,723,209
1999 23,285,800
2000 150,832,696
2001 43,392,285
2002 46,752,004
Thereafter 128,998,936
------------
Subtotal 401,984,930
Net unamortized debt premiums 5,542,277
------------
Total $407,527,207
============
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
June 30, 1998
4. Earnings Per Share
The following summarizes the calculation of basic and diluted earnings
per share for the three months ended, June 30, 1998 and 1997(in thousands
except per share data):
1998 1997
---- ----
Basic Earnings Per Share (EPS) Calculation:
Weighted average common shares outstanding 24,945 13,051
Net income for common stockholders $ 10,798 4,727
Less: dividends paid on Class B common stock 1,344 1,285
----- -----
Net income for Basic EPS $ 9,454 3,442
===== =====
Basic EPS $ .38 .26
=== ===
Diluted Earnings Per Share (EPS) Calculation:
Weighted average shares outstanding for Basic EPS 24,945 13,051
Redeemable operating partnership units 1,294 2,891
Class B common stock equivalents, if dilutive - -
Incremental shares to be issued under common
stock options using the Treasury method - 78
Contingent units or shares for the acquisition
of real estate 519 1,138
Total diluted shares 26,758 17,158
Net income for Basic EPS $ 9,454 3,442
Add: minority interest of redeemable partnership units 297 970
----- -----
Net income for Diluted EPS $ 9,751 4,412
===== =====
Diluted EPS $ .36 .26
===== ===
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
June 30, 1998
4. Earnings Per Share (continued)
The following summarizes the calculation of basic and diluted earnings
per share for the six months ended, June 30, 1998 and 1997(in thousands
except per share data):
1998 1997
---- ----
Basic Earnings Per Share (EPS) Calculation:
Weighted average common shares outstanding 24,837 12,127
Net income for common stockholders $ 30,354 8,764
Less: dividends paid on Class B common stock 2,689 2,570
----- -----
Net income for Basic EPS $ 27,665 6,194
====== =====
Basic EPS $ 1.11 .51
==== ===
Diluted Earnings Per Share (EPS) Calculation:
Weighted average shares outstanding for Basic EPS 24,837 12,127
Redeemable operating partnership units 1,135 1,926
Class B common stock equivalents, if dilutive (a) 2,975 -
Incremental shares to be issued under common
stock options using the Treasury method 27 89
Contingent units or shares for the acquisition
of real estate
428 759
Total diluted shares 29,402 14,901
Net income for Basic EPS $ 27,665 6,194
Add: dividends paid on Class B common stock 2,689 -
Add: minority interest of redeemable partnership units 892 1,603
------ -----
Net income for Diluted EPS 31,246 7,797
====== =====
Diluted EPS 1.06 .51
==== ===
(a) Class B common stock is not included in the 1997 calculation of
diluted earnings per share because it is anti-dilutive.
PART II
Item 1. Legal Proceedings
None
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (dollar amounts in thousands).
The following discussion should be read in conjunction with the accompanying
Consolidated Financial Statements and Notes thereto of Regency Realty
Corporation (the "Company") appearing elsewhere in this Form 10-Q, and with the
Company's Form 10-K dated December 31, 1997. Certain statements made in the
following discussion may constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
involve unknown risks and uncertainties of business and economic conditions
pertaining to the operation, acquisition, or development of shopping centers
including the retail business sector, and may cause actual results of the
Company in the future to significantly differ from any future results that may
be implied by such forward-looking statements.
Organization
The Company is a qualified real estate investment trust ("REIT") which began
operations in 1993. The Company invests in real estate primarily through general
partnership interest in Regency Centers, L.P., ("RCLP" or "Partnership") an
operating partnership in which the Company currently owns approximately 95% of
the outstanding partnership units ("Units"). Of the 124 properties included in
the Company's portfolio at June 30, 1998, 103 properties were owned either fee
simple or through partnerships interests by RCLP. At June 30, 1998, the Company
had an investment in real estate, at cost, of approximately $1.1 billion of
which $891 million or 81% was owned by RCLP.
Shopping Center Business
The Company's principal business is owning, operating and developing grocery
anchored neighborhood infill shopping centers. Infill refers to shopping centers
within a targeted investment market offering sustainable competitive advantages
such as barriers to entry resulting from zoning restrictions, growth management
laws, or limited new competition from development or expansions. The Company's
properties summarized by state including their gross leasable areas (GLA)
follows:
Location June 30, 1998 December 31, 1997
-------- ------------- -----------------
# Properties GLA % Leased # Properties GLA % Leased
------------- ------------- -------------- ------------- ---------- ----------
Florida 46 5,686,915 91.4% 45 5,267,894 91.5%
Georgia 27 2,715,918 91.7% 25 2,539,507 92.4%
North Carolina 12 1,241,784 97.2% 6 554,332 99.0%
Ohio 12 1,675,550 94.4% 2 629,920 89.1%
Alabama 5 516,080 99.9% 5 516,080 99.9%
Texas 5 450,267 89.6% - - -
Colorado 5 451,949 81.1% - - -
Tennessee 4 295,257 93.7% 3 208,386 98.5%
Kentucky 1 205,060 96.1% - - -
South Carolina 1 79,723 95.0% 1 79,743 84.3%
Virginia 2 197,324 98.1% - - -
Michigan 1 85,478 99.0% - - -
Missouri 1 82,498 98.4% - - -
Mississippi 2 185,061 97.8% 2 185,061 96.9%
-------------- ----------- -------- ------------ --------- --------
Total 124 13,868,864 92.7% 89 9,980,923 92.8%
============== =========== ======== ============ ========= =======
The Company is focused on building a platform of grocery anchored neighborhood
shopping centers because grocery stores provide convenience shopping of daily
necessities, foot traffic for adjacent local tenants, and should withstand
adverse economic conditions. The Company's current investment markets have
continued to offer strong stable economies, and accordingly, the Company expects
to realize growth in net income as a result of increasing occupancy in the
portfolio, increasing rental rates, development and acquisition of shopping
centers in targeted markets, and redevelopment of existing shopping centers. The
following table summarizes the four largest tenants occupying the Company's
shopping centers:
Average
Grocery Anchor Number of % of % of Annual Remaining Lease
Stores Total GLA Base Rent Term
Kroger * 37 16.0% 15.7% 20 yrs
Publix 31 9.6% 7.1% 12 yrs
Winn Dixie 17 5.6% 4.4% 11 yrs
Harris Teeter 5 1.7% 2.4% 16 yrs
*includes properties under development scheduled for opening in 1998
and 1999. Excluding development properties, Kroger would represent
12.8% of GLA and 12.0% of annual base rent.
Acquisition and Development of Shopping Centers
During the first six months of 1998, the Company acquired 24 shopping centers
for approximately $239.2 million (the "1998 Acquisitions"). In January, 1998,
the Company entered into an agreement to acquire the shopping centers from
various entities comprising the Midland Group ("Midland") consisting of 21
shopping centers plus a development pipeline of 11 shopping centers. Of the 32
centers to be acquired or developed, 31 are anchored by Kroger, or its
affiliate. Eight of the shopping centers included in the development pipeline
will be owned through a joint venture in which the Company will own less than a
50% interest upon completion of construction (the "JV Properties"). The
Company's investment in the properties acquired from Midland is $180.3 million
at June 30, 1998. As of June 30, 1998, the Company has acquired all but one of
the shopping centers and all the JV Properties. During 1998, 1999 and 2000,
including all payments made to date, the Company will pay approximately $213
million (including costs to be incurred on properties currently under
construction) for the 32 properties, and in addition may pay contingent
consideration of $23 million for the properties through the issuance of units of
RCLP, the payment of cash and the assumption of debt.
The Company acquired 35 shopping centers during 1997 (the "1997 Acquisitions")
for approximately $395.7 million. The 1997 Acquisitions include the acquisition
of 26 shopping centers from Branch Properties ("Branch") for $232.4 million in
March, 1997. The real estate acquired from Branch included 100% fee simple
interests in 20 shopping centers, and also partnership interests (ranging from
50% to 93%) in four partnerships with outside investors that owned six shopping
centers. The Company was also assigned the third party property management
contracts of Branch on approximately 3 million SF of shopping center GLA that
generate management fees and leasing commission revenues. Additional Units and
shares of common stock may be issued after the first, second and third
anniversaries of the closing with Branch (each an "Earn-Out Closing"), based on
the performance of the properties acquired. The formula for the earn-out
provides for calculating any increases in value on a property-by-property basis,
based on any increases in net income for the properties acquired, as of February
15 of the year of calculation. The earn-out is limited to 721,997 Units at the
first Earn-Out Closing and 1,020,061 Units for all Earn-Out Closings (including
the first Earn-Out Closing). During March, 1998, the Company issued 721,997
Units and shares valued at $18.2 million to the partners of Branch.
Liquidity and Capital Resources
Net cash provided by operating activities was $32.7 million and $24.9 million
for the six months ended June 30, 1998 and 1997, respectively, and is the
primary source of funds to pay dividends and distributions on outstanding common
stock and Units, maintain and operate the shopping centers, and pay interest and
scheduled principal reductions on outstanding debt. Changes in net cash provided
by operating activities is further discussed below under results from
operations. Net cash used in investing activities was $115 million and $ 125.1
million, during 1998 and 1997, respectively, as discussed above in Acquisitions
and Development of Shopping Centers. Net cash provided by financing activities
was $78.5 million and $105.3 million during 1998 and 1997, respectively.
The Company paid dividends and distributions of $25.4 million and $13.7 million,
during 1998 and 1997, respectively (see Funds from Operations below for further
discussion on payment of dividends). In 1998, the Company increased its
quarterly common dividend and distribution per Unit to $.44 per share vs. $.42
per share in 1997, had more outstanding common shares and Units in 1998 vs.
1997; and accordingly, expects dividends and distributions paid during 1998 to
increase substantially over 1997.
The Company's total indebtedness at June 30, 1998 and 1997 was approximately
$407.5 million and $356.4 million, respectively, of which $305.1 million and
$205.7 million had fixed interest rates averaging 7.5% and 7.4%, respectively.
The weighted average interest rate on total debt at June 30, 1998 and 1997 was
7.5% respectively. During 1998, the Company, as part of its acquisition
activities, assumed debt with a fair value of $113.9 million. The cash portion
of the purchase price for the 1998 and 1997 Acquisitions was financed from the
Company's line of credit (the "Line"). At June 30, 1998 and 1997, the balance of
the Line was $89.7 million and $111.3 million, respectively. The Line has a
variable rate of interest currently equal to the London Inter-bank Offered Rate
("LIBOR") plus 87.5 basis points.
In March, 1998, the Company entered into an agreement with the banks that
provide the Line to increase the unsecured commitment amount to $300 million,
provide for a $150 million competitive bid facility, and reduce the interest
rate on the line based upon achieving an investment grade rating. During the
first quarter of 1998, the Company received investment grade ratings from
Moody's of Baa2, Duff and Phelps of BBB, and S&P of BBB-.
On June 29, 1998, the Company, through RCLP, issued $80 million of 8.125% Series
A Cumulative Redeemable Preferred Units to an institutional investor in a
private placement. The issuance involved the sale of 1.6 million Preferred Units
for $50.00 per unit. The Preferred Units, which may be called at par on or after
June 25, 2003, have no stated maturity or mandatory redemption, and pay a
cumulative, quarterly dividend at an annualized rate of 8.125%. The Preferred
Units are not convertible into common stock of the Company. The net proceeds of
the offering were used to reduce the balance of the Line.
On July 17, 1998 the Company, through RCLP, completed a $100 million private
offering of senior notes at an effective interest rate of 7.17%. The Notes were
priced at 162.5 basis points over the current yield for seven year US Treasury
Bonds. The net proceeds of the offering were used to reduce the balance of the
Line.
The Company qualifies and intends to continue to qualify as a REIT under the
Internal Revenue Code. As a REIT, the Company is allowed to reduce taxable
income by all or a portion of its distributions to stockholders. As
distributions have exceeded taxable income, no provision for federal income
taxes has been made. While the Company intends to continue to pay dividends to
its stockholders, it also will reserve such amounts of cash flow as it considers
necessary for the proper maintenance and improvement of its real estate, while
still maintaining its qualification as a REIT.
The Company's real estate portfolio has grown substantially during 1998 as a
result of the acquisitions discussed above. The Company intends to continue to
acquire and develop shopping centers during 1998, and expects to meet the
related capital requirements from borrowings on the Line, and from additional
public equity and debt offerings. Because such acquisition and development
activities are discretionary in nature, they are not expected to burden the
Company's capital resources currently available for liquidity requirements. The
Company expects that cash provided by operating activities, unused amounts
available under the Line, and cash reserves are adequate to meet liquidity
requirements.
Results from Operations
Comparison of the Six Months Ended June 30, 1998 to 1997
Revenues increased $23.2 million or 55% to $65.5 million in 1998. The increase
was due primarily to the 1998 Acquisitions and 1997 Acquisitions providing
increases in revenues of $19.5 million during 1998. At June 30, 1998, the real
estate portfolio contained approximately 13.9 million SF, was 92.7% leased and
had average rents of $9.25 per SF. Minimum rent increased $17.1 million or 56%,
and recoveries from tenants increased $3.7 million or 52%. On a same property
basis (excluding the 1998 and 1997 Acquisitions) revenues decreased $.2 million
or 1%, primarily due to the sale of the office properties. Revenues from
property management, leasing, brokerage, and development services provided on
properties not owned by the Company were $5.4 million in 1998 compared to $3.7
million in 1997, the increase due primarily to fees earned from third party
property management and leasing contracts acquired as part of the acquisition of
Branch and Midland. During 1998, the Company sold four office buildings and a
parcel of land for $ 30.6 million, and recognized a gain on the sale of $10.7
million. As a result of these transactions the Company's real estate portfolio
is comprised entirely of neighborhood shopping centers. The proceeds from the
sale were applied toward the purchase of the 1998 acquisitions.
Operating expenses increased $11.0 million or 50% to $32.9 million in 1998.
Combined operating and maintenance, and real estate taxes increased $4.7 million
or 49% during 1998 to $14.3 million. The increases are due to the 1998 and 1997
Acquisitions generating operating and maintenance expenses and real estate tax
increases of $5.1 million during 1998. On a same property basis, operating and
maintenance expenses and real estate taxes decreased $445,000 or 6% due to the
sale of the four office properties. General and administrative expenses
increased 39% during 1998 to $7.3 million due to the hiring of new employees and
related office expenses necessary to manage the shopping centers acquired during
1998 and 1997, as well as, the shopping centers that the Company began managing
for third parties during 1997. Depreciation and amortization increased $4.3
million during 1998 or 61% primarily due to the 1998 and 1997 Acquisitions
generating $6.1 million in depreciation and amortization.
Interest expense increased to $12.9 million in 1998 from $10.2 million in 1997
or 26% due to increased average outstanding loan balances related to the
financing of the 1998 and 1997 Acquisitions on the Line and the assumption of
debt.
Net income for common stockholders was $30.4 million in 1998 vs. $8.8 million in
1997, a $21.6 million or 246% increase for the reasons previously described.
Diluted earnings per share in 1998 was $1.06. vs. $.51 in 1997 due to the
increase in net income combined with the dilutive impact from the increase in
weighted average common shares and equivalents of 14.5 million primarily due to
the acquisition of Branch and Midland, the issuance of shares to SC-USREALTY
during 1997, and the public offering completed in July, 1997.
Comparison of the Three Months Ended June 30, 1998 to 1997
Revenues increased $10.2 million or 41% to $34.8 million in 1998. The increase
was due primarily to the 1998 Acquisitions and 1997 Acquisitions providing
increases in revenues of $8.5 million during 1998. Minimum rent increased $7.3
million or 41%, and recoveries from tenants increased $1.9 million or 50%. On a
same property basis (excluding the 1998 and 1997 Acquisitions) revenues
decreased $.4 million or 3%, primarily due to the sale of the office properties.
Revenues from property management, leasing, brokerage, and development services
provided on properties not owned by the Company were $2.9 million in 1998
compared to $2.0 million in 1997, the increase due primarily to fees earned from
third party property management and leasing contracts acquired as part of the
acquisition of Branch.
Operating expenses increased $4.6 million or 37% to $17.1 million in 1998.
Combined operating and maintenance, and real estate taxes increased $2.1 million
or 39% during 1998 to $7.4 million. The increases are due to the 1998 and 1997
Acquisitions generating operating and maintenance expenses and real estate tax
increases of $2.4 million during 1998. On a same property basis, operating and
maintenance expenses and real estate taxes decreased $294,000 or 8% due to the
sale of the office properties. General and administrative expenses increased 28%
during 1998 to $3.8 million due to the hiring of new employees and related
office expenses necessary to manage the shopping centers acquired during 1998
and 1997, as well as, the shopping centers that the Company began managing for
third parties during 1997. Depreciation and amortization increased $1.7 million
during 1998 or 40% primarily due to the 1998 and 1997 Acquisitions generating
$3.4 million in depreciation and amortization.
Interest expense increased to $7.7 million in 1998 from $6.5 million in 1997 or
18% due to increased average outstanding loan balances related to the financing
of the 1998 and 1997 Acquisitions on the Line and the assumption of debt.
Funds from Operations
The Company considers funds from operations ("FFO"), as defined by the National
Association of Real Estate Investment Trusts as net income (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring and sales of income producing property held for
investment, plus depreciation and amortization of real estate, and after
adjustments for unconsolidated investments in real estate partnerships and joint
ventures, to be the industry standard for reporting the operations of real
estate investment trusts ("REITs"). Adjustments for investments in real estate
partnerships are calculated to reflect FFO on the same basis. While management
believes that FFO is the most relevant and widely used measure of the Company's
performance, such amount does not represent cash flow from operations as defined
by generally accepted accounting principles, should not be considered an
alternative to net income as an indicator of the Company's operating
performance, and is not indicative of cash available to fund all cash flow
needs. Additionally, the Company's calculation of FFO, as provided below, may
not be comparable to similarly titled measures of other REITs.
FFO increased by 89% from 1997 to 1998 as a result of the acquisition activity
discussed above under "Results of Operations". FFO for the six months ended June
30, 1998 and 1997 are summarized in the following table:
1998 1997
---- ----
Net income for common stockholders $ 30,354 8,764
Add (subtract):
Real estate depreciation and amortization 10,997 6,773
Gain on sale of operating property (9,844) -
Minority interests in net income of
redeemable partnership units 892 1,603
Funds from operations $ 32,399 17,140
========= ======
Cash flow provided by (used in):
Operating activities $ 32,685 24,932
Investing activities (115,041) (125,141)
Financing activities 78,502 105,328
New Accounting Standards and Accounting Changes
The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS 130"),
which is effective for fiscal years beginning after December 15, 1997. FAS 130
establishes standards for reporting total comprehensive income in financial
statements, and requires that Companies explain the differences between total
comprehensive income and net income. Management has adopted this statement in
1998. No differences between total comprehensive income and net income existed
in the interim financial statements reported at June 30, 1998 and 1997.
The FASB issued Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("FAS
131"), which is effective for fiscal years beginning after December 15, 1997.
FAS 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. Management does not believe that FAS 131
will effect its current disclosures.
Effective March 19, 1998, the Emerging Issues Task Force (EITF) ruled in Issue
97-11, "Accounting for Internal Costs Relating to Real Estate Property
Acquisitions", that only internal costs of identifying and acquiring
non-operating properties that are directly identifiable with the acquired
properties should be capitalized, and that all internal costs associated with
identifying and acquiring operating properties should be expensed as incurred.
The Company had previously capitalized direct costs associated with the
acquisition of operating properties as a cost of the real estate. The Company
has adopted EITF 97-11 effective March 19, 1998. During 1997, the Company
capitalized approximately $1.5 million of internal costs related to acquiring
operating properties. Through the effective date of EITF 97-11, the Company has
capitalized $474,000 of internal acquisition costs. For the remainder of 1998,
the Company expects to incur $1.1 million internal costs related to acquiring
operating properties which will be expensed.
On May 22, 1998, the EITF reached a consensus on Issue 98-9 "Accounting for
Contingent Rent in Interim Financial Periods". The EITF has stated that lessors
should defer recognition of contingent rental income that is based on meeting
specified targets until those specified targets are met and not ratably
throughout the year. The Company has previously recognized contingent rental
income (i.e. percentage rent) ratably over the year based on the historical
trends of its tenants. The Company has adopted Issue 98-9 prospectively and has
ceased the recognition of contingent rents until such time as its tenants have
achieved its specified target. The Company believes this will effect the interim
period in which percentage rent is recognized, however it will not have a
material impact on the annual recognition of percentage rent.
Environmental Matters
The Company like others in the commercial real estate industry, is subject to
numerous environmental laws and regulations and the operation of dry cleaning
plants at the Company's shopping centers is the principal environmental concern.
The Company believes that the dry cleaners are operating in accordance with
current laws and regulations and has established procedures to monitor their
operations. Based on information presently available, no additional
environmental accruals were made and management believes that the ultimate
disposition of currently known matters will not have a material effect on the
financial position, liquidity, or operations of the Company.
Inflation
Inflation has remained relatively low during 1998 and 1997 and has had a minimal
impact on the operating performance of the shopping centers, however,
substantially all of the Company's long-term leases contain provisions designed
to mitigate the adverse impact of inflation. Such provisions include clauses
enabling the Company to receive percentage rentals based on tenants' gross
sales, which generally increase as prices rise, and/or escalation clauses, which
generally increase rental rates during the terms of the leases. Such escalation
clauses are often related to increases in the consumer price index or similar
inflation indices. In addition, many of the Company's leases are for terms of
less than ten years, which permits the Company to seek increased rents upon
re-rental at market rates. Most of the Company's leases require the tenants to
pay their share of operating expenses, including common area maintenance, real
estate taxes, insurance and utilities, thereby reducing the Company's exposure
to increases in costs and operating expenses resulting from inflation.
Year 2000 System Compliance
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" problem and is in
process of resolving the issue. During 1997, the Company converted its operating
system, and its general accounting and lease administration software systems to
versions containing modifications that corrected for the Year 2000 problem. The
Company will continue to assess its other internal systems and reprogram or
upgrade as necessary, however, the cost to convert remaining systems is not
expected to have a material effect on the Company's financial position. The
Company is also reviewing the Year 2000 system conversions of other companies of
which it does business in order to determine their compliance.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting for Regency Realty Corporation was held on May 26,
1998 for the following purpose:
To elect one Class III Director, one Class I Director and four
Class II Directors to serve terms expiring at the annual
meeting of shareholders to be held in 1999, 2000, and 2001,
respectively, and until their successors have been elected and
qualified.
To consider and vote on a proposed amendment to the Company's
Articles of Incorporation that would apply to the Company's
major beneficial shareholder, Security Capital U.S. Realty and
its subsidiary (collectively, "SC-USREALTY'), the same transfer
restrictions that currently apply to all other Non-U.S. Persons
(as defined in the Articles of Incorporation).
To transact such other business as may properly come before the
meeting or any adjournment thereof.
All items were approved with total outstanding votes received of
22,006,051. The votes were as follows: 18,365,301 voting FOR and
19,712 ABSTAIN for Item 1, 18,343,286 votes FOR, 23,556 AGAINST
and 18,170 ABSTAIN for Item 2 and 18,385,023 FOR Item 3.
Accordingly, the proposals were passed.
5. Other Information
The deadline for submission of shareholder proposals pursuant to Rule
14a-8 under the Securities Exchange Act of 1934, as amended
("Rule14a-8"), for inclusion in the Company's proxy statement for its
1999 Annual Meeting of Shareholders is December 16, 1998. After March
1, 1999, notice to the Company of a shareholder proposal submitted
otherwise than pursuant to Rule 14a-8 will be considered untimely, and
the persons named in proxies solicited by the Company's Board of
Directors for its 1999 Annual Meeting of Shareholders may exercise
discretionary voting power with respect to any such proposal as to
which the Company does not receive timely notice.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
3. Articles of Incorporation
(a) Restated Articles of Incorporation of Regency Realty
Corporation as amended to date.
(i) Amendment to Restated Articles of Incorporation of Regency
Realty Corporation as amended to date.
4. Instruments defining the rights of security holders, including
indentures
Indenture dated as of July 20, 1998 among RCLP, the Guarantors
named therein and First Union National Bank, as trustee,
incorporated by reference to Exhibit 10.3 to the Regency
Centers, L.P. Form 10 Registration Statement.
Material Contracts
Item 10. Material contracts
Purchase and Sale Agreement, dated March 10, 1998 between
Faison-Fleming Island Limited Partnership, a Florida limited
partnership, as Seller, and RRC Acquisitions, Two, Inc. a Florida
corporation, its designees, successors and assigns ("Buyer"), relating
to the acquisition of Fleming Island Shopping Center.
10.1
Exchange and Registration Rights Agreement dated as of July 15, 1998
among RCLP, the Guarantors named therein and the Purchasers named
therein, incorporated by reference to Exhibit 10.4 to the Partnership's
Form 10 Registration Statement.
10.2 Registration Rights Agreement dated as of June 25, 1998 between
Regency Realty Corporation and the Unit Holder named therein.
Reports on Form 8-K:
A report on Form 8-K was filed on July 20, 1998 reporting
under Item 5. Acquisition of five shopping centers to include
audited financial statements and December 31, 1997 audited
financial statements for the Midland Group and pro forma
condensed consolidated financial statements of operations for
the three months ended March 31, 1998 and the year ended
December 31, 1997.
27. Financial Data Schedule
June 30, 1998
Restated June 30, 1997
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 14, 1998 REGENCY REALTY CORPORATION
By: /s/ J. Christian Leavitt
Vice President, Treasurer
and Secretary
REGENCY REALTY CORPORATION
AMENDMENT TO ARTICLES OF INCORPORATION
This corporation was incorporated on July 8, 1993 effective July 9,
1993 under the name Regency Realty Corporation. Pursuant to Sections 607.1001,
607.1003, 607.1004 and 607.1006, Florida Business Corporation Act, amendments to
Section 5.14 of the Articles of Incorporation, as restated on November 4, 1996,
were approved by the Board of Directors at a meeting held on December 5, 1997
and adopted by the shareholders of the corporation on May 26, 1998. The only
voting group entitled to vote on the adoption of the amendment to Section 5.14
of the Articles of Incorporation consists of the holders of the corporation's
common stock. The number of votes cast by such voting group was sufficient for
approval by that voting group. Section 5.14 of the Restated Articles of
Incorporation of the Company is hereby amended in its entirety to read as
follows:
"Section 5.14 Certain Transfers to Non-U.S. Persons Void. Any
Transfer of shares of Capital Stock of the Corporation to any Person on
or after the effective date of this Amendment shall be void ab initio
to the fullest extent permitted under applicable law and the intended
transferee shall be deemed never to have had an interest therein if the
Transfer:
1. occurs prior to the 15% Termination Date and
results in the fair market value of the shares of Capital
Stock of the Corporation owned directly or indirectly by
Non-U.S. Persons (other than a Special Shareholder who is a
Non-U.S. Person) comprising five percent (5%) or more of the
fair market value of the issued and outstanding shares of
Capital Stock of the Corporation; or
2. results in the fair market value of the shares of
Capital Stock of the Corporation owned directly or indirectly
by Non-U.S. Persons (including Special Shareholders who are
Non-U.S. Persons) comprising fifty percent (50%) or more of
the fair market value of the issued and outstanding shares of
Capital Stock of the Corporation.
If either of the foregoing provisions is determined to be void or
invalid by virtue of any legal decision, statute, rule or regulation,
then the shares held or purported to be held by the transferee shall,
automatically and without the necessity of any action by the Board of
Directors or otherwise:
(i) be prohibited from being voted at any time such
securities result in the fair market value of the shares of
Capital Stock of the Corporation owned directly or indirectly
by Non-U.S. Persons (other than Special Shareholders who are
Non-U.S. Persons) or by Non-U.S. Persons (including Special
Shareholders who are Non-U.S. Persons) comprising five percent
(5%) or more or fifty percent (50%) or more, respectively, of
the fair market value of the issued and outstanding shares of
Capital Stock of the Corporation;
(ii) not be entitled to dividends with respect thereto;
(iii) be considered held in trust by the transferee
for the benefit of the Corporation and shall be subject to the
provisions of Section 5.3(c) as if such shares of Capital
Stock were the subject of a Transfer that violates Section
5.2; and
(iv) not be considered outstanding for the purpose of
determining a quorum at any meeting of shareholders.
The Special Shareholders may, in their sole discretion, with prior
notice to the Board of Directors, waive, alter or revise in writing all
or any portion of the Transfer restrictions set forth in this Section
5.14 from and after the date on which such notice is given, on such
terms and conditions as they in their sole discretion determine."
IN WITNESS WHEREOF, the undersigned Chairman of this corporation has
executed these Articles of Amendment this day of May, 1998.
Martin E. Stein, Jr., Chairman and Chief
Executive Officer
C:\WP51\REIT\CORP\AMENDMNT.598|8/13/98|JAXC14|KRP:krp
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF
REGENCY REALTY CORPORATION
DESIGNATING THE PREFERENCES, RIGHTS AND
LIMITATIONS OF 1,600,000 SHARES OF
8.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
$0.01 Par Value
Pursuant to Section 607.0602 of the Florida Business
Corporation Act ("FBCA"), Regency Realty Corporation, a Florida corporation (the
"Corporation"), does hereby certify that:
FIRST: Pursuant to the authority expressly vested in the Board
of Directors of the Corporation by Section 4.2 of the Amended and Restated
Articles of Incorporation of the Corporation (the "Charter") and Section
607.0602 of the FBCA, the Board of Directors of the Corporation (the "Board of
Directors"), by resolutions duly adopted on May 26, 1998 has classified
1,600,000 shares of the authorized but unissued Preferred Stock par value $.01
per share ("Preferred Stock") as a separate class of Preferred Stock, authorized
the issuance of a maximum of 1,600,000 shares of such class of Preferred Stock,
set certain of the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, terms and conditions
of redemption and other terms and conditions of such class of Preferred Stock,
and pursuant to the powers contained in the Bylaws of the Corporation and the
FBCA, appointed a committee (the "Committee") of the Board of Directors and
delegated to the Committee, to the fullest extent permitted by the FBCA and the
Charter and Bylaws of the Corporation, all powers of the Board of Directors with
respect to designating, and setting all other preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of, such
class of Preferred Stock determining the number of shares of such class of
Preferred Stock (not in excess of the aforesaid maximum number) to be issued and
the consideration and other terms and conditions upon which such shares of such
class of Preferred Stock are to be issued. Shareholder approval was not required
under the Charter with respect to such designation.
2
NYDOCS03/321456 7
SECOND: Pursuant to the authority conferred upon the Committee
as aforesaid, the Committee has unanimously adopted resolutions designating the
aforesaid class of Preferred Stock as the A8.125% Series A Cumulative Redeemable
Preferred Stock," setting the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, terms and
conditions of redemption and other terms and conditions of such 8.125% Series A
Cumulative Redeemable Preferred Stock (to the extent not set by the Board of
Directors in the resolutions referred to in Article FIRST of these Articles of
Amendment) and authorizing the issuance of up to 1,600,000 shares of 8.125%
Series A Cumulative Redeemable Preferred Stock.
THIRD: The class of Preferred Stock of the Corporation created
by the resolutions duly adopted by the Board of Directors of the Corporation and
by the Committee and referred to in Articles FIRST and SECOND of these Articles
of Amendment shall have the following designation, number of shares,
preferences, conversion and other rights, voting powers, restrictions and
limitation as to dividends, qualifications, terms and conditions of redemption
and other terms and conditions:
Section 1.Designation and Number. A series of Preferred Stock, designated the
"8.125% Series A Cumulative Redeemable Preferred Stock" (the "Series A Preferred
Stock") is hereby established. The number of shares of Series A Preferred
Stock shall be 1,600,000.
Section 2. Rank. The Series A Preferred Stock will, with
respect to distributions or rights upon voluntary or involuntary liquidation,
winding-up or dissolution of the Corporation, or both, rank senior to all
classes or series of Common Stock (as defined in the Charter) and to all classes
or series of equity securities of the Corporation now or hereafter authorized,
issued or outstanding, other than any class or series of equity securities of
the Corporation expressly designated as ranking on a parity with or senior to
the Series A Preferred Stock as to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Corporation, or both.
For purposes of these Articles of Amendment, the term "Parity Preferred Stock"
shall be used to refer to any class or series of equity securities of the
Corporation now or hereafter authorized, issued or outstanding expressly
designated by the Corporation to rank on a parity with Series A Preferred Stock
with respect to distributions or rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Corporation, or both, as the
context may require, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or conversion rights or exchange
rights shall be different from those of the Series A Preferred Stock. The term
"equity securities" does not include debt securities, which will rank senior to
the Series A Preferred Stock prior to conversion.
Section 3. Distributions. (a) Payment of Distributions.
Subject to the rights of holders of Parity Preferred Stock as to the payment of
distributions and holders of equity securities issued after the date hereof in
accordance herewith ranking senior to the Series A Preferred Stock as to payment
of distributions, holders of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation,
out of funds legally available for the payment of distributions, cumulative cash
distributions at the rate per annum of 8.125% of the $50.00 liquidation
preference per share of Series A Preferred Stock. Such distributions shall be
cumulative, shall accrue from the original date of issuance and will be payable
in cash (A) quarterly in arrears, on or before March 31, June 30, September 30
and December 31 of each year commencing on the first of such dates to occur
after the original date of issuance and, (B) in the event of a redemption, on
the redemption date (each a "Preferred Stock Distribution Payment Date"). The
amount of the distribution payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months and for any period shorter than a full
quarterly period for which distributions are computed, the amount of the
distribution payable will be computed on the basis of the actual number of days
elapsed in such a 30-day month. If any date on which distributions are to be
made on the Series A Preferred Stock is not a Business Day (as defined herein),
then payment of the distribution to be made on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. Distributions on the Series A Preferred Stock will be made to the
holders of record of the Series A Preferred Stock on the relevant record dates
to be fixed by the Board of Directors of the Corporation, which record dates
shall be not less than 10 days and not more than 30 Business Days prior to the
relevant Preferred Stock Distribution Payment Date (each a "Distribution Record
Date"). Notwithstanding anything to the contrary set forth herein, each share of
Series A Preferred Stock shall also continue to accrue all accrued and unpaid
distributions, whether or not declared, up to the exchange date on any Series A
Preference Unit (as defined in the Second Amended and Restated Agreement of
Limited Partnership of Regency Centers, L.P., dated as March 5, 1998 as amended
by that certain Amendment No. One to Second Amendment and Restatement of
Agreement of Limited Partnership dated as of June 25, 1998 (as amended the
APartnership Agreement")) validly exchanged into such share of Series A
Preferred Stock in accordance with the provisions of such Partnership Agreement.
The term "Business Day" shall mean each day, other than a
Saturday or a Sunday, which is not a day on which banking institutions in New
York, New York are authorized or required by law, regulation or executive order
to close.
(b) Limitation on Distributions. No distribution on the Series
A Preferred Stock shall be declared or paid or set apart for payment by the
Corporation at such time as the terms and provisions of any agreement of the
Corporation (other than any agreement with a holder or affiliate of holder of
Capital Stock of the Corporation) relating to its indebtedness, prohibit such
declaration, payment or setting apart for payment or provide that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration, payment or setting
apart for payment shall be restricted or prohibited by law. Nothing in this
Section 3(b) shall be deemed to modify or in any manner limit the provisions of
Section 3(c) and 3(d).
(c) Distributions Cumulative. Distributions on the Series A
Preferred Stock will accrue whether or not the terms and provisions of any
agreement of the Corporation, including any agreement relating to its
indebtedness at any time prohibit the current payment of distributions, whether
or not the Corporation has earnings, whether or not there are funds legally
available for the payment of such distributions and whether or not such
distributions are authorized or declared. Accrued but unpaid distributions on
the Series A Preferred Stock will accumulate as of the Preferred Stock
Distribution Payment Date on which they first become payable. Distributions on
account of arrears for any past distribution periods may be declared and paid at
any time, without reference to a regular Preferred Stock Distribution Payment
Date to holders of record of the Series A Preferred Stock on the record date
fixed by the Board of Directors which date shall be not less than 10 days and
not more than 30 Business Days prior to the payment date. Accumulated and unpaid
distributions will not bear interest.
(d) Priority as to Distributions. (i) So long as any Series A
Preferred Stock is outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Common Stock or any class or series of other stock of the
Corporation ranking junior as to the payment of distributions to the Series A
Preferred Stock (such Common Stock or other junior stock, collectively, "Junior
Stock"), nor shall any cash or other property be set aside for or applied to the
purchase, redemption or other acquisition for consideration of any Series A
Preferred Stock, any Parity Preferred Stock with respect to distributions or any
Junior Stock, unless, in each case, all distributions accumulated on all Series
A Preferred Stock and all classes and series of outstanding Parity Preferred
Stock as to payment of distributions have been paid in full. The foregoing
sentence will not prohibit (i) distributions payable solely in Junior Stock,
(ii) the conversion of Series A Preferred Stock, Junior Stock or Parity
Preferred Stock into stock of the Corporation ranking junior to the Series A
Preferred Stock as to distributions, and (iii) purchases by the Corporation of
such Series A Preferred Stock or Parity Preferred Stock with respect to
distributions or Junior Stock pursuant to Article 5 of the Charter to the extent
required to preserve the Corporation=s status as a real estate investment trust.
(ii)So long as distributions have not been paid in full (or a sum sufficient for
such full payment is not irrevocably deposited in trust for payment) upon the
Series A Preferred Stock, all distributions authorized and declared on the
Series A Preferred Stock and all classes or series of outstanding Parity
Preferred Stock with respect to distributions shall be authorized and declared
so that the amount of distributions authorized and declared per share of Series
A Preferred Stock and such other classes or series of Parity Preferred Stock
shall in all cases bear to each other the same ratio that accrued distributions
per share on the Series A Preferred Stock and such other classes or series of
Parity Preferred Stock (which shall not include any accumulation in respect of
unpaid distributions for prior distribution periods if such class or series of
Parity Preferred Stock do not have cumulative distribution rights) bear to each
other.
(e) No Further Rights. Holders of Series A Preferred Stock
shall not be entitled to any distributions, whether payable in cash, other
property or otherwise, in excess of the full cumulative distributions described
herein.
Section 4. Liquidation Preference. (a) Payment of Liquidating
Distributions. Subject to the rights of holders of Parity Preferred Stock with
respect to rights upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation and subject to equity securities ranking senior to
the Series A Preferred Stock with respect to rights upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, the
holders of Series A Preferred Stock shall be entitled to receive out of the
assets of the Corporation legally available for distribution or the proceeds
thereof, after payment or provision for debts and other liabilities of the
Corporation, but before any payment or distributions of the assets shall be made
to holders of Common Stock or any other class or series of shares of the
Corporation that ranks junior to the Series A Preferred Stock as to rights upon
liquidation, dissolution or winding-up of the Corporation, an amount equal to
the sum of (i) a liquidation preference of $50 per share of Series A Preferred
Stock, and (ii) an amount equal to any accumulated and unpaid distributions
thereon, whether or not declared, to the date of payment. In the event that,
upon such voluntary or involuntary liquidation, dissolution or winding-up, there
are insufficient assets to permit full payment of liquidating distributions to
the holders of Series A Preferred Stock and any Parity Preferred Stock as to
rights upon liquidation, dissolution or winding-up of the Corporation, all
payments of liquidating distributions on the Series A Preferred Stock and such
Parity Preferred Stock shall be made so that the payments on the Series A
Preferred Stock and such Parity Preferred Stock shall in all cases bear to each
other the same ratio that the respective rights of the Series A Preferred Stock
and such other Parity Preferred Stock (which shall not include any accumulation
in respect of unpaid distributions for prior distribution periods if such Parity
Preferred Stock do not have cumulative distribution rights) upon liquidation,
dissolution or winding-up of the Corporation bear to each other.
(b) Notice. Written notice of any such voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, stating
the payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be given by (i) fax
and (ii) by first class mail, postage pre-paid, not less than 30 and not more
that 60 days prior to the payment date stated therein, to each record holder of
the Series A Preferred Stock at the respective addresses of such holders as the
same shall appear on the share transfer records of the Corporation.
(c) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series A
Preferred Stock will have no right or claim to any of the remaining assets of
the Corporation.
(d) Consolidation, Merger or Certain Other Transactions. The
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the Corporation to, or the consolidation or merger or
other business combination of the Corporation with or into, any corporation,
trust or other entity (or of any corporation, trust or other entity with or into
the Corporation) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Corporation.
(e) Permissible Distributions. In determining whether a
distribution (other than upon voluntary liquidation) by dividend, redemption or
other acquisition of shares of stock of the Corporation or otherwise is
permitted under the FBCA, no effect shall be given to amounts that would be
needed, if the Corporation were to be dissolved at the time of the distribution,
to satisfy the preferential rights upon dissolution of holders of shares of
stock of the Corporation whose preferential rights upon dissolution are superior
to those receiving the distribution.
Section 5. Optional Redemption. (a) Right of Optional
Redemption. The Series A Preferred Stock may not be redeemed prior to June 25,
2003. On or after such date, the Corporation shall have the right to redeem the
Series A Preferred Stock, in whole or in part, at any time or from time to time,
upon not less than 30 nor more than 60 days' written notice, at a redemption
price, payable in cash, equal to $50 per share of Series A Preferred Stock plus
accumulated and unpaid distributions, whether or nor declared, to the date of
redemption. If fewer than all of the outstanding shares of Series A Preferred
Stock are to be redeemed, the shares of Series A Preferred Stock to be redeemed
shall be selected pro rata (as nearly as practicable without creating fractional
shares).
(b)Limitation on Redemption. (i) The redemption price of the Series A Preferred
Stock (other than the portion thereof consisting of accumulated but unpaid
distributions) will be payable solely out of sale proceeds of capital stock of
the Corporation and from no other source. For purposes of the preceding
sentence, "capital stock" means any equity securities (including Common Stock
and Preferred Stock), shares, participation or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable for equity securities) or options to purchase any of the
foregoing.
(ii)The Corporation may not redeem fewer than all of the outstanding shares of
Series A Preferred Stock unless all accumulated and unpaid distributions have
been paid on all Series A Preferred Stock for all quarterly distribution periods
terminating on or prior to the date of redemption.
(c) Procedures for Redemption. (i) Notice of redemption will
be (i) faxed, and (ii) mailed by the Corporation, postage prepaid, not less than
30 nor more than 60 days prior to the redemption date, addressed to the
respective holders of record of the Series A Preferred Stock to be redeemed at
their respective addresses as they appear on the transfer records of the
Corporation. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series A Preferred Stock
except as to the holder to whom such notice was defective or not given. In
addition to any information required by law or by the applicable rules of any
exchange upon which the Series A Preferred Stock may be listed or admitted to
trading, each such notice shall state: (i) the redemption date, (ii) the
redemption price, (iii) the number of shares of Series A Preferred Stock to be
redeemed, (iv) the place or places where such shares of Series A Preferred Stock
are to be surrendered for payment of the redemption price, (v) that
distributions on the Series A Preferred Stock to be redeemed will cease to
accumulate on such redemption date and (vi) that payment of the redemption price
and any accumulated and unpaid distributions will be made upon presentation and
surrender of such Series A Preferred Stock. If fewer than all of the shares of
Series A Preferred Stock held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of shares of Series A
Preferred Stock held by such holder to be redeemed.
(ii) If the Corporation gives a notice of redemption in respect of Series A
Preferred Stock (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Corporation will deposit irrevocably in
trust for the benefit of the Series A Preferred Stock being redeemed funds
sufficient to pay the applicable redemption price, plus any accumulated and
unpaid distributions, whether or not declared, if any, on such shares to the
date fixed for redemption, without interest, and will give irrevocable
instructions and authority to pay such redemption price and any accumulated and
unpaid distributions, if any, on such shares to the holders of the Series A
Preferred Stock upon surrender of the certificate evidencing the Series A
Preferred Stock by such holders at the place designated in the notice of
redemption. If fewer than all Series A Preferred Stock evidenced by any
certificate is being redeemed, a new certificate shall be issued upon surrender
of the certificate evidencing all Series A Preferred Stock, evidencing the
unredeemed Series A Preferred Stock without cost to the holder thereof. On and
after the date of redemption, distributions will cease to accumulate on the
Series A Preferred Stock or portions thereof called for redemption, unless the
Corporation defaults in the payment thereof. If any date fixed for redemption of
Series A Preferred Stock is not a Business Day, then payment of the redemption
price payable on such date will be made on the next succeeding day that is a
Business Bay (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
payment of the redemption price or any accumulated or unpaid distributions in
respect of the Series A Preferred Stock is improperly withheld or refused and
not paid by the Corporation, distributions on such Series A Preferred Stock will
continue to accumulate from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the applicable redemption price and any
accumulated and unpaid distributions.
(d) Status of Redeemed Stock. Any Series A Preferred Stock
that shall at any time have been redeemed shall after such redemption, have the
status of authorized but unissued Preferred Stock, without designation as to
class or series until such shares are once more designated as part of a
particular class or series by the Board of Directors.
Section 6. Voting Rights.(a) General. Holders of the Series A Preferred Stock
will not have any voting rights, except as set forth below.
(b) Right to Elect Directors. (i) If at any time distributions
shall be in arrears (which means that, as to any such quarterly distributions,
the same have not been paid in full) with respect to six (6) prior quarterly
distribution periods (including quarterly periods on the Series A Preferred
Units prior to the exchange into Series A Preferred Stock), whether or not
consecutive, and shall not have been paid in full (a "Preferred Distribution
Default"), the authorized number of members of the Board of Directors shall
automatically be increased by two and the holders of record of such Series A
Preferred Stock, voting together as a single class with the holders of each
class or series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable, will be entitled to fill the vacancies so
created by electing two additional directors to serve on the Corporation's Board
of Directors (the "Preferred Stock Directors") at a special meeting called in
accordance with Section 6(b)(ii) at the next annual meeting of stockholders, and
at each subsequent annual meeting of stockholders or special meeting held in
place thereof, until all such distributions in arrears and distributions for the
current quarterly period on the Series A Preferred Stock and each such class or
series of Parity Preferred Stock have been paid in full.
(ii) At any time when such voting rights shall have vested, a
proper officer of the Corporation shall call or cause to be called, upon written
request of holders of record of at least 10% of the outstanding Shares of Series
A Preferred Stock, a special meeting of the holders of Series A Preferred Stock
and all the series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable (collectively, the AParity Securities@) by
mailing or causing to be mailed to such holders a notice of such special meeting
to be held not less than ten and not more than 45 days after the date such
notice is given. The record date for determining holders of the Parity
Securities entitled to notice of and to vote at such special meeting will be the
close of business on the third Business Day preceding the day on which such
notice is mailed. At any such special meeting, all of the holders of the Parity
Securities, by plurality vote, voting together as a single class without regard
to series will be entitled to elect two directors on the basis of one vote per
$25.00 of liquidation preference to which such Parity Securities are entitled by
their terms (excluding amounts in respect of accumulated and unpaid dividends)
and not cumulatively. The holder or holders of one-third of the Parity
Securities then outstanding, present in person or by proxy, will constitute a
quorum for the election of the Preferred Stock Directors except as otherwise
provided by law. Notice of all meetings at which holders of the Series A
Preferred Shares shall be entitled to vote will be given to such holders at
their addresses as they appear in the transfer records. At any such meeting or
adjournment thereof in the absence of a quorum, subject to the provisions of any
applicable law, a majority of the holders of the Parity Securities present in
person or by proxy shall have the power to adjourn the meeting for the election
of the Preferred Stock Directors, without notice other than an announcement at
the meeting, until a quorum is present. If a Preferred Distribution Default
shall terminate after the notice of a special meeting has been given but before
such special meeting has been held, the Corporation shall, as soon as
practicable after such termination, mail or cause to be mailed notice of such
termination to holders of the Series A Preferred Shares that would have been
entitled to vote at such special meeting.
(iii) If and when all accumulated distributions and the
distribution for the current distribution period on the Series A Preferred Stock
shall have been paid in full or a sum sufficient for such payment is irrevocably
deposited in trust for payment, the holders of the Series A Preferred Stock
shall be divested of the voting rights set forth in Section 6(b) herein (subject
to revesting in the event of each and every Preferred Distribution Default) and,
if all distributions in arrears and the distributions for the current
distribution period have been paid in full or set aside for payment in full on
all other classes or series of Parity Preferred Stock upon which like voting
rights have been conferred and are exercisable, the term and office of each
Preferred Stock Director so elected shall terminate. Any Preferred Stock
Director may be removed at any time with or without cause by the vote of, and
shall not be removed otherwise than by the vote of, the holders of record of a
majority of the outstanding Series A Preferred Stock when they have the voting
rights set forth in Section 6(b) (voting separately as a single class with all
other classes or series of Parity Preferred Stock upon which like voting rights
have been conferred and are exercisable). So long as a Preferred Distribution
Default shall continue, any vacancy in the office of a Preferred Stock Director
may be filled by written consent of the Preferred Stock Director remaining in
office, or if none remains in office, by a vote of the holders of record of a
majority of the outstanding Series A Preferred Stock when they have the voting
rights set forth in Section 6(b) (voting separately as a single class with all
other classes or series of Parity Preferred Stock upon which like voting rights
have been conferred and are exercisable). The Preferred Stock Directors shall
each be entitled to one vote per director on any matter.
(c) Certain Voting Rights. So long as any Series A Preferred
Stock remains outstanding, the Corporation shall not, without the affirmative
vote of the holders of at least two-thirds of the Series A Preferred Stock
outstanding at the time (i) designate or create, or increase the authorized or
issued amount of, any class or series of shares ranking prior to the Series A
Preferred Stock with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any authorized shares of
the Corporation into any such shares, or create, authorize or issue any
obligations or securities convertible into or evidencing the right to purchase
any such shares, (ii) designate or create, or increase the authorized or issued
amount of, any Parity Preferred Stock or reclassify any authorized shares of the
Corporation into any such shares, or create, authorize or issue any obligations
or securities convertible into or evidencing the right to purchase any such
shares, but only to the extent such Parity Preferred Stock is issued to an
affiliate of the Corporation (other than Security Capital U.S. Realty, Security
Capital Holdings, S.A. or their affiliates), or (iii) either (A) consolidate,
merge into or with, or convey, transfer or lease its assets substantially as an
entirety, to any corporation or other entity, or (B) amend, alter or repeal the
provisions of the Corporation=s Charter (including these Articles of Amendment)
or By-laws, whether by merger, consolidation or otherwise, in each case that
would materially and adversely affect the powers, special rights, preferences,
privileges or voting power of the Series A Preferred Stock or the holders
thereof; provided, however, that with respect to the occurrence of a merger,
consolidation or a sale or lease of all of the Corporation=s assets as an
entirety, so long as (a) the Corporation is the surviving entity and the Series
A Preferred Stock remains outstanding with the terms thereof unchanged, or (b)
the resulting, surviving or transferee entity is a corporation organized under
the laws of any state and substitutes the Series A Preferred Stock for other
preferred stock having substantially the same terms and same rights as the
Series A Preferred Stock, including with respect to distributions, voting rights
and rights upon liquidation, dissolution or winding-up, then the occurrence of
any such event shall not be deemed to materially and adversely affect such
rights, privileges or voting powers of the holders of the Series A Preferred
Stock and no vote of the Series A Preferred Stock shall be required in such case
and provided further that any increase in the amount of authorized Preferred
Stock or the creation or issuance of any other class or series of Preferred
Stock, or any increase in an amount of authorized shares of each class or
series, in each case ranking either (a) junior to the Series A Preferred Stock
with respect to payment of distributions and the distribution of assets upon
liquidation, dissolution or winding-up, or (b) on a parity with the Series A
Preferred Stock with respect to payment of distributions and the distribution of
assets upon liquidation, dissolution or winding-up to the extent such Preferred
Stock is not issued to a affiliate of the Corporation, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers and no vote of the Series A Preferred Stock shall be required in such
case.
Section 7. No Conversion Rights. The holders of the Series A
Preferred Stock shall not have any rights to convert such shares into shares of
any other class or series of stock or into any other securities of, or interest
in, the Corporation.
Section 8. No Sinking Fund. No sinking fund shall be established for the
retirement or redemption of Series A Preferred Stock.
Section 9. No Preemptive Rights. No holder of the Series A
Preferred Stock of the Corporation shall, as such holder, have any preemptive
rights to purchase or subscribe for additional shares of stock of the
Corporation or any other security of the Corporation which it may issue or sell.
FOURTH: The Series A Preferred Stock have been classified and designated by the
Board of Directors under the authority contained in the Charter.
FIFTH: These Articles of Amendment have been approved by the Board of Directors
in the manner and by the vote required by law.
NYDOCS03/321456 7
SIXTH: The undersigned President of the Corporation
acknowledges these Articles of Amendment to be the corporate act of the
Corporation and, as to all matters or facts required to be verified under oath,
the undersigned President acknowledges that to the best of his knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties for perjury.
[Signature Page Follows]
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment to be executed under seal in its name and on its behalf by its
Executive Vice President and attested to by its Secretary on this 24th day of
June, 1998.
REGENCY REALTY CORPORATION
By:_____________________________
Name: Bruce M. Johnson
Title: Executive Vice President
[SEAL]
ATTEST:
----------------------------
Name: J. Christian Leavitt
Title: Secretary
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of June 25, 1998
(this "Agreement"), is entered into by and between Regency Realty Corporation, a
Florida corporation (the "Company" or the "REIT") and the unit holder whose name
is set forth on the signature page hereto ("Unit Holder").
RECITALS
WHEREAS, in connection with the offering of 1,600,000 8.125%
Series A Cumulative Redeemable Preferred Units (the "OP Units") of Regency
Centers, L.P., a Delaware limited partnership ( the "Operating Partnership"),
Belair Capital Fund LLC, a Massachusetts limited liability company (the
"Contributor"), contributed to the Operating Partnership $80,000,000 in return
for the OP Units on terms and conditions set forth in the Contribution
Agreement, dated as of June 25, 1998 (the "Contribution Agreement"), by and
among the Company, the Operating Partnership and the Contributor;
WHEREAS, the Unit Holder will receive the OP Units in exchange
for cash contributed to the Operating Partnership;
WHEREAS, pursuant to the Partnership Agreement (as defined
below), the OP Units owned by the Unit Holder will be redeemable for cash or
exchangeable for shares of the Company's 8.125% Series A Cumulative Redeemable
Preferred Stock (the "Preferred Stock") upon the terms and subject to the
conditions contained therein; and
WHEREAS, in order to induce the Contributor to enter into the
Contribution Agreement, the Company and the Operating Partnership have agreed to
enter into this Agreement and to provide registration rights set forth herein to
the Contributor and any subsequent holder or holders of the OP Units.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
NYDOCS03/322368 6
1
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. In addition to the definitions set forth above, the
following terms, as used herein, shall have the following meanings:
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Amendment" means that certain Amendment No. 1 to Second
Amended and Restated Agreement of Limited Partnership, dated as of June 25,
1998, which amends the Partnership Agreement.
"Agreement" means this Registration Rights Agreement, as it
may be amended, supplemented or restated from time to time.
"Articles of Incorporation" means the Articles of Amendment
and Restatement of the Company, as the same may be amended, modified or restated
from time to time.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York or Jacksonville,
Florida are authorized by law to close.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time or any successor statute thereto, as interpreted by the
applicable regulations thereunder.
"Commission" means the Securities and Exchange Commission.
"Company" means Regency Realty Corporation, a Florida corporation.
"Contribution Agreement" means the Contribution Agreement,
dated June 25, 1998, by and among the Company, the Operating Partnership and the
Contributor.
"Contributor" means Belair Capital Fund LLC, a Massachusetts
limited liability company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
NYDOCS03/322368 6
2
"Exchangeable OP Units" means OP Units which may be redeemable
for cash pursuant to Section 7 of the Amendment or exchangeable for Preferred
Stock or redeemable for cash pursuant to Section 10 of the Amendment (without
regard to any limitations on the exercise of such exchange rights as a result of
the Ownership Limit Provisions, as defined below).
"General Partner" means the Company or its successors as general partner of the
Operating Partnership.
"Holder" means any Unit Holder who is the record or beneficial
owner of any Registrable Security or any permitted assignee or permitted
transferee of such Registrable Security (including assignments or transfers of
Registrable Securities to such assignees or transferees as a result of the
foreclosure on any loans secured by such Registrable Securities) unless such
Registrable Security is acquired in a public distribution pursuant to a
registration statement under the Securities Act or in a public distribution
pursuant to transactions exempt from registration under the Securities Act, in
each such case where securities sold in such transaction may be resold in a
public distribution without subsequent registration under the Securities Act.
"Incapacitated" shall have the meaning set forth in the Partnership Agreement.
"Indemnified Party" shall have the meaning set forth in Section 2.8 hereof.
"Indemnifying Party" shall have the meaning set forth in Section 2.8 hereof.
"Inspectors" shall have the meaning set forth in Section 2.4(g).
"Operating Partnership" means Regency Centers, L.P., a Delaware limited
partnership.
"OP Units" means 8.125% Series A Cumulative Redeemable
Preferred Units of the Operating Partnership issued on the date hereof.
"Ownership Limit Provisions" mean the various provisions of
the Articles of Incorporation set forth in Article 5 thereof restricting the
ownership of stock of the company, including the Preferred Stock by certain
Persons to specified percentages of the outstanding stock of the company.
"Partnership Agreement" means the Second Amended and Restated
Agreement of Limited Partnership of the Operating Partnership dated as of March
5, 1998, as amended by the Amendment as the same may be further amended,
modified or restated from time to time.
"Person" means an individual or a corporation, Partnership,
limited liability company, association, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
NYDOCS03/322368 6
3
"Preferred Stock" means the Company's 8.125% Series A
Cumulative Redeemable Preferred Stock.
"REIT" means a real estate investment trust under Section 856 through Section
860 of the Code.
"Registrable Securities" means shares of Preferred Stock at
any time owned, either of record or beneficially, by any Holder and no matter
how acquired (including, without limitation, shares of Preferred Stock issued or
issuable upon exchange of Exchangeable OP Units or issued or issuable by way of
stock dividend or stock split, or in connection with a merger, consolidation,
combination of shares, recapitalization or other reorganization and any other
securities issued pursuant to any other distribution with respect to the
Preferred Stock or in exchange for or replacement of such Preferred Stock) until
(i) a registration statement covering such securities has been declared
effective by the Commission and such shares have been sold or transferred
pursuant to such effective registration statement, (ii) such shares are
permitted to be distributed in a transaction that would constitute a sale
thereof under the Securities Act pursuant to Rule 144(k) or are otherwise freely
transferable to the public without registration pursuant to Section 4(l) of the
Securities Act (to be confirmed in a written opinion of counsel to the Company
addressed to the Holders) under circumstances in which all of the applicable
conditions of Rule 144 are satisfied or (iii) such shares have been otherwise
transferred pursuant to an applicable exemption under the Securities Act, new
securities for such securities not bearing a legend restricting further transfer
shall have been delivered by the Company and such securities shall be freely
transferable to the public in a transaction that would constitute a sale thereof
without registration under the Securities Act.
"Registration Expenses" shall have the meaning set forth in Section 2.5 hereof.
"Rule 144" means Rule 144 promulgated under the Securities
Act, as such rule may be amended from time to time, or any similar rule (other
than Rule 144A) or regulation hereafter adopted by the Commission providing for
offers and sales of securities made in compliance therewith resulting in offers
and sales by subsequent holders that are not affiliates of the Company of such
securities being free of the registration and prospectus delivery requirements
of the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act, as such rule may be amended from time to time, or any similar rule (other
than Rule 144) or regulation hereafter adopted by the Commission.
"Rule 415" means Rule 415 promulgated under the Securities
Act, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission.
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"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement under the Securities Act
pursuant to this Agreement.
"Shelf Registration" shall have the meaning set forth in Section 2.1 hereof'.
"Shelf Registration Statement" means any registration
statement relating to a Shelf Registration that covers any shares of Preferred
Stock of the Company filed with the Commission under the Securities Act,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
"Unit Holder(s)" shall have the meaning set forth in the
introductory paragraphs hereto and shall include any successors, transferees or
assigns permitted under the Amendment.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Shelf Registration.
(a) At any time (and from time to time) OP Units representing in the
aggregate 25% or more of the 1,600,000 OP Units issued in accordance with the
Contribution Agreement are exchanged for shares of Preferred Stock, the Company
shall prepare and file a "shelf" registration statement (the "Shelf Registration
Statement") with respect to such Registrable Securities covering the resale
thereof by the Holders on an appropriate form for an offering to be made on a
continuous or delayed basis pursuant to Rule 415 (the "Shelf Registration")
within 60 days after the date such OP Units are exchanged for shares of
Preferred Stock and shall use all commercially reasonable efforts to cause such
Shelf Registration Statement to be declared effective within 120 days after the
date of such exchange. The Company shall use all commercially reasonable efforts
to keep such Shelf Registration Statement continuously effective with respect to
such Registrable Securities until the earliest of (A) 28 months following the
date such Registrable Securities are issued by the Company to such Holder or
Holders and (B) such time as all of the Registrable Securities which are the
subject of such Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or Rule 144.
(b) In lieu of the Shelf Registrations set forth in Section
2.1(a), the Company may, at the Company's option, to the extent permitted by
applicable law, rules and regulations, upon
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the first exchange of OP Units for shares of Preferred Stock, prepare and file a
Shelf Registration Statement with respect to all Registrable Securities (i)
issued in exchange for OP Units and (ii) thereafter issuable in exchange for OP
Units, and covering the resale thereof by the Holders on an appropriate form for
an offering to be made on a continuous or delayed basis pursuant to Rule 415
within 60 days after the date OP Units are first exchanged for shares of
Preferred Stock and shall use all commercially reasonable efforts to cause such
Shelf Registration Statement to be declared effective within 120 days after the
date of such exchange. The Company shall use all commercially reasonable efforts
to keep such Shelf Registration Statement continuously effective with respect to
all such Registrable Securities theretofore or thereafter issued until such time
as all such Registrable Securities which are the subject of such Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or Rule 144.
SECTION 2.3. Registration Procedures; Filings; Information. In
connection with any Shelf Registration Statement under Section 2.1 hereof, the
Company will use all commercially reasonable efforts to effect the registration
and the sale of such Registrable Securities in accordance with the intended
method or methods of disposition thereof as expeditiously as possible (and in
any event within the periods referred to in Section 2.1), and in connection with
any such request:
(a) As provided in Section 2.1 hereof, the Company will as expeditiously
as possible prepare and file with the Commission a registration statement on any
form for which the Company then qualifies or which counsel for the Company shall
deem appropriate and which form shall be available for the sale by the Selling
Holders of the Registrable Securities to be registered thereunder in accordance
with the intended method of distribution thereof and which shall comply as to
form in all material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required by the
Commission to be filed therewith, and use all commercially reasonable efforts to
cause such filed registration statement to become and remain effective for the
period specified elsewhere herein.
(b) The Company will, if requested, prior to filing a registration statement
or prospectus or any amendment or supplement thereto, notify each Holder of
Registrable Securities that a Shelf Registration Statement is being filed and
advise such Holder that an offering of Registrable Securities will be made in
accordance with the method or methods elected (which method may also include an
underwritten offering by a nationally recognized Underwriter selected by the
Company and reasonably acceptable to the electing Holders) by the Holders of a
majority of the Registrable Securities, furnish to each Selling Holder and each
Underwriter, if any, of the Registrable Securities covered by such registration
statement or prospectus copies of such registration statement or prospectus or
any amendment or supplement thereto as proposed to be filed, and thereafter
furnish to such Selling Holder and Underwriter, if any, such number of conformed
copies of such registration statement, each amendment and supplement thereto (in
each case including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement (including each
preliminary prospectus) and such other
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documents as such Selling Holder or Underwriter may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by such
Selling Holder.
(c) The Company will notify each Holder of Registrable Securities and
counsel for such Holder promptly and, if requested by such Holder or counsel,
confirm such advice in writing promptly (i) when a registration statement has
become effective and when any post-effective amendments and supplements thereto
become effective, (ii) of any request by the Commission or any state securities
authority for post-effective amendments and supplements to a registration
statement that has become effective, (iii) of the issuance by the Commission or
any state securities authority of any stop order suspending the effectiveness of
a registration statement or the initiation of any proceedings for that purpose,
(iv) if, during the period a registration statement is effective, the
representations and warranties of the Company contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to such offering
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cease to be true and correct in all material respects, (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (vi) of any determination by
the Company that a post-effective amendment to a registration statement would be
appropriate.
(d) The Company will use all commercially reasonable efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States (where an exemption is
not available) as any Selling Holder or managing Underwriter or Underwriters, if
any, reasonably (in light of such Selling Holder's intended plan of
distribution) requests by the time the registration statement relating thereto
is declared effective by the Commission and (ii) cause such Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities, including the National Association of Securities Dealers
("NASD"), as may be necessary by virtue of the business and operations of the
Company and do any and all other acts and things that may be reasonably
necessary or advisable to enable such Selling Holder to consummate the
disposition of the Registrable Securities owned by such Selling Holder; provided
that the Company will not be required to (A) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this paragraph (d), (B) subject itself to taxation in any such jurisdiction or
(C) consent to general service of process in any such jurisdiction except as may
be required by the Securities Act.
(e) The Company will immediately notify each Selling Holder or
Underwriter of such Registrable Securities, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
occurrence of an event requiring the preparation of a supplement or amendment to
such prospectus and shall file with the Commission such amendments and
supplements to such prospectus and deliver copies of the same to the Selling
Holders or Underwriters, as the case may be, so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances then existing, not misleading and promptly make
available to each Selling Holder a reasonable number of copies of any such
supplement or amendment.
(f) The Company will enter into customary agreements (including an
underwriting agreement or securities sale agreement, if any, in customary form)
containing such representations and warranties to the Holders of such
Registrable Securities and the Underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in similar underwritten
offerings as may be reasonably requested by them and take such other actions as
are reasonably required in order to expedite or facilitate the disposition of
such Registrable Securities.
(g) The Company will make available for inspection by any Selling
Holder of such Registrable Securities, any Underwriter participating in any
disposition pursuant to such registration statement and any attorney, accountant
or other professional retained by any such
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Selling Holder or Underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
Inspectors in connection with such registration statement. Records which the
Company determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. Each Selling Holder of such Registrable Securities agrees that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates or otherwise
disclosed by it unless and until such is made generally available to the public.
Each Selling Holder of such Registrable Securities further agrees that it will,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of the Records deemed
confidential.
(h) The Company will furnish to each Selling Holder and to each
Underwriter, if any, a signed counterpart, addressed to such Selling Holder or
Underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a
comfort letter or comfort letters from the Company's independent public
accountants (to the extent permitted by the standards of the American Institute
of Certified Public Accountants), each in customary form and covering such
matters of the type customarily covered by opinions or comfort letters, as the
case may be, as the Holders of a majority of the Registrable Securities included
in such offering or the managing Underwriter or Underwriters therefor reasonably
request.
(i) The Company will otherwise use all commercially reasonable efforts
to comply with all applicable rules and regulations of the Commission. and make
available to its securityholders, as soon as reasonably practicable, an earnings
statement covering a period of twelve (12) months, beginning within three (3)
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Commission promulgated thereunder (or any successor rule or
regulation hereafter adopted by the Commission).
(j) The Company will use all commercially reasonable efforts to cause
all such Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Company are then listed.
(k) The Company will use all commercially reasonable efforts to obtain
CUSIP numbers for the Preferred Stock not later than the effective date of the
Shelf Registration Statement.
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The Company may require, as a condition precedent to the
obligations of the Company under the Agreement, each Selling Holder of
Registrable Securities to promptly furnish in writing to the Company such
information regarding such Selling Holder, the Registrable Securities held by it
and the intended method of distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
2.3(e) hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement and prospectus
covering such Registrable Securities until such Selling Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section 2.3(e)
hereof, and, if so directed by the Company, such Selling Holder will deliver to
the Company all copies, other than permanent file copies then in such Selling
Holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. Each Selling Holder of
Registrable Securities agrees that it will immediately notify the Company at any
time when a prospectus relating to the registration of such Registrable
securities is required to be delivered under the Securities Act of the happening
of an event as a result of which information previously furnished by such
Selling Holder to the Company in writing for inclusion in such prospectus
contains an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading. In the
event the Company shall give such notice, the Company shall extend the period
during which such registration statement shall be maintained effective
(including the periods referred to in Section 2.1 hereof) by the number of days
during the period from and including the date of the giving of notice pursuant
to Section 2.3(e) hereof to the date when the Company shall make available to
the Selling Holders of Registrable Securities covered by such registration
statement a prospectus supplemented or amended to conform with the requirements
of Section 2.3(e) hereof.
SECTION 2.4. Registration Expenses. In connection with any
registration statement required to be filed hereunder, the Company shall pay the
following registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all Commission, stock exchange,
NASD or other registration and filing fees, (ii) fees and expenses of compliance
with securities or blue sky laws and compliance with the rules of the NASD
(including reasonable fees and disbursements of U.S. and local counsel for any
Underwriters and Holders in connection with blue sky qualifications of the
Registrable Securities), (iii) printing expenses of any persons in preparing and
distributing any Shelf Registration Statement, any prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements,
certificates representing the Preferred Stock and any other document relating to
the performance of, and compliance with, this Agreement, (iv) internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange, (vi) reasonable fees and disbursements of counsel for the
Company and customary fees and expenses for independent certified public
accountants retained by the Company
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(including the expenses of any special audits or comfort letters or costs
associated with compliance with such special audits of with the delivery by
independent certified public accountants of a comfort letter or comfort letters
requested pursuant to Section 2.3(h) hereof, (vii) the reasonable fees and
expenses of any special experts retained by the Company in connection with such
registration, and (viii) reasonable fees and expenses of one counsel (who shall
be reasonably acceptable to the Company) for the Selling Holders. Except as
expressly provided in the preceding sentence, the Company shall have no
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities, or any out-of-pocket expenses of the
Holders (or the agents who manage their accounts) or any transfer taxes relating
to the registration or sale of the Registrable Securities.
SECTION 2.5. Indemnification by the Company. The Company
agrees to indemnify and hold harmless each Selling Holder of Registrable
Securities, its officers, directors and agents, and each Person, if any, who
controls such Selling Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages, expenses and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any Preliminary Prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, except insofar as such losses, claims, damages
or liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished in writing to the
Company by such Selling Holder or on such Selling Holder's behalf expressly for
inclusion therein. The Company also agrees to indemnify Underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such Underwriters within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act on substantially the same basis as that of
the indemnification of the Selling Holders provided in this Section 2.5,
provided that the foregoing indemnity with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter of the Registrable Securities
from whom the Person asserting any such losses, claims, damages or liabilities
purchased the Registrable Securities which are the subject thereof if (i) such
person did not receive a copy of the prospectus (or the prospectus as
supplemented) at or prior to the confirmation of the sale of such Registrable
Securities to such person in any case where such delivery is required by the
Securities Act and the untrue statement or omission of a material fact contained
in such preliminary Prospectus was corrected in the prospectus (or the
prospectus as supplemented), provided that such Underwriter received prior
notice that such prospectus (or the Prospectus as supplemented) corrected such
untrue statement or omission of a material fact; or (ii) such person received a
prospectus at or prior to the confirmation of the sale of such Registrable
Securities to such person during the period when the use of such Prospectus has
been suspended in accordance with Section 2.3, provided that such Underwriter
received prior notice of such suspension.
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SECTION 2.6. Indemnification by Holders of Registrable
Securities. Each Selling Holder agrees, severally but not jointly, to indemnify
and hold harmless the Company, its officers, directors and agents and each
Person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Selling Holder, but only with
respect to information relating to such Selling Holder furnished in writing by
such Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its officers,
directors or agents or any such controlling person, in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to the Company, and the Company or its
officers, directors or agents or such controlling person shall have the rights
and duties given to such Selling Holder, by Section 2.5 hereof.
SECTION 2.7. Conduct of Indemnification Proceedings. In case
any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Sections 2.5 or 2.6 hereof, such person (an "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (an "Indemnifying
Party") in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all fees and expenses. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by (i) in the case
of Persons indemnified pursuant to Section 2.5 hereof, by the Selling Holders
which owned a majority of the Registrable Securities sold under the applicable
registration statement and (ii) in the case of Persons indemnified pursuant to
Section 2.6 hereof, the Company. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Party shall have requested an Indemnifying Party
to reimburse the Indemnified Party for fees and expenses of counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than
thirty (30)
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Business Days after receipt by such Indemnifying Party of the aforesaid request,
(ii) such Indemnifying Party shall not have responded to such request (or, if
such Indemnifying Party shall have responded, the same shall be contesting in
good faith any portion of the requested reimbursement) and (iii) such
Indemnifying Party shall not have reimbursed the Indemnified Party for the
uncontested fees and expenses of counsel in accordance with such request prior
to the date of such settlement. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened proceeding in which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability arising out of such proceeding.
SECTION 2.8. Contribution. If the indemnification provided for
in Sections 2.5 or 2.6 hereof is unavailable to an Indemnified Party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (i)
as between the Company and the Selling Holders on the one hand and the
Underwriters on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Holders on the one
hand and the Underwriters on the other from the offering of the securities, or
if such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Company on the one
hand and each Selling Holder on the other, in such proportion as is appropriate
to reflect the relative fault of the Company and of each Selling Holder in
connection with such statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Holders on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total Proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the Selling Holders bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company and
the Selling Holders on the one hand and of the Underwriters on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and the Selling
Holders or by the Underwriters. The relative fault of the Company on the one
hand and of each Selling Holder on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or such Selling Holder, and the
Company's and the Selling Holder's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
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The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 2.8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in Sections 2.5 and 2.6
hereof shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 2.8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities of such Selling Holder were offered to the
public exceeds the amount of any damages which such Selling Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Selling Holder's obligations to contribute pursuant to
this Section 2.8 are several in the proportion that the proceeds of the offering
received by such Selling Holder bears to the total proceeds of the offering
received by all the Selling Holders and not joint.
SECTION 2.9. Participation in Underwritten Registrations. No
Person may participate in any underwritten registration hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents in customary
form and reasonably required under the terms of such underwriting arrangements
and these registration rights provided for in this Article II.
SECTION 2.10. Rule 144. The Company covenants that it will use
all commercially reasonable efforts to file any reports required to be filed by
it under the Securities Act and the Exchange Act and that it will use all
commercially reasonable efforts take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
SECTION 2.11. Holdback Agreements.
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(a) Restrictions on Public Sale by Holder of Registrable Securities. To
the extent not inconsistent with applicable law, upon receipt of written notice
front the Company, each Holder whose securities are included in a registration
statement pursuant to Section 2.1 agrees not to effect any sale or distribution
of the issue being registered or a similar security of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
including a "broker's transaction" pursuant to Rule 144, but excluding any
private sale made in reliance on Section 4(2) of the Securities Act, during the
7 days prior to, and during the 90-day period beginning on, the effective date
of such registration statement , if and to the extent requested in writing by
the Company in the case of a non-underwritten public offering or if and to the
extent requested in writing by the managing Underwriter or Underwriters in the
case of an underwritten public offering.
(b) If the Company determines in its good faith judgment that the filing
of the Shelf Registration Statement under Section 2.1 hereof or the use of any
related prospectus would require the disclosure of non-public material
information that the Company has a bona fide business purpose for preserving as
confidential or the disclosure of which would impede the Company's ability to
consummate a material transaction, and that the Company is not otherwise
required by applicable securities laws or regulations to disclose, upon written
notice of such determination by the Company, the rights of the Holders to offer,
sell or distribute any Registrable Securities pursuant to the Shelf Registration
Statement or to require the Company to take action with respect to the
registration or sale of any Registrable Securities pursuant to the Shelf
Registration Statement shall be suspended until the earlier of (i) the date upon
which the Company notifies the Holders in writing that suspension of such rights
for the grounds set forth in this Section 2.11(b) is no longer necessary and
(ii) 45 days; provided however, the aggregate number of days in any consecutive
twelve (12) month period during which such suspension or suspensions shall
continue shall not exceed one hundred twenty (120) days. The Company agrees to
give such notice as promptly as practicable following the date that such
suspension of rights is no longer necessary.
(c) If all reports required to be filed by the Company pursuant to the
Exchange Act have not been filed by the required date without regard to any
extension, or if the consummation of any business combination or property
acquisition by the Company has occurred or is probable for purposes of Rule 3-05
or 3-14 or Article 11 of Regulation S-X under the Act, upon written notice
thereof by the Company to the Holders, the rights of the Holders to offer, sell
or distribute any Registrable Securities pursuant to the Shelf Registration
Statement or to require the Company to take action with respect to the
registration or sale of any Registrable Securities pursuant to the Shelf
Registration Statement shall be suspended until the date on which the Company
has filed such reports or obtained and filed the financial information required
by Rule 3-5 or 3-14 or Article 11 of Regulation S-X to be included or
incorporated by reference, as applicable, in the Shelf Registration Statement,
and the Company shall notify the Holders as promptly as practicable when such
suspension is no longer required.
NYDOCS03/322368 6
15
(d) The Company shall extend the period during which a registration
statement shall be maintained effective (including the periods referred to in
Section 2.1 hereof by the number of days of suspension pursuant to Section
2.11(a), Section 2.11(b) or Section 2.11(c).
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Remedies. In addition to being entitled to
exercise all rights provided herein and granted by law, including recovery of
damages. the Holders shall be entitled to specific performance of the rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
SECTION 3.2. Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the prior written consent of the
Company and the Holders or any such Holder's representative if any such Holder
is Incapacitated. No failure or delay 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 any breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
SECTION 3.3. Notices. All notices and other communications in
connection with this Agreement shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or air courier guaranteeing
overnight delivery:
(1) if to any Unit Holder:
Belair Capital Fund LLC
c/o Eaton Vance Management
24 Federal Street
Boston, MA 02110
Attn: Alan Dynner
Facsimile Number: (617) 338-8054
NYDOCS03/322368 6
16
with a copy to:
Peter Blessing, Esq.
(6544-4)
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Facsimile Number: (212) 848-7179
(2) if to the Company or the Operating Partnership:
Regency Realty Corporation
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
Attention: Bruce M. Johnson
Facsimile Number: (904) 634-3428
or to such other address as the Company may hereafter specify in
writing.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; when
received if deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if telecopied; and on the next
business day, if timely delivered to an air courier guaranteeing overnight
delivery.
SECTION 3.4. Successors and Assigns. The rights and
obligations of any Holder hereunder may be assigned to any other Holder. Except
as expressly provided in this Agreement, the rights and obligations of the
Holders under this Agreement shall not be assignable by any Holder to any Person
that is not a Holder. This Agreement shall be binding upon the parties hereto
and their respective successors and assigns.
SECTION 3.5. Counterparts; Facsimile Signatures. This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement. Each party shall become bound by this Agreement immediately upon
affixing its signature hereto, which may be an original signature or facsimile
thereof.
SECTION 3.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Florida without
regard to the choice of law provisions thereof.
NYDOCS03/322368 6
17
SECTION 3.7. Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
SECTION 3.8. Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
SECTION 3.9. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 3.10. No Third Party Beneficiaries. Nothing express or
implied herein is intended or shall be construed to confer upon any person or
entity, other than the parties hereto and their respective successors and
assigns, any rights, remedies or other benefits under or by reason of this
Agreement.
(Signature Page Follows)
NYDOCS03/322368 6
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date above written.
REGENCY REALTY CORPORATION,
a Florida corporation
By:
Bruce M. Johnson
Chief Financial Officer
BELAIR CAPITAL FUND LLC
By: Eaton Vance Management, as its
Manager
By:
Tom Otis
Vice President
NYDOCS03/322368 6
19
5
0000910606
REGENCY REALTY CORPORATION
1
6-MOS
DEC-31-1998
JUN-30-1998
12,732,702
0
12,887,801
2,203,559
0
0
1,103,886,076
46,160,048
1,093,098,056
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0
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254,229
552,257,952
1,093,098,056
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65,513,848
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14,259,705
11,384,555
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12,873,370
30,354,266
0
30,354,266
0
0
0
30,354,266
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1.06
5
0000910606
REGENCY REALTY CORPORATION
1
6-MOS
DEC-31-1997
JUN-30-1997
13,412,380
0
5,619,257
1,856,136
0
0
764,544,372
32,950,739
754,982,774
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358,848,647
754,982,774
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42,359,107
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7,074,670
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10,221,374
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8,763,549
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0
0
8,763,549
0.51
0.51
