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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 11, 1998
REGENCY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Florida 1-12298 59-3191743
(State or other (Commission (IRS Employer
jurisdiction File No.) Identification No.)
of incorporation)
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (904)356-7000
N/A
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
General
On March 11, 1998, Regency Realty Corporation (the "Company")
acquired, through a limited partnership (the "Partnership") of which the
Company is the sole general partner, substantially all of the completed
properties and third party management assets of Midland Development Group,
Inc. and certain of its affiliates ("Midland") pursuant to a Contribution
Agreement dated January 12, 1998. For additional information, see the
Company's current report on Form 8-K filed with the Commission on February
4, 1998.
Item 7. Financial Statements and Exhibits.
(a) and (b) Financial Statements and Pro Forma Financial
Information
Audited statement of revenues and certain expenses for Midland for
the year ended December 31, 1996 and unaudited pro forma consolidated
balance sheet as of September 30, 1997 and unaudited pro forma
consolidated statements of operations for the nine months ended September
30, 1997 and the year ended December 31, 1996 were included in the
Company's current report on Form 8-K filed with the Commission on February
4, 1998.
(c) Exhibits
(2) Contribution Agreement dated as of January 12, 1998, by and among
Regency Realty Corporation, Midland Development Group, Inc., the Midland
Principals and certain Midland Affiliates.
(10) Material Contracts:
(a) Second Amended and Restated Agreement of Limited
Partnership of Regency Centers, L.P., dated as of March 5,
1998, by and among Regency Realty Corporation, as General
Partner, and the Limited Partners named therein.
(b) Registration Rights Agreement dated as of March 5, 1998, by
and among Regency Realty Corporation and the Investors
named therein.
(c) Amended and Restated Redemption Agreement dated as of March
5, 1998, by and among Regency Realty Corporation and the
Investors named therein.
(d) Non-Competition Agreement dated as of March 11, 1998, by
and among Regency Centers, L.P., Regency Realty Group,
Inc., Regency Realty Corporation and Lee S. Wielansky.
(e) Lock-up letter agreement of Lee S. Wielansky dated as of
March 1, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
REGENCY REALTY CORPORATION
(Registrant)
March 19, 1998 By: /s/ J. Christian Leavitt
------------------------------------
J. Christian Leavitt
Vice President and Treasurer
CONTRIBUTION AGREEMENT
TABLE OF CONTENTS
ARTICLE 1: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2: CONTRIBUTION TO PARTNERSHIP . . . . . . . . . . . . . . . 21
2.1 Contribution Values. . . . . . . . . . . . . . . . . . . . 21
2.2 Capitalization of the Partnership. . . . . . . . . . . . . 23
2.3 OSTRS Consideration. . . . . . . . . . . . . . . . . . . . 25
2.4 Assumptions. . . . . . . . . . . . . . . . . . . . . . . . 26
2.4.1 Assumption of Liabilities . . . . . . . . . . . . . 26
2.4.2 Substitution of NewSubs in Joint Ventures . . . . . 26
2.5 Subsequent Closings. . . . . . . . . . . . . . . . . . . . 27
2.5.1 In-Process Earn-Out . . . . . . . . . . . . . . . . 27
2.5.2 In-Place Earn-Out . . . . . . . . . . . . . . . . . 28
2.5.3 Midland Group Earn-Out . . . . . . . . . . . . . . . 29
2.5.4 Worthington Outparcel Earn-Out . . . . . . . . . . . 32
2.5.5 Evans Crossing Land Earn-Out . . . . . . . . . . . . 32
2.6 Subsequent Closings for OSTRS Eastern Option Properties. . 33
ARTICLE 3: FORMATION OF SUBPARTNERSHIPS . . . . . . . . . . . . . . 33
3.1 R&M Western Partnership. . . . . . . . . . . . . . . . . . 33
3.1.1 Partnership Agreement of R&M Western Partnership . . 34
3.2 OTR Joint Ventures . . . . . . . . . . . . . . . . . . . . 34
3.2.1 Mechanics of Contribution . . . . . . . . . . . . . 34
ARTICLE 4: ADDITIONAL CLOSING AND POST-CLOSING TRANSACTIONS . . . . 34
4.1 Purchase Option. . . . . . . . . . . . . . . . . . . . . . 34
4.2 Right of First Refusal . . . . . . . . . . . . . . . . . . 35
4.3 Transfer of Options. . . . . . . . . . . . . . . . . . . . 35
4.4 Additional Outparcels. . . . . . . . . . . . . . . . . . . 36
4.5 Management Contracts . . . . . . . . . . . . . . . . . . . 36
ARTICLE 5: COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 36
5.1 Implementing Agreement . . . . . . . . . . . . . . . . . . 36
5.2 Preservation of Business . . . . . . . . . . . . . . . . . 37
5.3 Consents and Approvals . . . . . . . . . . . . . . . . . . 37
5.4 Additional Acquisitions. . . . . . . . . . . . . . . . . . 37
5.5 Continuation of Employees. . . . . . . . . . . . . . . . . 38
5.6 Disclosur. . . . . . . . . . . . . . . . . . . . . . . . . 38
5.7 Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . 39
5.8 New Contracts. . . . . . . . . . . . . . . . . . . . . . . 40
5.9 Leasing Arrangements . . . . . . . . . . . . . . . . . . . 40
5.10 Obligation to Supplement Information . . . . . . . . . . . 41
5.11 Access to Information; Environmental Audits . . . . . . . 41
5.12 Monthly Updates of Rent Rolls and Operating
Statements . . . . . . . . . . . . . . . . . . . . . . . . 42
5.13 Tenant Estoppels . . . . . . . . . . . . . . . . . . . . . 42
5.14 Service Contracts . . . . . . . . . . . . . . . . . . . . 42
5.15 Work Contracts . . . . . . . . . . . . . . . . . . . . . . 43
5.16 Title Insurance; Survey . . . . . . . . . . . . . . . . . 43
5.17 Later Title Exceptions . . . . . . . . . . . . . . . . . . 43
5.18 Damage . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.19 Condemnation . . . . . . . . . . . . . . . . . . . . . . . 45
5.20 Windmiller . . . . . . . . . . . . . . . . . . . . . . . . 45
5.21 Future Joint Venture Agreements . . . . . . . . . . . . . 46
ARTICLE 6: REPRESENTATIONS, WARRANTIES AND FURTHER
COVENANTS OF MIDLAND . . . . . . . . . . . . . . . . . . . 46
6.1 As to Property Entities, Joint Ventures, Midland Affiliates
and Midland Principals . . . . . . . . . . . . . . . . . . 46
6.1.1 Due Organization, etc. . . . . . . . . . . . . . . 46
6.1.2 Due Authorization; Consents; No Violations. . . . . 47
6.1.3 Existing Mortgage Debt. . . . . . . . . . . . . . . 48
6.1.4 Financial Statements. . . . . . . . . . . . . . . . 48
6.1.5 No Adverse Change . . . . . . . . . . . . . . . . . 49
6.1.6 No Litigation . . . . . . . . . . . . . . . . . . . 49
6.1.7 Leased Real Property. . . . . . . . . . . . . . . . 49
6.1.8 Leased Personal Property. . . . . . . . . . . . . . 50
6.1.9 Intellectual Property . . . . . . . . . . . . . . . 50
6.1.10 Contracts . . . . . . . . . . . . . . . . . . . . . 50
6.1.11 Insurance . . . . . . . . . . . . . . . . . . . . . 51
6.1.12 Tax Matters . . . . . . . . . . . . . . . . . . . . 52
6.2 Representations of Midland Principals, the Property
Entities and the Midland Affiliates. . . . . . . . . . . . 53
6.2.1 Retained Properties . . . . . . . . . . . . . . . . 53
6.2.2 Securities. . . . . . . . . . . . . . . . . . . . . 53
6.2.3 Distributions and Payments. . . . . . . . . . . . . 54
6.2.4 Tax Advice. . . . . . . . . . . . . . . . . . . . . 54
6.2.5 Foreign Person. . . . . . . . . . . . . . . . . . . 55
6.2.6 No Employees. . . . . . . . . . . . . . . . . . . . 55
6.2.7 Brokers . . . . . . . . . . . . . . . . . . . . . . 55
6.2.8 Insolvency. . . . . . . . . . . . . . . . . . . . . 55
6.3 Additional Matters Relating to Joint Ventures. . . . . . . 55
6.3.1 Tax Matters . . . . . . . . . . . . . . . . . . . . 55
6.3.2 No Defaults . . . . . . . . . . . . . . . . . . . . 55
6.3.3 Other . . . . . . . . . . . . . . . . . . . . . . . 56
6.4 Additional Representations of Midland Development. . . . . 56
6.4.1 No Defaults . . . . . . . . . . . . . . . . . . . . 56
6.4.2 Management Contracts. . . . . . . . . . . . . . . . 56
6.4.3 Permits . . . . . . . . . . . . . . . . . . . . . . 56
6.4.4 Title To and Condition of Assets. . . . . . . . . . 57
6.4.5 Employee Benefit Plans. . . . . . . . . . . . . . . 57
6.4.6 Other Employee Matters. . . . . . . . . . . . . . . 58
6.5 As to the Properties . . . . . . . . . . . . . . . . . . . 58
6.5.1 Title; Purchase Commitments . . . . . . . . . . . . 58
6.5.2 Physical Condition. . . . . . . . . . . . . . . . . 58
6.5.3 Rentable Area and Parking Spaces. . . . . . . . . . 58
6.5.4 Compliance with Laws. . . . . . . . . . . . . . . . 59
6.5.5 Insurability. . . . . . . . . . . . . . . . . . . . 59
6.5.6 Utilities; Permits. . . . . . . . . . . . . . . . . 59
6.5.7 Contract Payments . . . . . . . . . . . . . . . . . 59
6.5.8 Assessments . . . . . . . . . . . . . . . . . . . . 60
6.5.9 Accuracy of Documents . . . . . . . . . . . . . . . 60
6.5.10 Rent Roll and Leases . . . . . . . . . . . . . . . 60
6.5.11 Permits . . . . . . . . . . . . . . . . . . . . . . 61
6.5.12 Service Contracts . . . . . . . . . . . . . . . . . 61
6.5.13 Security Deposits . . . . . . . . . . . . . . . . . 61
6.5.14 Condemnation . . . . . . . . . . . . . . . . . . . 62
6.5.15 Environmental Matters . . . . . . . . . . . . . . . 62
6.5.16 Flood Hazard . . . . . . . . . . . . . . . . . . . 64
6.5.17 Zoning . . . . . . . . . . . . . . . . . . . . . . 65
6.5.18 Access . . . . . . . . . . . . . . . . . . . . . . 65
6.5.19 No Defects . . . . . . . . . . . . . . . . . . . . 65
6.5.20 Use of Property . . . . . . . . . . . . . . . . . . 65
6.5.21 No Default . . . . . . . . . . . . . . . . . . . . 65
6.5.22 Development Properties . . . . . . . . . . . . . . 65
6.5.23 Acquisition Properties . . . . . . . . . . . . . . 66
6.5.24 Work Contracts . . . . . . . . . . . . . . . . . . 66
6.5.25 Budgets and Projections . . . . . . . . . . . . . . 66
6.6 Limit on Representations . . . . . . . . . . . . . . . . . 67
ARTICLE 7: REPRESENTATIONS, WARRANTIES AND
FURTHER COVENANTS OF REGENCY. . . . . . . . . . . . . . . 67
7.1 Due Incorporation, etc. . . . . . . . . . . . . . . . . . 67
7.2 Due Authorization; Consents; No Violations . . . . . . . . 67
7.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . 68
7.4 Valid Issuance of Shares . . . . . . . . . . . . . . . . . 69
7.5 Regency Exchange Act Reports . . . . . . . . . . . . . . . 69
7.6 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.7 No Adverse Change. . . . . . . . . . . . . . . . . . . . . 70
7.8 No Defaults or Violations. . . . . . . . . . . . . . . . . 70
7.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 71
7.10 Title to Properties; Leasehold Interests . . . . . . . . . 71
7.11 Environmental Matters . . . . . . . . . . . . . . . . . . 71
7.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.13 REIT Status . . . . . . . . . . . . . . . . . . . . . . . 73
7.14 Employees: ERISA . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE 8: CONDITIONS PRECEDENT TO OBLIGATIONS OF REGENCY . . . . . 73
8.1. Conditions for the First Closing as to the
Transaction. . . . . . . . . . . . . . . . . . . . . . . . 73
8.1.1 Aggregate Assets . . . . . . . . . . . . . . . . . . 73
8.1.2 Representations and Warranties . . . . . . . . . . . 73
8.1.3 Compliance with Covenants and Agreements . . . . . . 74
8.1.4 No Material Adverse Change . . . . . . . . . . . . . 74
8.1.5 No Injunction . . . . . . . . . . . . . . . . . . . 74
8.1.6 Delivery of Documents . . . . . . . . . . . . . . . 74
8.1.7 Consents . . . . . . . . . . . . . . . . . . . . . . 74
8.1.8 No Notice of Material Claims . . . . . . . . . . . . 74
8.1.9 Additional Indemnity . . . . . . . . . . . . . . . . 74
8.2 Conditions for the First Closing as to a Property. . . . . 74
8.2.1 Representations and Warranties. . . . . . . . . . . 75
8.2.2 Compliance with Covenants and Agreements. . . . . . 75
8.2.3 No Material Adverse Change. . . . . . . . . . . . . 76
8.2.4 No Injunction . . . . . . . . . . . . . . . . . . . 76
8.2.5 Title . . . . . . . . . . . . . . . . . . . . . . . 76
8.2.6 Lender Estoppels. . . . . . . . . . . . . . . . . . 76
8.2.7 Tenant Estoppels. . . . . . . . . . . . . . . . . . 76
8.2.8 Work Contract Estoppels . . . . . . . . . . . . . . 76
8.2.9 Delivery of Documents . . . . . . . . . . . . . . . 76
8.2.10 Consents . . . . . . . . . . . . . . . . . . . . . 76
8.2.11 Romanelli and Hughes Properties . . . . . . . . . . 76
8.2.12 Waiver of Rights of First Refusal . . . . . . . . . 77
8.2.13 Lake Pine Road Construction . . . . . . . . . . . . 77
ARTICLE 9: CONDITIONS PRECEDENT TO OBLIGATIONS
OF CONTRIBUTORS . . . . . . . . . . . . . . . . . . . . . 77
9.1 Conditions for the First Closing . . . . . . . . . . . . . 77
9.1.1 Representations and Warranties. . . . . . . . . . . 77
9.1.2 Compliance with Covenants and Agreements. . . . . . 77
9.1.3 No Material Adverse Change. . . . . . . . . . . . . 78
9.1.4 No Injunction . . . . . . . . . . . . . . . . . . . 78
9.1.5 Delivery of Documents . . . . . . . . . . . . . . . 78
9.1.6 Midland Consents. . . . . . . . . . . . . . . . . . 78
9.1.7 No Notice of Material Claims. . . . . . . . . . . . 78
9.1.8 Minimum Asset Contribution. . . . . . . . . . . . . 78
9.1.9 Regency Reorganization. . . . . . . . . . . . . . . 78
9.1.10 Partnership Agreement . . . . . . . . . . . . . . . 78
9.1.11 Joint Venture Debt . . . . . . . . . . . . . . . . 78
ARTICLE 10: CLOSINGS . . . . . . . . . . . . . . . . . . . . . . . . 79
10.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . 79
10.1.1 Time and Place . . . . . . . . . . . . . . . . . 79
10.1.2 Representations, Warranties and Covenants as to
Deferred Property Closings . . . . . . . . . . . 79
10.2 Contribution to the Partnership . . . . . . . . . . . . . 79
10.2.1 Deliveries by Midland. . . . . . . . . . . . . . 79
10.2.2 Deliveries by Regency. . . . . . . . . . . . . . 82
10.3 Closing Statements/Escrow Fees . . . . . . . . . . . . . . 84
ARTICLE 11: PRORATIONS AND ADJUSTMENTS . . . . . . . . . . . . . . . 84
11.1 Prorations . . . . . . . . . . . . . . . . . . . . . . . . 84
11.1.1 Taxes and Assessments. . . . . . . . . . . . . . 84
11.1.2 Collected Rent . . . . . . . . . . . . . . . . . 85
11.1.3 Percentage Rents . . . . . . . . . . . . . . . . 85
11.1.4 Operating Expense Pass-Throughs. . . . . . . . . 85
11.1.5 Service Contracts. . . . . . . . . . . . . . . . 86
11.1.6 Utilities. . . . . . . . . . . . . . . . . . . . 86
11.2 Work Contracts . . . . . . . . . . . . . . . . . . . . . . 86
11.3 Tenant Deposits . . . . . . . . . . . . . . . . . . . . . 86
11.4 Deposits . . . . . . . . . . . . . . . . . . . . . . . . 86
11.5 Wages . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.5.1 Determination of Midland Development Value
Adjustment . . . . . . . . . . . . . . . . . . . 87
11.5.2 Midland Development Value Adjustment . . . . . . 89
11.5.3 Payment of Midland Development Value Adjustment. 89
11.6 Due Diligence Costs . . . . . . . . . . . . . . . . . . . 89
ARTICLE 12: TERMINATION AND REMEDIES . . . . . . . . . . . . . . . . 90
12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 90
12.2 Effect of Termination . . . . . . . . . . . . . . . . . . 90
12.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE 13: INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 91
13.1 By Midland Principals . . . . . . . . . . . . . . . . . . 91
13.2 By Contributors . . . . . . . . . . . . . . . . . . . . . 92
13.3 By the Partnership and Other Transferees . . . . . . . . . 92
13.4 By Regency . . . . . . . . . . . . . . . . . . . . . . . . 93
13.5 Remedies Upon Fraud . . . . . . . . . . . . . . . . . . . 93
13.6 Indemnification of Third-Party Claims . . . . . . . . . . 93
13.7 Payment . . . . . . . . . . . . . . . . . . . . . . . . . 94
13.7.1 General. . . . . . . . . . . . . . . . . . . . . 94
13.7.2 Security Interest. . . . . . . . . . . . . . . . 95
13.8 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . 96
13.9 Threshold and Cap . . . . . . . . . . . . . . . . . . . . 97
13.10 No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . 97
13.11 Designated Representatives . . . . . . . . . . . . . . . . 97
ARTICLE 14: POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . 98
14.1 Completion of 1997 Audit . . . . . . . . . . . . . . . . . 98
14.2 Access to Books and Records . . . . . . . . . . . . . . . 98
14.3 Environmental Matters . . . . . . . . . . . . . . . . . . 98
14.4 Reports on Earn-Out Performance . . . . . . . . . . . . . 98
14.5 Midland Development 401(k) Plan . . . . . . . . . . . . . 99
ARTICLE 15: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 99
15.1 Headings and Interpretation . . . . . . . . . . . . . . . 99
15.2 Pronouns and Plurals . . . . . . . . . . . . . . . . . . . 99
15.3 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
15.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 99
15.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 99
15.6 Costs of Litigation . . . . . . . . . . . . . . . . . . . 100
15.7 Mediation . . . . . . . . . . . . . . . . . . . . . . . . 100
15.8 Additional Actions and Documents . . . . . . . . . . . . . 101
15.9 Remedies Cumulative . . . . . . . . . . . . . . . . . . . 101
15.10 Entire Agreement; Amendment and Modification . . . . . . . 101
15.11 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 101
15.12 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 102
15.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 102
15.14 Governing Law . . . . . . . . . . . . . . . . . . . . . . 102
15.15 Assignment; Parties in Interest . . . . . . . . . . . . . 103
15.15.1 Assignment. . . . . . . . . . . . . . . . . . . . 103
15.15.2 Parties in Interest . . . . . . . . . . . . . . . 103
15.16 No Third Party Beneficiaries . . . . . . . . . . . . . . . 103
15.17 Severability . . . . . . . . . . . . . . . . . . . . . . . 103
15.18 Limitation of Liability . . . . . . . . . . . . . . . . . 103
15.19 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . 103
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "Agreement") is made as of the
day of January, 1998, by and among MIDLAND DEVELOPMENT GROUP, INC., a
Missouri corporation ("Midland Development"), the Property Entities (as
hereinafter defined) party hereto, the Midland Principals (as hereinafter
defined), the Midland Affiliates (as hereinafter defined), and REGENCY
REALTY CORPORATION, a Florida corporation ("Regency"), under the following
circumstances:
A. Regency is in the business of investing in shopping centers.
B. Midland Development and its Affiliates are in the business of
developing and investing in shopping centers. The Midland Affiliates and
Property Entities own directly or indirectly Properties, Acquisition
Contracts, Management Contracts and certain other Assets (as such terms
are hereinafter defined). The Midland Affiliates and Property Entities
collectively wish to contribute the Properties that are the subject of
this Agreement to a transferee that will acquire all such Properties and
are not willing to permit the transferee to pick and choose which of their
Properties it wishes to acquire.
C. Regency has caused the prior formation of a Delaware limited
partnership (the "Partnership"), and Regency wishes to amend and restate
the partnership agreement in substantially the form of Exhibit 1.1.104
(the "Partnership Agreement"). Regency Atlanta, Inc., the current sole
general partner of the Partnership and a wholly-owned subsidiary of
Regency, will merge into Regency, and Regency will be the sole general
partner of the Partnership.
D. Regency will make certain cash contributions to the Partnership,
the Property Entities will contribute their respective Assets to the
Partnership (in some cases for contribution in turn to other Transferees
(as hereinafter defined)) in exchange for Units (as hereinafter defined)
and, in some cases earn-out rights, and each Midland Affiliate owning an
interest in a Joint Venture (as hereinafter defined) will assign its
interest in such Joint Venture to the Partnership (in some cases for
contribution in turn to another Transferee), in exchange for earn-out
rights, all as provided for herein and in the Partnership Agreement.
E. Each entity contributing Assets to the Partnership will
distribute the Units it so receives to its respective equity owners.
F. Subject to the provisions of a redemption agreement in the form
of Exhibit 1.1.118 (the "Redemption Agreement") and the OTR Redemption
Agreement (as hereinafter defined), the Units may be redeemed for Shares
(as hereinafter defined) or cash.
G. OTR, as nominee for OSTRS (as hereinafter defined), is a party
with a Midland Affiliate to a joint venture known as OTR/Midland Realty
Holdings, Ltd. ("OTR/Midland Ltd."), which joint venture is a Property
Entity that owns 11 Properties to be contributed to the Partnership
hereunder in exchange for Units. OTR/Midland Ltd. has the right and
obligation, directly or through a sub-partnership, to acquire two
additional Development Properties (as hereinafter defined) located in Ohio
and North Carolina and two additional Development Properties located in
Texas. OTR/Midland Ltd. also has the right to acquire certain properties
being developed by Midland Affiliates through Joint Ventures, or to be
developed in the future (subject to OSTRS Option Rights) by Affiliates of
Midland Development through joint ventures, with Affiliates of The Kroger
Company.
H. OTR will release its rights to participate, through OTR/Midland
Ltd., in the acquisition and ownership of the OSTRS Committed Eastern
Properties being developed by Joint Ventures and the OSTRS Eastern Option
Properties (as those terms are hereinafter defined), which rights will be
released in exchange for Units.
I. OTR wishes to continue participating (on the same terms that it
has invested in Properties through OTR/Midland Ltd.) in investments in the
Properties referred to elsewhere herein as the OSTRS Committed Western
Properties. OTR also wishes to have the right to participate in
investments in (all of which are subject to OSTRS Option Rights (as
hereinafter defined)): (i) the Properties being developed by Joint
Ventures and referred to elsewhere herein as the OSTRS Western Option
Properties and (ii) certain properties that may be developed directly or
indirectly by the Partnership during a specified time period through joint
ventures with Affiliates of The Kroger Company. Accordingly, the
Partnership will cause the formation of joint ventures (the "OTR Joint
Ventures") between OTR and a new partnership, R&M Western Partnership (as
defined below), for the purpose of making such investments, the governing
documents of which will be identical in substance to those of OTR/Midland
Ltd..
J. In consideration of, among other things, the interests in the
OSTRS Committed Western Properties and the Joint Ventures for OSTRS
Western Option Properties being contributed by certain Midland Affiliates
to the Partnership, such Midland Affiliates (through an entity to be
formed by them) will be admitted to a limited partnership ("R&M Western
Partnership") to be formed by or on behalf of the Partnership to serve as
the joint venture partner of OSTRS in the OTR Joint Ventures. Through R&M
Western Partnership, such Midland Affiliates will participate in the
Partnership's indirect investment (through the OTR Joint Ventures) in the
OSTRS Committed Western Properties and the OSTRS Western Option Properties
identified as such at the First Closing Date, but not in any other
investments of the OTR Joint Ventures. R&M Western Partnership also will
serve as the vehicle for (i) certain Midland Affiliates developing two
Development Properties in Colorado to continue to participate in the
ownership of such Properties after they contribute their existing
ownership interests therein to the Partnership and (ii) continued
participation by Midland Affiliates in the ownership of any OSTRS Western
Option Properties they are developing as of the First Closing Date as to
which OSTRS elects not to exercise OSTRS Option Rights.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1: DEFINITIONS
1.1 Definitions. In addition to the terms defined in this
Agreement, the following terms shall have the meanings set forth herein:
1.1.1 "Abated Rent" means base rent for which tenants have
received abatement credit, but only to the extent that such abatement
credit is consistent with the criteria set forth on Schedule 1.1.1.
1.1.2 "Acquisition Contracts" means the Contracts to acquire
certain real property and, if applicable, leases, personal property and
intangible property relating to such real property, to which certain
Property Entities are a party, all as more particularly described on
Schedule 1.1.2 (as it may be amended at the First Closing pursuant to
Section 5.4), including the rights of OTR/Midland Ltd. and OTR/Midland
Texas Limited Partnership to acquire (i) certain Development Properties
pursuant to the OTR/Midland Transfer and Contribution Agreement and (ii)
additional OSTRS Option Properties which shall be subject to the OSTRS
Option Rights in the future.
1.1.3 "Acquisition Properties" means the real property and
other assets that are the subject of the Acquisition Contracts.
1.1.4 [Intentionally omitted]
1.1.5 "Additional Units" means the Units to be issued at any
Subsequent Closings pursuant to Section 2.5 or 2.6.
1.1.6 "Affiliate" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under common
control with such Person, with control meaning the possession, direct or
indirect, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
1.1.7 "Allocation Chart" means the description of the
allocation of Units and Additional Units attached hereto as Schedule
1.1.7, which sets forth (a) the name of each Unit Recipient; and (b) shows
separately as to each Property Entity, the respective percentage
allocation of Units issuable to each Unit Recipient and the respective
percentage allocation of Additional Units, if any, to be issued to certain
Unit Recipients at a Subsequent Closing with respect to the various earn-
outs described in Section 2.5 and the Property Closings described in
Section 2.6.
1.1.8 "Annualized NOI" means the projected annualized net
operating income of a property determined as of the applicable Calculation
Date on an accrual basis by calculating the excess of:
(a) for executed leases for occupied space in effect as of
the end of the calendar month (the "Measurement
Month") ending on the Calculation Date that meet the
Leasing Criteria (including any leases that expire
during the following twelve months), the sum of each
of the following accrued during the Measurement Month,
times twelve (as if all such leases were in effect at
the beginning of the month): all rents (including
Abated Rent, but excluding other free or reduced rent
that does not meet the criteria set forth on Schedule
1.1.1) at the rates in effect on the last day of the
Measurement Month, charges, reimbursements, revenues,
percentage rent, expense recoveries and common area
maintenance, and all other amounts payable in each
case pursuant to such leases, assuming a vacancy rate
for GLA leased to Non-Credit Tenants equal to the
greater of the actual vacancy rate of all such space
or 7.5%, over
(b) the following accrued during the Measurement Month,
times twelve: the operating expenses for such
property (such as ad valorem Taxes, insurance, and
maintenance and repair costs), assuming a management
fee equal to $1,000 per month for each tenant which is
Kroger or King Soopers and equal to 4% of monthly base
rentals for all other tenants, but excluding (A)
capital replacements and improvements (including
tenant improvements), (B) leasing commissions, (C)
depreciation, and (D) debt service; and
(c) subtracting a structural reserve of $0.15 per square
foot of GLA except as set forth on Schedule 1.1.8.
1.1.9 "Articles of Incorporation" means the Amended and
Restated Articles of Incorporation of Regency, as filed with the Florida
Department of State, as further amended or restated from time to time.
1.1.10 "Assets" means (i) the Properties, (ii) the
Acquisition Contracts (and any assets acquired by the Property Entities or
the Joint Ventures thereunder prior to the First Closing), (iii) the
Development Contracts, (iv) the interests of any Midland Affiliate in the
Kroger Joint Ventures and the Dillon Joint Ventures and (v) the Other
Assets, but excludes the Excluded Assets.
1.1.11 "Assumed Liabilities" means the matters set forth on
Schedule 1.1.11.
1.1.12 "Assumed Obligations" means the matters set forth on
Schedule 1.1.12.
1.1.13 "Business Day" means any day of the year other than
Saturday, Sunday or any other day on which banks located in New York, New
York generally are closed for business.
1.1.14 "Calculation Date" means any one of the First
Calculation Date, the Second Calculation Date or the Third Calculation
Date.
1.1.15 "Capital Expenditure Budget and Schedule" means,
collectively, the capital expenditure budget and schedule for each
Property, copies of which are attached as Schedule 1.1.15 (as it may be
amended pursuant to Section 5.10), which describes the capital
expenditures that the respective Property Entities have budgeted for each
Property for the year ending December 31, 1998.
1.1.16 "Capitalized Annualized NOI" means the quotient of (a)
Annualized NOI divided by (b) 9.95% (9.25% in the case of the Property
known as Garner).
1.1.17 "Claim" means all actions, causes of action, suits,
debts, dues, accounts, reckonings, bonds, bills, covenants, contracts,
controversies, promises, trespasses, damages, judgments, executions,
penalties, fines, claims, liabilities and demands whatsoever, in law or
equity.
1.1.18 "Closing" means generally the execution and delivery
of those documents, securities and/or funds necessary to effect the
transactions contemplated by this Agreement.
1.1.19 "Closing Date" means, (i) with respect to the First
Closing, five Business Days after the date on which the conditions set
forth herein with respect thereto shall be satisfied or duly waived, or if
the Midland Representatives and Regency mutually agree on a different
date, the date upon which they have mutually agreed, and (ii) with respect
to any Subsequent Closing, the date specified therefor in Section 2.5 or
Section 2.6 or elsewhere in this Agreement.
1.1.20 "Code" means the Internal Revenue Code of 1986, as
amended, and any successor legislation thereto, including all of the rules
and regulations promulgated thereunder.
1.1.21 "Common Stock" means the voting Common Stock, $0.01
par value, of Regency.
1.1.22 "Collateral" means the collateral pledged pursuant to
Section 13.7.2.
1.1.23 "Contracts" means the Acquisition Contracts, the
Development Contracts, the Management Contracts, the Repair Contracts, the
Service Contracts, the TI Contracts and any other contract, direct
property management agreement, asset management agreement, development
agreement, partnership agreement, lease commitment, purchase order, or
other legally binding indenture, mortgage, note, license, deed of trust,
commitment, understanding, restriction or other agreement or instrument,
other than the Leases, to which any Property Entity is a party or by which
any of its assets are bound.
1.1.24 "Contribution Value" has the meaning set forth in
Section 2.1.
1.1.25 "Contributors" means the Property Entities, each
Midland Affiliate that owns an interest in a Joint Venture and each Joint
Venture that transfers, directly or indirectly, a Property, Development
Property or Acquisition Contract to a Transferee at the First Closing.
1.1.26 "Development Budget and Schedule" has the meaning set
forth in Section 6.5.22.
1.1.27 "Development Contracts" means all contracts listed on
Schedule 1.1.27 for the development or redevelopment of the Development
Properties or the Acquisition Properties.
1.1.28 "Development Cost" means the costs and expenses
incurred in acquiring, constructing and developing or redeveloping a
property, including any Contribution Value assigned to the property or
amounts reimbursed to a Property Entity at the First Closing for such
costs, all out-of-pocket hard and soft costs, any development fee paid or
credited to a Regency Entity, and all allocable personnel and overhead
costs (but not to exceed $1.50 per square foot for space leased by Kroger
and $4.00 per square foot for other leased space in combination with any
development fees and leasing commissions) capitalized as part of the
acquisition, construction or development cost thereof, less the Net
Proceeds from the sale of outparcels and expansion land that originally
were part of or adjacent to the property and included as part of its
acquisition cost. Development Cost for Phase 2 of Creekside shall be
reduced by the fair market value of the expansion land and outparcels for
Phase 3 of Creekside as of the applicable Earn-Out Calculation Date.
1.1.29 "Development Earn-Out" has the meaning set forth in
Section 2.5.3.2.
1.1.30 "Development Properties" means the Properties listed
on Schedule 1.1.30 each of which consists of Real Property which is in the
process of being developed or redeveloped; provided, however, upon the
acquisition of any Acquisition Property by any Property Entity prior to
the First Closing which is to be developed, renovated or redeveloped, as
further described on Schedule 1.1.30, such Acquisition Property also shall
be deemed a Development Property.
1.1.31 "Dillon" means Dillon Real Estate Co., Inc., a Kansas
corporation.
1.1.32 "Earn-Out Closing Date" means any one of the First
Earn-Out Closing Date, Second Earn-Out Closing Date or Third Earn-Out
Closing Date (collectively, the "Earn-Out Closing Dates").
1.1.33 "Eligibility Criteria" means each of the following,
determined as of the date of the First Closing, except as otherwise
provided below:
(a) the property is the site of a development which has
been approved by the Kroger/Dillon capital committee
(or such other group or individuals authorized to
provide a similar function with respect to the
determination of store locations for Kroger or Dillon)
or, if the property is not the site of a Kroger or
King Soopers Joint Venture development, then the
property must be subject to a fully executed anchor
lease consistent with a first class neighborhood
shopping center;
(b) in the case of an Acquisition Property, the property
must be subject to a binding purchase contract; and
(c) zoning and all land use approvals, construction
permits and any other consents or approvals of any
Government Entity required under any Law relating to
the property and the development plans related thereto
have been obtained as of the 120th day after the date
of the First Closing;
provided, however, that in the case of the Frisco and Woodman & Rangewood
Properties, the Eligibility Criteria means that the Property is owned as
of the First Closing Date by joint venture between Affiliates of Midland
Development and Affiliates of Kroger, notwithstanding anything to the
contrary provided above.
1.1.34 "Eligible Property" means any Development Property or
Acquisition Property described in Schedule 1.1.34 (or on any amendment to
Schedule 1.1.34 which may be delivered at the First Closing or promptly
after the 120th day after the First Closing) which satisfies the
Eligibility Criteria (collectively, the "Eligible Properties"). Schedule
1.1.34 also lists those Properties that the parties presently expect will
qualify as Eligible Properties; however, a Property must satisfy the
Eligibility Criteria in order to actually qualify as an Eligible Property.
1.1.35 "Endorsements" means endorsements to the Title
Insurance, to the extent available under applicable law, including,
without limitation, Comprehensive, Access, Survey, Separate Lot, Legal
Lot, Non-Imputation, Fairways, Contiguity, Zoning 3.1, and any other
endorsement owned by a Property Entity or typically obtained by customary
practice in the area of the respective Property for transactions of the
type contemplated by this Agreement.
1.1.36 "ERISA" mean the Employee Retirement Income Security
Act of 1974, as amended, and any successor legislation thereto.
1.1.37 "Estimated Closing Balance Sheet" has the meaning set
forth in Section 11.5.1(a).
1.1.38 "Exchange Act" means the Securities Exchange Act of
1934, as amended.
1.1.39 "Excluded Assets" means the assets listed on Schedule
1.1.39.
1.1.40 "Existing Mortgage Debt" means collectively the loans
of each Property Entity described on Schedule 1.1.40 and the loans
obtained with Regency's consent or in compliance with Section 5.2 in
connection with the purchase and/or development of the Acquisition
Properties or the development of the Development Properties.
1.1.41 "Final Closing Balance Sheet" has the meaning set
forth in Section 11.5.1(b).
1.1.42 "First Calculation Date" means the month end
immediately following the first anniversary date of the First Closing
Date.
1.1.43 "First Closing" means the Closing at which, among
other things, the Assets will be contributed to the Partnership.
1.1.44 "First Closing Date" means the date on which the First
Closing is effective.
1.1.45 "First Earn-Out Closing Date" means the first Business
Day thirty (30) days after the First Calculation Date.
1.1.46 "First Midland NOI Cap" means $1,600,000 if, during
the twelve calendar months immediately preceding the First Calculation
Date, any Regency Entity commences development or redevelopment of and/or
acquires shopping center developments in the Territory which are approved
by Regency's investment committee and have budgeted Development Costs (as
of the First Calculation Date) and/or purchase price (including the
principal amount of any mortgage debt assumed) in the aggregate equal to
or greater than $10,000,000. If such Development Costs and/or purchase
price in the aggregate are less than $10,000,000, then the First Midland
NOI Cap shall be an amount equal to (i) $1,600,000, multiplied by (ii) the
quotient of such aggregate Development Costs and/or purchase price divided
by $10,000,000.
1.1.47 "First Midland NOI Threshold" has the meaning set
forth in Schedule 1.1.47.
1.1.48 "Franklin Earn-Out Deficiency" has the meaning set
forth in Section 2.5.3(a).
1.1.49 "GAAP" means generally accepted accounting principles.
1.1.50 "GLA" means gross leasable area.
1.1.51 "Government Entity" means any court, arbitrator,
department, commission, board, bureau, agency, authority, instrumentality
or other governmental body, whether federal, state, municipal, foreign or
other.
1.1.52 "Gross Asset Value" with respect to an Asset means the
sum of its aggregate Contribution Value as of the applicable calculation
date plus the aggregate principal amount of debt encumbering such Asset as
of such date.
1.1.53 "Hold Period" means the period necessary in order for
the sale of a Property or Option Property eligible for capital gains
treatment for Federal income tax purposes to be eligible for treatment at
the long-term rate of 20%.
1.1.54 "In-Place Earn-Out" has the meaning set forth in
Section 2.5.2.
1.1.55 "In-Process Earn-Out Value" has the meaning set forth
in Section 2.5.1(a).
1.1.56 "Intangible Property" means all intangible property
now or on the First Closing Date owned by any Property Entity or Joint
Venture and used in connection with the Real Property, the Personal
Property, Midland Headquarters or the Third Party Management Business,
including, without limitation, all of their right, title and interest in
and to all: licenses, approvals, applications and permits issued or
approved by any Government Entity and relating to the use, operation,
ownership, occupancy and/or maintenance of the Real Property, the Personal
Property, Midland Headquarters or the Third Party Management Business; the
various Contracts to be assigned to the Transferees hereunder, including,
without limitation, Management Contracts, Work Contracts and Service
Contracts; utility arrangements; claims against third parties; plans;
drawings; specifications; surveys; maps; engineering reports and other
technical descriptions; books and records; insurance proceeds and
condemnation awards; and all other intangible rights used in connection
with or relating to the Real Property, the Personal Property, Midland
Headquarters or the Third Party Management Business, including rights, if
any, to current and past names of the Real Property.
1.1.57 "IRS" means the Internal Revenue Service.
1.1.58 "Joint Venture" means a Kroger Joint Venture or a King
Soopers Joint Venture (collectively, the "Joint Ventures").
1.1.59 "King Soopers" means a King Soopers Supermarket owned
by Dillon or any of its Affiliates.
1.1.60 "King Soopers Joint Venture" means each of the
entities set forth on Schedule 1.1.60, which owns the Development Property
or the Acquisition Contracts set forth opposite the name of such King
Soopers Joint Venture on Schedule 1.1.60 and the joint ventures to be
formed to assume the Acquisition Contracts held by Midland Acquisitions,
Inc., as described on Schedule 1.1.60 (collectively, the "King Soopers
Joint Ventures").
1.1.61 "Kroger" means a Kroger supermarket owned by The
Kroger Co. or any of its Affiliates.
1.1.62 "Kroger Joint Venture" means (i) each of the entities
set forth on Schedule 1.1.62, which own the Development Property set forth
opposite the name of such Kroger Joint Venture on Schedule 1.1.62, (ii)
the entity shown on Schedule 1.1.62 that owns the Evans Crossing Outparcel
(as defined in Section 2.5.5) and (iii) the joint ventures to be formed to
assume the Acquisition Contracts held by Midland Acquisitions, Inc., as
described on Schedule 1.1.62 (collectively, the "Kroger Joint Ventures").
1.1.63 "Law" means any statute, law, ordinance, rule,
regulation or judicial decision of any Government Entity.
1.1.64 "Leases" means, as to each Property, all ground leases
and all leases within the Improvements (whether oral or written),
including leases which may be made by a Property Entity or Joint Venture
after the date hereof and before the First Closing as permitted by this
Agreement.
1.1.65 "Leasing Criteria" means the criteria listed on
Schedule 1.1.65.
1.1.66 "Liability" means any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or unfixed, known or unknown, asserted
or unasserted, liquidated or unliquidated, secured or unsecured.
1.1.67 "Lien" means a lien (statutory or otherwise), security
interest, deed of trust, deed to secure debt, claim, charge, pledge,
license, equity, option, conditional sales contract, easement, assessment,
levy, covenant, condition, right of way, reservation, restriction,
exception, limitation, charge or encumbrance of any nature whatsoever.
1.1.68 "Litigation" means any action, suit, proceeding,
arbitration, investigation or inquiry, whether civil, criminal or
investigative, by or before any Government Entity.
1.1.69 "Loss and Expenses" means any and all damages, Claims,
losses, expenses, costs, interest, obligations, and Liabilities,
including, without limitation, all reasonable attorneys' fees and expenses
in collecting a Claim, enforcing a right to indemnification hereunder and
enforcing rights in Collateral (as defined in Section 13.7.2(a)).
1.1.70 "Management Contracts" means all property management
agreements, asset management agreements and leasing agreements listed on
Schedule 1.1.70 pursuant to which Midland Development currently provides
leasing and/or management services with respect to a real property owned
by one or more third parties.
1.1.71 "Material Adverse Effect" means (i) with respect to
any Property Entity or Joint Venture, a material adverse effect on the
Assets or the financial condition, results of operations, business or
prospects of such entity taken as a whole, (ii) with respect to a Property
or Option Property, a material adverse effect on the financial condition,
results of operations, business or prospects of such Property or Option
Property, and (iii) with respect to Regency, a material adverse effect on
Regency's assets or the financial condition, results of operations,
business or prospects of Regency taken as a whole (including its
subsidiaries).
1.1.72 "Midland Affiliates" means the managing general
partner or managing member of each Property Entity or, in the case of
Kroger Joint Ventures or King Soopers Joint Ventures, the administrative
member of such Joint Venture, as described on Schedule 1.1.72.
1.1.73 "Midland Development" means Midland Development Group,
Inc., a Missouri corporation.
1.1.74 "Midland Development Value Adjustment" means either a
Positive Midland Development Value Adjustment or a Negative Midland
Development Value Adjustment.
1.1.75 "Midland Financial Statements" means (i) the unaudited
balance sheets of each Property Entity and Joint Venture (to the extent
then in existence) as of December 31, 1995 and 1996, and the related
statements of income and cash flows for the years ended December 31, 1994,
1995 and 1996 (including the notes and schedules contained therein or
annexed thereto), and (ii) the unaudited statements of income and cash
flows of each Property Entity and Joint Venture as of the ten months ended
October 31, 1997 (including the notes and schedules contained therein or
annexed thereto), all as previously delivered to Regency.
1.1.76 "Midland Group Earn-Out" has the meaning set forth in
Section 2.5.3.
1.1.77 "Midland Headquarters" means the principal offices
occupied by Midland Development, Westpark I, Suite 200, 12655 Olive
Boulevard, St. Louis, Missouri 63141.
1.1.78 "Midland NOI" means the sum of (i) the Annualized NOI
of the Properties contributed to the Partnership by the Property Entities,
excluding the Western Properties, as of the applicable Calculation Date,
and (ii) the Annualized NOI as of the applicable Calculation Date of
shopping centers (including but not limited to the Acquisition Properties)
developed, redeveloped or acquired by any Regency Entity, with the
approval of Regency's investment committee, in the Territory and following
the First Closing; provided, however, that, in either case, (x) if any
such properties are held on the applicable Calculation Date by an entity
(other than the Partnership) in which Regency and its Affiliates do not
own collectively 100% of the interests, the Annualized NOI attributable to
such property shall be included in the calculation of Midland NOI only to
the extent of such interests in such entity, and (y) there shall be
excluded the Annualized NOI from any development property until it has
attained the Minimum Leasing Criteria.
1.1.79 "Midland Principals" means Lee S. Wielansky, Stephen
M. Notestine, Joseph H. Apter, Rodney K. Jones and Ned M. Brickman.
1.1.80 "Midland Representatives" has the meaning set forth in
Section 13.11.
1.1.81 "Midland Western Partnership" has the meaning set
forth in Section 3.1.
1.1.82 "Minimum Leasing Criteria" has the meaning set forth
in the OTR/Midland Transfer and Contribution Agreement.
1.1.83 "Negative Midland Development Value Adjustment" has
the meaning set forth in Section 11.5.2.
1.1.84 "Net Proceeds" means the net proceeds from the sale of
a property (including the aggregate principal balance of any debt to which
the property is subject when it is transferred), after the payment of all
closing and other transaction costs relating to the disposition thereof
(but before repaying any indebtedness encumbering the property), including
brokerage commissions, title insurance costs, environmental reports, loan
assumption fees, loan prepayment penalties, transfer taxes and deed
stamps.
1.1.85 "NewSub" means any new subsidiary (including R&M
Western Partnership or any other partnership) organized by or on behalf of
the Partnership to become a substitute member or partner of any Joint
Venture at the First Closing in place of the existing Midland Affiliate
that is a member or partner thereof.
1.1.86 "Non-Credit Tenant" means any tenant other than a
tenant (i) whose senior unsecured debt is rated "BBB-" or better by
Standard & Poors Corporation and "Baa(3)" or better by Moody's Investor
Service (where a Moody's rating is available) or (ii) in respect of
tenants where Standard & Poors and Moody's ratings are not available,
tenants having a National Association of Insurance Commissioners
designation of "NAIC-2" or better.
1.1.87 "Option Property" means each real property described
or referred on Schedule 4.1, together with all rights privileges,
hereditaments and interests appurtenant thereto including, without
limitation, any water and mineral rights, development rights, air rights,
easements, and any and all rights of the optionor in and to any streets,
alleys, passages and other rights of way; and all buildings, structures
and other improvements located on or affixed to such real property and all
replacements and additions thereto (collectively, the "Option
Properties"). Any outparcel sold prior to the First Closing pursuant to
Section 5.2 (Preservation of Business) or Section 5.7 (Exclusivity) shall
be excluded from the definition of an Option Property.
1.1.88 "Order" means any order, writ, injunction, judgment,
plan or decree of any Government Entity.
1.1.89 "OSTRS" means the State Teachers Retirement System of
Ohio.
1.1.90 "OSTRS Committed Eastern Properties" means the
Properties and Development Properties listed on Schedule 1.1.90, which
have been transferred to OTR/Midland Ltd. or are subject to the
OTR/Midland Transfer and Contribution Agreement.
1.1.91 "OSTRS Committed Western Properties" means the
Properties and Development Properties listed on Schedule 1.1.91, which are
subject to the OTR/Midland Transfer and Contribution Agreement.
1.1.92 "OSTRS Eastern Option Properties" means the Properties
and Development Properties listed on Schedule 1.1.92, which are subject to
OSTRS Option Rights, and those additional properties that are not located
west of the state of Missouri which subsequently become subject to OSTRS
Option Rights.
1.1.93 "OSTRS Option Properties" means all properties
currently identified and to be identified in the future which are subject
to OSTRS Option Rights.
1.1.94 "OSTRS Option Rights" means the rights of OTR/Midland
Ltd. pursuant to the Option and Right of First Offer Agreement dated May
14, 1997 to acquire, on the terms and conditions set forth in the
OTR/Midland Transfer and Contribution Agreement, certain properties
acquired or developed prior to May 14, 1999 by Affiliates of Topvalco and
Midland Development, including the OSTRS Eastern Option Properties and,
through the OTR/Midland Texas Limited Partnership, the OSTRS Western
Option Properties located in Texas.
1.1.95 "OSTRS Western Option Properties" means the Properties
and Acquisition Properties listed on Schedule 1.1.95, which are subject to
OSTRS Option Rights, and those additional properties located west of the
state of Missouri which subsequently become subject to OSTRS Option
Rights.
1.1.96 "Other Assets" means the Third Party Management Assets
currently operated by Midland Development, all utility deposits (to the
extent transferable), all tenant deposits under the Leases, and all other
assets of any Property Entity or Joint Venture (whether owned or leased),
including, without limitation, ground leases, under which a Property
Entity or Joint Venture is lessee, and all deposits under the Contracts
which relate to the Acquisition Properties, but excluding the Excluded
Assets.
1.1.97 "OTR" means OTR, an Ohio general partnership acting as
nominee for OSTRS.
1.1.98 "OTR Joint Ventures" means the limited partnerships
referred to in Section 3.2.
1.1.99 "OTR/Midland Ltd." means OTR/Midland Realty Holdings,
Ltd., a Property Entity that has the right to acquire the OSTRS Committed
Eastern Properties, the OSTRS Eastern Option Properties and other OSTRS
Option Properties located in states other than Texas.
1.1.100 "OTR/Midland Texas Limited Partnership" means
OTR/Midland Realty Holdings, L.P., an Ohio limited partnership which has
the right to acquire the OSTRS Western Option Properties located in Texas
and other OSTRS Option Properties located in Texas.
1.1.101 "OTR/Midland Transfer and Contribution Agreement" means
the Transfer and Contribution Agreement dated as of May 14, 1997 to which
Topvalco and OTR, among others, are parties.
1.1.102 "OTR Redemption Agreement" means the Redemption
Agreement applicable to OSTRS in substantially the form attached hereto as
Exhibit 1.1.102.
1.1.103 "Partnership" means Regency Retail Partnership, L.P.
(to be renamed Regency Centers, L.P. prior to the First Closing), a
limited partnership formed under Delaware law.
1.1.104 "Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of the Partnership in substantially the
form attached as Exhibit 1.1.104.
1.1.105 "Permitted Exceptions" means:
(a) Liens for Taxes or other assessments or charges of
Government Entities (other than Liens imposed under ERISA or any
environmental Law or in connection with any environmental Claim) that are
not yet delinquent;
(b) as disclosed on the Rent Roll, rights of tenants, as
tenants only, under the Leases;
(c) those existing title matters affecting the Properties,
Option Properties and the Acquisition Properties (i) disclosed in the
Title Insurance Commitments and not timely specified in Regency's written
objection to the applicable Property Entity or Joint Venture pursuant to
Section 5.16 (Title Insurance; Survey) or (ii) otherwise described on
Schedule 1.1.105(c);
(d) those matters shown on the existing surveys of the
Properties and Option Properties (but not the surveys of the Acquisition
Properties) and any changes since the date of such existing surveys
reflected on the updated Survey which in either case are not objected to
by Regency in accordance with Section 5.16 or for which Regency elects to
close notwithstanding such matters in accordance with Section 5.16;
(e) easements, rights-of-way, covenants and restrictions
which are customary and typical for properties similar to the Properties
or Option Properties and which do not (i) interfere with the ordinary
conduct of any Property or Option Property or the business of any Property
Entity or Joint Venture as a whole or (ii) detract from the value or
usefulness of the Properties or Option Properties to which they apply;
(f) liens, mortgages, deeds of trust and other
encumbrances securing the Existing Mortgage Debt; and
(g) any other matters not objected to by Regency in
accordance with Section 5.16 or for which Regency elects to close
notwithstanding such matters in accordance with Section 5.16.
1.1.106 "Person" means an individual or a corporation,
partnership, limited liability company, joint venture, trust,
unincorporated organization, association, other form of business or legal
entity or Government Entity.
1.1.107 "Personal Property" means all tangible property owned
or leased by any Property Entity or Joint Venture now or on the First
Closing Date and used in conjunction with the operation, maintenance,
ownership and/or occupancy or development of the Real Property, Midland
Headquarters or the Third Party Management Business, including without
limitation: furniture; furnishings; art work; sculptures; paintings;
office equipment and supplies; landscaping; plants; lawn equipment; and
whether stored on or off the Real Property, tools and supplies,
maintenance equipment, materials and supplies, shelving and partitions,
and any construction and finish materials and supplies not incorporated
into the Improvements and held for repairs and replacements thereto or
development thereof, wherever located.
1.1.108 "Positive Midland Development Value Adjustment" has the
meaning set forth in Section 11.5.2.
1.1.109 "Property" means, for each property described on
Schedule 1.1.115, and any Acquisition Property acquired by a Property
Entity or a Joint Venture pursuant to Section 5.4 hereof prior to the
First Closing, the Real Property, Leases, Personal Property and Intangible
Property related to it, and the "Properties" means all of the Properties.
1.1.110 "Property Entity" means Midland Development and each
entity as set forth on Schedule 1.1.110, which own the Real Property or
Acquisition Contracts set forth opposite the name of such entity on
Schedule 1.1.110 (collectively, the "Property Entities").
1.1.111 "Property Owners" means the Property Entities (except
that Midland Development shall be excluded for purposes of Section 6.5)
and the Joint Ventures.
1.1.112 "Proration Items" has the meaning assigned thereto in
Section 2.1.
1.1.113 "Qualified Development" means development or
redevelopment of a property that is not included in the calculation of the
In-Process Earn-Out (as defined in Section 2.5.1) and for which
construction has commenced by any Regency Entity, or by a joint venture
between a Regency Entity and any Affiliate of Dillon or Topvalco, in the
twelve calendar months immediately preceding the applicable Calculation
Date for a shopping center which has been approved by Regency's investment
committee.
1.1.114 "REIT" means a real estate investment trust within the
meaning of Section 856 of the Code.
1.1.115 "Real Property" means, as to each Property, the real
property described or referred to on Schedule 1.1.115, together with all
rights, privileges, hereditaments and interests appurtenant thereto
including, without limitation: any water and mineral rights, development
rights, air rights, easements, and any and all rights of any Property
Entity or Joint Venture in and to any streets, alleys, passages and other
rights of way; and all buildings, structures and other improvements
located on or affixed to such real property and all replacements and
additions thereto (collectively, the "Improvements").
1.1.116 "Recent Balance Sheet Date" means October 31, 1997.
1.1.117 "Record Date Adjustment Amount" means, with respect to
the Units or Additional Units issuable to a Contributor (but for the
Record Date Adjustment Amount), the quotient arrived at by (i) dividing
the Unit Value (or the then Value in the case of Additional Units that
this Agreement requires to be issued based on the then Value) into (ii)
the total number of such Units or Additional Units multiplied times an
amount equal to that portion of the per Share quarterly dividend on the
Common Stock (assuming a quarterly dividend per Share equal to the most
recent quarterly dividend declared by Regency at the time of the Closing)
which is attributable (assuming that quarterly dividends are prorated
evenly by day) to the period prior to the Closing but will be paid after
the Closing (the amount in this clause (ii) is referred to as the
"Windfall Distribution Amount"). In the event that Units or Additional
Units are issued on a record date for the payment by Regency of a cash
dividend on the Common Stock, the Windfall Distribution Amount shall be
based on the entire per Share quarterly dividend payable with respect to
such record date. The Record Date Adjustment Amount shall be zero in the
event that Units or Additional Units are issued on a date that is the
first day following a record date for the payment by Regency of a cash
dividend on the Common Stock.
1.1.118 "Redemption Agreement" means the Redemption Agreement
in substantially the form attached as Exhibit 1.1.118.
1.1.119 "Redemption Rights" means the right to redeem Units for
Shares pursuant to the Redemption Agreement.
1.1.120 "Regency Entity" means any one of the Partnership,
Regency, R&M Western Partnership or any of their Affiliates but excludes
(i) Security Capital or any of its Affiliates other than Regency or any of
its subsidiaries and (ii) Midland Western Partnership.
1.1.121 "Regency Exchange Act Reports" means the following
documents filed by Regency with the SEC since December 31, 1996 and prior
to the First Closing: (i) Regency's Form 10-K annual report, (ii) all
quarterly reports on Form 10-Q and periodic reports on Form 8-K, (iii) all
definitive proxy statements, (iv) all other reports required to be filed
by Regency under the Securities Exchange Act of 1934, and (v) all
amendments or supplements to any of the foregoing.
1.1.122 "R&M Western Partnership" means a limited partnership
formed under Delaware law pursuant to Section 3.1.
1.1.123 "Registration Rights Agreement" means the Registration
Rights Agreement in substantially the form attached as Exhibit 1.1.123.
1.1.124 "Rent Roll" means collectively the rent roll and
summaries of Leases (including all amendments to Leases) attached as
Schedule 1.1.124, identifying with particularity the space leased by each
tenant, the term (including extensions and termination rights), square
footage and applicable rent, common area maintenance, Tax and other
reimbursements, security deposits, exclusivity or expansion rights, and
options to purchase or rights of first refusal.
1.1.125 "Repair Contracts" means all contracts listed on
Schedule 1.1.125 for repairs, restoration, renovations or improvements
(other than tenant improvements) being performed on the Properties but
does not include any such contracts that are terminable without penalty on
thirty (30) days or less notice or requiring less than $10,000 in
aggregate payments under the remaining term of the contract.
1.1.126 "Return on Regency Equity" means the amount by which a
10% per annum return on equity invested directly or indirectly (e.g.,
through R&M Western Partnership) by Regency in a property, while so
invested, would exceed actual cash distributions allocable to Regency from
the property. Such equity shall include equity attributable to any
Contribution Value of a property except that such equity shall be deemed
to be zero while a property is held by a joint venture with Dillon or
Topvalco and thereafter shall be deemed not to exceed 70% of the
Development Cost of the Property even if actual equity of Regency in the
Property exceeds such amount. For purposes of computing the Return on
Regency Equity, cash distributions to Regency that exceed a 10% per annum
return on such equity shall be deemed to reduce Regency's equity.
1.1.127 "SEC" means the Securities and Exchange Commission.
1.1.128 "Second Calculation Date" means the month end
immediately following the second anniversary date of the First Closing
Date.
1.1.129 "Second Earn-Out Closing Date" means the first Business
Day thirty (30) days after the Second Calculation Date.
1.1.130 "Second Midland NOI Cap" means $3,200,000 if, from the
First Closing Date to the Second Calculation Date, any Regency Entity
commences development or redevelopment of and/or acquires shopping center
developments in the Territory which are approved by Regency's investment
committee and have budgeted Development Costs and/or purchase price
(including the principal amount of any mortgage debt assumed) in the
aggregate equal to or greater than $20,000,000. If such Development Costs
and/or purchase price in the aggregate are less than $20,000,000, then the
Second Midland NOI Cap shall be an amount equal to (i) $3,200,000,
multiplied by (ii) the quotient of such aggregate Development Costs and/or
purchase price divided by $20,000,000. In the event that the Second
Midland NOI Cap was less than $3,200,000 on the Second Calculation Date,
the Second Midland NOI Cap for purposes of the Third Calculation Date
shall be equal to (i) $3,200,000 multiplied by (ii) the lesser of (x) one
(1) or (y) the quotient of such aggregate Development Costs and/or
purchase price from the First Closing Date to the Third Closing Date
divided by $20,000,000.
1.1.131 "Second Midland NOI Threshold" has the meaning set
forth in Schedule 1.1.131.
1.1.132 "Securities Act" means the Securities Act of 1933, as
amended.
1.1.133 "Security Capital" means, collectively, Security
Capital Holdings, S.A., a Luxembourg corporation, and Security Capital
U.S. Realty, a Luxembourg corporation.
1.1.134 "Service Contracts" means, as to each Property, all
management, service, maintenance, utility, supply, equipment rental, and
other contracts listed on Schedule 1.1.134 related to the operation of
each Real Property or the related Personal Property, but does not include
any such contracts which are terminable without penalty on thirty (30)
days or less notice or requiring less than $10,000 in aggregate payments
over the remaining term of the contract.
1.1.135 "Shares" means shares of Common Stock.
1.1.136 "Subsequent Closing" means any Closing after the First
Closing.
1.1.137 "Survey" means, collectively, a map of a stake survey
of each Property which shall comply with Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys, jointly established and
adopted by ALTA and ACSM in 1992, and includes items 1, 2, 3, 4, 5, 6, 7,
8, 9, 10 and 11 of Table "A" thereof, which meets the accuracy standards
(as adopted by ALTA and ACSM and in effect on the date of the Survey) of
an urban survey, which is dated not earlier than 90 days prior to the
First Closing, and which is certified to the Partnership and any other
applicable Transferee, the Property Entity or Joint Venture owning such
Property, Regency, lenders under the Existing Mortgage Debt and the Title
Company providing the Title Insurance, and dated as of the date the Survey
was made. Notwithstanding the foregoing, the Survey shall, at a minimum,
show the following:
(a) the metes and bounds legal description of the
Property;
(b) a certificate by the surveyor certifying to the
Partnership, Regency, the Property Entity or Joint Venture owning such
Property, lenders under the Existing Mortgage Debt and the Title Company,
in such form as may be reasonably acceptable to the Partnership, dated as
of a date not earlier than the date of execution of this Agreement (and
subsequently updated to within 90 days of the First Closing, if
necessary);
(c) all physical matters on the ground, which may
adversely affect the Property or title thereof and the number of parking
spaces located on the Property;
(d) whether the Property is located in a "Special Flood
Hazard Area" as determined by review of a stated, identified, Flood Hazard
Boundary Map or Flood Hazard Rate Map published by the Federal Insurance
Administration of the United States Department of Housing and Urban
Development;
(e) all easements of record affecting the Property with
proper notation of the book and page of each easement as recorded in the
public records;
(f) the lines of the public streets abutting the Property
and the widths and center lines of all such streets;
(g) all encroachments and the extent thereof, if any, in
feet and inches on the Property or any portion thereof; and
(h) the number of square feet (to the nearest 1/100 of a
square foot) contained within the Property.
1.1.138 "Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including
taxes under Code Section 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or
other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not. The term "Tax" also includes
any amounts payable pursuant to any tax sharing agreement to which any
relevant entity is liable as a successor or pursuant to contract.
1.1.139 "Tenant Estoppels" has the meaning set forth in Section
5.13.
1.1.140 "Territory" means the states of Colorado, Illinois,
Indiana, Michigan, Missouri, North Carolina, Ohio, Tennessee, Texas,
Virginia and Wyoming.
1.1.141 "Third Calculation Date" means the month end
immediately following the third anniversary of the First Closing Date.
1.1.142 "Third Earn-Out Closing Date" means the first Business
Day thirty (30) days after the Third Calculation Date.
1.1.143 "Third Party Management Assets" means the furniture,
fixtures and equipment of Midland Development (an itemized list of which
shall be provided to Regency prior to the First Closing) and the other
assets, including all cash, deposits (to the extent assignable),
receivables and the Management Contracts, used by Midland Development in
its business of (i) managing and/or leasing properties owned by third
parties, (ii) developing properties for third parties, (iii) acting as
real estate broker for third parties, and (iv) consulting and business
services performed for third parties, including without limitation, tenant
representation, asset management, construction management and other
consulting services. Notwithstanding the foregoing, Third Party
Management Assets shall not include rights relating to pending
transactions which have been substantially agreed to and are in the
process of being documented and which are set forth on Schedule 1.1.143
(or on any amendment to Schedule 1.1.143 which may be delivered at or
prior to the First Closing).
1.1.144 "Third Party Management Company" means Regency Realty
Group, Inc., a Florida corporation, or, at the election of Regency,
Regency Realty Group II, Inc., a Florida corporation.
1.1.145 "TI Budget and Schedule" means, collectively, the
tenant improvement budget and schedule for each Property or Acquisition
Property, copies of which are attached as Schedule 1.1.145 (as it may be
amended pursuant to Section 5.10), which describes the tenant improvements
that each Property Entity or Joint Venture respectively budgeted therefor
the periods shown therein.
1.1.146 "TI Contracts" means all contracts listed on Schedule
1.1.146 (as it may be amended pursuant to Section 5.10) for tenant
improvements under the Leases.
1.1.147 "Title Company" means Lawyers Title Insurance
Corporation.
1.1.148 "Title Defect" means any exception in the Title
Insurance Commitment or any matter disclosed by the Survey, other than a
Permitted Exception.
1.1.149 "Title Insurance" means an ALTA Form B Owner's Policy
of Title Insurance (Revised 10-17-70 and 10-17-84), with extended coverage
(i.e., with ALTA General Exceptions 1 through 5 deleted), for such amount
as Regency reasonably determines, insuring the applicable Transferee as
owner of good, marketable and indefeasible fee simple title to the
Properties, subject only to the Permitted Exceptions, issued by the Title
Company or another title insurer acceptable to Regency.
1.1.150 "Title Insurance Commitment" means a binder whereby the
Title Company agrees to issue the Title Insurance to the applicable
Transferee.
1.1.151 "Topvalco" means Topvalco, Inc., an Ohio corporation
and a wholly owned subsidiary of The Kroger Co.
1.1.152 "Transaction Documents" means the Partnership
Agreement, the Redemption Agreement, the OTR Redemption Agreement, the
Registration Rights Agreement and the various other agreements and
documents executed and delivered in connection with the transactions
contemplated hereby.
1.1.153 "Transferee" means the Partnership, R&M Western
Partnership, any OTR Joint Venture or any NewSub (collectively,
"Transferees").
1.1.154 "Unit Recipient" means each equity owner of a
Contributor who receives Units at the First Closing, as set forth on the
Allocation Chart (collectively, the "Unit Recipients").
1.1.155 "Unit Value" means a value per Unit of $26.5813.
1.1.156 "Units" means units of partnership interests in the
Partnership to be held by the Unit Recipients as more fully described in
the Partnership Agreement.
1.1.157 "Value" has the meaning set forth in the Redemption
Agreement. Whenever the value is being determining for Units pledged
pursuant to Article 13, the Value of a Unit shall be determined by
multiplying the Value of a Share by the Unit Adjustment Factor (as defined
in the Redemption Agreement).
1.1.158 "Western Properties" means the OSTRS Committed Western
Properties, the OSTRS Western Option Properties, the Development
Properties known as Cheyenne and Lloyd King, and any properties located in
Colorado, Texas or Wyoming which become subject to this Agreement prior to
the First Closing pursuant to Section 5.4.
1.1.159 "Windfall Distribution Amount" has the meaning set
forth in Section 1.1.117.
1.1.160 "Work Contracts" means the TI Contracts, the Repair
Contracts and the Development Contracts.
ARTICLE 2: CONTRIBUTION TO PARTNERSHIP
2.1 Contribution Values. The aggregate Contribution Value (after
giving effect to the reserves for capital expenditures set forth on
Schedule 2.1) of all the Assets (and the individual Contribution Value of
each Property or other Asset) to be contributed hereunder by the Property
Entities, and the aggregate and individual Gross Asset Value of each such
Asset as of November 30, 1997, is as set forth on Schedule 2.1.
(a) The Contribution Value of each Property being contributed
at the First Closing shall be adjusted (i) based upon the Annualized NOI
of such Property as of the end of the month immediately preceding the
First Closing, calculated in the same manner and utilizing the same
capitalization percentage rates as described on Schedule 2.1 for such
Property and (ii) based upon the Existing Mortgage Debt for such Property
as of the First Closing. Any closing prorations and adjustments credited
to the Transferees (but excluding any cash reimbursements of items such as
earnest money deposits) or charged against Property Entities pursuant to
Sections 5.16 (Title Insurance; Survey), 5.18 (Damage), or 5.19
(Condemnation) or Article 11 (Prorations and Adjustments) (collectively,
the "Proration Items") shall increase or reduce the Contribution Value of
the applicable Property, and the amount of out-of-pocket acquisition and
development costs funded after the date hereof and prior to the First
Closing in accordance with Section 5.2 (Preservation of Business) (other
than costs funded through the incurrence of debt or costs reimbursed in
cash at the First Closing) shall increase the Contribution Value of the
applicable Asset. In the event that a Closing of a Property is deferred
until after the First Closing (a "Deferred Property") and the Deferred
Property is expected to have a negative Contribution Value, an appropriate
reserve shall be deducted from the Contribution Value of the other Assets
contributed at the First Closing by the Contributor(s) who own the
Deferred Properties so that, after taking such reserve into account, the
Partnership will not reasonably be expected to have issued too many Units
taking into consideration the Contribution Value of (i) the Assets
contributed by such Contributors at the First Closing and (ii) all the
Deferred Properties.
(b) The Contribution Value of the Third Party Management
Assets and the Other Assets being contributed by Midland Development
(i) shall be increased as of the First Closing by the estimated amount by
which Midland Development's Assets constituting current assets (cash,
deposits and accounts receivable) exceed the sum of Midland Development's
current liabilities and the outstanding balance under its line of credit
(to the extent included in the Assumed Liabilities), or (ii) shall be
decreased by the estimated amount by which such current liabilities and
outstanding line of credit balance (to the extent included in the Assumed
Liabilities) exceed such current assets, as applicable, in either case, on
the First Closing Date, as reflected on the Estimated Closing Balance
Sheet).
(c) Any Additional Units issued to a Unit Recipient at a
Subsequent Closing shall increase the Contribution Value of the applicable
Assets to which the Additional Units relate by an amount equal to the Unit
Value (or the then Value in the case of Additional Units that this
Agreement requires to be issued based on the then Value) times the number
of such Additional Units, less the Record Date Adjustment Amount
attributable to such Units, and such increase in Contribution Value shall
be allocated among such Assets as provided in the Partnership Agreement.
2.2 Capitalization of the Partnership.
(a) At the First Closing, (i) Regency shall contribute cash in
return for an additional interest as general partner, in accordance with
the Partnership Agreement, in the amount described in Section 10.2.2(h)
hereof, which contribution shall be applied immediately following the
First Closing to pay that portion of the Existing Mortgage Debt set forth
on Schedule 2.2(a) and to pay the closing costs described in Section 15.5,
and (ii) each Contributor shall contribute its Assets to the Partnership,
subject to the Assumed Liabilities and Assumed Obligations, free and clear
of all Liens, other than Permitted Exceptions, in exchange for Units
representing its respective limited partner's interest. The number of
Units to which a Contributor is entitled (i) shall be determined by
dividing (x) the Contribution Value of the Assets as of the First Closing
contributed by such Contributor by (y) the Unit Value, and subtracting the
Record Date Adjustment Amount and (ii) shall be rounded to the nearest
whole Unit. At Regency's election, OTR/Midland Ltd. shall contribute its
Properties and other Assets to the Partnership by merging into the
Partnership at the First Closing, with the Partnership being the surviving
entity in the merger.
(b) At the First Closing, each Contributor shall distribute to
its respective Unit Recipients, in the respective percentages set forth on
the Allocation Chart (which are included at the Contributor's
instructions), the Units that such entity receives in exchange for its
capital contributions to the Partnership, with fractional Units paid in
cash by the Partnership based on the Unit Value. At the First Closing, in
lieu of issuing Units to each Contributor and then reissuing them to such
entity's Unit Recipients pursuant to the steps outlined above, at the
direction of each respective Contributor, the Partnership shall issue such
consideration directly to such Unit Recipients pro rata in accordance with
their respective percentages shown on the Allocation Chart.
(c) At the First Closing, prior to the exercise of any
Redemption Right by the Unit Recipients, the Partnership shall sell the
Third Party Management Assets, at a price equal to their Contribution
Value, to Regency Realty Group, Inc., pursuant to a separate purchase and
sale agreement.
(d) Pursuant to the Redemption Agreement, in addition to the
other redemption rights granted thereunder, each Unit Recipient shall be
entitled to elect to immediately cause Regency to redeem all or any
portion of the Units issued to such Unit Recipient for cash in an amount
equal to the Unit Value, payable at the First Closing; provided, however,
that in the event the closing price per Share on the New York Stock
Exchange is less than $24 per Share on the Business Day immediately
preceding the First Closing, then notwithstanding the failure to elect to
immediately redeem Units for cash, each Unit Recipient may so elect at the
First Closing, and the redemption price shall be payable following the
First Closing, all as provided in the Redemption Agreement. Any Unit
Recipient who does not elect to retain his Units or does not execute any
election form or investment representation form submitted with the
Disclosure Documents referred to in Section 5.6 shall be deemed to have
elected to redeem all of the Units issued to such Unit Recipient for cash.
Notwithstanding the foregoing, the Midland Principals may only immediately
redeem their Units for cash to the extent that the Midland Principals
collectively hold at least 67% of the aggregate consideration which they
receive at the First Closing (other than the amounts placed in escrow
pursuant to Section 2.2(e)) in the form of Units which are not so redeemed
(the "Minimum Unit Requirement"). In the event that the elections of the
Midland Principals to immediately redeem Units for cash at the First
Closing do not in the aggregate satisfy the Minimum Unit Requirement, each
Midland Principal will be deemed to elect to retain a pro rata number of
Units based on the percentage allocations set forth on Schedule 2.2(c)
sufficient in the aggregate to satisfy the Minimum Unit Requirement. OTR
shall be entitled to certain additional redemption and other rights
pursuant to the OTR Redemption Agreement.
(e) Notwithstanding the above provisions of this Section 2.2,
Units representing $400,000 of the Contribution Value with respect to the
St. Ann Property and Units representing $400,000 of the Contribution Value
(which shall be allocable only to the Midland Affiliate owning an interest
in such Property (the "Hamilton Escrow Entity")) with respect to the
Hamilton Meadows Property shall be redeemed by Regency for cash and the
cash redemption price shall be placed in separate escrow accounts (each,
an "Escrow") with Foley & Lardner pursuant to escrow agreements to be
executed at the First Closing, providing for interest to be distributed
annually (i) to the Property Entity that contributes the St. Ann Property
and (ii) to the Hamilton Escrow Entity, respectively (collectively, the
"Escrow Entities"). Upon the election of either Regency or the Midland
Representatives, Regency shall use reasonable commercial efforts to
dispose of such Properties and shall use reasonable commercial efforts to
effect such dispositions as "like-kind" tax deferred exchanges pursuant to
Section 1031 of the Code provided that such Properties are eligible for
such treatment thereunder. With respect to each of the St. Ann Property
and the Hamilton Meadows Property:
(i) In the event that the Net Proceeds from the sale of
such Property are greater than its Gross Asset Value
as of the First Closing (determined after any
Proration Items), Units with a value equal to 50% of
the amount of such excess together with the funds held
in the respective Escrow for such Property will be
distributed to the applicable Escrow Entity.
(ii) In the event that the Net Proceeds from the sale
of such Property are less than its respective
Gross Asset Value as of the First Closing
(determined after any Proration Items), funds
equal to 50% of the excess of such Gross Asset
Value over the Net Proceeds will be distributed
from the respective Escrow for such Property to
the Partnership, and any funds thereafter
remaining in such Escrow shall be distributed to
the applicable Escrow Entity.
(iii) In no event shall an Escrow Entity be responsible
or liable for any deficiency in the Net Proceeds
for its respective Property beyond the amount
held in the respective Escrow for such Property.
For purposes of this Section 2.2(e), there shall
not be deducted from Net Proceeds any brokerage
commissions payable to any Affiliate of Regency
in connection with the sale of the Property.
(iv) The number of any new Units issuable under this
Section 2.2(e) shall be (x) based on the Unit
Value and (y) reduced by the Record Date
Adjustment Amount.
(f) Any Unit Recipient who does not elect to exercise a
Redemption Right at the First Closing may affirmatively elect, on forms
provided as part of the Disclosure Documents referred to in Section 5.6,
to purchase Units from the Partnership, at a price per Unit equal to the
Unit Value, to be issued simultaneously with the other Units issued to
such Unit Recipient at the First Closing (the "Asset Units"), in an amount
(the "Adjustment Units") equal to the Record Date Adjustment Amount
applicable to the Asset Units. The purchase price for such Adjustment
Units shall be equal to the Windfall Distribution Amount applicable to the
Asset Units and shall be payable in cash to the Partnership on the tenth
Business Day after the payment date for the first cash dividend paid by
Regency on the Common Stock after the First Closing Date. The Partnership
shall hold a first priority security interest in the Adjustment Units to
secure the payment of the purchase price thereof. Certificates for the
Adjustment Units, together with related stock powers or other powers of
attorney otherwise reasonably acceptable to the Partnership, shall be held
by the Partnership until the release of the security interest therein
pursuant to this Section 2.2(f). Until such time as the full purchase
price is paid, the Unit Recipient pledging the Adjustment Units shall (i)
keep such Units free of all security interests, voting trust agreements,
shareholder agreements, or other interests and encumbrances, except for
the security interest granted herein, and (ii) not assign, deliver, sell,
transfer, lease or otherwise dispose of (including dispositions by
operation of law) any portion of the Adjustment Units or any interest
therein without the prior written consent of the Partnership. The
Partnership shall have the right to cancel the Adjustment Units in the
event that the Partnership does not receive the full purchase price of
such Units by the fifteenth Business Day after the due date thereof, and
in addition, shall have all rights and remedies of a secured party under
the Uniform Commercial Code. A Unit Recipient who purchases Adjustment
Units hereunder shall also be deemed to have elected to purchase
Adjustment Units on the same terms and conditions with respect to any
Additional Units issued to such Unit Recipient at a Subsequent Closing
except Units representing the Evans Crossing Land Earn-Out.
2.3 OSTRS Consideration. Notwithstanding the provisions of Section
2.2 hereof, the consideration to be received by the equity owners of
OTR/Midland Ltd. at the First Closing with respect to the OSTRS Committed
Eastern Properties transferred by OTR/Midland Ltd. to the Partnership at
the First Closing shall be governed by this Section 2.3. Upon the
transfer of such Properties to the Partnership at the First Closing as
provided hereunder, OTR/Midland Ltd. shall be entitled to receive, for
distribution to its equity owners, in accordance with the respective
percentages set forth on the Allocation Chart (which are included at
OTR/Midland Ltd.'s instructions), the Units which OTR/Midland Ltd. would
receive pursuant to Section 2.2, plus an additional amount of Units with a
Unit Value equal to the OSTRS Capitalization Premium. As used herein, the
"OSTRS Capitalization Premium" (which shall be allocated 100% to OSTRS)
means 65% of the difference between (i) the Contribution Value of the
Properties owned by OTR/Midland Ltd. determined in accordance with Section
2.1(a), but using the respective capitalization rates set forth on the
Allocation Chart (which is a weighted average capitalization rate of
9.486%) and (ii) the Contribution Value of such Properties determined in
accordance with Section 2.1(a).
2.4 Assumptions.
2.4.1 Assumption of Liabilities. At the First Closing, each
Transferee shall assume the applicable Assumed Liabilities and Assumed
Obligations (but in the case of Assumed Liabilities that are non-recourse,
only to the extent of the carve-outs from the non-recourse provisions)
that relate to the Assets transferred to it, and the applicable Property
Entity shall assign such Assumed Liabilities and Assumed Obligations to
the applicable Transferee. The amount of such Assumed Liabilities that
encumber Option Properties, as further described on Schedule 2.4.1, shall
be deducted from the Contribution Value as of the First Closing for the
adjacent Property described on Schedule 2.4.1. Except for the Assumed
Liabilities and Assumed Obligations, the Transferees shall not assume or
become subject at any Closing to any Liabilities of any Property Entity or
Midland Affiliate unless to the extent a Transferee expressly accepts the
benefits of a Contract that a Contributor neglected to transfer to the
Transferee, in which case such Transferee shall be deemed to have assumed
the Contributor's obligations thereunder.
2.4.2 Substitution of NewSubs in Joint Ventures.
(a) At the First Closing, each Midland Affiliate that is a
member or a partner in a Joint Venture shall transfer and assign its
interest in such Joint Venture to the Partnership (which may contribute
all or a portion thereof in turn to one or more NewSubs), such
Transferee(s) shall become the substitute members or partners of such
Joint Venture and, at Regency's election, Third Party Management Company
may be admitted as a one percent (1%) member or partner so long as the
aggregate interests of the Regency Entities therein do not exceed fifty
percent (50%).
(b) The ultimate Transferee of the Partnership shall have
the right to direct that the Transaction Documents convey the interests in
the Joint Ventures directly to such ultimate Transferee rather than to the
Partnership and then to the ultimate Transferee.
(c) Each Joint Venture will be obligated to transfer its
Development Property to either the Partnership, R&M Western Partnership or
an OTR Joint Venture (pursuant to obligations under the OTR/Midland
Transfer and Contribution Agreement and the OSTRS Option Rights
transferred to the Partnership and then transferred, with certain
exceptions, to such other Transferees), when such Property attains the
Minimum Leasing Criteria. Notwithstanding the foregoing, at Regency's
election, (i) the Joint Ventures that are developing the Properties known
as Cheyenne and Lloyd King, and (ii) any Joint Ventures developing
Properties in Colorado, Texas or Wyoming as to which OSTRS does not
exercise OSTRS Option Rights, may retain their Properties in the event
that Midland Western Partnership (as defined in Section 3.1) is admitted
to such Joint Ventures.
2.5 Subsequent Closings. As described in this Section 2.5,
Additional Units may be issued at Subsequent Closings to Contributors that
have contributed their Assets to the Partnership at the First Closing,
provided that certain performance criteria are satisfied. The number of
any Additional Units issuable to a Contributor pursuant to this Section
2.5 shall be based on the Unit Value, shall be reduced by the Record Date
Adjustment Amount and shall be rounded to the nearest whole Unit. At the
direction of the Contributor, in lieu of issuing such Additional Units to
the Contributor for distribution by the Contributor to its equity owners,
the Partnership shall issue the Additional Units directly to such equity
owners, in accordance with the Contributor's instructions, which are
included as part of the Allocation Chart. Any fractional Unit resulting
from such instructions shall be paid in cash, based on the Unit Value.
2.5.1 In-Process Earn-Out. Contributors who contribute
Eligible Properties shall have the right to receive Additional Units in
the event that the performance criteria set forth below are satisfied (the
"In-Process Earn-Out"). Such Additional Units issued on account of the
In-Process Earn-Out shall be allocated to the Contributors who contributed
the Eligible Properties and, in accordance with their instructions, shall
be allocated among their Unit Recipients in the respective percentages set
forth on the Allocation Chart.
(a) "In-Process Earn-Out Value" means as of the applicable
Calculation Date, the excess of (x) the aggregate Capitalized Annualized
NOI as of the Calculation Date for the Eligible Properties that have first
attained the Minimum Leasing Criteria during the twelve months ending on
such Calculation Date over (y) the sum of (A) the aggregate Development
Costs for such Eligible Properties, plus (B) an amount equal to the Return
on Regency Equity with respect to such Eligible Properties as of the
applicable Calculation Date, plus (C) all rent concessions, including
aggregate Abated Rent, for such Eligible Properties for the period after
the applicable Calculation Date, plus (D) Regency's reasonable estimate of
aggregate unrealized losses based on the value (computed using Capitalized
Annualized NOI less Development Costs) of Eligible Properties deferred by
the Midland Representatives pursuant to paragraph (c) below ("Loss
Estimation"). If Topvalco or Dillon retains an interest in an Eligible
Property on the Calculation Date, the In-Process Earn-Out Value shall be
reduced to the extent of such interest. Notwithstanding the above, the
In-Process Earn-Out Value with respect to the Garner Property shall be
determined at anytime after the First Closing and prior to the First or
Second Calculation Date, as may be designated by the Midland
Representatives (referred to herein as the "Garner Calculation Date"). In
the event that no such designation is made by the Midland Representatives,
the In-Process Earn-Out for Garner will be determined on the applicable
Calculation Date.
(b) If the In-Process Earn-Out Value is a positive number
on the First Calculation Date (or on the Garner Calculation Date with
respect to the Garner Property, if applicable), on the First Earn-Out
Closing Date (or on the 30th day following the Garner Calculation Date, if
applicable), Additional Units shall be issued in an aggregate amount equal
to the quotient obtained by dividing (i) the In-Process Earn-Out Value as
of the First Calculation Date (or in the In-Process Earn-Out Value of the
Garner Property as of the Garner Calculation Date) by (ii) the Unit Value,
and then subtracting the Record Date Adjustment Amount.
(c) Notwithstanding the foregoing, the Midland
Representatives shall have the right to defer the calculation of the In-
Process Earn-Out Value with respect to an Eligible Property ("Deferred
Eligible Properties") until the Second Calculation Date. If Regency makes
a Loss Estimation with respect to a Deferred Eligible Property on the
First Calculation Date, and as of the Second Calculation Date (i) such
Eligible Property has Capitalized Annualized NOI that does not result in
an unrealized loss in value or (ii) the amount of such Capitalized
Annualized NOI results in an unrealized loss in value which is less than
the Loss Estimation, an amount equal to such Loss Estimation or the amount
by which the Loss Estimation exceeded the actual unrealized loss in value
(which amount in either case shall be a positive amount) shall be credited
to the aggregate Capitalized Annualized NOI of the Deferred Eligible
Properties on the Second Calculation Date. If the In-Process Earn-Out
Value with respect to the Deferred Eligible Properties as of the Second
Calculation Date is a positive number, on the Second Earn-Out Closing
Date, Additional Units shall be issued in an aggregate amount equal to the
quotient obtained by dividing (i) such In-Process Earn-Out Value as of the
Second Calculation Date by (ii) the Unit Value, and then subtracting the
Record Date Adjustment Amount. For purposes of computing the In-Process
Earn-Out as of the Second Calculation Date, all base rent shall be
computed using the initial base rent in effect as of the end of the
calendar month immediately prior to the First Calculation Date or, with
respect to leases which are not in effect on that date, as of the
beginning of the lease term.
2.5.2 In-Place Earn-Out. The Contributors who contribute
the Properties known as Maxtown, Cherry Grove and Franklin Square shall
respectively have the right to receive Additional Units as provided herein
in the event that the performance criteria set forth below are satisfied
(the "In-Place Earn-Out").
(a) "The In-Place Earn-Out Base" shall mean the extent, if
any, to which (A) the Gross Asset Value of such Property calculated as of
the First Calculation Date determined on the same basis as contained in
Schedule 2.1 and based on the Annualized NOI calculated as of the First
Calculation Date exceeds (B) 103% of the Gross Asset Value of such
Property determined as of the First Closing (after any Proration Items)
pursuant to Section 2.1.
(b) If the In-Place Earn-Out Base is a positive number
with respect to the Property known as Maxtown, the "In-Place Earn-Out
Value" shall be equal to that percentage of the In-Place Earn-Out Base
with respect to such Property that equals the aggregate percentage of
ownership held by Vincent Romanelli, David Hughes and their Affiliates in
the Contributor of such Property, who shall be entitled to 100% of such
In-Place Earn-Out Value, pro rata in accordance with their relative
individual percentage interests in such Contributor.
(c) If the In-Place Earn-Out Base is a positive number
with respect to the Property known as Cherry Grove, the "In-Place Earn-Out
Value" shall be equal to that percentage of the In-Place Earn-Out Base
with respect to such Property that equals the aggregate percentage of
ownership held by Bartlett Real Estate Limited Partnership Fund VI in the
Contributor of such Property, which shall be entitled to 100% of such In-
Place Earn-Out Value.
(d) If the In-Place Earn-Out Base is a positive number
with respect to the Property known as Franklin Square, "In-Place Earn-Out
Value" shall be equal to 100% of the In-Place Earn-Out Base with respect
to such Property.
(e) If a Property named in this Section 2.5.2 produces In-
Place Earn-Out Value, on the First Earn-Out Closing Date, Additional Units
shall be issued to the Property Entity contributing such Property to the
Partnership at the First Closing, in the amount equal to the In-Place
Earn-Out Value divided by the Unit Value, less the Record Date Adjustment
Amount. At the direction of the Contributor, such Additional Units shall
be issued directly to the Unit Recipients entitled thereto, who are
identified on Schedule 2.5.2, in accordance with the allocation procedures
set forth therein (which are included at the Contributor's instructions).
2.5.3 Midland Group Earn-Out. Midland Development shall
have the right to receive Additional Units in the event that the
performance criteria set forth below are satisfied (the "Midland Group
Earn-Out"). The Midland Group Earn-Out shall consist of two components:
the Midland NOI Earn-Out and the Midland Development Earn-Out.
2.5.3.1 The Midland NOI Earn-Out.
(a) The Midland NOI shall be determined as of the First
Calculation Date. An amount equal to 100% of the excess, if any, of the
Midland NOI as of the First Calculation Date over the First Midland NOI
Threshold shall be the "First Midland NOI Earn-Out Value"; provided,
however, the First Midland NOI Earn-Out Value (including any Property Sale
Participation, as defined below) shall not exceed (a) the First Midland
NOI Cap, plus (b) the amount by which the In-Place Earn-Out with respect
to Franklin Square, as determined pursuant to Section 2.5.2(d), is less
than $1,310,000 (the "Franklin Earn-Out Deficiency") (the sum of clauses
(a) and (b) is referred to as the "Maximum First Midland NOI Earn-Out").
If the First Midland NOI Earn-Out Value is a positive number, on the First
Earn-Out Closing Date, Additional Units shall be issued to Midland
Development in an amount equal to the quotient obtained by dividing (i)
the First Midland NOI Earn-Out Value by (ii) the Unit Value, and then
subtracting the Record Date Adjustment Amount.
(b) The Midland NOI shall be determined as of the Second
Calculation Date. An amount equal to 100% of the excess, if any, of the
Midland NOI as of the Second Calculation Date over the Second Midland NOI
Threshold shall be the "Second Midland NOI Earn-Out Value"; provided,
however, that the sum of the First Midland NOI Earn-Out Value plus the
Second Midland NOI Earn-Out Value (including in either case any Property
Sale Participation) shall not exceed (a) the Second Midland NOI Cap, plus
(b) an amount equal to the Franklin Earn-Out Deficiency (the sum of
clauses (a) and (b) is referred to as the "Maximum Possible Midland NOI
Earn-Out"). If the Second Midland NOI Earn-Out Value is a positive
number, on the Second Earn-Out Closing Date, Additional Units shall be
issued to Midland Development equal to the quotient obtained by dividing
(i) the Second Midland NOI Earn-Out Value by (ii) the Unit Value, and then
subtracting the Record Date Adjustment Amount.
(c) In the event that the Maximum Possible Midland NOI
Earn-Out would not otherwise be paid on the Second Earn-Out Closing Date,
and on the First Calculation Date there was Midland NOI remaining after
reaching the Maximum First Midland Group Earn-Out, (i) the amount of such
excess shall be carried forward to the Second Calculation Date, (ii) the
Second Midland NOI Earn-Out Value shall be recomputed on that basis and
(iii) Additional Units, at the Unit Value, less the Record Date Adjustment
Amount, shall be issued to Midland Development for the amount by which the
Second Midland NOI Earn-Out Value computed in accordance with this Section
2.5.3.1(c) exceeds the Second Midland NOI Earn-Out Value computed without
regard to this Section 2.5.3.1(c), provided, however, that the sum of the
First Midland NOI Earn-Out Value plus the Second Midland NOI Earn-Out
Value as so recomputed (including in either case any Property Sale
Participation) shall not exceed the Maximum Possible Midland NOI Earn-Out.
(d) In the event that the sum of the First Midland NOI
Earn-Out Value and the Second Midland NOI Earn-Out Value is less than the
Maximum Possible Midland NOI Earn-Out, the Midland NOI shall be determined
as of the Third Calculation Date. An amount equal to 100% of the excess,
if any, of the Midland NOI as of the Third Calculation Date over the
Second Midland NOI Threshold shall be the "Third Midland Group Earn-Out
Value"; provided, however, that the sum of the First Midland NOI Earn-Out
Value plus the Second Midland NOI Earn-Out Value plus the Third Midland
Group Earn-Out Value (including in each case any Property Sale
Participation) shall not exceed the Maximum Possible Midland NOI Earn-Out.
If the Third Midland Group Earn-Out Value is a positive number, on the
Third Earn-Out Closing Date, Additional Units shall be issued to Midland
Development equal to the quotient obtained by dividing (i) the Third
Midland Group Earn-Out Value by (ii) the Unit Value, and then subtracting
the Record Date Adjustment Amount.
(e) If the maximum possible Midland NOI Earn-Out Value
(without regard to the Property Participation) would not be paid on the
related Earn-Out Closing Date, the deficiency may be made up in the event
that a Property contributed by a Property Entity to the Partnership
pursuant to Article 2 hereof (other than the Western Properties) is sold
by the Partnership in the twelve calendar months immediately preceding the
applicable Calculation Date. The amount of such deficiency is referred to
herein as the "Earn-Out Gap." "Property Sale Participation" means an
amount, but not more than the Earn-Out Gap, equal to 75% of the Net
Proceeds (with no deduction for any commissions payable to a Regency
Entity) from the sale of the applicable Property after deducting (A) the
Gross Asset Value of the Property at the time of its acquisition by the
Partnership, or (B) in the case of a Property that was a Development
Property at or after the First Closing, if greater, the Development Costs
thereof, plus, in either case, an amount equal to the Return on Regency
Equity. On the applicable Earn-Out Closing Date, Additional Units shall
be issued to Midland Development equal to the quotient obtained by
dividing (i) the Property Sale Participation by (ii) the Unit Value, and
then subtracting the Record Date Adjustment Amount.
2.5.3.2 Development Earn-Out. Midland Development shall
have the right to receive Additional Units in the event that the
performance criteria set forth below are satisfied (the "Development Earn-
Out").
(a) The Development Earn-Out shall be determined as of the
First and Second Calculation Dates, respectively. If the budgeted
Development Cost of Qualified Development is equal to at least $25,000,000
as of either Calculation Date, then the Development Earn-Out for such
Calculation Date shall be equal to $3,000,000. If the budgeted
Development Cost of Qualified Development as of such Calculation Date is
less than $25,000,000, then the Development Earn-Out as to such
Calculation Date shall be arrived at by multiplying (i) $3,000,000 times
(ii) the quotient of such Development Cost of Qualified Development
divided by $25,000,000. A Development Cost must be approved by Regency's
investment committee (and Regency agrees that the decisions of such
investment committee, and the timing of such decisions, shall be made on a
reasonable basis and in good faith and not for the purpose of defeating or
minimizing the Development Earn-Out) as part of the applicable development
budget in order to qualify as a budgeted Development Cost. If any Person
other than the Partnership is expected to own an interest in a Qualified
Development following its completion and attainment of the Minimum Leasing
Criteria, the budgeted Development Cost with respect to such Qualified
Development shall be included in the calculation of the Development Earn-
Out only to the extent of the interest of Regency and its Affiliates in
the Qualified Development. Without limiting the foregoing, if a Qualified
Development is subject to OSTRS Option Rights, the Budgeted Development
Cost for such Qualified Development shall be included in the calculation
of the Development Earn-Out only to the extent of the then percentage
interest of R&M Western Partnership in "Net Sale Proceeds" of the OTR
Joint Venture (as defined in its partnership agreement) that has the right
to acquire such Qualified Development. If the budgeted Development Cost
of Qualified Development as of either Calculation Date exceeds $25,000,000
(the "Excess Qualified Development"), then Midland Development shall be
entitled to reallocate the Excess Qualified Development to the other
applicable Calculation Date and may calculate the Development Earn-Out as
of such prior or subsequent Calculation Date, as applicable, including
such Excess Qualified Development; provided, however, that (a) the sum of
the Development Earn-Out for the First and Second Earn-Out Closing Dates
shall not exceed $6,000,000 and (b) Midland Development shall not be
entitled to any Development Earn-Out as of a Calculation Date to the
extent that the budgeted Development Cost of Qualified Development for the
immediately preceding twelve calendar months does not exceed $10,000,000,
excluding any reallocation of Excess Qualified Development.
(b) If applicable, on the First Earn-Out Closing Date,
Additional Units shall be issued to Midland Development equal to the
quotient obtained by dividing (i) the Development Earn-Out as of the First
Calculation Date by (ii) the Unit Value, and then subtracting the Record
Date Adjustment Amount.
(c) If applicable, on the Second Earn-Out Closing Date,
Additional Units shall be issued to Midland Development equal to the
quotient obtained by dividing (i) the Development Earn-Out as of the
Second Calculation Date by (ii) the Unit Value, and then subtracting the
Record Date Adjustment Amount.
(d) In the event that (i) a Qualified Development is
transferred to an OTR Joint Venture and is sold at any time prior to the
Third Earn-Out Calculation Date, (ii) the maximum possible cumulative
Development Earn-Out has not been paid as of the date of the next Earn-Out
Calculation Date, and (iii) as a result of such sale the interest of R&M
Partnership in "Net Sales Proceeds" of the OTR Joint Venture (as defined
in its partnership agreement) increases because OSTRS has received the
preferential return to which it is entitled, the Development Earn-Out
shall be recalculated based on the increased percentage interest of R&M
Western Partnership in the Qualified Development, and Additional Units
shall be issued at the Unit Value, less the Record Date Adjustment Amount,
on the next Calculation Date, for the amount by which the Development
Earn-Out computed in accordance with this Section 2.5.3.2 exceeds the
Development Earn-Out computed without regard to this Section 2.5.3.2, but
only to the extent that the maximum possible cumulative Development Earn-
Out has not previously been paid.
2.5.4 Worthington Outparcel Earn-Out. Subject to the
satisfaction of the conditions precedent set forth in Section 8.2.11 with
respect to the Property known as Worthington Park Centre, the Unit
Recipients having an equity interest in the outparcel Properties
identified on Schedule 2.5.4 (the "Worthington Outparcels") shall have the
right to receive Additional Units in the event the conditions set forth
below are satisfied (the "Worthington Outparcel Earn-Out").
(a) "Worthington Outparcel Earn-Out Value" means the
excess of (x) the Annualized NOI of a Worthington Outparcel calculated as
of the month end of the month in which such Worthington Outparcel has
attained the Minimum Leasing Criteria (the "Stabilization Date"), divided
by a capitalization rate of 11.0%, over (y) the Development Cost of such
Worthington Outparcel, plus the Return on Regency Equity invested in
developing such Worthington Outparcel through the date of issuance of the
Additional Units plus rent concessions and Abated Rent for the period
after the Stabilization Date.
(b) In the event that the Partnership develops a
Worthington Outparcel, the Outparcel Earn-Out Value shall be calculated as
to such Worthington Outparcel as of the Stabilization Date. If the
Worthington Outparcel Earn-Out Value is a positive number, the Unit
Recipients owning an equity interest in such Worthington Outparcel shall
be entitled to receive their respective percentage allocations, as shown
on the Allocation Chart, of that number of Additional Units arrived at by
dividing (i) the Worthington Outparcel Earn-Out Value by (ii) the Unit
Value, after subtracting the Record Date Adjustment Amount.
2.5.5 Evans Crossing Land Earn-Out. The Midland Affiliate
contributing its equity interest in the Joint Venture owning the outparcel
Property identified on Schedule 2.5.5 (the "Evans Crossing Outparcel")
shall have the right to receive Additional Units in the event the
conditions set forth below are satisfied (the "Evans Crossing Land Earn-
Out"). The Partnership shall have the right to deliver such Additional
Units to an agent named by such Midland Affiliate, for delivery in turn to
the Person(s) entitled to receive the same, in the event that such Midland
Affiliate dissolves, and if the Midland Affiliate fails to name such an
agent, the Partnership shall have no responsibility for locating such
Person(s).
(a) "Evans Crossing Land Earn-Out Value" means the excess
of (x) the Annualized NOI of the Evans Crossing Outparcel calculated as of
the month end of the month in which the Evans Crossing Outparcel has
attained the Minimum Leasing Criteria (the "Stabilization Date"), divided
by a capitalization rate of 11.0%, over (y) the sum of the Development
Cost of the Evans Crossing Outparcel, plus the Return on Regency Equity
invested in the Evans Crossing Outparcel through the date of issuance of
the Additional Units plus all rent concessions and Abated Rent for the
Evans Crossing Outparcel for the period after the Stabilization Date.
(b) In the event that the Partnership develops the Evans
Crossing Outparcel prior to the later of (i) the R&M Redemption Date or
(ii) the tenth anniversary of the First Closing Date, the Evans Crossing
Land Earn-Out Value shall be calculated as of the Stabilization Date.
"R&M Redemption Date" means the date on which Midland Western Partnership
no longer holds any interest in R&M Western Partnership. If the Evans
Crossing Land Earn-Out Value is a positive number, the Midland Affiliate
owning an equity interest in such Evans Crossing Outparcel shall be
entitled to receive that number of Additional Units arrived at by dividing
(i) 50% of the Evans Crossing Land Earn-Out Value, by (ii) the Unit Value,
and then subtracting the Record Date Adjustment Amount.
2.6 Subsequent Closings for OSTRS Eastern Option Properties. At
Subsequent Closings to take place within 105 days after OSTRS receives
notice that the OSTRS Option Rights with respect to an OSTRS Eastern
Option Property have become exercisable, OSTRS shall be entitled to
receive additional consideration as provided herein for the release of its
investment rights with respect to such Property hereunder (the "OSTRS
Release Price"). The OSTRS Release Price shall be equal to 65% of the
excess of (a) OSTRS Capitalized Annual NOI over (b) Capitalized NOI for
such Property, assuming a Calculation Date as of forty-five (45) days
after such Property achieves Minimum Leasing Criteria. "OSTRS Capitalized
Annual NOI" means the quotient of (a) Annualized NOI divided by (b)
9.486%. At a Closing for the payment of the OSTRS Release Price,
Additional Units, rounded to the nearest whole Additional Unit, shall be
issued to OSTRS equal to the quotient obtained by (i) dividing the amount
of the OSTRS Release Price by the Unit Value and (ii) then subtracting the
Record Date Adjustment Amount.
ARTICLE 3: FORMATION OF SUBPARTNERSHIPS
3.1 R&M Western Partnership. No later than the First Closing,
Regency shall cause the formation of R&M Western Partnership, the general
partner of which shall be Third Party Management Company. At the First
Closing, an entity to be formed by the Midland Affiliates owning interests
in the Joint Ventures for the applicable Western Properties ("Midland
Western Partnership") and the Partnership shall be admitted as limited
partners in R&M Western Partnership. At the First Closing, OTR/Midland
Ltd. shall assign to the Partnership, for contribution in turn to R&M
Western Partnership, for contribution in turn to the applicable OTR Joint
Ventures formed pursuant to Section 3.2, OTR/Midland Ltd.'s rights to
acquire properties, including the OSTRS Western Option Properties,
pursuant to (i) the OSTRS Option Rights and (ii) the OTR/Midland Transfer
and Contribution Agreement. R&M Western Partnership shall retain the
rights to acquire the Properties in Texas and Colorado as to which OSTRS
does not exercise OSTRS Option Rights and those Properties which are not
subject to OSTRS Option Rights. At the First Closing, the Partnership
also shall contribute the Creekside and Village Center Properties
(immediately following their contribution to the Partnership) to R&M
Western Partnership, for contribution in turn to the applicable OTR Joint
Venture.
3.1.1 Partnership Agreement of R&M Western Partnership. The
Partnership Agreement of R&M Western Partnership shall contain the
provisions regarding such entity's purpose, the disposition of its assets
and the allocation of distributions in substantially the form attached
hereto as Exhibit 3.1.1.
3.2 OTR Joint Ventures. No later than the First Closing, Regency
shall cause the formation of the OTR Joint Ventures, the general partner
of which shall be R&M Western Partnership. A separate OTR Joint Venture
shall be formed for the properties in Texas as to which OSTRS exercises
OSTRS Option Rights, and a separate OTR Joint Venture shall be formed to
acquire all the properties in states other than Texas as to which OSTRS
exercises OSTRS Option Rights. The limited partnership agreement of each
OTR Joint Venture shall be identical in substance to the operating
agreement of OTR/Midland Ltd., except that it shall exclude the OSTRS
Committed Eastern Properties and the OSTRS Eastern Option Properties. At
the First Closing, OTR shall be admitted to the OTR Joint Ventures. At
Regency's election, in lieu of creating a new limited partnership to serve
as an OTR Joint Venture, Regency may cause OTR/Midland Texas Limited
Partnership to be reorganized to serve as an OTR Joint Venture in Texas,
with R&M Western Partnership as general partner and OTR as limited
partner.
3.2.1 Mechanics of Contribution. The ultimate Transferee of
Assets to be transferred pursuant to this Article 3 shall have the right
to direct that the Transaction Documents convey such Assets directly to
such ultimate Transferee rather than to the Partnership and then to any
intervening Transferee and then to the ultimate Transferee.
ARTICLE 4: ADDITIONAL CLOSING AND POST-CLOSING TRANSACTIONS
4.1 Purchase Option. Each Property Entity owning an Option
Property, as set forth on Schedule 4.1, shall grant, and the Midland
Principals shall use reasonable commercial efforts to cause each joint
venture owning an Option Property to grant, to the Partnership at the
First Closing an option to purchase the Option Property for cash (the
"Purchase Option"), which shall be exercisable separately for each Option
Property. The Purchase Option as to each Option Property shall have a
term ending at the later of: (a) one year from the date of the First
Closing or (b) the end of the Hold Period applicable to such Option
Property (the "Option Expiration Date") and shall have an exercise price
as set forth on Schedule 4.1 plus reimbursement of the actual cost of any
capital expenditures and ad valorem Taxes and special assessments paid by
the optionor after the First Closing Date and prior to the date of the
closing of the exercise of the Purchase Option. Each Purchase Option
shall be evidenced by a written agreement in substantially the form
attached hereto as Exhibit 4.1, subject to revisions required by the Law
of the jurisdiction in which the Option Property is located ("Option
Agreement") and by a Memorandum of Option in the form attached hereto as
part of Exhibit 4.1 (the "Memorandum of Option"). The Memorandum of
Option shall be recorded in the appropriate public records for the
jurisdiction in which the Option Property is located, together with
restrictive covenants regarding the use and operation of the Option
Property to supplement existing restrictive covenants to the extent that
such existing restrictive covenants do not cover all the types of
restrictions that Regency customarily requires, all as further described
on Schedule 4.1. The closing of the exercise of the Purchase Option shall
take place no later than sixty (60) days following the notice of exercise.
4.2 Right of First Refusal. At the First Closing, the Property
Entity owning an Option Property shall grant, and the Midland Principals
shall use reasonable commercial efforts to cause each joint venture owning
an Option Property to grant, to the Partnership a right of first refusal
to purchase the Option Property for cash, to the extent such Option
Property is not purchased pursuant to a Purchase Option (the "Right of
First Refusal"). The Right of First Refusal as to each Option Property
shall have a term of four years beginning on the Option Expiration Date.
The Partnership shall have the right to purchase an Option Property
pursuant to a Right of First Refusal upon any notice from the optionor
that it intends to accept a bona fide written offer to purchase such
Option Property (a "Third Party Offer"). The Right of First Refusal may
be exercised at a purchase price equal to 90% of the purchase price
pursuant to the Third Party Offer. The Partnership shall have 15 days
from the date of the optionor's notice to elect to exercise its Right of
First Refusal, by executing a form of purchase agreement containing the
same terms as the Third Party Offer. Each Right of First Refusal shall be
evidenced by the Memorandum of Option relating to the applicable Option
Property. In the event the Partnership does not exercise its Right of
First Refusal, the optionor shall have 180 days after the deadline for the
Partnership's notice of exercise of its Right of First Refusal in which to
sell the Option Property on substantially the same terms as set forth in
the Third Party Offer, and if such Property Entity does not do so within
such period, the Option Property shall again be subject to the Right of
First Refusal as if such Third Party Offer had never occurred.
4.3 Transfer of Options. In the event that a Purchase Option or
Right of First Refusal is for an outparcel or expansion land for a
Property or Acquisition Property (a "Related Property") that is
transferred to a Transferee hereunder other than the Partnership, the
Partnership may transfer the Purchase Option and Right of First Refusal
for such Option Property to the Transferee that takes title to the Related
Property, and such Transferee may transfer the Purchase Option and Right
of First Refusal to any Person to which such Transferee may transfer the
Related Property. However, except as provided in the preceding sentence,
the Purchase Options and Rights of First Refusal are not transferable.
4.4 Additional Outparcels. In the event that after the date hereof
any Midland Principal becomes aware that he owns a 20% or greater equity
interest in any outparcel, expansion land or other property to be
developed which is contiguous or adjacent to Properties but which is not
an Asset or Option Property under this Agreement or properties set forth
on Schedule 4.4, such Midland Principal shall give Regency written notice
within 30 days of becoming aware of such property and shall use reasonable
commercial efforts to cause the Person owning such property to execute a
Memorandum of Option granting an Option and Right of First Refusal with
respect thereto within 90 days after delivering such notice to Regency.
4.5 Management Contracts. With respect to each real property
constituting an Excluded Asset and each real property identified on
Schedule 6.2.1, including real property subject to Acquisition Rights and
Development Rights (as those terms are defined in Section 6.2.1), which
are grocery-anchored shopping centers which are or will be subject to
contracts for property leasing and/or management services, each Midland
Principal directly or indirectly owning an interest in such real property
shall use reasonable commercial efforts to cause the record owner of such
real property to enter into agreements for such services with Third Party
Management Company or its Affiliates based on customary fees and terms.
ARTICLE 5: COVENANTS
Each Property Entity, as to itself, each Midland Affiliate, as to
itself and as to any Property Entity or Joint Venture in which it owns an
interest, and each Midland Principal, as to himself, hereby covenants as
provided in this Article 5, as applicable. A covenant herein of a Joint
Venture or Property Entity that is not a party to this Agreement shall be
the covenant of the Midland Affiliate and each Midland Principal owning an
equity interest therein to use reasonable commercial efforts to cause such
Joint Venture or Property Entity to fulfill such covenant. For purposes
of this Article 5, each Property Entity and Joint Venture is referred to
as a "Property Owner." In all events that Regency's approval is requested
under this Article 5, if Regency does not grant approval or give notice
that it has withheld its consent within 10 Business Days after such
request is made, such consent shall be deemed to have been granted.
5.1 Implementing Agreement. Subject to the terms and conditions
hereof, each party hereto shall use reasonable commercial efforts to take
all action required of it to fulfill its obligations under the terms of
this Agreement, to cause the conditions to Closing to be satisfied and to
facilitate the consummation of the transactions contemplated hereby and
thereby. Without limiting the foregoing, each Midland Principal shall use
reasonable commercial efforts to cause each Contributor and Joint Venture
in which such Person owns an equity interest to fulfill its obligations
hereunder.
5.2 Preservation of Business. From the date of this Agreement to
the First Closing, each Property Owner shall cause its Properties or Third
Party Management Assets, as applicable, to be operated only in the
ordinary and usual course of business and consistent with past practice,
shall not sell or list for sale any of its Properties (other than Excluded
Assets) or (except as provided below) Option Properties until such time as
the Purchase Options granted in Section 4.1 have expired, shall use its
reasonable commercial efforts to preserve its good will and advantageous
relationships with tenants, customers, suppliers, independent contractors,
employees and other Persons material to the operation of its Properties or
Third Party Management Assets, as applicable, shall perform its material
obligations under the Leases and other material agreements affecting its
Properties and Option Properties, shall perform its material obligations
under the Management Contracts, as applicable, shall use reasonable
commercial efforts to develop its Development Properties substantially in
accordance with their respective Development Budget and Schedules, and
shall not take or permit any action or omission which would cause any of
its representations or warranties contained herein to become inaccurate in
any material respect or any of the covenants made by it to be breached in
any material respect. Without limiting the foregoing, no Property Owner
will cause or permit any default to occur under the Existing Mortgage Debt
or cause or permit any increase in the outstanding aggregate principal
balance thereof from the date hereof until the First Closing, except to
fund expenditures made in substantial conformity with the Development
Budget and Schedule, Capital Expenditure Budget and Schedule and the TI
Budget and Schedule. The Property Owners shall not agree to any material
change orders or additions to tenant improvements or changes in the scope
of work or specifications with respect to any Work Contract without
Regency's prior written approval, which shall not be unreasonably withheld
or delayed. Each Property Owner shall continue to maintain all insurance
policies referred to in Section 6.1.11 in full force and effect up to and
including the First Closing Date. Notwithstanding the foregoing, the
Property Owners shall be entitled to sell the outparcels constituting
Option Properties listed on Schedule 5.2 provided that the Net Proceeds
from any such sale are applied to pay down the Existing Mortgage Debt
encumbering the Property to which such outparcel relates.
5.3 Consents and Approvals. Each party shall use its reasonable
commercial efforts to obtain all consents, approvals, certificates and
other documents required in connection with the performance by it of this
Agreement and the consummation of the transactions contemplated hereby and
thereby, including the consents listed on Schedules 6.1.2(b) and 7.2(b),
and shall make all filings, applications, statements and reports to all
Government Entities and other Persons which are required to be made prior
to the First Closing Date by or on behalf of such party or any of their
Affiliates pursuant to any applicable Law or contract in connection with
this Agreement and the transactions contemplated hereby.
5.4 Additional Acquisitions. The parties shall cooperate in
pursuing any acquisition opportunities in the ordinary course of business
agreed on by both parties, and if prior to the First Closing a Property
Owner enters into a binding contract for an acquisition, with Regency's
consent, which shall not be unreasonably withheld or delayed, the parties
shall enter into mutually agreed amendments to this Agreement (including
applicable Schedules) and to the applicable Transaction Documents taking
into appropriate account the additional Assets to be so acquired pursuant
to this Agreement.
5.5 Continuation of Employees. Midland Development agrees to use
reasonable commercial efforts to persuade those of its employees
designated by Regency in writing to Midland Development to accept
employment with the Partnership immediately following the First Closing,
and Regency agrees to cause the Partnership to hire such employees
immediately following the First Closing provided that any such employee
does not engage in malfeasance prior to the First Closing. Regency agrees
that any "stay bonuses" for such employees shall be an expense of the
Partnership. Regency shall pay severance compensation for employees whose
employment is terminated by Midland Development prior to the First Closing
or by the Partnership after the First Closing, in either case because
their services will not be required by the Partnership following the First
Closing; provided, however, that all such severance compensation shall not
exceed $50,000. Midland Development shall be responsible for any
severance compensation that exceeds such amount, and if any such excess
severance compensation is paid by the Partnership after the First Closing,
the Partnership shall be entitled to deduct such excess amount from the
Midland Group Earn-Out at the First Earn-Out Closing. Regency shall make
capital contributions to the Partnership for the purpose of funding
severance compensation or stay bonuses expressly assumed by Regency
hereunder. Nothing herein is intended to make any employee hired by the
Partnership other than an employee at will, and nothing herein is intended
to obligate Regency with respect to independent contractor brokers who
perform services for Midland Development.
5.6 Disclosure.
5.6.1 The parties hereto agree to cooperate in preparing and
distributing as promptly as practicable following the execution of this
Agreement, (i) a disclosure document for use by the Unit Recipients whose
consent is required under Section 6.1.2(b) in determining whether to
consent to the transactions contemplated by this Agreement, and (ii) a
disclosure document delivered to each other Unit Recipient notifying them
of this Agreement and the transactions contemplated hereby including (a)
the contribution of the Assets to the Partnership, (b) the distribution of
the proceeds therefrom to the Unit Recipients, (c) provisions in this
Agreement and the other Transaction Documents regarding other transactions
between the Regency Entities and Midland Development and the Midland
Principals, and (d) provisions in this Agreement and the other Transaction
Documents regarding other transactions involving OSTRS (collectively, the
"Disclosure Documents"). In either case, the Disclosure Documents shall
provide information to each Unit Recipient with respect to (i) Regency and
the Partnership, (ii) the Units to be issued at the First Closing and any
Subsequent Closing, (iii) the right of Unit Recipients to elect to redeem
Units for cash immediately following the First Closing and certain
consequences thereof, and (iv) the Redemption Rights applicable to Unit
Recipients in the event that such an election is not made, including in
certain circumstances the right to receive Shares pursuant to such
Redemption Rights. In addition to the applicable Disclosure Document,
each Unit Recipient shall receive a form of election relating to the right
to elect to redeem Units for cash immediately following the First Closing,
and, in the event such election is not made with respect to all Units
distributable to such Unit Recipient, (i) an investor questionnaire and
agreement between such Unit Recipient and the Partnership, (ii) a
Redemption Rights Agreement between such Unit Recipient and the
Partnership and (iii) a Registration Rights Agreement between such Unit
Recipient and the Partnership.
5.6.2 The Midland Principals, the Midland Affiliates and
each Property Owner agree to supply information for the Disclosure
Documents concerning such Property Owner, the Assets owned by it, the
solicitation of any required consents for the transactions contemplated by
this Agreement and the allocation among the equity owners of each
Contributor of the consideration to be received in exchange for the Assets
contributed by it.
5.6.3 Regency agrees to supply information concerning
Regency and the securities being offered by Regency or the Partnership to
the Unit Recipients pursuant to the transactions contemplated by this
Agreement.
5.6.4 The information provided by the Midland Principals,
Midland Affiliates and Property Owners for inclusion in the Disclosure
Documents is referred to hereinafter as the "Midland Information" and the
information provided by Regency for inclusion in the Disclosure Documents
is referred to hereinafter as the "Regency Information; provided, however,
that information concerning any Property Owner as adjusted in the pro
forma combined financial information relating to Regency or the
Partnership or which relates to the expected operation of the Assets as
part of Regency or the Partnership shall be deemed "Regency Information."
5.6.5 The Midland Principals and Regency each shall advise
the other if such party becomes aware of any additional information that
should be included in the Midland Information or the Regency Information,
respectively, for inclusion in the Disclosure Documents or a supplement
thereto.
5.6.6 Each Property Owner and Midland Affiliate covenants
that its Midland Information and each Midland Principal covenants that all
the Midland Information shall not, and Regency covenants that the Regency
Information shall not, contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary
to make such Midland Information or the Regency Information, respectively,
that is included in the Disclosure Documents, in light of the
circumstances under which it was made, not misleading.
5.6.7 The Midland Principals, Property Owners and Midland
Affiliates acknowledge that nothing herein is intended to impose on
Regency, or relieve any Midland Principal, Property Owner or Midland
Affiliate of, the fiduciary duties such Person may have in connection with
consummating the transactions contemplated by this Agreement.
5.7 Exclusivity. Unless and until this Agreement is terminated
pursuant to its terms, no Midland Principal, Midland Affiliate or Property
Owner shall, directly or indirectly, through any Affiliate, officer,
director, partner, agent or otherwise, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or
assistance), or take any other action to facilitate knowingly, any
inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Competing Transaction, or enter
into or maintain or continue discussions or negotiate with any Person in
furtherance of such inquiries or to obtain a Competing Transaction, or
agree to or endorse any Competing Transaction, or authorize or knowingly
permit any of the officers, directors, partners or employees of such party
or any of its Affiliates or any investment banker, financial advisor,
attorney, accountant or other representative retained by such party or any
of such party's Affiliates to take any such action, and any Midland
Principal, Midland Affiliate, Property Owner or Affiliate of such Property
Owner shall notify Regency orally (within one business day) and in writing
(as promptly as practicable) of all of the relevant details relating to
all inquiries and proposals which a Midland Principal, Midland Affiliate,
Property Owner or Affiliate of such Property Owner or any such officer,
director, employee, partner, investment banker, financial advisor,
attorney, accountant or other representative may receive relating to any
of such matters. A "Competing Transaction" means, whether in a single
transaction or a series of transactions, the sale by any Midland Principal
or Midland Affiliate of any equity interest in a Midland Affiliate or
Property Owner, or the sale or other transfer by any Contributor or Joint
Venture of its assets or business other than an Excluded Asset, in whole
or in part, whether through direct sale, merger, consolidation, asset
sale, exchange, recapitalization, other business combination, liquidation,
or other action out of the ordinary course of business but shall exclude
(a) any transaction that results from the exercise by any equity owner of
a Property Owner (other than a Midland Principal or Midland Affiliate) of
a right of first refusal, option or buy-sell right the exercise of which
is triggered by the transactions contemplated by this Agreement, (b) any
sale of excess land or outparcels which do not constitute Option
Properties, or (c) any transfer of an equity interest in a Midland
Affiliate so long as the Midland Principals collectively own at least a
majority of the voting securities of each Midland Affiliate. Unless and
until this Agreement is terminated pursuant to its terms, Regency shall
not, directly or indirectly, through any officer, director, agent or
otherwise, negotiate, undertake or consummate a business combination,
whether through a direct purchase, merger, consolidation, asset purchase,
exchange, recapitalization, other business combination, or other action
out of the ordinary course of business, which would prevent or hinder
Regency from consummating the transactions contemplated by this Agreement
or which have a Material Adverse Effect on Regency.
5.8 New Contracts. Without Regency's prior written consent in each
instance (which shall not be unreasonably withheld or delayed), no
Property Owner will enter into, or grant concessions regarding, any
Contract that will be an obligation affecting the Properties or Option
Properties or binding on any Transferee or Joint Venture after the Closing
except Contracts entered into in the ordinary course of business that
either involve payments which total less than $10,000 in the aggregate or
are terminable without cause or any termination fee on 30 days' or less
notice, and each Property Owner agrees to terminate such Contracts by the
First Closing if Regency gives such Property Owner notice at least 60 days
prior to the First Closing.
5.9 Leasing Arrangements. As to any Lease in excess of 5,000 square
feet of usable space in any Property or Option Property, no Property Owner
will amend, terminate, grant concessions regarding, or enter into any
Lease unless Regency has given its written consent, which consent shall
not be unreasonably withheld or delayed. As to Leases for 5,000 square
feet or less of usable space, no Property Owner will amend, terminate,
grant concessions regarding, or enter into any new Lease without the prior
written consent of Regency (which will not be unreasonably withheld or
delayed) if such action would require approval by any owner of the
Property Owner, Topvalco, Dillon or OSTRS. A new Lease shall be deemed
reasonable if in compliance (i) with the financial criteria contained in
the 1998 budget and/or (if applicable) the Development Budget and Schedule
as to such Property and (ii) with the Leasing Criteria. The respective
Property Owner shall provide Regency with all material information related
to each request for consent, including without limitation, lease form,
lease terms, leasing commissions, tenant improvement obligations and other
lease procurement costs, description of tenant's business, and tenant's
financial statements or a Dunn & Bradstreet credit report (to the extent
available). The respective Property Owner shall provide such information
concerning all other new Leases promptly after the execution of each new
Lease.
5.10 Obligation to Supplement Information. From time to time prior
to the First Closing, the Midland Principals, the Property Owners and
Midland Affiliates, on the one hand, and Regency, on the other hand, will
promptly disclose in writing to the other party any matter hereafter
arising or discovered which, if existing, occurring or known at the date
of this Agreement would have been required to be disclosed by any party or
which would render inaccurate any representation or warranty by any party.
Additionally, the Midland Principals, Property Owners and Midland
Affiliates agree to provide Regency with prompt written notice of any
matter hereafter arising or discovered with respect to a Property or
Option Property which could have a Material Adverse Effect on the
condition, operations or prospects of such Property or Option Property.
No information provided to a party pursuant to this Section 5.10 shall be
deemed to cure any breach of any representation, warranty or covenant made
in this Agreement. Notwithstanding the foregoing, the parties contemplate
that certain Schedules to this Agreement will be updated periodically and
any such update shall not be deemed a breach of any representation,
warranty or covenant made with respect to the Schedule being updated if
the additional information contained in such update is not likely to cause
any damage or loss to the parties or parties who are the beneficiaries of
a corresponding representation, warranty or covenant or such update is
made in conformity with the following requirements. The Capital
Expenditure Budget and Schedule, the Development Budget and Schedule, the
TI Budget and Schedule and the list of TI Contracts (Schedule 1.1.146) may
be updated by the Contributors from time to time in the ordinary course of
business, with the prior written consent of Regency (which will not be
unreasonably withheld or delayed). A proposed change to a Development
Budget and Schedule shall be deemed reasonable if it would not reasonably
be expected to cause the Development Property to be developed at a loss.
5.11 Access to Information; Environmental Audits. At all times
before the First Closing, during customary business hours and other
mutually convenient times, the Property Owners and Midland Affiliates
shall provide Regency and its Affiliates, their respective agents,
employees, consultants, and representatives, with continuing and
reasonable access to all files, books, records and other materials in
their possession or control relating to their respective Properties and
Assets, the Third Party Management Assets and the business and operations
of the Property Owners and the right to examine, inspect and make copies
of such materials as appropriate (including for the purpose of reviewing
or preparing audited financial statements required to be filed by Regency
with the SEC). During such period, Regency and its Affiliates shall have
reasonable physical access to the Properties, which may be in the presence
of Midland Development personnel, for the purpose of conducting surveys,
architectural, engineering, geotechnical and environmental inspections and
tests (including sampling and invasive testing performed in connection
with Phase I and Phase II environmental audits), feasibility studies and
any other inspections, studies or tests reasonably required by them. With
reasonable advance notice to the respective Property Owners, Regency may
conduct a "walk-through" of tenant spaces upon appropriate notice to
tenants and subject to the rights of tenants, which "walk-throughs" shall,
at the option of Midland Development, be in the presence of and
accompanied by Midland Development personnel. In the course of its
investigations, Regency may make inquiries to third parties, including,
without limitation, contractors, property managers, parties to Work
Contracts, lenders, tenants and Government Entities. Regency shall keep
the Properties free of any liens claimed by Regency's contractors or
consultants in connection with such entry, shall indemnify, defend and
hold the respective Property Owners harmless from all Claims and
Liabilities caused by Regency, its contractors or consultants that are
asserted against or incurred by the respective Property Owners as a result
of such entry and investigation and shall maintain insurance customary in
the industry with respect to such Claims and Liabilities. Any liability
or loss related to a condition of any Property discovered or disclosed by
Regency or any consultant or contractor of Regency in connection with such
investigation is not a liability that is covered by this indemnity. At
all times before the First Closing, Regency shall provide the Property
Owners and their respective agents, employees, consultants, and
representatives, with continuing and reasonable access to all files,
books, records and other materials in Regency's possession or control
relating to the business and operations of Regency and the right to
examine, inspect and make copies of such materials as appropriate. No
investigation made by a party shall limit, qualify or modify any
representations, warranties, covenants or indemnities made by another
party hereunder, irrespective of the knowledge and information obtained as
a result of any such investigation, but if a party discovers as a result
of any investigation made by it prior to the First Closing that any
representation or warranty made herein by the other party is materially
inaccurate, it shall promptly notify and advise the other party.
5.12 Monthly Updates of Rent Rolls and Operating Statements. Each
Property Owner will promptly provide Regency with monthly updates of the
Rent Roll and operating statements for its Properties.
5.13 Tenant Estoppels. Each Property Owner shall endeavor to secure
and deliver to Regency estoppel certificates in the form of Exhibit 5.13
from all tenants under all Leases (collectively, the "Tenant Estoppels"),
dated no earlier than 30 days before the First Closing Date. Regency and
the Property Owners will consult and cooperate with each other as to the
timing of solicitation of Tenant Estoppels with the goal of obtaining the
Tenant Estoppels at least three days before the First Closing Date.
5.14 Service Contracts. The applicable Transferee will assume the
obligations arising from and after the First Closing Date under those
Service Contracts that are not in default as of the First Closing Date and
which the applicable Property Owner and Regency have agreed will not be
terminated and which are not terminable as a result of such assumption
under its terms. Each Property Owner shall terminate at the First Closing
all Service Contracts that such Property Owner has agreed will not be so
assumed to the extent such Service Contracts are terminable upon notice
and at no cost to the terminating entity.
5.15 Work Contracts. Ten days before the First Closing, each
Property Owner shall notify Regency in a written progress report as to
those Work Contracts that will not be completed by the First Closing.
5.16 Title Insurance; Survey. Regency shall order the Title
Insurance Commitments from the Title Company and each Survey from a
reputable surveyor familiar with the Property (the Property Owners
agreeing to furnish to Regency copies of any existing surveys and title
information in its possession promptly after execution of this Agreement)
and shall use reasonable commercial efforts to obtain such items as
promptly as practicable following the execution of this Agreement.
Regency will have the later of (i) ten (10) days from (x) the date of this
Agreement or (y) 30 days prior to the applicable Subsequent Closing with
respect to any Property to be conveyed by a Property Owner in which
Regency does not then own an equity interest, or (ii) twenty (20) days
from receipt of the later to be received of the Title Insurance Commitment
(including legible copies of all recorded exceptions noted therein) and
Survey to notify the Property Owner owning such Property in writing of any
Title Defects, encroachments or other matters not acceptable to Regency
which are not Permitted Exceptions by this Agreement. Any Title Defect or
other objection disclosed by the Title Insurance Commitment or the Survey
which is not timely specified in Regency's written notice to the
respective Property Owner owning the Property in question shall be deemed
a Permitted Exception. The respective Property Owner shall notify Regency
in writing within ten (10) days of Regency's notice if such Property Owner
intends to cure any Title Defect or other objection. If such Property
Entity elects to cure, it shall use diligent efforts to cure the Title
Defects and/or objections by the First Closing Date (as it may be
extended), which may include insuring over or bonding off such Title
Defects and/or objections at such Property Owner's expense. If such
Property Owner elects not to cure or if such Title Defects and/or
objections are not cured and if such Title Defects and/or objections are
likely to have a Material Adverse Effect upon the Property ("Material
Uncured Title Defect"), Regency shall have the right, in its sole
discretion, subject to the satisfaction or waiver by Regency of the
condition to the First Closing set forth in Section 8.1.1 (aggregate
assets), to either (i) extend the time for the date of the Closing with
respect to such Property thirty (30) days to afford additional time for
the respective Property Owner to cure (after which Regency may proceed
under (ii) or (iii) if not cured); (ii) waive such Title Defects and/or
objections and close the purchase of the Property hereunder, subject to
Regency receiving a credit for the amount necessary to pay or bond off
such Title Defects; or (iii) elect not to acquire any or all Property
subject to such Material Uncured Title Defects and receive a credit for
the Contribution Value of such Property as set forth in Schedule 2.1
against the consideration required to be delivered by Regency at the First
Closing. In the case of a Title Defect that is not a Material Uncured
Title Defect, Regency's remedy shall be limited to receiving a credit
pursuant to clause (ii) in the preceding sentence. Any Property which
Regency elects not to acquire pursuant to clause (iii) above shall be an
Excluded Asset and shall no longer be subject to this Agreement.
5.17 Later Title Exceptions. In the event that a Property Owner
becomes aware that an exception to title has been filed of record
subsequent to the date of the Title Commitment and prior to the Closing (a
"Later Exception"), such Property Owner shall send written notice of such
Later Exception to Regency. Regency shall have the right to postpone the
Closing for a period up to thirty (30) days in order to give the
respective Property Owner owning the Property in question sufficient time
to satisfy, release, cure or remove such lien or exception. Upon such
Property Owner's cure, removal, insurance over or bonding off of any such
Later Exception, at such Property Owner's expense, the Closing shall be
scheduled upon ten (10) days prior written notice to the respective
Property Owner as to the Property in question but in no event earlier than
the First Closing Date notwithstanding such Later Exception. If such
Property Owner is unable, within said thirty-day period, or elects not to
cure, remove, bond off or otherwise dispose of any Later Exception, and if
such Later Exception is likely to have a Material Adverse Effect upon the
Property ("Material Later Exception"), Regency may in its sole discretion,
subject to the satisfaction or waiver by Regency of the condition to the
First Closing set forth in Section 8.1.1 (aggregate assets), either (i)
waive such objection to the Later Exception and proceed with the Closing,
receiving a credit for the amount necessary to pay or bond off such Later
Exception; (ii) postpone the date of the Closing with respect to such
Property for a reasonable time to allow the respective Property Owner
additional time to remedy said Later Exception, and if thereafter such
Property Owner is unable to remedy said Later Exception, at that time
Regency may elect either (i) or (iii); or (iii) elect not to acquire any
or all Property subject to such Later Exception and receive a credit for
the Contribution Value of such Property as set forth in Schedule 2.1
against the consideration required to be delivered by Regency at the
Closing. In the case of a Later Exception that is not a Material Later
Exception, Regency's remedy shall be limited to receiving a credit
pursuant to clause (i) in the preceding sentence. At the First Closing,
the Title Company will issue the Title Insurance. Any Property which
Regency elects not to acquire (pursuant to clause (iii) above) shall be an
Excluded Asset and shall no longer be subject to this Agreement.
5.18 Damage. The Property Owners shall promptly give Regency written
notice of any damage to their respective Properties, describing such
damage whether such damage is covered by insurance and the estimated cost
of repairing such damage. If such damage would not have a Material
Adverse Effect on the damaged Property, (i) the respective Property Owner
owning the Property in question shall, to the extent possible, begin
repairs prior to the First Closing, (ii) at the First Closing the
Partnership shall receive all insurance proceeds not applied to cure the
damage with respect to such Property prior to the First Closing (including
rent loss insurance applicable to any period from and after the First
Closing) due to a Property Entity for the damage, together with an
assignment of any unsettled insurance claim, and in the case of a Property
owned by a Joint Venture, such Joint Venture shall not assign, transfer or
encumber any such unapplied proceeds and unsettled insurance claim, (iii)
any uninsured damage, coinsurance or deductible and any rent abatement not
covered by rent loss insurance proceeds delivered to a Property Owner, as
reasonably estimated by Regency, shall be credited to the Partnership at
the First Closing, and (iv) and, in the case of a Property owned by a
Property Entity, the Partnership shall assume the responsibility for the
repair after the First Closing. The Partnership shall be entitled to any
excess of the proceeds of the respective Property Entity's insurance over
and above the actual cost of repair and restoration. If such damage is
likely to have a Material Adverse Effect on the damaged Property which
cannot be substantially remedied by applying insurance proceeds to cure
the Material Adverse Effect ("Unremedied Material Damage"), Regency may
elect, subject to the satisfaction or waiver by Regency of the condition
to the First Closing set forth in Section 8.1.1 (aggregate assets), by
notice to the respective Property Owner as to the Property in question
given within 20 Business Days after Regency is notified of such damage
(and the Closing as to such Property shall be extended, if necessary, to
give Regency such 20 Business Day period to respond to such notice) to
(i) proceed in the same manner as in the case of damage that is not
material, receiving a credit at the Closing equal to the amount by which
the Contribution Value of such Property as set forth on Schedule 2.1 is
reduced by such damage, or (ii) elect not to acquire the Property in
question and receive a credit for the Contribution Value of such Property
as set forth in Schedule 2.1 against consideration required to be
delivered by Regency at the Closing. In the case of damage that does not
constitute an Unremedied Material Damage, Regency's remedy shall be
limited to receiving a credit pursuant to clause (i) in the preceding
sentence. Any Property which Regency so elects not to acquire pursuant to
clause (ii) above shall be an Excluded Asset and shall no longer be
subject to this Agreement.
5.19 Condemnation. Each Property Owner will give Regency prompt
written notice of the institution or threat of any exercise of the power
of eminent domain on any of the Properties. If the proceedings in eminent
domain would have a Material Adverse Effect on the Property subject to
such proceedings ("Material Eminent Domain Proceedings"), by notice to the
respective Property Owner as to the Property in question given within 20
Business Days after Regency receives notice of proceedings in eminent
domain that are contemplated, threatened or instituted by any Government
Entity having the power of eminent domain with respect to the Properties,
Regency may, subject to the satisfaction or waiver by Regency of the
condition to the First Closing set forth in Section 8.1.1 (aggregate
assets), (i) elect not to purchase the Property subject to such
proceedings and receive a credit for the Contribution Value of such
Property as set forth in Schedule 2.1 against the consideration required
to be delivered by Regency at the Closing, or (ii) proceed under this
Agreement. If Regency elects to proceed under this Agreement, the
respective Property Entity owning the Property in question shall assign to
the Partnership at the Closing its entire right, title and interest in and
to any condemnation award or, if the Property in question is owned by a
Joint Venture, such Joint Venture shall not assign any right, title or
interest in such condemnation award, and the Partnership shall have the
sole right during the pendency of this Agreement to negotiate and
otherwise deal with the condemning authority in respect of such matter.
If necessary, the Closing as to such Property shall be extended to give
Regency the full 20 Business Day period to make such election. Any
Property which Regency elects not to acquire shall be an Excluded Asset
and shall no longer be subject to this Agreement.
5.20 Windmiller. Regency, the Midland Principals, OTR/Midland Ltd.
and the Midland Affiliates that own equity interests in OTR/Midland Ltd.
agree to use reasonable commercial efforts to enter into an agreement
together with Topvalco and the Property Entity that owns the Property
known as Windmiller substantially in the form attached hereto as Exhibit
5.20. In the event that the parties are unable to reach an agreement with
respect to such matters, Windmiller shall be deeded to the Partnership at
a Deferred Closing (as defined in Section 10.1.2) after it has been
platted; provided, however, that such Deferred Closing shall not be
required to take place within thirty (30) days of the First Closing.
5.21 Future Joint Venture Agreements. The Midland Principals shall
promptly provide to Regency true and complete copies of the governing
documents of each of the Kroger Joint Ventures and King Soopers Joint
Ventures to be formed with respect to the Acquisition Properties upon
formation of such Joint Ventures. Such governing documents shall be
substantially similar to the governing documents of each other Kroger
Joint Venture and King Soopers Joint Venture, respectively.
ARTICLE 6: REPRESENTATIONS, WARRANTIES AND FURTHER
COVENANTS OF MIDLAND
The representations and warranties contained in this Article 6 are
made as of the date of this Agreement. Except as specifically provided,
all representations and warranties contained in this Article 6 are several
and not joint and several; provided, however, that the representations of
Midland Development shall also be made jointly and severally by the
Midland Principals. The survival of and liability for the representations
and warranties contained in this Article 6 after the First Closing Date
shall be governed solely by Article 13 (Indemnification) hereof and the
remedies set forth in Article 13 shall be the sole remedies after the
First Closing Date for any breach of such representations and warranties.
All representations that are made "to the knowledge of the Midland
Principals" means to the actual knowledge of such individuals after
reasonable inquiry. All representations that are made "to the knowledge
of Midland Development" means to the actual knowledge of the individuals
listed on Schedule 6 after reasonable inquiry. All representations that
are made "to the knowledge of the Property Entity" means to the actual
knowledge of individuals for such Property Entity listed in Schedule 6
after reasonable inquiry. All representations that are made "to knowledge
of the Midland Affiliate" means to the knowledge of the individuals for
such Midland Affiliate listed on Schedule 6 after reasonable inquiry. All
representations that are made "to the knowledge of the Property Owner"
means to the actual knowledge of the individuals for such Property Owners
listed on Schedule 6 after reasonable inquiry. The Midland Principals,
each Midland Affiliate (as to the individuals shown on Schedule 6 with
respect to such Midland Affiliate) and each Property Entity (as to the
individuals shown on Schedule 6 with respect to such Property Entity)
represent that such individuals are the appropriate individuals who, in
the course of their duties, would normally be aware of material issues and
facts affecting the Properties, the Option Properties, the Midland
Affiliates, the Property Entities and the Joint Ventures and that such
individuals have made reasonable inquiry to have a reasonable basis for
the matters represented.
6.1 As to Property Entities, Joint Ventures, Midland Affiliates and
Midland Principals. Each Property Entity (including Midland Development),
as to itself, and each Midland Affiliate, as to itself and as to any
Property Entity or Joint Venture in which it owns an interest, and each
Midland Principal, as to himself, represents and warrants as follows:
6.1.1 Due Organization, etc. Such Property Entity, Joint
Venture and Midland Affiliate is duly organized, validly existing and in
good standing under the Laws of its respective jurisdiction of
organization, with all requisite power and authority to own, lease,
operate and sell its assets and to carry on its businesses as they are now
being conducted. Such Property Entity, Joint Venture and Midland
Affiliate is in good standing as a foreign entity authorized to do
business in each jurisdiction where it engages in business.
6.1.2 Due Authorization; Consents; No Violations.
(a) Such Property Entity, Joint Venture and Midland
Affiliate has made available to Regency true and complete copies of its
respective partnership agreement or other governing document, as
applicable, including each amendment thereto, of which a complete list is
set forth on Schedule 6.1.2(a). Such Property Entity and Midland
Affiliate has full power and authority to enter into this Agreement and
the Transaction Documents, and to consummate the transactions contemplated
hereby and thereby, and the Persons executing this Agreement and
applicable Transaction Documents on behalf of such Property Entity or
Midland Affiliate have been duly authorized to do so on behalf of such
Property Entity or Midland Affiliate. Subject to the last sentence of
this paragraph, the execution, delivery and performance by such Property
Entity or Midland Affiliate of this Agreement have been, and the
Transaction Documents to be executed and delivered by it pursuant to this
Agreement shall be, duly and validly approved by such Property Entity or
Midland Affiliate and by all necessary partnership, corporate or other
applicable action, and no other action or proceeding on the part of any
Midland Principal, Property Entity or Midland Affiliate or any other
Person is necessary to authorize this Agreement and the Transaction
Documents to be executed and delivered by such Midland Principal, Property
Entity or Midland Affiliate pursuant hereto and the transactions
contemplated hereby and thereby, other than obtaining the consents set
forth on Schedule 6.1.2(b). Subject to the last sentence of this
paragraph, this Agreement has been duly and validly executed and delivered
by such Midland Principal, Property Entity and Midland Affiliate and,
assuming due authorization, execution and delivery of this Agreement by
the other parties hereto, this Agreement constitutes, and the Transaction
Documents to be executed and delivered by such Midland Principal, Property
Entity or Midland Affiliate pursuant to this Agreement when executed will
constitute, valid and binding obligations of each such Midland Principal,
Property Entity or Midland Affiliate enforceable in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization, or similar
laws or court decisions from time to time in effect that affect creditors'
rights generally and by legal and equitable limitations on the
availability of specific remedies. The representations and warranties
contained in this paragraph are subject to obtaining the required consents
under the applicable partnership agreement or operating agreement or other
governing document with respect to such Property Entity or Midland
Affiliate, which consents are listed in Schedule 6.1.2(b).
(b) Except for obtaining the consents set forth on
Schedule 6.1.2(b), no consents, waivers, exemptions or approvals of,
notices to, or filings or registrations by such Midland Principal,
Property Entity, Joint Venture or Midland Affiliate with, any Government
Entity or any other Person not a party to this Agreement are necessary in
connection with the execution, delivery and performance by such Midland
Principal, Property Entity or Midland Affiliate of this Agreement or the
Transaction Documents to which he or it is a party or to be delivered by
Midland Principals, Property Entities and Midland Affiliates pursuant to
this Agreement or the consummation of the transactions contemplated hereby
and thereby which involve responsibilities by such Property Entity or
Midland Affiliate, including but not limited to notices to any employees
thereof.
(c) Upon obtaining those consents set forth on Schedule
6.1.2(b) (and assuming receipt of such consents), the execution, delivery
and performance by such Midland Principal, Property Entity and Midland
Affiliate of this Agreement and the Transaction Documents to be executed,
delivered and performed by such Midland Principal, Property Entity and
Midland Affiliate pursuant hereto, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i)
violate any Law or Order; (ii) violate or conflict with, result in a
breach of, constitute a default (or an event which with the passage of
time or the giving of notice, or both, would constitute a default) under,
or will result in the termination of, or accelerate the performance
require by, or permit cancellation of, or result in the creation of any
Lien upon any of his or its Assets under any Contract to which such
Midland Principal, Property Entity, Joint Venture or Midland Affiliate is
a party or by which such Midland Principal, Property Entity, Joint Venture
or Midland Affiliate or any of his or its Assets are bound or by which
such Midland Principal, Property Entity, Joint Venture or Midland
Affiliate or any of his or its Assets may be affected; (iv) permit the
acceleration of the maturity of any indebtedness of such Midland
Principal, Property Entity, Joint Venture or Midland Affiliate or any
indebtedness secured by his or its Assets; or (v) violate or conflict with
any provision of the partnership agreement or governing document of such
Property Entity, Joint Venture or Midland Affiliate.
(d) Except as set forth in the Allocation Chart, no Person
holds any options, warrants, securities or other rights with respect to
such Property Entity, Joint Venture or Midland Affiliate entitling, or
which if exercised would entitle, them to receive Units or Additional
Units to be delivered pursuant to this Agreement.
6.1.3 Existing Mortgage Debt. Except as set forth on
Schedule 6.1.3, there are no defaults (and no Property Entity, Joint
Venture or Midland Affiliate has received any notice of a default asserted
by any lender) under the Existing Mortgage Debt of such Property Entity,
Joint Venture or Midland Affiliate, or facts or circumstances which
through the passage of time or the giving of notice, or both, would result
in such a default, nor will such Property Entity or Midland Affiliate
cause or permit any default to occur thereunder or cause or permit any
increase in the outstanding aggregate principal balance thereof from the
date hereof until the First Closing, except to fund expenditures made
substantially in conformity with the Development Budget and Schedule and
the TI Budget and Schedule. The documents described on Schedule 1.1.40
are all of the loan documents executed in connection with such Existing
Mortgage Debt of such Property Entity, Joint Venture or Midland Affiliate,
and such documents have not been modified or amended except as noted
thereon. The aggregate principal balance outstanding to each lender under
such Existing Mortgage Debt as of the Recent Balance Sheet Date is set
forth on Schedule 1.1.40.
6.1.4 Financial Statements. To the knowledge of such
Property Entity or Midland Affiliate, the financial statements of such
Property Entity or Joint Venture reflected in the Midland Financial
Statements fairly present the financial condition, results of operations
and cash flows of such Property Owner for the periods indicated therein,
do not reflect any transactions which are not bona fide transactions of
such entity, have been prepared in accordance with the books and records
of such entity and make full and adequate disclosure of, and provision
for, all Liabilities of such entity required to be reflected in accordance
with GAAP as of the dates thereof. Regency and its independent certified
accountants shall be given access to the books of such entity at any time
prior to the First Closing upon reasonable advance notice in order that
they may prepare audited financial statements described in Section 14.1.
6.1.5 No Adverse Change. To the knowledge of such Midland
Affiliate or Property Entity, since the Recent Balance Sheet Date, there
has not been (i) any event, circumstance or change in such Property
Entity, Joint Venture or Midland Affiliate, its respective business or
prospects which would cause or reasonably be expected to result in a
Material Adverse Effect on any such entity or its Assets, or (ii) any
material loss, damage or destruction to any of its Assets (whether or not
covered by insurance) or any other event or condition which has had or is
likely to have a Material Adverse Effect on such entity or its Assets.
Since the Recent Balance Sheet Date, there has not been any sale, lease or
other transfer or disposition of the Assets of such Property Entity, Joint
Venture or Midland Affiliate, or any cancellation of any debts or claim of
any such entity, except in the ordinary course of its business. Since the
Recent Balance Sheet Date, such Property Entity's, Joint Venture's or
Midland Affiliate's business has been conducted in all material respects
only in the ordinary course and with respect to any of its Properties,
consistent with its contemplated use.
6.1.6 No Litigation. Except as set forth on Schedule 6.1.6,
there is no Litigation pending or, to the knowledge of such Midland
Principal, Midland Affiliate or Property Entity, threatened (a) against
such Property Entity, Joint Venture, Midland Affiliate or the Assets of
such Property Entity, Joint Venture or Midland Affiliate, the Option
Properties of such Property Entity or Joint Venture or its respective
business or directors or officers or Persons performing comparable
functions (in such capacity), or (b) which challenges or impairs such
Midland Principal's, Property Entity's or Midland Affiliate's ability to
execute, delivery or perform its obligations under this Agreement and the
Transaction Documents to be executed and delivered by such Midland
Principal, Property Entity or Midland Affiliate pursuant to this
Agreement, nor does such Midland Principal, Property Entity or Midland
Affiliate know of any facts which are reasonably likely to be the basis
for any such Litigation. Except as set forth on Schedule 6.1.6, neither
such Midland Principal, Property Entity or Midland Affiliate nor any of
the Assets or Option Properties of such Midland Principal, Property
Entity, Joint Venture or Midland Affiliate is subject to any Order.
6.1.7 Leased Real Property. Schedule 6.1.7 lists all leases
pursuant to which such Property Entity, Joint Venture or Midland Affiliate
holds any real property used in connection with its respective business.
True and complete copies of all such leases have been delivered to
Regency, together with copies of all reports of any engineers,
environmental consultants or other consultants which relate to any
property subject to such a lease, if any.
6.1.8 Leased Personal Property. Schedule 6.1.8 lists all leases
pursuant to which such Property Entity or Joint Venture holds equipment,
vehicles, furniture or any other item of personal property used in
connection with its respective business, other than leases terminable
without penalty on less than thirty (30) days or less notice or requiring
less than $10,000 in aggregate payments over the remaining term of the
lease. All of the personal property leased by such Property Entity or
Joint Venture under such leases is presently utilized by such Property
Entity or Joint Venture in the ordinary course of its business. True and
complete copies of all such leases have been made available to Regency.
6.1.9 Intellectual Property. Except for the "Midland" name and
the name of each individual Property, there are no trade names,
trademarks, service marks or copyrights (or any registrations with any
Government Entity of, or applications for registration pending with
respect to, any of the foregoing) owned or licensed by such Midland
Principal, Property Entity or Joint Venture that are material to the
conduct of the business of such Property Entity or Joint Venture.
6.1.10 Contracts. Except as set forth on Schedule 6.1.10,
and except for the partnership agreements, operating agreements or other
governing documents of the Joint Ventures listed on Schedule 6.1.2(a), and
those other contracts disclosed elsewhere in the Schedules to this
Agreement, including but not limited to the Leases described on the Rent
Roll, Schedules 1.1.2 (Acquisition Contracts), 1.1.27 (Development
Contracts), 1.1.40 (Existing Mortgage Debt), 1.1.70 (Management
Contracts), 1.1.125 (Repair Contracts), 1.1.134 (Service Contracts),
1.1.146 (TI Contracts), 6.1.7 (Leased Real Property), 6.1.8 (Leased
Personal Property), 6.1.11 (Insurance Policies) and 6.2.7 (Brokers),
include all of the Contracts of the following types (i) to which such
Joint Venture is a party or is bound, (ii) to which such Property Entity
is a party or is bound and which its respective Transferee is assuming, or
(iii) to which any of the Assets or Option Properties of such Property
Entity or Joint Venture are subject or are bound:
(a) all property management agreements, asset management
agreements, and development agreements;
(b) all partnership agreements or other governing
documents;
(c) any Contract of any kind with any equity owner of the
Property Entity or Joint Venture or any Affiliate of such equity owner;
(d) any Contract with a dealer, broker, leasing agency,
advertising agency or other Person engaged in sales, or promotional
activities (other than Contracts terminable without penalty on thirty (30)
days or less notice or requiring less than $10,000 in aggregate payments
under the remaining term of the contract);
(e) any Contract of any nature which involves an
unperformed commitment in excess of, or services having a value in excess
of, $10,000;
(f) any Contract pursuant to which the Property Entity or
Joint Venture has made or will make loans or advances, or has or will have
incurred debts or become a guarantor, indemnitor or surety or pledged its
credit on or otherwise become contingently or secondarily liable with
respect to any undertaking or obligation of any other Person (except for
the negotiation or collection of negotiable instruments in transactions in
the ordinary course of business);
(g) any indentures, credit agreements, loan agreements,
notes, letters of credit, mortgages, security agreements, leases of real
property or personal property, deeds of trust or other agreements for
financing;
(h) any Contract involving a partnership, joint venture or
other cooperative undertaking;
(i) any Contract involving any restrictions relating to
the Property Entity or Joint Venture with respect to the geographical area
of operations or scope or type of business of the Property Entity or Joint
Venture;
(j) any power of attorney or agency agreement or
arrangement with any Person pursuant to which such Person is granted the
authority to act for or on behalf of the Midland Principal, Property
Entity, Joint Venture or Midland Affiliate;
(k) any Contract under which the requirements for
performance extend beyond thirty (30) days from the date of this Agreement
(other than Contracts requiring less than $10,000 in aggregate payments
over the term of the contract); and
(l) all other Contracts relating to the business of the
Property Entity or Joint Venture not made in the ordinary course of
business which are to be performed at or after the date of this Agreement
(other than Contracts terminable without penalty on thirty (30) days or
less notice or requiring less than $10,000 in aggregate payments over the
term of the contract).
Such Property Entity, Joint Venture or Midland Affiliate has made
available to Regency each Contract listed on Schedules 1.1.2 (Acquisition
Contracts), 1.1.27 (Development Contracts), 1.1.40 (Existing Mortgage
Debt), 1.1.70 (Management Contracts), 1.1.125 (Repair Contracts), 1.1.134
(Service Contracts), 1.1.146 (TI Contracts), 6.1.7 (Leased Real Property),
6.1.8 (Leased Personal Property), 6.1.11 (Insurance Policies) and 6.2.7
(Brokers) with respect to its business or Assets, and a written
description of each oral arrangement so listed. All such Contracts are
duly authorized and enforceable in accordance with their terms by such
Property Entity or Joint Venture, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization,
similar laws or court decisions from time to time in effect that affect
creditors' rights generally and by legal and equitable limitations on the
availability of specific remedies.
6.1.11 Insurance. The Property Entity or Joint Venture has
in full force and effect policies of insurance of the types and amounts
customarily maintained by organizations similarly situated sufficient to
insure it against loss of its respective Assets and Option Properties and
will continue to maintain all such insurance in full force and effect up
to and including the First Closing Date. Schedule 6.1.11 is a list of all
casualty, liability, business interruption and other insurance policies
insuring against loss of its Assets and Option Properties. True and
complete copies of such policies shall be delivered to Regency as promptly
as practicable following the date of this Agreement. The parties shall
use reasonable commercial efforts to (i) determine whether there will be
any gaps in insurance for the Property Entities and Joint Ventures, on the
one hand, and the Transferees, on the other hand, in their respective
insurance coverages before and after the First Closing, and (ii) name each
other, where appropriate, at no additional cost as additional named
insureds on each other's policies.
6.1.12 Tax Matters.
(a) No Midland Tax is Payable by Transferees. Except as
provided on Schedule 6.1.12, and except to the extent reflected in the
Proration Items, there are no unpaid Taxes arising from the operation of
the business of the Property Entity or Joint Venture (or as a result of
the Property Entity or Joint Venture succeeding to the Liabilities of any
other Person by operation of law pursuant to a purchase of assets or
stock, merger, consolidation or similar transaction) during any period
prior to the First Closing Date for which the Joint Venture or any
Transferee will become liable or which will become a Lien against any of
the Assets or Option Properties of such Property Entity or Joint Venture
following the First Closing, including but not limited to payroll,
withholding and social security Taxes for any employee or person deemed to
be an employee of such entity.
(b) Tax Audits. Except as provided on Schedule 6.1.12,
such Property Entity or Joint Venture has not received from the IRS or
from the Tax authorities of any state, county, local or other jurisdiction
(i) any notice of underpayment of Taxes or other deficiency which has not
been paid, (ii) any objection to any Tax return or report filed by such
Property Entity or Joint Venture, nor (iii) any notice of audit with
respect to any Tax, nor is such Property Entity or Joint Venture currently
the subject of any such audit. There are no outstanding agreements or
waivers extending the statutory period of limitations applicable to any
Tax return or report filed by such Property Entity or Joint Venture.
(c) Leases. All of the services provided by the Property
Entity or Joint Venture (or any other Person acting as lessor or landlord
for any of its Assets or Option Properties) to the tenants of its
Properties (including the Development Properties) or Acquisition
Properties under its respective leases are customary in that geographic
area for first class shopping centers and are primarily for the
convenience of the tenant as described in Section 856(d) of the Code. No
formula for determining percentage rents under any lease with a tenant of
the Property Entity or Joint Venture (including the Development
Properties) or any of its Acquisition Properties has the effect of basing
such rent on the income (as opposed to revenues) or profits of any
Persons. Any rent payable by tenants of its Properties (including the
Development Properties) or its Acquisition Properties attributable to
personal property does not exceed 15% of the total rent under the relevant
Lease attributable to both real and personal property (determined in
accordance with Section 856(d)(1)(C) of the Code). Schedule 1.1.134 lists
any Service Contract (including those which are terminable without penalty
on thirty (30) days or less notice or requiring less than $10,000 in
aggregate payments over the remaining term of the contract) for the
provision of services to any Property as to which the Property Entity or
Joint Venture receives a mark-up.
6.2 Representations of Midland Principals, the Property
Entities and the Midland Affiliates. The following representations are
made jointly and severally by the Midland Principals as to each matter set
forth herein (except as to Section 6.2.1 and 6.2.2 for which each Midland
Principal represents severally as to himself and in the case of Section
6.2.2, jointly and severally as to each entity named therein in which such
Midland Principal owns an equity interest), by each Property Entity, as to
itself, and by each Midland Affiliate, as to itself, and as to each
Property Entity in which it owns an equity interest:
6.2.1 Retained Properties. Other than the real property
constituting Excluded Assets and the real property identified on Schedule
6.2.1, such Midland Principal does not, directly or indirectly, (a) own
more than a 20% interest in real property which is either presently or is
contemplated to be a grocery store anchored shopping center ("Grocery
Related Real Estate") and which is not an Asset or an Option Property
hereunder, (b) possess the right to acquire any interest in Grocery
Related Real Estate ("Acquisition Rights") which is not an Acquisition
Contract, or (c) possess the right, directly or indirectly, to develop or
redevelop Grocery Related Real Estate ("Development Rights") other than
the Development Contracts. For purposes of this Section 6.2.1, a Midland
Principal's passive investment in securities of a publicly traded
enterprise which, together with any of such Midland Principal's
Affiliates, does not exceed 5% of the outstanding shares of the publicly-
traded stock of such enterprise shall not constitute the foregoing
indirect ownership or possession.
6.2.2 Securities.
(a) Such Property Entity will acquire the Units for its
own account and not with a view to or for sale in connection with any
public distribution thereof within the meaning of the Securities Act,
except that the Units may be distributed to the Unit Recipients pursuant
to the transactions contemplated by this Agreement, and such Midland
Principal receiving Units in such distribution will acquire such Units for
his own account and not with a view to or for sale in connection with any
public distribution.
(b) Such Midland Principal, Property Entity and Midland
Affiliate has sufficient knowledge and experience in financial and
business matters to enable him or it to evaluate the merits and risks of
investment in the Units and the Common Stock issuable upon exercise of the
Redemption Rights (collectively, the "Regency Securities"), and has the
ability to bear the economic risk of acquiring the Regency Securities.
(c) Such Midland Principal, Property Entity and Midland
Affiliate has been furnished with a copy of the Regency Exchange Act
Reports and all other materials which he or it has requested from Regency,
and such Midland Principal, Property Entity and Midland Affiliate has had
a full opportunity to ask questions of and receive answers from Regency or
Persons acting on behalf of Regency concerning Regency and the terms and
conditions of the acquisition of the Regency Securities.
(d) Such Midland Principal, Property Entity and Midland
Affiliate hereby acknowledges that the Regency Securities are not
registered under the Securities Act or any state securities Laws and
cannot be resold without registration thereunder or exemption therefrom.
Such Midland Principal, Property Entity and Midland Affiliate agrees that
he or it will not transfer all or any portion of the Regency Securities
except as contemplated hereby unless such transfer has been registered or
is exempt from registration under the Securities Act and any applicable
state securities Laws, and he or it shall require the Unit Recipients to
be bound by the same agreement as a condition of the distribution to them
of the Units. The Regency Securities shall, unless otherwise registered,
contain a prominent legend with respect to the restrictions on transfer
under the Securities Act and other applicable state securities Laws.
(e) To the knowledge of the Midland Principals, no more
than 35 Unit Recipients do not qualify as an "accredited investor," as
such term is defined in Regulation D promulgated under the Securities Act.
Each such Midland Principal is such an "accredited investor."
(f) Schedule 6.2.2(f) lists the jurisdiction of residence
of each Unit Recipient.
6.2.3 Distributions and Payments. Upon obtaining the consents
set forth in Schedule 6.1.2(b) applicable to such Property Entity and upon
the execution of the other documents contemplated by this Agreement,
Midland Affiliate or Joint Venture, the allocation of the consideration,
including Units and Additional Units, to be received in exchange for the
Assets among all of the equity owners of the respective Contributor as
described in Article 2 of this Agreement (including the Allocation Chart)
or set forth elsewhere in the Transaction Documents will not violate (or
when such Transaction Document is executed will not violate) any of the
partnership agreements or other governing documents applicable to such
Property Entity, Joint Venture or Midland Affiliate, and neither the
Partnership nor Regency shall have any Liability as to any such matters.
The Midland Principals represent and warrant that such allocation among
all the Contributors of the consideration, including Units and Additional
Units, to be received in exchange for the Assets will not violate any
governing documents, agreements or duties applicable to any Property
Entity, Joint Venture or Midland Affiliate, and neither the Partnership
nor Regency shall have any Liability as to any such matters.
6.2.4 Tax Advice. The Midland Principals, Property Entities,
Joint Ventures and Midland Affiliates have relied on their accountants,
attorneys and other advisors for advice in connection with structuring the
transactions contemplated by this Agreement and are not relying on Regency
or Regency's accountants, attorneys or other advisors with regard to the
structure of such transactions.
6.2.5 Foreign Person. No Unit Recipient, Property Entity or
Midland Affiliate is a "foreign person" within the meaning of Section
1445(f)(3) of the Code, and each Unit Recipient, Property Entity and
Midland Affiliate will furnish to the Partnership, if requested by the
Partnership, an affidavit in form satisfactory to the Partnership
confirming the same.
6.2.6 No Employees. Except as set forth on Schedule 6.2.6, no
Property Entity or Joint Venture has ever had any employees.
6.2.7 Brokers. Except as disclosed on Schedule 6.2.7, neither
Regency, the Partnership nor any Affiliate of either has or shall have any
Liability or otherwise suffer or incur any loss as a result of or in
connection with any brokerage or finder's fee or other commission of any
Person retained by any Midland Principal, Property Entity, Joint Venture
or Midland Affiliate in connection with the transactions contemplated by
this Agreement.
6.2.8 Insolvency. There is not pending (nor to the knowledge of
such Property Entity or such Midland Affiliate threatened) against any
Property Entity, Joint Venture or Midland Affiliate a petition in
bankruptcy or any other insolvency proceeding, whether voluntary or
otherwise, any petition seeking reorganization or arrangement or
appointment of a receiver or trustee, or any other action brought under
the bankruptcy laws of the United States or any state, nor has any
Property Entity, Joint Venture or Midland Affiliate made an assignment for
the benefit of creditors, nor entered into an arrangement with creditors,
nor admitted in writing its inability to pay debts as they become due.
6.3 Additional Matters Relating to Joint Ventures. Each
Midland Affiliate that owns an interest in a Joint Venture and each
Midland Principal owning an interest in such Midland Affiliate hereby
represents and warrants as follows with respect to such Joint Venture:
6.3.1 Tax Matters. The Joint Venture is qualified, and since the
date of its formation has been qualified to be treated as a partnership
for federal income tax purposes. The Joint Venture has never applied for
any Tax ruling or entered into a closing agreement with any Taxing
authority.
6.3.2 No Defaults. Except to the extent any default or non-
compliance is not likely to cause a Material Adverse Effect as to such
Joint Venture, the Joint Venture has not: (a) breached any provision of,
nor is it in default under the terms of, any Contract to which it is a
party or under which it has any rights or by which it is bound or which
relates to its businesses, Assets or Option Properties and to the
knowledge of the Midland Affiliate, no other party to any such Contract
has breached such Contract or is in default thereunder (nor has the Joint
Venture waived any such default), and to the knowledge of the Midland
Affiliate, no event has occurred and no condition or state of facts exists
which with the passage of time or the giving of notice, or both, would
constitute such a default or breach by the Joint Venture or by any such
other party, or give right to an automatic termination or the right of
discretionary termination thereof; (b) each of the Joint Venture and the
Midland Affiliate owning an interest therein has complied with its
obligations, and has not breached any of its duties, under the respective
partnership agreement or other documents governing such entity; (c) each
of its Assets and Option Properties is in compliance with, and no
violation exists under, any Law or Order applicable in any way to the
Joint Venture, any of its Assets or Option Properties; and (d) no notice
from any Government Entity has been received by or on behalf of the Joint
Venture claiming any violation of any Law (including any building, zoning
or other ordinance) or Order, or requiring any work, construction or
expenditure.
6.3.3 Other. Except as disclosed on Schedule 6.3.3, the Joint
Venture has not succeeded to the Liabilities of any other Person by
operation of Law pursuant to a purchase of stock, merger, consolidation or
similar transaction.
6.4 Additional Representations of Midland Development. The
following representations are made by Midland Development and by each
Midland Principal, jointly and severally:
6.4.1 No Defaults. Except to the extent any default or non-
compliance is not likely to cause a Material Adverse Effect as to Midland
Development or the Third Party Management Assets, Midland Development has
not: (a) breached any provision of, nor is it in default under the terms
of, any Contract to which it is a party or under which it has any rights
or by which it is bound or which relates to its business and Assets and to
the knowledge of the Midland Principals, no other party to any such
Contract has breached such Contract or is in default thereunder (nor has
Midland Development waived any such default), and no event has occurred
and no condition or state of facts exists which with the passage of time
or the giving of notice, or both, would constitute such a default or
breach by Midland Development or by any such other party, or give right to
an automatic termination or the right of discretionary termination
thereof; (b) Midland Development has complied with its obligations, and
has not breached any of its duties, under the documents governing such
entity; (c) its Assets are in compliance with, and no violation exists
under, any Law or Order applicable in any way to Midland Development or
its Assets; and (d) no notice from any Government Entity has been received
by or on behalf of Midland Development claiming any violation of any Law
(including any building, zoning or other ordinance) or Order, or requiring
any work, construction or expenditure.
6.4.2 Management Contracts. Except as disclosed on Schedule
6.4.2 and except as would not be likely to cause a Material Adverse Effect
as to Midland Development or the Third Party Management Assets, no other
party to a Management Contract has rights of set-off or counterclaim
against Midland Development under such Management Contract. Except as set
forth on Schedule 6.4.2, neither Midland Development nor any Midland
Principal has received notice of termination of any Management Contract
from any other party thereto, nor is Midland Development or any Midland
Principal aware that any other party presently intends to terminate, or
contemplates terminating a Management Contract.
6.4.3 Permits. To the knowledge of Midland Development and each
Midland Principal, except as provided on Schedule 6.4.3, the Third Party
Management Business possesses all of the permits, certificates,
franchises, rights, variances, interim permits, approvals, authorizations
or consents, whether federal, state, local or foreign, currently necessary
for the lawful operation of such business, the absence of which would have
a Material Adverse Effect.
6.4.4 Title To and Condition of Assets. Midland Development has
good and marketable title to its Assets, free and clear of all Liens other
than the Permitted Exceptions. To the knowledge of the Midland Principals
and Midland Development, the tangible assets constituting the Assets owned
by Midland Development are free from defects that would have a Material
Adverse Effect on Midland Development or the Third Party Management
Business.
6.4.5 Employee Benefit Plans.
(a) Disclosure. Schedule 6.4.5 identifies each employee
benefit plan, fund, program, contract, policy or arrangement covering or
benefitting employees of Midland Development, including, but not limited
to, all "employee benefit plans," as defined in Section 3(3) of ERISA, and
specifically including each retirement, pension, profit sharing, stock
bonus, savings, thrift, bonus, medical, health, hospitalization, welfare,
life insurance, disability, accident insurance, group insurance, sick pay,
holiday and vacation programs, executive or deferred compensation plans or
contracts, stock purchase, stock option or stock appreciation rights,
plans or arrangements, employment and consulting contracts, and severance
agreements or plans (collectively, the "Employee Benefit Plans"). With
respect to each of the Employee Benefit Plans:
(1) No such plan has been terminated so as to
subject, directly or indirectly, the Transferees, the Assets, or the
Option Properties to any Liability or the imposition of any Lien;
(2) If any such plan were terminated, neither the
Transferees, the Assets nor the Option Properties would be subject,
directly or indirectly, to any Liability or the imposition of any Lien;
(3) No condition or event has occurred, currently
exists or currently is expected to occur, including violations of any
Laws, that could subject, directly or indirectly, the Transferees, the
Assets or the Option Properties to any Liability or the imposition of any
Lien;
(4) No such plan is a "multiemployer plan" or
"defined benefit plan" (as defined in Section 4001 of ERISA), and neither
Midland Development nor any member of its controlled group (as defined in
Section 4001(a)(14) of ERISA) has ever contributed or been obligated to
contribute to any such plan; and
(5) There have been no "prohibited transactions"
within the meaning of Section 406 or 407 of ERISA or Section 4975 of the
Code for which a statutory or administrative exemption does not exist, and
the consummation of the transactions contemplated by this Agreement will
not result in any prohibited transaction.
(b) Successor Liability. No condition or event could
subject, directly or indirectly, the Transferees, the Assets or the Option
Properties to any Liability or the imposition of any Lien under ERISA as a
result of Midland Development having succeeded to the Liabilities of any
other Person by operation of law pursuant to a purchase of assets or
stock, merger, consolidation or similar transaction prior to the First
Closing Date.
6.4.6 Other Employee Matters. Midland Development has and
currently is conducting its business in full compliance with all Laws
relating to employment and employment practices, terms and conditions of
employment, wages and hours and nondiscrimination in employment, the
violation of which would have a Material Adverse Effect on any Property
Entity, Joint Venture, the Third Party Management Assets or the
transactions contemplated by this Agreement.
6.5 As to the Properties. Each Property Entity (other than
Midland Development), as to itself, each Midland Affiliate, as to itself
and as to any Property Entity or Joint Venture in which it owns an
interest, and each Midland Principal, as to himself and to each of the
foregoing in which he owns an equity interest, makes the representations
and warranties set forth in this Section 6.5. For purposes of this
Section 6.5, each Property Entity (other than Midland Development) and
Joint Venture is referred to as a "Property Owner."
6.5.1 Title; Purchase Commitments. Except for that portion of
the Worthington Shopping Center which is a ground leasehold interest held
by the Property Owner as a tenant, the Property Owner is the sole owner
of, and has had good and indefeasible title to an undivided fee simple
interest in its Properties and Option Properties, subject only to the
Permitted Exceptions. The Property Owner shall cause the encumbrances
listed on Schedule 6.5.1 to be fully paid and discharged of record on or
prior to the First Closing Date. The Property Owner has not entered into
any agreement to lease, sell, mortgage or otherwise encumber or dispose of
its interest in its Properties and Option Properties or any part thereof,
except with respect to the Existing Mortgage Debt, the Permitted
Exceptions, and this Agreement.
6.5.2 Physical Condition. All buildings and improvements on the
Properties of the Property Owner and all Personal Property constituting a
part thereof, including, without limitation, all heating and air
conditioning equipment, plumbing and electrical systems and paving are in
as good condition and repair as was the case on the date of Regency's (or
its representatives') on-site inspection of such Properties (as set forth
in Schedule 6.5.2), except items calling for repair due to normal wear and
tear. Without limiting the generality of the foregoing, except for the
Properties set forth on Schedule 6.5.2 or as disclosed in the Capital
Expenditure Budget and Schedule, to the knowledge of such Property Owner,
Midland Affiliate and Midland Principal, the roofs, walls and foundations
of the buildings are free from leaks and seepage of moisture except as
disclosed in the engineering reports prepared on behalf of Regency or the
applicable Transferee in respect of such Properties or in Schedule 6.5.2.
6.5.3 Rentable Area and Parking Spaces. With the exception of
the Development Properties and Acquisition Properties, each Property of
the Property Owner, on the First Closing Date, will contain the number of
square feet of rentable area and number of parking spaces specified in
Schedule 6.5.3. Each Development Property and Acquisition Property is
projected to contain the number of square feet of rentable area and number
of parking spaces specified in Schedule 6.5.3.
6.5.4 Compliance with Laws. To the knowledge of such Property
Owner, Midland Affiliate and Midland Principal (without inquiry of any
tenants of the Properties or Option Properties), other than non-compliance
or violations which are not likely to have a Material Adverse Effect, each
Property or Option Property of such Property Owner and the operation
thereof conform with all applicable Laws of all applicable public
authorities and private restrictions except for non-conformity or
violations which are disclosed on Schedule 6.5.4, and each such Property
(or in the case of Development Properties and Acquisition Properties, upon
completion) may be operated in its present manner as a shopping center and
with all accessory uses which now exist for such Property without
violating any federal, state, local or other governmental building,
zoning, health, safety (including, without limitation, fire and life
safety), disability-related, platting or subdivision Laws, or any
applicable private restrictions, and no such use is a preexisting,
nonconforming use. Except as contained in Schedule 6.5.4, no notices or
citations of any applicable private restriction or of the violation of any
zoning regulation or directive of any governmental authority or
authorities having jurisdiction relating to any such Property or Option
Property or any parts thereof have been received by the Property Owner,
Midland Affiliate or Midland Principal other than restrictions or
violations not likely to have a Material Adverse Effect.
6.5.5 Insurability. Neither the Property Owner, the Midland
Affiliate nor the Midland Principal, nor to the knowledge of such Property
Owner, Midland Affiliate or Midland Principal, any tenant of any Property
or Option Property of such Property Owner, has received any notices from
any insurance company of any defects or inadequacies in such Property or
Option Property or any part thereof which would affect adversely the
insurability of such Property or Option Property, and, to the knowledge of
the Property Owner, Midland Affiliate or Midland Principal, each such
Property or Option Property complies with the requirements of all
insurance carriers providing insurance therefor.
6.5.6 Utilities; Permits. Except for the Properties set forth on
Schedule 6.5.6, all water, sewer, gas (if any) , electric, telephone and
drainage facilities and any other utilities required by law for the normal
operation of each Property of the Property Owner are installed to the
property line thereof and are connected with valid permits, and are
sufficient to permit full compliance with all requirements of Law and of
the Leases applicable thereto. Except for the Properties set forth on
Schedule 6.5.6, all permits and connection fees with respect to such
Properties are fully paid and any action necessary on the part of the
Property Entity to transfer such permits will be accomplished as of the
First Closing.
6.5.7 Contract Payments. Except for the Development Properties,
the applicable Property Owner will have paid for all work, labor and
material furnished to each Property on or prior to the First Closing Date
except as disclosed on Schedule 6.5.7 in respect of the punch list items
for which there is retainage, and there will be no Liens or the
possibility thereof in connection therewith relating to any work or labor
done or materials furnished prior to the First Closing Date, except as
disclosed on Schedule 6.5.7.
6.5.8 Assessments. Each Property of the Property Owner is
assessed for full value as a completed unit for real estate tax purposes,
except as set forth on Schedule 6.5.8. Except as set forth on Schedule
6.5.8, neither the Property Owner, the Midland Affiliate nor the Midland
Principal has received any notice or order from any governmental authority
in respect of any proposed change in the valuation of such Property or
Option Property for personal property or real estate tax purposes from
that assessed for the current assessment period, nor do such Property
Owner, Midland Affiliate or Midland Principal know of any action or
proceeding designed to levy any special assessments against such Property
or Option Property. Neither the Property Owner, the Midland Affiliate nor
the Midland Principal have been notified of possible future improvements
by any public authority, any part of the cost of which would or might be
assessed against such Property or Option Property or of any contemplated
future assessments of any kind, except as set forth on Schedule 6.5.8.
6.5.9 Accuracy of Documents. The Contracts, Leases and other
documents pertaining to each Property or Option Property of the Property
Owner which have been or will be delivered by the Property Owner to the
applicable Transferee hereunder will be true, accurate and complete and
constitute all Leases and Contracts with respect to such Property or
Option Property as of the First Closing Date.
6.5.10 Rent Roll and Leases. The Rent Rolls attached hereto
as Schedule 1.1.124 are complete and accurate as to each Property and
Option Property of the Property Owner; each Lease with respect to such
Property or Option Property is in full force and effect; no tenant or any
other person has any option to renew or extend its Lease except to the
extent indicated on Schedule 6.5.10 and no tenant or any other person has
any other right to possess or acquire any interest in any part of such
Property or Option Property; to the knowledge of the Property Owner, the
Midland Affiliate or the Midland Principal, no tenant under the Leases
with respect to such Property or Option Property is in default thereunder
except to the extent indicated on Schedule 6.5.10; the landlord under each
of such Leases has neither committed nor suffered any act or omission
which with the giving of notice or the lapse of time, or both, would
constitute a default on its part, or would entitle the respective tenants
thereunder to damages under the terms of any of such Leases or a right of
set-off or a right to terminate the Lease; none of the tenants has
notified any Property Owner, Midland Affiliate or Midland Principal in
respect of any materially defective condition of such Property or Option
Property or of any material alleged default on the part of any such
Property Owner, Midland Affiliate or Midland Principal except to the
extent indicated on Schedule 6.5.10; no tenant under any of such Leases
has paid any rental more than thirty (30) days in advance (other than as
required by its Lease) or is in arrears in rent payments for more than
thirty (30) days, except to the extent listed on Schedule 6.5.10; except
as provided in Schedule 6.5.10 as of the date hereof in respect of such
Property or Option Property, all tenants have accepted and are occupying
the leased premises; except as set forth in such Leases or in Schedule
6.5.10, no tenant is entitled to receive any concession, rental or
otherwise, or other similar compensation in connection with renting the
space it occupies or by reason of any reduction in service; except as
provided in Schedule 6.5.10, the Property Owner has eliminated or
satisfied all of the landlord's obligations under such Leases which are
conditions to the obligations of the respective tenants thereunder to pay
rent. Neither the Property Owner, the Midland Affiliate or the Midland
Principal have any obligation continuing after the First Closing Date to
do any maintenance or make any improvements in respect of any leased
premises except as set forth in Schedule 6.5.10 and no commissions to any
broker or leasing agent are due or will become due on account of any of
such Leases or upon extension or renewal of the term thereof or upon the
leasing of additional space in such Property or Option Property, whether
or not pursuant to an option or other right contained in any such Lease,
except as set forth in Schedule 6.5.10 or except to the extent reflected
in the "Proration Items."
6.5.11 Permits. To the knowledge of such Property Owner,
Midland Affiliate and Midland Principal, the copies of the licenses and
permits delivered by the Property Owner to the applicable Transferee prior
to the First Closing Date constitute all licenses and permits (and with
the exception of the Development Properties, including, without
limitation, occupancy permits) which are required from all governmental
authorities having jurisdiction over each Property or Option Property of
such Property Owner which are necessary for the operation thereof in the
manner operated by the Property Owner at the time of the First Closing or
to insure vehicular and pedestrian ingress to and egress from such
Property or Option Property and neither the Property Owner, the Midland
Affiliate or the Midland Principal have received any notice regarding, nor
do such Property Owner, Midland Affiliate or Midland Principal have any
knowledge of, any default or violation under any of such licenses or
permits or any other licenses or permits applicable to such Property or
Option Property.
6.5.12 Service Contracts. No Property Owner, Midland
Affiliate or Midland Principal has any written or, to the knowledge of
such Property Owner, Midland Affiliate or Midland Principal, oral contract
for services, equipment, supplies or the like relating to the ownership,
operation or management of any Property or Option Property of such
Property Owner, including, but not limited to, management, rubbish
removal, equipment leasing, furnishing of supplies, cleaning or employment
contracts other than those listed on Schedule 1.1.134 and other than those
which are terminable without penalty on thirty (30) days or less notice or
requiring less than $10,000 in aggregate payments over the remaining terms
of the contract. Each of such Contracts is in full force and effect, no
default or any event which with notice or lapse of time or both would
constitute a default exists under any such Contract and all payments are
current thereunder.
6.5.13 Security Deposits. All security deposits to be paid
by tenants pursuant to the Leases on the Property or Option Property of
such Property Owner which require security deposits have been paid and the
amount of security deposits (and interest thereon, if required to be paid
by law) that will be transferred to the applicable Transferee (as set
forth in Schedule 6.5.13) will be equal to the total amount of the
security deposits made by tenants (plus interest thereon to the extent
applicable) pursuant to such Leases that are in effect on the First
Closing Date.
6.5.14 Condemnation. Except as set forth on Schedule 6.5.14,
there are no condemnation, environmental, zoning or other land use
regulations or proceedings pending of which the Property Owner has
received written notice or, to the knowledge of the Property Owner,
Midland Affiliate or Midland Principal, contemplated which would affect
all or any part of any Property or Option Property of such Property Owner.
No portion of any such Property or Option Property has been affected by
fire or other casualty, except for such portions which have been fully
repaired or restored to their condition prior to such fire or other
casualty.
6.5.15 Environmental Matters. For purposes of this
subparagraph 6.5.15, the following definitions apply:
(a) "Environmental Conditions" means circumstances in
respect of soil, surface waters, groundwaters, stream sediment, air
and similar environmental media, both on-site and off-site a Property
or Option Property, that could require remedial action and/or that
may result in claims and/or demands by and/or liabilities to third
parties, including, but not limited to governmental entities.
Environmental Conditions shall include those discovered after the
First Closing Date that do not directly result from the applicable
Transferee's (or their assignees') operation of the Properties or
Option Properties after the applicable Closing Date.
(b) "Environmental Assessment Reports" means all
environmental studies, reports, surveys and assessments made by
environmental consultants on behalf of any of the Property Owner,
Midland Affiliate or Midland Principal or Regency or the applicable
Transferee.
(c) "Existing Environmental Compliance Liability" means
any or all claims and/or demands by and/or liabilities to third
parties including, but not limited to, governmental entities arising
from any and all Laws applicable to any Property or Option Property
as of or prior to the First Closing Date for such Property or Option
Property, including, without limitation, compliance with all Permits.
(d) "Hazardous Materials" means any petroleum, petroleum
products, fuel oil, explosives, reactive materials, ignitable
materials, corrosive materials, hazardous chemicals, hazardous
wastes, hazardous substances, extremely hazardous substances, toxic
substances, toxic chemicals, radioactive materials, infectious
materials and any other element, compound, mixture, solution or
substance which may pose a present or potential hazard to human
health or the environment.
(e) "Laws" shall mean all applicable laws, ordinances or
regulations existing on or before the Closing Date for such Property
or Option Property relating to the environment, including, without
limitation, those pertaining to air and water quality, solid waste,
Hazardous Materials, worker and community right-to-know hazardous
materials communication, toxic substance control, radioactive
material management and waste disposal.
(f) "Notice" shall mean any written communication in
respect of such Property or Option Property from the United States
Environmental Protection Agency ("USEPA"), Department of
Environmental Protection of the state where each Property or Option
Property is located, or any other federal, state or local agency or
authority, or any other entity or any individual, concerning any
intentional or unintentional act or omission which has resulted in or
which may result in the Release of any Hazardous Material into the
environment including, the surface water, groundwater, soil, air or
other environmental media, or other violation or alleged violation of
environmental laws and shall expressly include the imposition of any
lien pursuant to any Laws.
(g) "Permits" shall mean permits, consents, licenses,
certificates, approvals, registrations or authorizations in
connection with environmental matters as required by the Laws.
(h) "Release" means releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, ejecting, escaping,
leaching, disposing, seeping, infiltrating, draining or dumping in
violation of any Laws. This term shall be interpreted to include
both the present and past tense, as appropriate.
Except as disclosed in the Environmental Assessment Reports described in
Schedule 6.5.15:
To the knowledge of such Property Owner, Midland Affiliate or Midland
Principal, there are no Permits which are required by the Laws. To
the knowledge of such Property Owner, Midland Affiliate or Midland
Principal, each of the Property Owner, Midland Affiliate and Midland
Principal has been and is in compliance with and has no liability or
obligation arising under applicable Laws in respect of the Properties
or Option Properties of such Property Owner. Neither the Property
Owner, Midland Affiliate nor Midland Principal has received any
Notice from any applicable governmental agency seeking any
information or alleging any violation of such Laws in connection with
such Properties or Option Properties. Neither the Property Owner,
Midland Affiliate nor Midland Principal has caused or permitted any
such Property or Option Property to be used to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer, produce
or process any Hazardous Materials or solid waste, except in
compliance with all applicable laws and has not caused or permitted
and the Property Owner, Midland Affiliate and Midland Principal have
no knowledge of the Release of any such Hazardous Materials on-site
of such Properties or Option Properties. To the knowledge of such
Property Owner, Midland Affiliate or Midland Principal, no buildings
or other improvements on any such Property or Option Property
contains any asbestos or other Hazardous Materials, and no such
materials are located on, in or under any such Property or Option
Property, except to the extent they comply with applicable Laws.
There is not located at any such Property or Option Property any
underground or above-ground tanks; to the knowledge of such Property
Owner, Midland Affiliate or Midland Principal, the removal of any
tank previously removed from such Properties or Option Properties has
been carried out in compliance with all applicable Laws. To the
knowledge of such Property Owner, Midland Affiliate or Midland
Principal, no condition, circumstance or set of facts exists in
respect of such Properties or Option Properties that constitutes a
significant hazard to health, safety, property or the environment for
which any of the Property Owner, Midland Affiliate and Midland
Principal is or may be liable under the Laws. No representation,
warranty or statement of such Property Owner, Midland Affiliate or
Midland Principal contained in this Agreement or contained in any
exhibit, certificate, schedule or other document furnished by the
Property Owner, Midland Affiliate and Midland Principal to Regency or
the applicable Transferee, pursuant to this Section 6.5.15 or in
connection with a transaction contemplated in this Section 6.5.15,
contains any untrue statement of a material fact or omits disclosing
a material fact with regard to environmental matters. The applicable
Transferee and such Property Owner, Midland Affiliate or Midland
Principal recognize that present, past or future Environmental
Conditions may exist which could require remedial action and/or may
result in claims and/or demands by and/or liabilities to third
parties, including, but not limited to, governmental entities.
Subject to the limitations set forth in Schedule 6.5.15, it is the
obligation of the Property Owner, Midland Affiliate and Midland
Principal to comply or ensure compliance with all matters arising out
of all Laws, agreements with governmental entities, and court and
administrative orders in respect of on-site and off-site
Environmental Conditions which may exist at each such Property on the
First Closing Date, or Option Property on the applicable closing
date, and which do not become Environmental Conditions as a result of
a change in the Laws after the First Closing Date or applicable
closing date. Such obligation, and any liability that such Property
Owner, Midland Affiliate or Midland Principal may have for any breach
thereof, shall survive the First Closing for the period of time set
forth in Section 13.1, below (the "Survival Period") and shall
include Environmental Conditions discovered after the First Closing
Date but within the Survival Period. In the event that the
applicable Transferee is notified by a third party or governmental
entity or discovers the existence of any Environmental Condition
prior to the expiration of the Survival Period, the result of which
may require remedial action or form the basis for the assertion of a
claim by any third party, including claims of governmental entities,
such Transferee shall notify such Property Owner, Midland Affiliate
and Midland Principal prior to the expiration of the Survival Period
thereof, and subject to the limitations set forth in Article 13
below, the Property Owner, Midland Affiliate and Midland Principal
shall proceed with due diligence to take the appropriate action and
respond thereto. In the event that the Property Owner, Midland
Affiliate and Midland Principal fail to proceed with due diligence,
such Transferee, at its option, may proceed to take the appropriate
action and shall continue to have all rights to indemnity as set
forth in this Agreement.
6.5.16 Flood Hazard. To the knowledge of such Property
Owner, Midland Affiliate or Midland Principal, no buildings now existing
or to be constructed prior to the First Closing Date on any Property or
Option Property of the Property Owner are or will be located in an area
designated by any governmental entity as a flood hazard zone, except as
disclosed on the Surveys performed in respect of such Property or Option
Property.
6.5.17 Zoning. Each Property or Option Property of the
Property Owner is zoned to permit the continued existence on the Real
Property comprising a portion of such Property or Option Property of the
buildings and other improvements now located thereon without relying on
any variance or other waiver of the requirements of the applicable zoning
laws except as disclosed on Schedule 6.5.17; no application for variance
or change in zoning is pending; and each such Property or Option Property
comprises a real estate tax lot or lots taxed separately from any other
property, except as disclosed on Schedule 6.5.17.
6.5.18 Access. Except for those Properties or Option
Properties set forth on Schedule 6.5.18, each Property or Option Property
of the Property Owner has direct access to all streets and roadways
abutting such Property or Option Property, as shown on the Survey
performed in respect of such Property or Option Property, and all such
streets and roadways are dedicated streets and roadways which have been
accepted by the appropriate governmental authority.
6.5.19 No Defects. Neither the Property Owner, Midland
Affiliate nor Midland Principal has any knowledge of any defective
condition (latent or otherwise) in respect of the Properties or Option
Properties of such Property Owner or any condition which is likely to have
a Material Adverse Effect on the ownership, operation or maintenance of
any such Property or Option Property.
6.5.20 Use of Property. Neither such Property Owner, Midland
Affiliate nor Midland Principal knows of any facts or has misrepresented
or failed to disclose any material fact which would prevent the applicable
Transferee from using and operating any Property or Option Property of
such Property Owner after the First Closing Date as a shopping center
except as set forth on Schedule 6.5.20.
6.5.21 No Default. The execution, delivery or performance of
this Agreement will not constitute a default under any agreement, Lease,
Contract, Permitted Exception, indenture, order or other instrument or
document by which the Property Owner or any Property or Option Property of
such Property Owner may be bound, subject to any consents required to be
obtained by the Property Owner (which consents are identified on Schedule
6.1.2(b)) or which are a condition for Closing pursuant to Section 8.2 of
this Agreement. Such Property Owner, Midland Affiliate and Midland
Principal agree to use their best efforts to obtain all such consents
prior to the First Closing Date.
6.5.22 Development Properties. A true and correct copy has
previously been furnished to Regency of the budget and development or
redevelopment schedule therefor prepared by or for the Property Owner as
applicable, for each of the Development Properties of such Property Owner
and to the extent they have been prepared for any Acquisition Property of
such Property Owner, each dated as of the date set forth on Schedule
6.5.22 (collectively, as they may be amended pursuant to Section 5.10, the
"Development Budget and Schedule"). Except as set forth on Schedule
6.5.22, each such Development Property is zoned for the lawful development
and/or redevelopment thereon, and the Property Owner has obtained all
permits, licenses, consents and authorizations required for the current
stage of development or redevelopment thereon. To the knowledge of the
Property Owner, Midland Affiliate and Midland Principal, except as set
forth on Schedule 6.5.22, there are no material impediments to or
constraints on the development or redevelopment of any such Development
Property, substantially within the time frame and not substantially in
excess of the cost set forth in the Development Budget and Schedule
applicable thereto. To the knowledge of the Property Owner, Midland
Affiliate and Midland Principal, in the case of each such Development
Property, the development or redevelopment of which has commenced, the
costs and expenses incurred in connection with such Development Property
and the progress thereof are consistent and substantially in compliance
with all aspects of the Development Budget and Schedule applicable
thereto, except as disclosed in Schedule 6.5.22. The Property Owner,
Midland Affiliate and Midland Principal have made available to Regency all
feasibility studies, soil tests, due diligence reports and other studies,
tests or reports performed by or for the Property Owner, Midland Affiliate
and Midland Principal, or otherwise in their possession, which relate to
the Development Properties.
6.5.23 Acquisition Properties. Each Acquisition Contract of
the Property Owner is enforceable by such Property Owner and neither such
Property Owner, nor to such Property Owner's knowledge, any other party
thereto, is in default under any such Acquisition Contract. Without
limiting the foregoing, the contract seller is not in breach of any
representations and warranties made by it in any such Acquisition
Contract.
6.5.24 Work Contracts. The Work Contracts relating to
Properties of the Property Owner are in full force and effect, no party is
in material default thereunder or under any construction loans applicable
thereto, nor are there any facts or circumstances which with the passage
of time or the giving of notice, or both, would result in any such
material default, except as disclosed in Schedule 6.5.24. To the
knowledge of such Property Owner, Midland Affiliate or Midland Principal,
except as disclosed in Schedule 6.5.24, the progress and remaining
expenditures under such Work Contracts are substantially consistent with
the Development Budget and Schedule, the TI Budget and Schedule and the
Capital Expenditures Budget and Schedule. To the knowledge of such
Property Owner, Midland Affiliate or Midland Principal, except as
disclosed in Schedule 6.5.24, any remaining work under such Work Contracts
to be performed after the First Closing will not exceed substantially the
amounts budgeted therefor on the foregoing schedules. To the knowledge of
such Property Owner, Midland Affiliate or Midland Principal, except as
disclosed in Schedule 6.5.24, the work remaining under such Work Contracts
will be sufficient to complete the respective projects to which they
relate, without material change orders, so as to comply with existing
development obligations of such Property Owner (including, without
limitation, obligations under any letters of intent to lease), obligations
for tenant improvements under Leases with respect to such Properties or
for repairs or other necessary work.
6.5.25 Budgets and Projections. To the knowledge of such
Property Owner, except as set forth on Schedule 6.5.25, all budgets and
projections, including without limitation, the Capital Expenditure Budget
and Schedule and the TI Budget and Schedule for each Property and
Acquisition Property of such Property Owner represent such Property
Owner's best estimate of capital expenditures anticipated to be made in
each year covered by such budget.
6.6 Limit on Representations. Except for the express
representations and warranties set forth in this Agreement, the
Partnership and Regency acknowledge and agree that the Assets are being
contributed to the Partnership "as is, where is, and with all faults"
without any other representation or warranty by the Midland Principals,
Property Entities, Joint Ventures, Midland Affiliates or any other
individual or entity, and no such Person nor any other individual or
entity has made any other express or implied representation or warranty
with respect to the Assets whatsoever, and except for the representations
and warranties expressly set forth in this Agreement, the Partnership and
Regency acknowledge that the Partnership accepts the Assets without
relying upon any such other representation or warranty whatsoever by such
Persons or any other Person or entity, and based solely upon the
Partnership's own inspections, investigations and analysis of the Assets.
ARTICLE 7: REPRESENTATIONS, WARRANTIES AND
FURTHER COVENANTS OF REGENCY
Regency hereby represents, warrants and covenants to the Property
Entities as of the date of this Agreement as follows. All representations
that are made "to Regency's knowledge" means to the actual knowledge of
the individuals listed on Schedule 7 attached hereto after reasonable
inquiry. Regency represents that such individuals are the appropriate
individuals who, in the course of their duties, would normally be aware of
material issues and facts affecting Regency.
7.1 Due Incorporation, etc.
(a) Regency is duly organized, validly existing and in
good standing under the Laws of the State of Florida, with all requisite
power and authority to own, lease, operate and sell its assets and to
carry on its business as it is now being conducted. Regency is in good
standing as a foreign entity authorized to do business in each
jurisdiction where it engages in business, except to the extent such
violation or failure does not cause or is not reasonably expected to cause
a Material Adverse Effect.
(b) Regency owns all of the outstanding capital stock of
its subsidiaries listed on Exhibit 21 of Regency's Form 10-K annual report
filed with the SEC for the fiscal year ended December 31, 1996, except
that Regency owns 100% of the outstanding preferred stock and 5% of the
outstanding common stock of Regency Realty Group, Inc. and of Regency
Realty Group II, Inc. Except as set forth on Schedule 7.1(b) and except
for its interests in its subsidiaries, Regency does not hold any interest
in any security issued by any other Person.
7.2 Due Authorization; Consents; No Violations.
(a) Regency has full power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Regency of this Agreement have
been, and the Transaction Documents to be executed and delivered by it
pursuant to this Agreement shall be, duly and validly approved by Regency,
and no other proceeding on the part of Regency is necessary to authorize
this Agreement and the transactions contemplated hereby (other than
obtaining the consents set forth on Schedule 7.2(b)). This Agreement has
been duly and validly executed and delivered by Regency and, assuming due
authorization (including the consummation of the matters described in the
foregoing sentence), execution and delivery of this Agreement by the other
parties hereto, this Agreement constitutes, and the Transaction Documents
to be executed and delivered by Regency pursuant to this Agreement when
executed will constitute, valid and binding obligations of Regency
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization, similar laws or court decisions from time to
time in effect that affect creditors' rights generally and by legal and
equitable limitations on the availability of specific remedies.
(b) Except as set forth on Schedule 7.2(b) and except for
an application to list the Shares issuable pursuant to the transactions
contemplated by this Agreement on the New York Stock Exchange, no
consents, waivers, exemptions or approvals of, notices to or filings or
registrations by Regency with, any Government Entity or any other Person
not a party to this Agreement are necessary in connection with the
execution, delivery and performance by Regency of this Agreement or the
consummation of the transactions contemplated hereby, except to the extent
the failure to obtain the same does not cause or is not expected to cause
a Material Adverse Effect on Regency or the transactions contemplated by
this Agreement.
(c) Upon obtaining those consents set forth on Schedule
7.2(b) (and assuming receipt of such consents) except to the extent same
does not cause or is not reasonably expected to cause a Material Adverse
Effect, the execution, delivery and performance by Regency of this
Agreement and the Transaction Documents to be executed, delivered and
performed by Regency pursuant hereto, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i)
violate any Order applicable to or binding on Regency or its assets; (ii)
violate any Law; (iii) violate or conflict with, result in a breach of,
constitute a default (or an event which with the passage of time or the
giving of notice, or both, would constitute a default) under, permit
cancellation of, accelerate the performance required by, or result in the
creation of any Lien upon any of Regency's assets under, any contract or
other arrangement of any kind or character to which Regency is a party or
by which Regency or any of its assets are bound; (iv) permit the
acceleration of the maturity of any indebtedness of Regency, or any
indebtedness secured by any of Regency's assets; or (v) violate or
conflict with any provision of the Articles of Incorporation or Regency's
bylaws.
7.3 Capitalization.
7.3.1 The authorized capital stock of Regency consists of (i)
25,000,000 shares of Common Stock, (ii) 10,000,000 shares of Special
Common Stock, $0.01 par value, and (iii) 10,000,000 shares of preferred
stock, $0.01 par value. As of December 16, 1997, there were 23,991,277
shares of Common Stock issued and outstanding, and 2,500,000 shares of
Class B Non-voting Common Stock, par value $0.01, issued and outstanding.
7.3.2 No shares of Regency's stock are entitled to preemptive
rights. Except as disclosed in the Regency Exchange Act Reports, in the
Articles of Incorporation relating to the Class B Non-voting Common Stock,
in this Agreement, in the Partnership Agreement or on Schedule 7.3.2,
there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of
Regency or any of its subsidiaries, or contracts or other arrangements by
which Regency or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of Regency or any of its subsidiaries.
Regency has furnished to the Property Entities true and correct copies of
the Articles of Incorporation and Regency's bylaws, as in effect on the
date hereof.
7.3.3 Except as set forth on Schedule 7.3.3, Regency has no
obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any of its capital stock or any interest therein or to pay any
dividend or make any other distribution in respect thereof.
7.3.4 Except for the agreements listed on Schedule 7.3.4, Regency
has no knowledge of any voting agreements, voting trusts, stockholders'
agreement, proxies or other agreements or understandings that are
currently in effect or that are currently contemplated with respect to the
voting of any capital stock of Regency.
7.3.5 All of the outstanding securities of the Company were
issued in compliance with all applicable federal and state securities
laws.
7.4 Valid Issuance of Shares. The Shares issuable upon the
exercise of the Redemption Rights will be duly and validly reserved for
such issuance and will be duly and validly issued, fully paid and
nonassessable, assuming that such exercise will not result in the value of
Regency's outstanding equity securities being owned directly or indirectly
by Persons who are Non-U.S. Persons (as defined in the Articles of
Incorporation).
7.5 Regency Exchange Act Reports.
7.5.1 Since November 5, 1993, Regency has timely filed all
Regency Exchange Act Reports. As of their respective dates, (i) the
Regency Exchange Act Reports complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the Regency Exchange Act Reports, and
(ii) no Regency Exchange Act Report contained, and no documents
subsequently filed by Regency with the SEC pursuant to the Exchange Act
will contain, any untrue statement of material fact or omitted a material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
7.5.2 The financial statements of Regency included in the Regency
Exchange Act Reports comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto. Such financial statements have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements) and on that basis present fairly in all
material respects the consolidated financial position and assets and
Liabilities of the entities included therein as going concerns, and the
results of the operations of such entities and changes in their financial
position for the periods covered thereby and as of the dates thereof.
Such financial statements are in accordance with the books and records of
the entities included therein, do not reflect any transactions which are
not bona fide transactions and do not contain any untrue statements of a
material fact or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances in which they
were made, not misleading. Such financial statements make full and
adequate disclosure of, and provision for all material Liabilities of the
entities included therein (including Regency's subsidiaries) as of the
dates thereof. Except as set forth in the balance sheets included in the
Regency Exchange Act Reports, there are no Liabilities (including "off-
balance sheet" Liabilities), whether due or to become due, which have had
or are reasonably likely to have a Material Adverse Effect.
7.6 Permits. Regency holds all licenses, certificates,
permits, franchises, rights, variances, interim permits, approvals,
authorizations or consents, whether federal, state, local or foreign,
which are currently necessary for the lawful operation of Regency's
business, except for those the absence of which would not cause and would
not be reasonably expected to cause a Material Adverse Effect on Regency.
7.7 No Adverse Change. Since the Recent Balance Sheet Date,
there has not been (i) any event or circumstance or change in Regency, its
business or prospects which would cause or reasonably be expected to
result in a Material Adverse Effect on Regency, (ii) any material loss,
damage or destruction to any of Regency's assets (whether or not covered
by insurance) or any other event or condition which has had or could
reasonably be expected to have a Material Adverse Effect on Regency, (iii)
any contract or other transaction entered into by Regency relating to, or
otherwise affecting in any way, its business or the operation thereof,
other than in the ordinary course of business, (iv) any sale, lease or
other transfer or disposition of any of Regency's assets, or any
cancellation of any debts or claim of Regency, except in the ordinary
course of business, and (v) any changes in the accounting systems,
policies or practices of Regency. Since the Recent Balance Sheet Date,
Regency's business has been conducted in all material respects only in the
ordinary course and consistent with past practices.
7.8 No Defaults or Violations. Except to the extent any
default or non-compliance does not cause or is not reasonably expected to
cause a Material Adverse Effect as to Regency: (a) Regency has not
materially breached any provision of, nor is it in material default under
the terms of, any lease, contract or commitment to which it is a party or
under which it has any rights or by which it is bound or which relates to
its business or its assets and, to Regency's knowledge, no other party to
any such lease, contract, or other commitment has breached such lease,
contract or commitment or is in default thereunder (nor has Regency waived
any such default) in any material respect, and no event has occurred and
no condition or state of facts exists which with the passage of time or
the giving of notice, or both, would constitute such a default or breach
by Regency, or to Regency's knowledge, by any such other party, or give
right to an automatic termination or the right of discretionary
termination thereof; (b) Regency is in material compliance with, and no
Liability or material violation exists under, any Law or Order applicable
in any way to Regency; and (c) no notice from any Government Entity has
been received by Regency claiming any violation of any Law (including any
building, zone or other ordinance) or Order, or requiring any work,
construction or expenditure.
7.9 Litigation. Except for certain matters which, to Regency's
knowledge, do not have a Material Adverse Effect on Regency or the
transactions contemplated by this Agreement, there is no Litigation
pending or, to Regency's knowledge, threatened against any of the
properties or businesses of Regency or relating to its assets or the
transactions contemplated by this Agreement. Except as disclosed on
Schedule 7.9, neither Regency nor any of its assets are subject to any
Order which has had or could have a Material Adverse Effect on Regency.
7.10 Title to Properties; Leasehold Interests. Regency has good
and marketable title to each of the properties and assets owned by it.
Certain real and personal property used by Regency in the conduct of its
business is held under lease, and, to Regency's knowledge, there is no
pending or threatened Claim by any lessor of any such property to
terminate any such lease. None of the properties owned or leased by
Regency is subject to any Liens which could reasonably be expected to
materially and adversely affect the assets, properties, liabilities,
business, affairs, results of operations, condition (financial or
otherwise) or prospects of Regency. Each lease or agreement to which
Regency is a party under which it is the lessee of any property, real or
personal, is a valid and subsisting agreement without any material default
of Regency thereunder and, to the best of Regency's knowledge, without any
material default thereunder of any other party thereto. No event has
occurred and is continuing which, with due notice or lapse of time or
both, would constitute a default or event of default by Regency under any
such lease or agreement or, to the best of Regency's knowledge, by any
party thereto, except for such defaults that would not individually or in
the aggregate have a Material Adverse Effect on Regency. Regency's
possession of such property has not been disturbed and, to the best of
Regency's knowledge, no claim has been asserted against it adverse to its
rights in such leasehold interests.
7.11 Environmental Matters. For purposes of this Section 7.11,
the term "Regency" means Regency and its Affiliates, and the term "Regency
Property" means a property owned or leased by Regency or its Affiliates
and any property in which Regency or its Affiliates has an interest. The
parties acknowledge that Regency does not possess any expertise with
regard to Materials of Environmental Concern and, accordingly, the
following representations and warranties are based exclusively on reports
prepared by environmental consultants to Regency.
(a) Regency is and each Regency Property is not presently in
violation of any applicable Environmental Law;
(b) Regency has not stored or used any Materials of Environ-
mental Concern at any Regency Property;
(c) Regency has not received any notice, complaint, warning
letter or notice of violation from any Government Authority or any other
person that Regency is in violation of any Environmental Law or
environmental permit or that it is responsible (or potentially
responsible) for the assessment or remediation of any release of any
Material of Environmental Concern at, on or beneath any Property;
(d) Regency is not the subject of any actual or, to Regency's
knowledge, threatened federal, state, local or private litigation
involving a claim of liability or a demand for damages arising out of
violation of any Environmental Law or from the release or threatened
release of any Material of Environmental Concern;
(e) Except for those matters described in Schedule 7.11,
Regency has timely filed all reports required by any applicable
Environmental Law and has generated and maintained all data,
documentation, and records required under any Environmental Law;
(f) Except for those matters described in Schedule 7.11, which,
to Regency's knowledge, do not have a Material Adverse Effect on Regency,
Regency is not aware of any release or threatened release of a Material of
Environmental Concern, the presence of any current or former drycleaning
facility, the presence of any current or former storage tanks, the
presence of any asbestos containing material, or the presence of any
condition or circumstance which could subject the owner or operator of any
Regency Property to liability or claims under the Environmental Laws or
any private cause of action arising out of an environmental condition;
(g) No Regency Property is subject to, and Regency has no
knowledge of any imminent restriction on the ownership, occupancy, use, or
transferability of any Regency Property; or
(h) To Regency's knowledge, there are no conditions or
circumstances at any Regency Property which pose a risk to the environment
or the health or safety of any Person.
7.12 Taxes. Regency has filed all federal, state, local and
other Tax returns and reports (except for foreign returns and reports the
failure to file which has not and is not reasonably expected to cause a
Material Adverse Effect), and any other material returns and reports with
any Government Entity, required to be filed by it. Regency has paid or
caused to be paid all Taxes that are due and payable, except those which
are being contested by it in good faith by appropriate proceedings and in
respect of which adequate reserves are being maintained on its books in
accordance with GAAP consistently applied. Regency does not have any
material Liabilities for Taxes other than those incurred in the ordinary
course of business and in respect of which adequate reserves are being
maintained by it in accordance with GAAP consistently applied. Federal
and state income Tax returns for Regency have not been audited by the IRS
or any state authority. No deficiency assessment with respect to or
proposed adjustment of Regency's federal, state, local or other Tax
returns is pending or, to the best of Regency's knowledge, threatened.
There is no Tax Lien, whether imposed by any federal, state, local or
other tax authority, outstanding against the assets, properties or
business of Regency. There are no applicable Taxes, fees or other
governmental charges payable by Regency in connection with the execution
and delivery of this Agreement.
7.13 REIT Status. Regency qualifies as a REIT under the Code.
Regency Atlanta, Inc. is a "qualified REIT subsidiary" within the meaning
of Code Section 856(i).
7.14 Employees: ERISA. Regency has good relationships with its
employees and has not had and does not expect any substantial labor
problems. Regency does not have any knowledge as to any intentions of any
key employee or any group of employees to leave the employ of Regency.
Other than as disclosed in the Regency Exchange Act Reports and materials
provided to the Midland Principals, Property Entities and Midland
Affiliates, Regency has not established, sponsored, maintained, made any
contributions to or been obligated by law to establish, maintain, sponsor
or make any contributions to any "employee pension benefit plan" or
"employee welfare benefit plan" (as such terms are defined in ERISA),
including, without limitation, any "multi-employer plan." Regency has
complied in all material respects with all applicable Laws relating to the
employment of labor, including provisions relating to wages, hours, equal
opportunity, collective bargaining and the payment of Social Security and
other Taxes, and with ERISA.
ARTICLE 8: CONDITIONS PRECEDENT TO OBLIGATIONS OF REGENCY
8.1. Conditions for the First Closing as to the Transaction.
The obligation of Regency to consummate the First Closing is subject to
the fulfillment, at or prior to the First Closing, of each of the
following conditions precedent, and, as described herein, the failure to
satisfy any such condition precedent, after written notice of such failure
followed by a thirty (30) day period in which to cure such failure, shall
excuse and discharge all obligations of Regency to carry out the
provisions of this Agreement unless such failure is waived in writing by
Regency.
8.1.1 Aggregate Assets. The exclusion of Assets from the
transactions contemplated by this Agreement by Regency pursuant to the
provisions of Section 8.2, together with the exclusion of Assets from the
transactions contemplated by this Agreement on account of any Material
Uncured Title Defect or other objection pursuant to Section 5.16, any
Material Later Exception pursuant to Section 5.17, any Unremedied Material
Damage as described in Section 5.18 and any Material Eminent Domain
Proceedings pursuant to Section 5.19, shall not result in the Assets to be
contributed to the Partnership hereunder having a Gross Asset Value as of
the date of the First Closing of less than 80% of the aggregate Gross
Asset Value as shown on Schedule 2.1 of all the Assets.
8.1.2 Representations and Warranties. The representations and
warranties made in Article 6 other than those described in Section 8.2.1,
and the statements and information contained in any certificate,
instrument, schedule, document or exhibit delivered by or on behalf of any
Property Entity, Joint Venture, Midland Affiliate or Midland Principal in
connection with the First Closing pursuant to this Agreement, shall be
true, correct and complete on and as of the date hereof, and shall be
true, correct and complete on and as of the First Closing Date with the
same effect as though such representations and warranties were made on and
as of the First Closing Date, other than a breach of a representation or
warranty which is not likely to have a Material Adverse Effect on the
transactions contemplated by this Agreement taken as a whole; provided,
however, that if any representation and warranty is already qualified in
any respect by materiality or as to Material Adverse Effect, the
materiality qualification immediately before this proviso shall not apply.
Each Midland Principal, Midland Affiliate and Property Entity shall have
delivered to Regency at the First Closing certificates in form and
substance reasonably satisfactory to Regency dated as of the First Closing
Date to such effect.
8.1.3 Compliance with Covenants and Agreements. The covenants,
obligations and agreements of the Property Entity, Joint Venture, Midland
Affiliate or Midland Principals other than those described in Section
8.2.2 to be performed and complied with on or before the First Closing
Date shall have been duly performed and complied with other than non-
performance or non-compliance which is not likely to have a Material
Adverse Effect on the transactions contemplated by this Agreement taken as
a whole.
8.1.4 No Material Adverse Change. Since the date of execution of
this Agreement, there shall not have been any change, circumstance or
event which has had or would reasonably be expected to have a Material
Adverse Effect on the transactions contemplated by this Agreement taken as
a whole.
8.1.5 No Injunction. There shall not be in effect any Order
which enjoins or prohibits consummation of the transactions contemplated
hereby.
8.1.6 Delivery of Documents. All of the documents and agreements
required to be delivered and performed pursuant to Section 10.2.1 which do
not relate to a specific Asset have been so delivered and performed.
8.1.7 Consents. Regency shall have obtained the consents set
forth on Schedule 7.2(b) and Midland Development and the Midland
Affiliates shall have obtained the consents set forth on Schedule 8.1.7.
8.1.8 No Notice of Material Claims. Regency shall not have
received notice of a failure to satisfy Section 9.1.1 which failure could
result in a claim or liability having a Material Adverse Affect on
Regency.
8.1.9 Additional Indemnity. Regency and the Transferees shall
have obtained indemnification (a) from OSTRS with respect to the
Properties in which it owns an equity interest and (b) from such other
Unit Recipients with respect to Properties in which OSTRS does not own an
equity interest in substantially the form attached as Exhibit 8.1.9.
8.2 Conditions for the First Closing as to a Property. The
obligation of Regency to consummate the First Closing as to a Property or
the Third Party Management Assets is subject to the fulfillment, at or
prior to the First Closing, of each of the following conditions precedent,
and, as described herein, the failure to satisfy any such condition
precedent, after written notice of such failure followed by a thirty (30)
day period in which to cure such failure, shall excuse and discharge all
obligations of Regency to carry out the provisions of this Agreement as to
such Property or the Third Party Management Assets, as applicable, unless
such failure is waived in writing by Regency. Subject to the satisfaction
or waiver by Regency of the condition to the First Closing set forth in
Section 8.1.1 (aggregate assets), Regency shall consummate the First
Closing with respect to those Properties as to which the conditions to
closing set forth in this Section 8.2 have been satisfied or waived, the
time and date for the Closing shall be extended thirty (30) days with
respect to the remaining Property or Properties to afford additional time
for the respective Property Owner(s) to cure the failure(s) of condition.
In the event that such failure of a condition for Closing with respect to
a Property has not been cured or waived within such thirty (30) day
period, Regency, at its election, may determine not to consummate the
Closing with respect to such Property.
8.2.1 Representations and Warranties. The representations and
warranties made in Article 6, and the statements and information contained
in any certificate, instrument, schedule, document or exhibit delivered by
or on behalf of any Property Entity, Joint Venture, Midland Affiliate or
Midland Principal with respect to the Property or the Third Party
Management Assets in connection with the First Closing pursuant to this
Agreement, shall be true, correct and complete on and as of the date
hereof, and shall be true, correct and complete on and as of the First
Closing Date with the same effect as though such representations and
warranties were made on and as of the First Closing Date, other than a
breach of a representation or warranty which is not likely to have a
Material Adverse Effect on the applicable Property or Assets to be
transferred by the applicable Contributor hereunder, provided, however,
that if any representation and warranty is already qualified in any
respect by materiality or as to Material Adverse Effect, the materiality
qualification immediately before this proviso shall not apply, and
provided, further, that an appropriate reduction agreed on by the
Contributor and Regency shall be made as of the First Closing Date to the
Contribution Value for the Asset to take account of any breach discovered
before the First Closing which is not likely to have such a Material
Adverse Effect (and if the parties are not able to so agree, Regency's
remedies with such breach shall be governed by Article 13). Each Midland
Principal, Midland Affiliate and Property Entity shall have delivered to
Regency at the First Closing certificates in form and substance reasonably
satisfactory to Regency dated as of the First Closing Date to such effect.
8.2.2 Compliance with Covenants and Agreements. The covenants,
obligations and agreements of the Property Entity, Joint Venture, Midland
Affiliate or Midland Principals to be performed and complied with on or
before the First Closing Date with respect to the Property or the Third
Party Management Assets shall have been duly performed and complied with
other than non-performance or non-compliance which is not likely to have a
Material Adverse Effect on the Assets of such Property Entity, Joint
Venture, Midland Affiliate or Midland Principal; provided, however, that
if any such covenant, obligation or agreement is already qualified in any
respect by materiality or as to Material Adverse Effect, the materiality
qualification immediately before this proviso shall not apply.
8.2.3 No Material Adverse Change. Since the date of execution of
this Agreement, there shall not have been any change, circumstance or
event in the Assets, Option Properties, business or prospects of such
Property Entity or Joint Venture which has had or would reasonably be
expected to have a Material Adverse Effect on such Property Entity or
Joint Venture or the Assets or Option Properties owned by such Property
Entity or Joint Venture (except such as may have arisen by reason of any
matter approved by Regency pursuant to Sections 5.4 (Additional
Acquisitions), 5.8 (New Contracts), 5.9 (Leasing Arrangements) or 5.10
(Obligation to Supplement Information)).
8.2.4 No Injunction. There shall not be in effect any Order
which enjoins or prohibits consummation of the transactions contemplated
hereby with respect to the Assets of such Property Entity, Midland
Affiliate or Joint Venture.
8.2.5 Title. The Title Company shall have delivered to the
Partnership and any other applicable Transferee the Title Insurance
Commitment marked down to constitute the effective Title Insurance and the
Endorsements (with such coinsurance or reinsurance as Regency may
reasonably require) as of the date and time of the First Closing with
respect to such Property.
8.2.6 Lender Estoppels. Estoppel letters shall have been
received from each lender under the Existing Mortgage Debt encumbering
such Property in form and substance reasonably acceptable to Regency.
8.2.7 Tenant Estoppels. Tenant Estoppels relating to such
Property shall have been received from each of the tenants identified on
Schedule 8.2.7 and 80% of all other tenants, without any material
exceptions, covenants or changes to the forms accepted by Regency pursuant
to Section 5.13.
8.2.8 Work Contract Estoppels. Estoppel letters in form and
substance reasonably acceptable to Regency shall have been received from
each contractor, engineer and architect contracted with pursuant to the
Work Contracts for all contracts relating to such Property which have an
amount due and owing of greater than $10,000.
8.2.9 Delivery of Documents. All of the documents and agreements
required to be delivered and performed pursuant to Section 10.2.1 relating
to such Property or Third Party Management Assets have been so delivered
and performed, except documents required pursuant to Section 10.2.1(g) for
the transfer of Assets which Regency has elected not to acquire hereunder.
8.2.10 Consents. The Property Entity shall have obtained its
applicable consents set forth on Schedule 6.1.2(b).
8.2.11 Romanelli and Hughes Properties. As to the Properties
known as the Worthington Park Centre, East Point Shopping Center and
Maxtown Road Shopping Center, Regency shall have received documentation in
form and substance satisfactory to it as to the transfer, option or
restriction, as applicable, of certain outparcels and expansion lands
relating to such Property, as described in the letter from Regency dated
December 4, 1997, attached hereto as Exhibit 8.2.11.
8.2.12 Waiver of Rights of First Refusal. The tenants listed
on Schedule 8.2.12 who have rights of first refusal to acquire the
Properties listed on Schedule 8.2.12 shall have waived such rights in
writing.
8.2.13 Lake Pine Road Construction. As to the Property known
as Lake Pine, Regency and T & M Lake Pine Development Co. LLC (the "Lake
Pine Entity") shall have entered into an agreement in form and substance
satisfactory to Regency pursuant to which the Lake Pine Entity agrees to
fulfill its obligations under that certain Shepards Vineyard Drive
Agreement dated as of November 25, 1997 by and between the Lake Pine
Entity and Faith Baptist Church.
ARTICLE 9: CONDITIONS PRECEDENT TO OBLIGATIONS
OF CONTRIBUTORS
9.1 Conditions for the First Closing. The obligation of each
Contributor to consummate the First Closing as to the Assets owned by such
Contributor is subject to the fulfillment, at or prior to the First
Closing, of each of the following conditions precedent, and the failure to
satisfy any such condition precedent, after written notice of such failure
followed by a thirty (30) day period in which to cure such failure, shall
excuse and discharge all obligations of such Contributor to carry out the
provisions of this Agreement as to the Assets owned by such Contributor
unless such failure is waived in writing by such Contributor.
9.1.1 Representations and Warranties. The representations and
warranties made by Regency in Article 7 and the statements and information
contained in any certificate, instrument, schedule, document or exhibit
delivered by or on behalf of Regency in connection with the First Closing
pursuant to this Agreement, shall be true, correct and complete on and as
of the date hereof, and shall be true, correct and complete as of the
First Closing Date with the same effect as though such representations and
warranties were made on and as of the First Closing Date other than a
breach of a representation or warranty which is not likely to have a
Material Adverse Effect on Regency; provided, however, that if any
representation and warranty is already qualified in any respect by
materiality or as to Material Adverse Effect, the materiality
qualification immediately before this proviso shall not apply. Regency
shall have delivered to the Property Entities at the First Closing
certificates in form and substance reasonably satisfactory to the Property
Entities dated as of the First Closing Date to such effect.
9.1.2 Compliance with Covenants and Agreements. The covenants,
obligations and agreements of Regency to be performed and complied with on
or before the First Closing Date shall have been duly performed and
complied with other than non-performance or non-compliance which is not
likely to have a Material Adverse Effect on Regency or on such
Contributor's transactions contemplated by this Agreement, taken as a
whole.
9.1.3 No Material Adverse Change. Since the date of this
Agreement, there shall not have been any change, circumstance or event in
the business or prospects of Regency which would reasonably be expected to
have a Material Adverse Effect on Regency or a Material Adverse Effect on
such Contributor's transactions contemplated by this Agreement.
9.1.4 No Injunction. There shall not be in effect any Order
which enjoins or prohibits consummation of such Contributor's contribution
of Assets contemplated hereby.
9.1.5 Delivery of Documents. All of the documents and agreements
required to be delivered and performed pursuant to Section 10.2.2 that are
relevant to the Contributor have been so delivered and performed.
9.1.6 Midland Consents. Such Contributor shall have obtained its
applicable consents set forth on Schedule 6.1.2(b) and Midland Development
and the Midland Affiliates shall have obtained the consents set forth on
Schedule 8.1.7, and Regency shall have obtained the consents set forth on
Schedule 7.2(b); provided, however, the consent of any lender to the
Property Entities shall not be required if Regency elects, in its sole
discretion, and causes a Transferee to pay off the loan from such lender
at the First Closing.
9.1.7 No Notice of Material Claims. Such Contributor shall not
have received notice of a failure to satisfy Section 8.1.2, which failure
could result in a claim or liability having a Material Adverse Affect on
such Contributor.
9.1.8 Minimum Asset Contribution. Assets of Contributors
representing not less than 80% of the aggregate Gross Asset Value of the
Assets as set forth on Schedule 2.1 shall be acquired by the Transferees
at the First Closing.
9.1.9 Regency Reorganization. The assets of Regency Centers,
Inc. shall have been transferred to the Partnership, whether by deed,
operation of law or otherwise.
9.1.10 Partnership Agreement. The Partnership Agreement
shall not have been substantially revised in a manner materially adverse
to the Unit Recipients as a result of negotiations between Regency and the
existing limited partners of the Partnership. Making the interests of all
or any portion of the existing limited partners senior to the Units shall
not be deemed adverse to the Unit Recipients as long as the condition in
Section 9.1.9 (Regency reorganization) is satisfied.
9.1.11 Joint Venture Debt. The applicable Midland Principals
and Midland Affiliates shall be released effective at the First Closing
from their guarantees of construction debt incurred by the Joint Ventures
or shall be indemnified by Regency with respect to such guaranties.
ARTICLE 10: CLOSINGS
10.1 Closing.
10.1.1 Time and Place. The First Closing shall take place at
a time and place mutually agreed upon by the parties as soon as
practicable following the satisfaction or waiver of all conditions
precedent to the First Closing, but the parties will use all reasonable
efforts to close on or before January 30, 1998. A pre-closing conference
shall commence at least five Business Days before the First Closing Date,
during which all deliveries (other than any delivery of cash) shall be
made into an escrow with the Title Company, or, at the option of the
parties, such deliveries may be made in such other manner as the parties
may determine. All deliveries made during the pre-closing period shall be
deemed deliveries made at the First Closing. Upon completion of the
deliveries hereunder and satisfaction of the other conditions to the First
Closing herein set forth, the parties shall direct the Title Company to
make such deliveries and disbursements according to the terms of this
Agreement and under a joint escrow instruction letter reasonably
acceptable to the Midland Representatives and Regency and their respective
counsel. Funds shall be delivered through the Title Company's closing
escrow account at a bank satisfactory to Regency and the Property
Entities. All Subsequent Closings shall take place on the dates specified
in Sections 2.5, 2.6, 5.16, 5.17, 5.18, 5.19 and 8.2 at such time and
location as the parties mutually agree.
10.1.2 Representations, Warranties and Covenants as to
Deferred Property Closings. Section 2.6 and Section 8.2, among others,
provide for Closings on certain Properties to take place (each a "Deferred
Closing") after the First Closing takes place with respect to the other
Properties. Anything in this Agreement to the contrary notwithstanding,
all representations and warranties with respect to a Property that is the
subject of a Deferred Closing and that is owned by a Property Owner in
which Regency does not then own an equity interest which representations
and warranties are required to be made as of the First Closing Date herein
shall be deemed to be made as of the date of the Deferred Closing and all
covenants with respect to such Property that are required to be performed
as of the date of the First Closing shall be required to be performed as
of the date of the Deferred Closing.
10.2 Contribution to the Partnership.
10.2.1 Deliveries by Midland. At the First Closing, in
addition to any other documents or agreements required under any other
provision of this Agreement, each Property Entity and, unless otherwise
indicated, each Midland Affiliate and Midland Principal shall make the
following deliveries and performance:
(a) Certificates. The certificates required pursuant to
Section 8.1.2 and Section 8.2.1.
(b) Partnership Agreement. The Partnership Agreement,
executed by or on behalf of the Property Entities;
(c) OTR Joint Venture Agreements. The joint venture
agreements described in Section 3.2, executed by OTR;
(d) R&M Western Partnership Agreement. The Agreement of
Limited Partnership of R&M Western Partnership described in Section 3.1,
executed by Midland Western Partnership;
(e) Redemption Agreement. The Redemption Agreement,
executed by or on behalf of the Property Entities, for the benefit of the
Unit Recipients;
(f) OTR Redemption Agreement. The OTR Redemption
Agreement, executed by OTR;
(g) Transfer Documents. The deeds, assignments and other
transfer documents which are listed on Schedule 10.2.1(g) transferring
title to its respective Assets free of any claims, except for the
Permitted Exceptions, including assignment of the interests of the Midland
Affiliates in the Joint Ventures to the applicable Transferee;
(h) Memorandum of Option. The Memoranda of Option
described in Section 4.1;
(i) Registration Rights Agreements. The Registration
Rights Agreement, executed by the Property Entities, for the benefit of
the Unit Recipients;
(j) Non-Compete Agreements. Non-Compete Agreements, in
the form attached as Exhibit 10.2.1(j), executed by each Midland Principal
and the officers of Midland Development identified on Schedule 10.2.1(j);
(k) Lock-Up Agreements. Lock-Up Agreements in the form
attached as Exhibit 10.2.1(k) executed by each Midland Principal;
(l) Escrow Agreements. The Escrow Agreements described in
Section 2.2(e), executed by the Escrow Entities described therein;
(m) Legal Opinion. An opinion of Greensfelder, Hemker &
Gale, P.C., with respect to each Property Entity, Midland Affiliate and
Joint Venture, as to due organization, due authorization, consents, waiver
or expiration of all options, rights of first refusal and buy-sells of
which such firm has knowledge triggered by the transactions contemplated
by this Agreement, violations (to such firm's knowledge), litigation (to
such firm's knowledge), the absence of statutory or contractual appraisal
rights of any equity owner thereof, enforceability and such other matters
as counsel to Regency may reasonably request prior to the First Closing,
which opinion may rely on the opinion of The Stolar Partnership, and The
Stolar Partnership may rely on the opinion of local counsel acceptable to
Regency, if The Stolar Partnership opines that such reliance is
reasonable;
(n) Existing Mortgage Documents. The documents evidencing
the assumption of the Existing Mortgage Debt executed by the respective
Property Entities and all deliveries of such Property Entities required
thereunder;
(o) Notice to Tenants. A notice of conveyance to each
tenant in form satisfactory to the parties hereto;
(p) State Law Disclosures. Such disclosures and reports
as are required by applicable state and local Law in connection with the
conveyance of real property;
(q) Affidavits. Owner's affidavits to the extent
reasonably and customarily required by the Title Company to issue the
Title Policy to the Partnership and the other Transferees and to close
this transaction in accordance with the terms hereof, and any other
documents which are reasonably and customarily required by the Title
Company to provide the Endorsements and to issue the Title Policy subject
only to the Permitted Exceptions;
(r) Permits and Approvals. Evidence reasonably
satisfactory to Regency to the effect that the Property Entities possess
the material licenses, permits, approvals, zoning exceptions and
approvals, consents and Orders of Government Entities relating to the
ownership, operation and use of the Properties, including, without
limitation, certificates of occupancy for the Properties, and assignments
thereof to the Partnership or the applicable Transferee, to the extent
they are assignable;
(s) Terminations. Terminations, effective no later than
the First Closing, of those Service Agreements which Regency and the
Property Entities have agreed that the Partnership shall not assume;
(t) Lien Waivers. Affidavits or other evidence reasonably
satisfactory to Regency that no Person has a right now or in the future to
file any liens against the Properties for brokerage commissions or fees in
connection with the Leases or the transactions set forth herein;
(u) Authority. Evidence of the existence, organization
and authority of each Property Entity, Midland Affiliate and Joint Venture
and of the authority of the Persons executing documents on behalf of each
Property Entity or Midland Affiliate reasonably satisfactory to the Title
Company and Regency;
(v) Possession. Possession of the Assets, subject only to
the applicable Permitted Exceptions;
(w) Books and Records. Delivery to the offices of the
Partnership of the original Leases and Contracts (or copies if the
originals cannot be located) and to the extent now or subsequently coming
into the possession or control of any Midland Principal, Property Entity
or Midland Affiliate: copies or originals (including information stored
electronically) of all books and records of account; contracts; copies of
correspondence with tenants and suppliers; receipts for deposits; unpaid
bills and other papers or documents which pertain to the Properties or the
Third Party Management Assets; all advertising materials, booklets, keys
and other items, if any, used in the operation of the Properties or the
Third Party Management Assets; and, if in the possession or control of any
Midland Principal, Property Entity and Midland Affiliate, the original
"as-built" plans and specifications and all other available plans and
specifications. The Property Entities shall cooperate with the
Transferees after the First Closing to provide to the Partnership any such
information stored electronically and to answer questions of the
Transferees from time to time regarding pre-Closing matters (e.g., in
connection with the preparation of Tax returns or financial statements);
(x) Additional Documents. Any additional documents that
Regency may reasonably require for the proper consummation of the
transactions contemplated by this Agreement.
10.2.2 Deliveries by Regency. At the First Closing, Regency
shall make the following deliveries and performance:
(a) Certificates. The certificates required by Section
9.1.1;
(b) Partnership Agreement. The Partnership Agreement,
executed by Regency, together with any filings with any Government Entity
required to be made by or on behalf of the Partnership;
(c) OTR Joint Venture Agreements. The joint venture
agreements described in Section 3.2, executed by R&M Western Partnership;
(d) R&M Western Partnership Agreement. The Agreement of
Limited Partnership of R&M Western Partnership described in Section 3.1,
executed by the Partnership and Third Party Management Company;
(e) Redemption Agreement. The Redemption Agreement,
executed by the Partnership and Regency;
(f) OTR Redemption Agreement. The OTR Redemption
Agreement, executed by the Partnership and Regency;
(g) Transferee Ratification. The written ratification of
this Agreement by the Transferees and their agreement to perform the
obligations of the Transferees that are to be performed after the First
Closing;
(h) Initial Capital Contribution. A cash capital
contribution to the Partnership sufficient to pay: (1) that portion of
the Existing Mortgage Debt which may be prepaid without incurring
penalties or "make whole" payments; and (2) the closing costs and
adjustments payable by the Partnership for the Properties at the First
Closing; and (3) other Partnership obligations related to the Closing (the
sum of (1) through (3) being the "Regency Capital Contribution") (provided
that the Regency Capital Contribution plus amounts paid by Regency to
redeem Units at the First Closing shall not exceed $80 million). Regency
shall not be obligated to deposit the Regency Capital Contribution into
the escrow until the closing statements have been executed and all
deliveries by or on behalf of all Midland Principals, Property Entities,
and Midland Affiliates have been made into escrow;
(i) Units. Issuance by the Partnership to the
Contributors of that number of Units specified in Section 2.2(a);
(j) Redemption. Redemption by Regency of all Units in
exchange for cash which are required to be redeemed at the First Closing
pursuant to the terms of the Redemption Agreement;
(k) Application of Capital Contribution. Application by
the Partnership of the Regency Capital Contribution in accordance with
this Agreement;
(l) Assumption Agreements. Execution by the applicable
Transferee of the transfer documents listed on Schedule 10.2.1(g) and any
other documents as the Property Entities may reasonably require to
evidence the assumption of the Assumed Liabilities and Assumed Obligations
by the applicable Transferee;
(m) Registration Rights Agreement. The Registration
Rights Agreement, executed by Regency;
(n) Authority. Evidence of existence, organization and
authority of Regency and the Transferees and the authority of the Person
executing documents on behalf of each of Regency and the Transferees
reasonably satisfactory to the Property Entities;
(o) Legal Opinion. An opinion of Foley & Lardner, counsel
for Regency, as to due organization; due authorization, enforceability of
Redemption Rights (as described in the Redemption Agreement) and the valid
issuance of Shares upon exercise of Redemption Rights, subject to the
assumptions in Section 7.4; enforceability of the Redemption Agreement and
Registration Rights Agreement; due organization and existence of the
Transferees; violations (to such firm's knowledge); litigation (to such
firm's knowledge), enforceability; the qualification of Regency as a REIT
under the Code; and such other matters as counsel to the Property Entities
may reasonably request prior to the First Closing;
(p) Existing Mortgage Debt. The documents evidencing the
assumption of the Existing Mortgage Debt, executed by the applicable
Transferee, and all deliveries of the applicable Transferee required
thereunder;
(q) State Law Disclosures. Such disclosures and reports
as are required by applicable state and local Law in connection with the
conveyance of real property;
(r) Election to Board. Certified Board resolutions
creating an additional seat on Regency's Board of Directors and electing
Lee S. Wielansky to fill the vacancy, effective immediately following the
First Closing, and an Indemnity Agreement executed by Regency, in the
standard form entered into between Regency and its directors; and
(s) Additional Documents. Any additional documents that
the Property Entities or the holders of the Existing Mortgage Debt may
reasonably require for the proper consummation of the transactions
contemplated by this Agreement.
10.3 Closing Statements/Escrow Fees. The Property Entities and
Regency shall deposit with the Title Company executed closing statements
consistent with this Agreement.
ARTICLE 11: PRORATIONS AND ADJUSTMENTS
11.1 Prorations. Before the First Closing, the Property
Entities shall provide such information and verification reasonably
necessary to support the prorations and adjustments under this Article 11.
All prorations set forth below in this Section 11.1 shall be as of the
First Closing Date (the "Cutoff Date"), with the Cutoff Date being a day
of income and expense to the Property Entities. All income and expense
with respect to the Assets and all items customarily prorated in real
estate closings shall be prorated as of the Cutoff Date between the
Transferee and the Property Entity with respect to the Assets contributed
by such Property Entity, except as otherwise provided herein. No
prorations shall be made with Midland Development for the Third Party
Management Assets, and no prorations shall be made with respect to the
Joint Ventures.
11.1.1 Taxes and Assessments. The Transferee shall receive a
credit for any real estate and tangible personal property Taxes (and any
assessments imposed by private covenant), whether or not then due or
payable, imposed in respect of a Property and applicable for the portion
of the current year or other applicable Tax period which has elapsed by
the Cutoff Date (and to the extent unpaid, for prior years or Tax
periods). If the amount of any such Taxes have not been determined as of
the First Closing, such credit shall be based on a reasonable estimate of
the parties as to the full assessed value of the Properties (based on
their Gross Asset Value as of the First Closing Date where the parties
anticipate that Taxes for the current year will be based on such amount)
and the assessment ratios and Tax rates anticipated to be in effect for
the current year (and if the parties are not able to agree on such rate,
the most recent ascertainable rate shall be used). The Transferee shall
receive a credit for the total amount of any special assessments or
similar charges which are levied or charged against a Property before the
First Closing, whether or not due and payable on the Cutoff Date. Any
such proration for Taxes and assessments shall be offset by the estimated
portions of such taxes which are recoverable from tenants of the
Transferees based on Leases in effect as of the applicable Cutoff Date.
11.1.2 Collected Rent. The Transferee shall receive a credit
for any rent and other income under Leases (and any applicable or local
Tax on rent) collected by the applicable Property Entity before the First
Closing and applicable to any period of time after the Cutoff Date. The
Property Entity shall receive a credit for receivables from tenants (less
any agreed on discount for uncollectibility) for rent and other income
under Leases (and any applicable or local Tax or rent) applicable to any
period of time prior to the Cutoff Date, except to the extent that the
Property Entity and Regency agree that such receivables are unlikely to be
collectible ("Doubtful Receivables"). All collections of accounts
receivable other than Doubtful Receivables after the First Closing shall
be retained by the Transferee. After the First Closing, the Partnership
shall apply all rent and income collected by the Transferees from a
tenant, unless the tenant properly identifies the payment as being for a
specific item, first to such tenant's monthly rental for the month in
which First Closing occurred to the extent not already paid and then to
arrearages in the reverse order in which they were due, remitting to the
Property Entity, after deducting collection costs, any rent properly
allocable to receivables constituting Doubtful Receivables for the period
ending on the Cutoff Date. The Transferees shall bill and attempt to
collect such rent arrearages constituting Doubtful Receivables in the
ordinary course of business, but shall not be obligated to engage a
collection agency to collect any such rent arrearages except at the
Contributor's expense, or to take legal action to collect any such rent
arrearages. After the First Closing, the Property Entities shall not have
the right to seek collection of any rents or other income applicable to
any period before the Cutoff Date. Any rent or other income received by
any Property Entity after the First Closing which are owed to the
Transferees shall be held in trust and remitted to the Transferees
promptly after receipt, and any rent collected by the Transferee which is
owed to the Property Entity shall be held in trust and remitted to the
Property Entity promptly after receipt.
11.1.3 Percentage Rents. Estimated percentage rents accrued
from any tenant under any Lease for any lease year in which the First
Closing occurs (with any such percentage rents to be deemed to have been
earned and received on an equal per diem basis spread throughout such
lease year) shall be prorated between the Property Entity and the
Transferees as of the Cutoff Date.
11.1.4 Operating Expense Pass-Throughs. The Property
Entities, as landlords under the Leases, are currently collecting from
tenants under the Leases additional rent to cover Taxes, insurance,
utilities, maintenance and other operating costs and expenses
(collectively, "Operating Expense Pass-Throughs") incurred by them in
connection with the ownership, operation, maintenance and management of
the Properties. If a Property Entity collected estimated prepayments of
Operating Expense Pass-Throughs in excess of any tenant's share of such
expenses, then if the excess can be determined by the First Closing, the
applicable Transferee shall receive a credit for the excess or, if the
excess cannot be determined at the First Closing, the Transferees shall
receive a credit based upon an estimate. The applicable Transferee shall
be responsible for crediting or repaying those amounts to the appropriate
tenants. At the First Closing, the Property Entities shall pay or provide
for all Operating Expense Pass-Throughs for the period through the Cutoff
Date except to the extent reflected in the Proration Items.
11.1.5 Service Contracts. Each Property Entity shall receive
a credit for regular charges under Service Contracts assumed by its
Transferees pursuant to this Agreement paid and applicable to the period
after the Cutoff Date and the Transferee shall receive a credit for such
charges payable and applicable to the period ending on the Cutoff Date.
11.1.6 Utilities. The Property Entities shall cause the
meters, if any, for utilities to be read on the Cutoff Date and to pay the
bills rendered on the basis of such readings, except for utilities paid
directly by tenants. If any such meter reading for any utility is not
available, then adjustment therefor shall be made on the basis of the most
recently issued bills therefor which are based on meter readings no
earlier than 30 days before the Cutoff Date.
11.2 Work Contracts. At the First Closing, the Property
Entities and Regency shall prorate the cost of all work under the Work
Contracts, other than the Development Contracts, that has been performed
through the Cutoff Date. Regency shall receive a credit against the
purchase price for the Property Entities' pro rata share of the work
performed under the Work Contracts, other than the Development Contracts,
through the Cutoff Date. At the First Closing, the Transferees shall
assume the obligation to complete the Work Contracts. TI Contracts,
Repair Contracts and Development Contracts shall be included in the
warranties described as Intangible Property related to the applicable
Properties. At the First Closing, the Property Entities shall provide for
Work Contracts under which all the work described therein has been
substantially completed, lien waivers, payment affidavits, certificates of
completion, and Tenant Estoppels. For Work Contracts which are not
substantially completed at the Cutoff Date, the Property Entities shall
provide contractor progress reports and estoppels and other evidence
reasonably necessary to confirm the Property Entities' compliance with its
obligations pursuant to the Work Contracts and this Section 11.2.
Notwithstanding the foregoing, lien waivers and payment affidavits will
not be required for Work Contracts under which all the work described
therein has been substantially completed but payment for contractual
retention has not been made pending completion of punch list items. At
the First Closing, the Property Entities shall also provide such indemnity
or other assurance to enable the Title Company to issue the Title Policy
without exception for mechanics' and materialmens' liens related to work
performed by the Property Entities under the Work Contracts.
11.3 Tenant Deposits. All tenant security deposits (and
interest thereon if required by Law or contract to be earned thereon)
shall be transferred to the Transferees at the First Closing without
adjustment to any party. As of the First Closing, the applicable
Transferee shall assume each Property Entity's obligations related to
tenant security deposits, but only to the extent they are properly
transferred or credited to the Transferee.
11.4 Deposits. The Partnership shall reimburse each Contributor
(other than a Midland Affiliate contributing an interest in a Joint
Venture) in cash at the First Closing for utility deposits, earnest money
deposits held by the seller under Acquisition Contracts, and escrows for
taxes and insurance and for similar types of deposits and escrows (but
excluding escrows for capital expenditures), to the extent that such items
are assigned to the Transferees at Closing. To the extent that any such
deposits are not transferable, promptly after the First Closing, the
Partnership shall make its own deposits and request a refund to the
Contributors of their own deposits.
11.5 Wages. The Partnership shall not be liable for any wages,
fringe benefits, payroll Taxes, unemployment insurance contributions,
accrued vacation pay, accrued pay for unused sick leave, accrued severance
pay and other compensation accruing prior to the First Closing for
employees of the Property Entities except to the extent reflected on the
Final Closing Balance Sheet.
11.5.1 Determination of Midland Development Value Adjustment.
(a) Estimated Closing Balance Sheet. For purposes of
determining any adjustment pursuant to Section 2.1(b), not less than five
(5) Business Days prior to the First Closing Date, Midland Development
shall, in consultation with Regency, prepare and deliver to Regency an
estimated balance sheet of Midland Development as of the close of business
on the Cutoff Date which shall represent Midland Development's reasonable
estimate of the Final Closing Balance Sheet; such balance sheet to be in
form and detail identical to, and in its accounting principles and
policies consistent in every respect with, the Midland Financial
Statements relating to Midland Development and accompanied by schedules
setting forth in reasonable detail all current assets (other than accounts
receivable for (i) brokerage transactions that are evidenced on the First
Closing Date by a signed agreement, (ii) any other transactions listed in
Schedule 1.1.143 (Third Party Management Assets), or (iii) advances to
brokers, all of which shall be retained by Midland Development
(collectively, the "Retained Items") and current liabilities (including
the outstanding balance of the line of credit) included therein. Such
balance sheet or the accompanying schedules shall contain sufficient
detail of such current assets and liabilities for the determination of any
adjustment pursuant to Section 2.1(b). In the event Regency shall object
to any of the information set forth on the balance sheet or accompanying
schedules as presented by Midland Development, the parties shall negotiate
in good faith and agree on appropriate adjustments to the end that such
balance sheet and accompanying schedules reflect a reasonable estimate of
the Final Closing Balance Sheet (the estimated balance sheet as finally
determined by the parties pursuant to this subsection is herein referred
to as the "Estimated Closing Balance Sheet"), except that the current
liabilities on the Estimated Closing Balance Sheet, but not on the Final
Closing Balance Sheet, shall be increased by $50,000 as a reserve for
payables that are not exactly determinable as of the First Closing Date.
In connection with the determination of the Estimated Closing Balance
Sheet, Midland Development shall provide to Regency such information and
detail as Regency shall reasonably request.
(b) Final Closing Balance Sheet. The balance sheet of
Midland Development prepared as of the Cutoff Date shall be prepared as
follows:
(i) Within thirty (30) days after the First Closing
Date, Regency shall deliver to Midland Development an
unaudited balance sheet of Midland Development as of the
Cutoff Date, prepared in accordance with GAAP (except for
the exclusion of the Retained Items) from the books and
records of Midland Development, on a basis consistent with
GAAP theretofore followed by Midland Development in the
preparation of the Midland Financial Statements relating to
Midland Development and in accordance with this Section
11.5.1(b), and fairly presenting the financial position of
Midland Development as of the Cutoff Date. The balance
sheet shall be accompanied by detailed schedules of the
current assets and current liabilities (including the
outstanding balance of its line of credit) of Midland
Development.
(ii) Within sixty (60) days following the delivery of
the balance sheet referred to in (i) above, Midland
Development or its independent accountants ("Midland
Development's Accountants") may object to any of the
information contained in said balance sheet or accompanying
schedules which could affect the necessity or amount of any
Midland Development Value Adjustment. Any such objection
shall be made in writing and shall state Midland
Development's determination of the amount of the Midland
Development Value Adjustment. Any dispute regarding the
determination of the Final Closing Balance Sheet shall be
resolved by a "Big 6" accounting firm other than a firm
that provides services to Midland Development or Regency
(which shall be selected by lot or such other procedure as
the parties may agree) whose decision shall be binding on
the parties. As used in this Agreement, the term "Final
Closing Balance Sheet" shall mean the balance sheet of
Midland Development as of the Cutoff Date as finally
determined or agreed to for purposes of this Section
11.5.1(b).
(iii) Regency agrees to permit Midland Development
and its respective representatives, during normal business
hours, to have reasonable access (at a location in St.
Louis, Missouri) to, and to examine and make copies of, all
books and records of Midland Development, including but not
limited to the books, records, schedules and work papers of
Regency, which documents and access are necessary to review
the balance sheet delivered by Regency in accordance with
Section 11.5.1(b)(i). Midland Development similarly agrees
to permit Regency and its representatives, during normal
business hours, to have reasonable access to any books and
records of Midland Development which do not constitute
Assets contributed hereunder, in order to enable them to
prepare such balance sheet.
(iv) Notwithstanding any provision contained herein
requiring that the Final Closing Balance Sheet be prepared
in a manner consistent with Midland Development's past
practices or in accordance with GAAP, the Final Closing
Balance Sheet shall be prepared excluding the Retained
Items and stating accounts receivable and notes receivable
net of an appropriate reserve for doubtful accounts and
anticipated collection expenses.
11.5.2 Midland Development Value Adjustment. The Midland
Development Value Adjustment shall be determined by comparing any
adjustment made to the Contribution Value of the Third Party Management
Assets pursuant to Section 2.1(b) based on the Estimated Closing Balance
Sheet and the adjustment that should have been made had the Final Closing
Balance Sheet been available at the First Closing. The adjustment that
needs to be made, after taking into account any adjustment made at the
First Closing, shall be a Positive Midland Development Value Adjustment if
the Contribution Value with respect to such Assets should be increased
based on the Final Closing Balance Sheet and shall be a Negative Midland
Development Value Adjustment if such Contribution Value should be
decreased based on the Final Closing Balance Sheet.
11.5.3 Payment of Midland Development Value Adjustment. On
or before the fifth Business Day following the final determination of the
Final Closing Balance Sheet (such date being hereinafter referred to as
the "Settlement Date"), either (i) Midland Development shall pay to
Regency in cash the amount, if any, of a Negative Midland Development
Value Adjustment, as reflected on the Final Closing Balance Sheet; or (ii)
Regency shall deliver to Midland Development that number of Additional
Units arrived at by dividing the Unit Value into the amount, if any, of a
Positive Midland Development Value Adjustment, as reflected on the Final
Closing Balance Sheet, and then subtracting the Record Date Adjustment
Amount. In the event that Midland Development fails to pay the Negative
Midland Development Adjustment Amount, the Partnership shall have the
right to offset such amount against the Midland Group Earn-Out payable at
the First Earn-Out Closing.
11.6 Due Diligence Costs. The Partnership shall reimburse the
applicable Contributors with respect to all reasonable costs of due
diligence applicable to an Acquisition Contract contributed to a Regency
Entity or owned by a Joint Venture an interest in which is contributed to
a Regency Entity and to the extent that such amounts are not reimbursable
to the applicable Contributor by Topvalco or Dillon. In addition, the
Partnership shall assume all payables with respect to such items, and
shall acquire as an Asset all receivables from Topvalco or Dillon with
respect to such items. Such due diligence costs shall include without
limitation all reasonable costs of environmental investigation, legal
fees, survey costs, title costs, construction inspections, site
investigations, architectural plans and all other expenses applicable with
respect to the investigation of the applicable property as a site suitable
for building and development.
ARTICLE 12: TERMINATION AND REMEDIES
12.1 Termination. This Agreement may be terminated:
12.1.1 At any time prior to the First Closing Date, with the
written consent of Regency and Midland Development;
12.1.2 At any time prior to the First Closing Date, by Regency
(provided it has not caused a failure of a condition to Closing by reason
of its breach of any of its material obligations hereunder), if there
shall have been a failure of any condition to Regency's obligation to
close, and such failure shall not have been remedied within the applicable
period to cure after notice has been provided pursuant to Article 5 or 8
(and the First Closing Date shall be extended to provide for such cure
period);
12.1.3 At any time prior to the First Closing Date, by Midland
Development (provided no Midland Principal, Property Entity or Midland
Affiliate has caused a failure of a condition to Closing by reason of its
breach of any of its material obligations hereunder), if there shall have
been a failure of any condition of the Contributors' obligation to close,
and such failure shall not have been remedied within the applicable period
to cure after notice has been provided pursuant to Article 9 (and the
First Closing Date shall be extended to provide for such cure period); or
12.1.4 If the First Closing has not taken place by March 31,
1998, at any time thereafter, by Midland Development or Regency, upon
delivery of written notice of termination to the other so long as the
cause for delay is not attributable to a default of this Agreement by the
terminating party.
12.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 12.1, all obligations of the parties hereunder shall
terminate, except for the obligations that expressly survive the
termination of this Agreement. No such termination shall relieve any
party from liability pursuant to Section 12.3 below.
12.3 Remedies.
12.3.1 All rights and remedies of any party hereunder are
cumulative and in addition to any rights and remedies which such party may
have under applicable law. The exercise of any one right or remedy
against one party hereto will not deprive the exercising party of any
right or remedy against that party or any other parties hereto. No right,
power or remedy conferred upon or reserved to a party under this Agreement
or any other of the Transaction Documents is exclusive of any other right,
power or remedy in any of the Transaction Documents, but each and every
such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power and remedy given hereunder or
under any other Transaction Documents, or now or hereafter existing at
law, in equity or by statute.
12.3.2 If (i) any Contributor receives prior to the First
Closing an offer for a Competing Transaction (as defined in Section 5.7),
and (ii) such Contributor fails to obtain its applicable consents shown on
Schedule 6.1.2(b) for any reason, and (iii) Contributors agree to or
consummate Competing Transactions on or before December 31, 1998 involving
more than 25% of the aggregate Gross Asset Value of the Assets as shown on
Schedule 2.1, and (iv) Regency is not in material breach of any covenant,
representation or warranty made by it in this Agreement and has performed
all material obligations required to be performed by it at or before the
First Closing, each Contributor (jointly and severally with each Midland
Principal who directly or indirectly owns an equity interest in such
Contributor) whose Assets are subject to such Competing Transactions shall
immediately pay to Regency upon the closing of such Competing Transactions
(by wire transfer) a break-up fee in an amount equal to 2% of the Gross
Asset Value of such Assets disposed of by such Contributor in the
Competing Transaction as shown on Schedule 2.1, whereupon such Contributor
shall have no further liability to Regency whatsoever arising out of any
Competing Transaction.
ARTICLE 13: INDEMNIFICATION
13.1 By Midland Principals. For a period of one year from the
First Closing Date (except for (i) Claims related to a breach of the
representations and warranties set forth in Sections 6.1.1 (Due
Organization), 6.1.2 (Due Authorization; Consents; No Violations), 6.2.2
(Securities) and 6.3 (Joint Ventures), for which the survival period shall
be two years, and (ii) Claims related to a breach of the representations
and warranties set forth in Section 6.2.6 (No Employees), Section 6.4.5
(Employee Benefit Plans), Section 5.6 (Disclosure) and Section 6.2.3
(Distributions and Payments), and related to any Tax, for which the
survival period shall be the applicable statute of limitation related to
such Claim), the Midland Principals hereby agree to indemnify, defend and
hold harmless Regency, each Transferee and their respective directors,
officers, employees and other Affiliates, from and against all Claims
asserted against, resulting to, imposed upon, or incurred, directly or
indirectly, by any such Person or the Assets transferred to such
Transferee pursuant to this Agreement by reason of, arising out of or
resulting from (i) the inaccuracy or breach of any representation or
warranty of (x) such Midland Principal, or (y) any Property Entity
(including Midland Development) or (z) Midland Affiliate in which he owns
an equity interest contained in or made pursuant to this Agreement,
including closing certificates (regardless of whether such breach is
deemed "material"); (ii) the breach of any covenant of (x) such Midland
Principal or (y) any Property Entity (including Midland Development) or
Midland Affiliate in which he owns an equity interest contained in this
Agreement (regardless of whether such breach is deemed "material"); or
(iii) any Claim accruing prior to the First Closing Date not constituting
an Assumed Liability or Assumed Obligation. Notwithstanding the
foregoing, with respect to an Indemnified Claim which results from (i) the
inaccuracy or breach of any representation or warranty of a Property
Entity (other than Midland Development) or Midland Affiliate, (ii) the
breach of a covenant of a Property Entity (other than Midland Development)
or Midland Affiliate or (iii) any Claim against a Property Entity (other
than Midland Development) or Midland Affiliate accruing prior to the First
Closing Date which is not an Assumed Liability or Assumed Obligation, each
Midland Principal shall only be liable to the extent of (i) the sum of the
Contribution Value and the Debt Amount of the Asset to which such
inaccuracy, breach or Claim relates, multiplied by (ii) his percentage
interest in such Property Entity (other than Midland Development) or
Midland Affiliate transferring such Asset. The "Debt Amount" with respect
to an Asset means the total outstanding amount of recourse construction
debt encumbering the Asset as of the First Closing and guaranteed by the
Midland Principal (but only so long as such construction debt remains
outstanding), and in the case of a violation prior to the First Closing of
carve-outs from the non-recourse provisions of Existing Mortgage Debt, the
Debt Amount also includes the amount of such Existing Mortgage Debt
outstanding on the First Closing Date which becomes recourse as a result
of such violation (but only to the extent of the loss caused to the lender
by such violation). With respect to an Indemnified Claim which results
from (i) the inaccuracy or breach of any representation or warranty of
Midland Development, (ii) the breach of a covenant of Midland Development
or (iii) any Claim against Midland Development accruing prior to the First
Closing Date which is not an Assumed Liability or Assumed Obligation, each
Midland Principal shall be jointly and severally liable with each other
Midland Principal. A Midland Principal owning an interest in a Midland
Affiliate is deemed to own an equity interest in any Property Entity owned
by such Midland Affiliate equal to his pro rata interest in such Midland
Affiliate multiplied times such Midland Affiliate's interest in the
Property Entity. As used in this Article 13, the term "Indemnified Claim"
shall include all Loss and Expenses.
13.2 By Contributors. For a period of one year from the First
Coast Closing Date (except for (i) Claims related to a breach of the
representations and warranties set forth in Sections 6.1.1 (Due
Organization), 6.1.2 (Due Authorization; Consents; No Violations), 6.2.2
(Securities) and 6.3 (Joint Ventures), for which the survival period shall
be two years, and (ii) Claims related to a breach of the representations
and warranties set forth in Sections 6.2.6 (No Employees), 6.4.5 (Employee
Benefit Plans), 5.6 (Disclosure) and 6.2.3 (Distributions and Payments),
and related to any Tax, for which the survival period shall be the
applicable statute of limitation related to such Claim), each Contributor
hereby agrees to indemnify, defend and hold harmless Regency, each
Transferee and their respective directors, officers, employees and other
Affiliates, from and against all Claims asserted against, resulting to,
imposed upon, or incurred, directly or indirectly, by any such Person or
the Assets transferred to such Transferee pursuant to this Agreement by
reason of, arising out of, or resulting from (i) the inaccuracy or breach
of any representation or warranty of such Contributor contained in or made
pursuant to this Agreement, including closing certificates (regardless of
whether such breach is deemed "material"); (ii) the breach of any covenant
of such Contributor contained in this Agreement (regardless of whether
such breach is deemed "material"); or (iii) any Claim accruing prior to
the First Closing Date not constituting an Assumed Liability or Assumed
Obligation. A Property Entity shall only be responsible for Claims made
with respect to its individual representations, warranties, covenants and
Claims, and not those of any other Property Entity (except as otherwise
specifically provided for with respect to Midland Development).
13.3 By the Partnership and Other Transferees. For the periods
indicated herein and subject to the terms and conditions of this Article
13, each Transferee and the Partnership hereby agrees to indemnify, defend
and hold harmless the Property Entities and their respective directors,
officers, employees, partners and other Affiliates from and against all
Claims asserted against, resulting to, imposed upon or incurred by any
such Person, directly or indirectly, by reason of, arising out of or
resulting from (i) any breach by such Transferee of any obligation of such
Transferee related to the Assets which by this Agreement, or any Closing
delivery, specifically become the obligation of such Transferee, for a
period equal to the applicable statute of limitations relating to such
Claims; or (ii) all Claims against the Property Entities or Midland
Affiliates constituting, relating to or arising out of any Assumed
Liabilities or Assumed Obligations or any Claim accruing after the date at
which the Asset relating to such Claim has been transferred to the
Partnership or other Transferee, for a period equal to the applicable
statute of limitations relating to such Claims.
13.4 By Regency. For a period of two years from the First
Closing Date (except with respect to the inaccuracy of any form or report
filed with the Securities and Exchange Commission in which case the
survival period shall be the applicable statute of limitations) and
subject to the terms and conditions of this Article 13, Regency hereby
agrees to indemnify, defend and hold harmless the Unit Recipients from and
against all Claims asserted against, resulting to, imposed upon or
incurred by any such Person, directly or indirectly, by reason of, arising
out of or resulting from (i) the inaccuracy or breach of any
representation or warranty of Regency contained in or made pursuant to
Article 7 of this Agreement (regardless of whether such breach is deemed
"material") or (ii) the breach of any covenant of Regency contained in
this Agreement (regardless of whether such breach is deemed "material").
13.5 Remedies Upon Fraud. Nothing in this Agreement or in any
Transaction Document shall be deemed to limit any right or remedy of any
party at law or in equity for criminal activity or acts constituting
fraud, notwithstanding anything contained herein to the contrary.
13.6 Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article 13 with
respect to Claims relating to third parties shall be subject to the
following terms and conditions:
13.6.1 Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") shall give the
party from whom indemnification is sought (the "Indemnifying Party")
written notice of any such Claim prior to the expiration of the survival
period to which the Claim relates, and the Indemnifying Party shall
undertake the defense thereof by representatives chosen by it. Failure to
give such notice shall not affect the Indemnifying Party's duty or
obligations under this Article 13, except to the extent the Indemnifying
Party is prejudiced thereby. So long as the Indemnifying Party is
defending any such Claim actively and in good faith, the Indemnifying
Party shall have the right to settle such Claim in its sole discretion,
provided that the Indemnifying Party shall not, without the written
consent of the Indemnified Party, settle or compromise any Claim or
consent to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to
the Indemnified Party of a release from all Liability in respect of such
Claim. If there is a reasonable probability that a Claim may materially
and adversely affect the Indemnified Party other than as a result of money
damages or other money payments, the Indemnified Party shall have the
right to retain its own counsel to defend against the portion of the Claim
not involving monetary relief, and the cost of such counsel shall be an
Expense of the Indemnifying Party. The Indemnified Party shall make
available to the Indemnifying Party or its representatives all records and
other materials required by them and in the possession or under the
control of the Indemnified Party, for the use of the Indemnifying Party
and its representatives in defending any such Claim, and shall in other
respects give reasonable cooperation in such defense. An Indemnified
Party includes any Unit Recipient who has received Units pursuant to the
transactions contemplated by this Agreement, and any such Person shall be
entitled to enforce a Claim for indemnification hereunder in such Person's
own right.
13.6.2 Failure to Defend. If the Indemnifying Party, within
a reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party will (upon further
notice and the failure of the Indemnifying Party to commence the defense
of such Claim within thirty (30) days after such further notice) have the
right to undertake the defense, compromise or settlement of such Claim or
consent to the entry of a judgment with respect to such Claim, on behalf
of and for the account and risk of the Indemnifying Party, and the
Indemnifying Party shall thereafter have no right to challenge the
Indemnified Party's defense, compromise, settlement or consent to
judgment.
13.7 Payment.
13.7.1 General. The Indemnifying Party shall promptly pay
the Indemnified Party any amount due under this Article 13. Upon
judgment, determination, settlement or compromise of any Indemnified Claim
pursuant to the provisions hereof, the Indemnifying Party shall pay
promptly on behalf of the Indemnified Party, and/or to the Indemnified
Party in reimbursement of any amount theretofore required to be paid by
it, the amount so determined by judgment, determination, settlement or
compromise pursuant to the provisions hereof, and all other Loss and
Expenses of the Indemnified Party with respect thereto, unless in the case
of a judgment an appeal is made from the judgment. If the Indemnifying
Party desires to appeal from an adverse judgment, then the Indemnifying
Party shall post and pay the cost of the security or bond to stay
execution of the judgment pending appeal. Upon the payment in full by the
Indemnifying Party of such amounts, the Indemnifying Party shall succeed
to the rights of such Indemnified Party, to the extent not waived in
settlement, against the third party who made such Indemnified Claim
(collectively, together with the Shares issued and/or cash paid (and
interest income earned on such cash) upon the exercise of the Redemption
Rights with respect to such Additional Units, the "Collateral"). The
security interests granted pursuant to this Section 13.7.1 shall not
impair any Midland Principal's Redemption Rights; provided, however, that
any Shares issued and/or cash paid (and interest income earned on such
cash) upon the exercise of such Redemption Rights must also be pledged
hereunder and shall be part of the Collateral.
13.7.2 Security Interest.
(a) Grant. In the event that either Regency or the
Partnership notifies a Midland Principal of a Claim, pursuant to Section
13.1, on or before the date of any Subsequent Closing, each Midland
Principal, as a condition to receiving such Person's respective percentage
(as set forth on the Allocation Chart) of Additional Units to be issued at
a Subsequent Closing, shall, in addition to being bound by the other
provisions set forth in this Section 13.7.2, secure such Midland
Principal's liability to pay an Indemnified Claim by pledging and granting
to Regency and the Transferees under the Uniform Commercial Code a first
priority security interest in such Additional Units having a Value as of
such date equal to 125% of such Midland Principal's pro rata portion of
such Claim (the "Collateral").
(b) Evidence and Perfection of Security Interest.
Certificates for the Collateral, together with related stock powers or
other powers of attorney otherwise reasonably acceptable to Regency, shall
be held by Regency until the release of the security interests therein
pursuant to this Article 13. In addition, each Midland Principal shall
deliver to Regency and/or the Transferees, as the case may be, such
financing statements, continuation statements, and similar documents as
Regency and/or the Transferees shall deem appropriate to perfect and to
continue perfection of their respective security interests in the
Collateral.
(c) No Encumbrance, Sale, Etc. Until such time as Regency
and the Transferees release their respective security interests in the
Collateral, each Midland Principal granting the security interest
described above shall (i) keep the Collateral free of all security
interests, voting trust agreements, shareholder agreements, or other
interests and encumbrances, except for the security interest granted
herein, and (ii) not assign, deliver, sell, transfer, lease or otherwise
dispose of (including dispositions by operation of law) any portion of the
Collateral or any interest therein without the prior written consent of
Regency and the Transferees.
(d) Disputed Claim. Notwithstanding anything herein to
the contrary, in the event that either Regency or a Transferee notifies a
Midland Principal of a Claim on or before the date of a Subsequent Closing
and such Midland Principal disputes such Claim, the Collateral shall be
pledged, and neither Regency nor any Transferee may exercise its rights
with respect to such security interests until the amount of such Claim has
either (i) been decided by a court of competent jurisdiction and such
decision is not subject to appeal, or (ii) agreed to by the Indemnifying
Parties with respect to such Claim. Once the amount of such Claim has
been decided or agreed upon, the Collateral may be used to satisfy the
Indemnified Claim, based on its then Value.
(e) Adjustment. In the event that the parties are not
able to agree on the amount of the pending Indemnified Claims, the Midland
Representatives shall have the right to request binding arbitration of the
maximum possible amount of such Claims (but not the merits of such
Claims), by delivery of written notice to Regency and the Partnership.
Arbitration proceedings shall be administered by and conducted pursuant to
the Commercial Arbitration Rules of the American Arbitration Association.
The arbitration proceedings shall be held in St. Louis, Missouri. Three
independent arbitrators shall be selected: one shall be a practicing
attorney, one shall be a certified public accountant, and the third shall
be a real estate professional, each of whom shall be knowledgeable about
the subject matter giving rise to the Claims in dispute. The arbitration
proceedings shall be completed within 30 days after the selection of the
arbitrators, who shall render their decision in writing, by majority vote,
within 30 days after the conclusion of the proceeding, stating the factual
basis for their decision. The arbitrators shall have authority to include
in their decision an award in favor of a party of all or any portion of
its attorneys' fees and expenses incurred in connection with the
arbitration, together with the cost of the arbitration. Within two
business days after the date of the arbitration decision, if the amount of
Collateral of a Midland Principal times the then Value equals at least
125% of his allocable share of the amount determined by the arbitrators to
be the maximum possible exposure of the pending Indemnified Claims,
Regency shall release the excess Collateral.
(f) Substitution of Collateral. Any Midland Principal
holding Collateral may substitute a letter of credit issued by a
responsible financial institution located in the United States in favor of
Regency and the Transferees, provided that the letter of credit (i) is for
an amount equal to or greater than 125% of the then Value of the
Collateral which such letter of credit is replacing and (ii) is
irrevocable until the security interest is released in the remaining
Collateral.
(g) Remedies. In the event that Regency or any Transferee
has the right to use the Collateral to satisfy the liability of a Midland
Principal, if any, to pay an Indemnified Claim, without waiving any other
right under this Agreement, Regency and such Transferee, as the case may
be, shall have all rights and remedies of a secured party under the
Uniform Commercial Code in addition to the rights and remedies as may be
available hereunder, subject to the limitations on their rights to
foreclose set forth in Section 13.7.2(d).
(h) Distributions in Respect of Collateral. Until such
time as Regency and the Transferees release their respective security
interests in the Collateral, each Midland Principal shall assign to and
authorize Regency and the Transferees to receive any and all non-cash
dividends or non-cash distributions of whatever nature now or hereafter
made in respect of the Collateral, including those made in connection with
the dissolution, liquidation, sale of assets, merger, consolidation or
other reorganization of Regency or any Transferee, or any stock dividend,
stock split, recapitalization, reclassification or otherwise, to surrender
such Collateral or any part thereof in exchange therefor, and to hold any
such dividend or distribution as part of the Collateral. Notwithstanding
Regency's and the Transferees' respective security interests in the
Collateral, each Midland Principal shall be entitled to receive all cash
distributions relating to Additional Units constituting Collateral without
any security interest attaching thereto.
13.8 Jurisdiction. Any suit, action or proceeding against any
Midland Principal with respect to this Article 13 may be brought in the
courts of the State of Missouri or in the U.S. District Court for the
Eastern District of Missouri as Regency or the applicable Transferee, as
the case may be, in its sole discretion may elect, and each Midland
Principal, by acceptance of any Additional Units, shall be deemed to
accept the nonexclusive jurisdiction of those courts for the purpose of
any suit, action or proceeding. In addition, each Midland Principal shall
be deemed to irrevocably waive, to the fullest extent permitted by law,
any objection which such Person may have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Section 13.8
or any judgment entered by any court in respect to any part thereof
brought in the State of Missouri and to further irrevocably waive any
claim that any suit, action or proceeding brought in the State of Missouri
has been brought in an inconvenient forum.
13.9 Threshold and Cap. Notwithstanding anything herein to the
contrary, no party required to indemnify any other under this Article 13
shall be responsible for any Indemnified Claim under the terms of this
Article 13 until the cumulative aggregate amount of such Indemnified
Claims suffered by the applicable Property Owner, on the one hand, or the
Transferees or Regency on the other hand, as the case may be, exceeds
$500,000, with respect to OTR/Midland Realty Holdings, Ltd. or $50,000
with respect to each other Property Owner, in which case the Contributor
and the Midland Principals, on the one hand, or the Transferees or Regency
on the other hand, as the case may be, shall then be liable for all such
Indemnified Claims as to such Property Owner, but (a) in the case of a
Midland Principal's liability for a breach of a representation, warranty
or covenant by a Property Entity, a Midland Affiliate or a Midland
Principal that is not willful or intentional, only to the extent that the
aggregate Loss and Expenses do not exceed the combined value of the
Collateral on the date that the Claim is satisfied, and (b) in the case of
a breach of a representation, warranty or covenant by Regency or any
Transferee that is not willful or intentional (other than a Claim relating
to an Assumed Liability), only to the extent that the aggregate Loss and
Expenses do not exceed the aggregate Contribution Value of the Assets.
13.10 No Waiver. The closing of the transactions contemplated by
this Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification otherwise has knowledge of the breach, violation or
failure of condition constituting the basis of the Claim at or before the
First Closing, and regardless of whether such breach, violation or failure
is deemed to be "material," subject to the provisions of Sections 5.10 and
5.11 (requiring notice to the other party).
13.11 Designated Representatives. Lee Wielansky and Stephen
Notestine are hereby designated to represent the Midland Principals and
each Property Entity and Midland Affiliate in connection with any consent,
approval, agreement, settlement, or other action to be taken after the
First Closing under this Article 13 (the "Midland Representatives"), and
the decision of the Midland Representatives shall be binding on the
Midland Principals and each Property Entity and Midland Affiliate.
Further, the Midland Representatives shall have the right to engage
attorneys to represent the interest of the Midland Principals and each
Property Entity and Midland Affiliate and incur reasonable costs and
expenses in connection with any action to be taken or issues arising under
this Article 13, and the Midland Principals, by acceptance of Additional
Units at any Subsequent Closing, shall be deemed to have agreed to fund
such costs and expenses, which liability shall be joint and several.
ARTICLE 14: POST-CLOSING COVENANTS
14.1 Completion of 1997 Audit. Each Midland Principal agrees to
cause, and to cooperate in facilitating the completion as promptly as
practicable after the First Closing of, the preparation of audited
financial statements for each Property Owner, in accordance with GAAP and
reported on by KPMG Peat Marwick, and complying in all material respects
with the requirements of the Exchange Act and the rules and regulations of
the SEC promulgated thereunder for filing by Regency with the SEC in a
Form 8-K. Without limiting the foregoing, each Midland Principal agrees
to give Regency and Regency's independent certified public accountants
access to the work papers for such Property Owner's financial statements.
Regency shall pay the cost of each Property Owner's audit.
14.2 Access to Books and Records. For a period of seven years
following the First Closing, Regency shall cause the Partnership and the
other Transferees to preserve and to give the Property Entities access,
upon reasonable advance notice and during normal business hours, to all
books and records delivered by the Property Entities to such Transferees
to enable the Property Entities to prepare Tax returns or respond to any
request of any Tax authority or Governmental Entity regarding matters
prior to the First Closing.
14.3 Environmental Matters.
14.3.1 Each Property Entity, Midland Principal and Midland
Affiliate hereby waives any claim for contribution against the Transferees
for any damages to the extent they arise from any pre-closing conditions
related to:
(1) any Release of, threatened Release of, or
disposal of any Hazardous Materials at any Property or Option Property;
(2) the operation or violation of any environmental
Law at any Property or Option Property; or
(3) any environmental Claim pursuant to any
environmental Law in connection with any Property or Option Property.
14.3.2 The waiver contained in this Section 14.3 shall be
binding upon the successors and assigns of the Midland Principals,
Property Entities and Midland Affiliates to the benefit of the Transferees
and their directors, officers, employees and agents, and their successors
and assigns.
14.4 Reports on Earn-Out Performance. From the First Closing
Date until the last Earn-Out Closing Date, the Transferees shall provide
the Midland Representatives with quarterly reports in a form reasonably
acceptable to such parties relating to the various factors that form the
basis for the computation of the various earn-outs described in Section
2.5, e.g., the performance of the Eligible Properties with respect to the
In-Process Earn-Out. The Transferees agree to cause to be preserved and
made available for inspection, during normal business hours and upon
reasonable prior notice, by a representative appointed by the Midland
Representatives, all books and records relating to amounts due on any
Earn-Out Closing Date. The Midland Representatives shall have the right
to conduct up to three audits of such books and records for the purpose of
confirming the amount due on any Earn-Out Closing Date, and if any such
audit discloses that any earn-out has been understated for any calendar
year preceding an Earn-Out Closing Date by more than 5%, Regency shall
reimburse the Midland Representatives for the cost of such audit.
14.5 Midland Development 401(k) Plan. Promptly after the First
Closing, Midland Development shall undertake the actions necessary to
inform participants in its 401(k) Plan of their right to a distribution,
including the right to make an eligible rollover distribution to Regency's
Plan. In addition, Midland Development shall maintain its 401(k) Plan for
as long as required by Treasury Regulation Section 401(k)-1(d)(4).
Participants in the Midland 401(k) Plan may receive a distribution
pursuant to this Section until the last day of the calendar year following
the year of the First Closing. Midland Development shall be solely
responsible for any costs associated with the responsibilities/duties
contained in this Section. Regency agrees to cause the Partnership to
provide access to records and to provide employee and management time in
assisting Midland Development in meeting its obligations hereunder with
respect to its 401(k) Plan.
ARTICLE 15: MISCELLANEOUS
15.1 Headings and Interpretation. The headings contained in
this Agreement are for reference purposes only and are in no way intended
to describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof. The parties acknowledge that this
Agreement and all other Transaction Documents have been negotiated at
arms' length, with the assistance of their respective counsel, and
accordingly, this Agreement and the other Transaction Documents shall not
be construed against or in favor of any party over any other party,
regardless of which party was responsible for drafting the same.
15.2 Pronouns and Plurals. Whenever required by the context,
any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns,
pronouns and verbs shall include the plural and vice versa.
15.3 Time. Time is of the essence for this Agreement.
15.4 Survival. The representations and warranties contained in
this Agreement and the provisions of this Agreement that contemplate
performance after the Closing shall survive the Closing and shall not be
deemed to be merged into or waived by the instruments of such Closing.
15.5 Expenses. At each Closing, Regency shall make a capital
contribution to the Partnership to enable the Partnership to pay expenses
incident to this Agreement and the transactions contemplated hereunder,
including (i) environmental audits, Survey, UCC Searches, the Title
Insurance premium, state and local transfer Taxes, recording costs, loan
assumption fees in connection with the assumption by the Partnership of
the Existing Mortgage Debt, and any prepayment penalties; (ii) the cost of
disseminating the disclosure document referred to in Section 5.6 and the
travel and related expenses incurred in connection with meetings with
Midland Principal partners; and (iii) the reasonable, itemized fees and
expenses of attorneys and accountants for the Property Entities. Except
as otherwise provided in Section 12.3, in the event that this Agreement is
terminated before the First Closing, each party hereto shall pay its own
expenses incident to this Agreement and the transactions contemplated
hereunder, including all legal and accounting fees and disbursements.
15.6 Costs of Litigation. The parties agree that the prevailing
party in any action brought with respect to or to enforce any right or
remedy under this Agreement shall be entitled to recover from the other
party or parties all reasonable costs and expenses of any nature
whatsoever incurred by the prevailing party in connection with such
action, including, without limitation, attorneys' fees and prejudgment
interest.
15.7 Mediation. Except as otherwise provided in Section 13.7.2,
in the Partnership Agreement and in the partnership agreement of R&M
Western Partnership, disputes arising under this Agreement shall be
resolved as follows:
(a) No party to this Agreement shall bring a civil action
seeking enforcement or any other remedy founded on this Agreement without
first complying in good faith with the provisions of this Section 15.7.
Any party may seek injunctive relief to preserve the status quo pending
the completion of mediation under this Agreement.
(b) Disputes arising under this Agreement shall be
submitted to mediation. The Midland Representatives, on the one hand, and
Regency, on the other hand, shall flip a coin to determine whether the
mediation shall be held in St. Louis, Missouri or Jacksonville, Florida,
and shall select a mutually acceptable mediator in such location. In the
event such parties are unable to agree on a mutually acceptable mediator,
then the dispute shall be submitted to the office of JAMS/ENDISPUTE
nearest to the determined location for mediation. If the parties cannot
agree on or have no particular choice of mediator from the list of
neutrals at JAMS/ENDISPUTE, then a list and resumes of available
mediators, numbering one more than there are parties, will be sent to the
parties, each of whom may strike one name. The remaining name shall be
the mediator; provided, however, if more than one name remains, the
mediator shall be selected by the Arbitration Administrator of
JAMS/Endispute from the remaining names. The mediation process shall
continue until the case is resolved or the mediator makes a finding that
there is no possibility of settlement through mediation.
(c) In the event that a dispute is submitted to mediation,
the Midland Representatives shall represent the Midland Principals and any
Contributor or other Property Entity or Midland Affiliate involved in the
dispute.
15.8 Additional Actions and Documents. Each party hereto hereby
agrees to take or cause to be taken such further actions, to execute,
deliver and file or cause to be executed, delivered and filed such further
documents, and to obtain such consents, as may be necessary or as may be
reasonably requested on or after the Closing Date in order to fully
effectuate the purposes, terms and conditions of this Agreement,
including, without limitation, the transfer and assignment to the
Transferees of, and the vesting in the Transferees title to, the Assets.
15.9 Remedies Cumulative. Except as otherwise expressly
provided in Section 12.3 and subject to the limitations set forth in
Article 13, the remedies provided in this Agreement shall be cumulative
and shall not preclude the assertion or exercise of any other rights or
remedies available by Law, in equity or otherwise.
15.10 Entire Agreement; Amendment and Modification. This Agreement,
including the schedules, exhibits and other documents referred to herein
or furnished pursuant hereto, together with the letter agreement regarding
confidentiality between Midland Development and Regency dated February 10,
1997 (the terms of which are incorporated herein) constitutes the entire
understanding and agreement among the parties hereto with respect to the
transactions contemplated herein, and supersedes all prior oral or written
agreements, commitments or understandings with respect to the matters
provided for herein. No amendment, modification or discharge of, or
supplement to, this Agreement shall be valid or binding unless set forth
in writing and duly executed and delivered by the party against whom
enforcement of the amendment, modification, or discharge is sought.
15.11 Notices. All notices, demands, requests, and other
communications which may be or are required to be given, served, or sent
by any party to any other party pursuant to this Agreement shall be in
writing and shall be hand delivered, sent by overnight courier or mailed
by first-class, registered or certified U.S. mail, return receipt
requested and postage prepaid, or transmitted by facsimile, telegram,
telecopy or telex, addressed as follows:
(i) If to Contributors: (ii) If to Regency or
Transferees:
Suite 200, Westpark I 121 W. Forsyth St., Suite 200
12655 Olive Blvd. Jacksonville, Florida 32202
St.Louis, Missouri 63141 Telephone: (904) 356-7000
Telephone: (314) 576-1900 Facsimile: (904) 634-3428
Facsimile: (314) 576-7005 Attention: Martin E. Stein,
Attention: Lee S. Wielansky Jr., President
Bruce M. Johnson,
Managing Director
and CFO
copy to: copy to:
Joseph D. Lehrer, Esq. Charles E. Commander, Esq.
Greensfelder, Hemker & Gale, P.C. Foley & Lardner
2000 Equitable Building Green Leaf Building
101 South Broadway 200 Laura Street
St. Louis, Missouri 63102-1774 Jacksonville, Florida 32202
Telephone: (314) 241-9090 Telephone: (904) 359-2000
Facsimile: (314) 241-8624 Facsimile: (904) 359-8700
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this
Section 15.11, such communication shall be deemed delivered the next
business day after transmission (and sender shall bear the burden of proof
of delivery); if sent by overnight courier pursuant to this Section 15.11,
such communication shall be deemed delivered upon receipt; and if sent by
U.S. mail pursuant to this Section 15.11, such communication shall be
deemed delivered as of the date of delivery indicated on the receipt
issued by the relevant postal service, or, if the addressee fails or
refuses to accept delivery, as of the date of such failure or refusal.
Any party to this Agreement may change its address for the purposes of
this Agreement by giving notice thereof in accordance with this Section
15.11.
15.12 Waivers. No delay or failure on the part of any party
hereto in exercising any right, power or privilege under this Agreement or
under any other documents furnished in connection with or pursuant to this
Agreement shall impair any such right, power or privilege to be construed
as a waiver of any default or any acquiescence therein. No single or
partial exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege, or the exercise of any
other right, power or privilege. No waiver shall be valid against any
party hereto unless made in writing and signed by the party against whom
enforcement of such waiver is sought and then only to the extent expressly
specified therein.
15.13 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15.14 Governing Law. This Agreement, the rights and obligations
of the parties hereto, and any claim or disputes relating thereto, shall
be governed by and construed and enforced in accordance with the Laws and
judicial decisions of the State of Florida, without regard to conflict of
Law principles (excluding the choice of Law rules thereof), except for
actions affecting title to real property, in which case the Laws of the
State in which the real property is located shall apply.
15.15 Assignment; Parties in Interest.
15.15.1 Assignment. No party hereto shall assign its rights
and/or obligations under this Agreement, in whole or in part, whether by
operation of Law or otherwise, without the prior written consent of the
other parties hereto; provided, that Regency, without the consent of any
other party hereto, may assign its rights and/or obligations under this
Agreement, in whole or in part, to any Affiliate. For the purposes of
this paragraph, "Affiliate" means (a) an entity that directly or
indirectly controls, is controlled by or is under common control with
Regency or (b) an entity at least a majority of whose economic interest is
owned by Regency; and the term "control" means the power to direct the
management of such entity through voting rights, ownership or contractual
obligations.
15.15.2 Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
administrators, successors, legal representatives and permitted assigns of
the parties hereto. Nothing contained herein shall be deemed to confer
upon any other Person any right or remedy under or by reason of this
Agreement.
15.16 No Third Party Beneficiaries. This Agreement is solely for
the benefit of the parties hereto, and no provision of this Agreement
shall be deemed to confer any third party benefit.
15.17 Severability. Every provision of this Agreement is
intended to be severable. If any provision or term of this Agreement, or
the application of a provision or term to any Person or circumstance,
shall be held invalid, illegal or unenforceable, the validity, legality or
enforceability of the other provisions and terms hereof, or the
application of such provision or term to Persons or circumstances other
than those to which it is held invalid, illegal or enforceable, shall not
be affected thereby, and there shall be deemed substituted for the
provision or term at issue a valid, legal and enforceable provision as
similar as possible to the provision or term at issue.
15.18 Limitation of Liability. Any obligation or liability
whatsoever of Regency which may arise at any time under this Agreement or
any obligation or liability which may be incurred by it pursuant to any
other instrument, transaction or undertaking contemplated hereby shall be
satisfied, if at all, out of Regency's assets only. No such obligation or
liability shall be personally binding upon, nor shall resort for the
enforcement thereof be had to, the property of any of its shareholders,
trustees, officers, employees or agents, regardless of whether such
obligation or liability is in the nature of contract, tort or otherwise.
15.19 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE TRANSACTION DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. THE PROVISIONS OF THIS SECTION 15.19 SHALL SURVIVE ANY
TERMINATION OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Contribution
Agreement to be duly executed on their behalf as of the date first above
written.
THE MIDLAND PRINCIPALS: REGENCY REALTY CORPORATION
/s/ Lee S. Wielansky By: /s/ Bruce M. Johnson
Lee S. Wielansky Bruce M. Johnson
Managing Director and CFO
/s/ Stephen M. Notestine
Stephen M. Notestine
/s/ Joseph H. Apter
Joseph H. Apter
/s/ Rodney K. Jones
Rodney K. Jones
/s/ Ned M. Brickman
Ned M. Brickman
THE PROPERTY ENTITIES
MIDLAND DEVELOPMENT GROUP, INC.,
a Missouri Corporation
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
OTR Eastern Properties
Bent Tree Plaza (North Carolina)
Westchester Plaza (Ohio)
Hamilton Meadows (Ohio)
Brookville Plaza (Virginia)
Lakeshore (Michigan)
Evans Crossing (Georgia)
Statler Square (Virginia)
Kernersville Marketplace (North Carolina)
Maynard Crossing (North Carolina)
Shoppes at Mason (Ohio)
Lake Pine Plaza (North Carolina)
OTR/MIDLAND REALTY HOLDINGS, LTD.,
an Ohio Limited Liability Company
By: Midland Realty Holdings L.L.C.,
a Missouri Limited Liability Company,
Managing Member
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
Beckett Commons Shopping Center
No. 1712
BECKETT PARTNERS LIMITED PARTNER-
SHIP, an Ohio Limited Partnership
By: Midland-Beckett Limited Partnership,
a Missouri Limited Partnership, General
Partner
By: Beckett Equities, Inc., a Missouri
Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
East Pointe Shopping Center
No. 1709
REYNOLDSBURG PARTNERS,
an Ohio General Partnership
By: Midland Reynoldsburg Development
Company Limited Partnership, a
Missouri Limited Partnership, Managing
General Partner
By: Reynoldsburg Equities, Inc., a
Missouri Corporation, General
Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky
Managing Member
Franklin Square
No. 1705
MIDLAND FRANKFORT DEVELOPMENT CO.
L.L.C., a Kentucky Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
By: /s/ Ned M. Brickman
Ned M. Brickman, Manager
By: /s/ Stephen M. Notestine
Stephen M. Notestine, Manager
Maxtown Road Shopping Center
No. 1710
MAXTOWN PARTNERS, LTD.,
an Ohio Limited Liability Company
By: Maxtown Development Company L.L.C.,
a Missouri Limited Liability Company,
Voting Member
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
By: /s/ Ned M. Brickman
Ned M. Brickman, Managing Member
St. Ann Square
No. 1706
K & M DEVELOPMENT COMPANY,
a Missouri General Partnership
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Partner
Worthington Park Centre
No. 1711
WORTHINGTON DEVELOPMENT COMPANY,
an Ohio General Partnership
By: /s/ Ned M. Brickman
Ned M. Brickman, Managing General
Partner
Acquisition Contracts
MIDLAND ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Acquisition Contracts
MIDLAND RALEIGH ACQUISITIONS, LLC,
a North Carolina Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Acquisition Contracts
MIDLAND DALLAS ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Acquisition Contracts
MIDLAND MICHIGAN ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
THE MIDLAND AFFILIATES
OTR Portfolio
MIDLAND REALTY HOLDINGS, L.L.C.,
a Missouri Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
Beckett Commons Shopping Center
No. 1712
MIDLAND-BECKETT LIMITED PARTNERSHIP,
a Missouri Limited Partnership, General
Partner
By: Beckett Equities, Inc., a Missouri
Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
East Pointe Shopping Center
No. 1709
MIDLAND REYNOLDSBURG DEVELOPMENT
COMPANY LIMITED PARTNERSHIP, a
Missouri Limited Partnership, Managing
General Partner
By: Reynoldsburg Equities, Inc., a
Missouri Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Garner Festival Center
No. 1725
MIDLAND GARNER DEVELOPMENT
COMPANY, L.L.C., a North Carolina Limited
Liability Company, Administrative Member
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Administrative Member
Maxtown Road Shopping Center
No. 1710
MAXTOWN DEVELOPMENT COMPANY
L.L.C., a Missouri Limited Liability
Company, Voting Member
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
By: /s/ Ned M. Brickman
Ned M. Brickman, Managing Member
Creekside Shopping Center
No. 1723
MIDLAND ARLINGTON DEVELOPMENT
COMPANY, L.P., a Texas Limited Partnership
By: Arlington Creekside Equities, Inc.,
a Texas Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Frisco Shopping Center
No. 1735
MIDLAND FRISCO DEVELOPMENT
COMPANY, L.P., a Texas Limited Partnership
By: Frisco Equities, Inc.,
a Texas Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Southpoint Crossing
No. 1727
MIDLAND DURHAM DEVELOPMENT
COMPANY L.L.C., a North Carolina
Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Lloyd King Center
No. 1737
MIDLAND ARVADA DEVELOPMENT
LLC, a Colorado Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Nashboro Village
No. 1726
MIDLAND NASHBORO DEVELOPMENT
COMPANY L.L.C., a Tennessee Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Administrative Member
(Chief Manager)
Shiloh Springs Shopping Center
No. 1734
MIDLAND SHILOH DEVELOPMENT
COMPANY L.P., a Texas Limited Partnership
By: Shiloh Equities, Inc.,
a Texas Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Village Center
No. 1733
MIDLAND SOUTHLAKE DEVELOPMENT
COMPANY, L.P., a Texas Limited Partnership
By: Southlake Equities, Inc., a Texas
Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Cheyenne Meadows
MIDLAND CHEYENNE MEADOWS
DEVELOPMENT, LLC,
a Colorado Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Bethany Lake
MIDLAND ALLEN DEVELOPMENT, L.P.,
a Texas Limited Partnership
By: Bethany Equities, Inc.,
a Texas Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Windmiller
No. 1724
MIDLAND PICKERINGTON DEVELOPMENT
LIMITED LIABILITY COMPANY,
an Ohio Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Administrative Member
Evans Crossing Expansion Land
MIDLAND REALTY NO. 1 LLC,
a Georgia Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
NWC Woodmen
MIDLAND WOODMEN DEVELOPMENT LLC,
a Colorado Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
LIST OF SCHEDULES TO CONTRIBUTION AGREEMENT
Schedule 1.1.1 Abated Rent Criteria
Schedule 1.1.2 Acquisition Contracts
Schedule 1.1.7 Allocation Chart
Schedule 1.1.8 Structural Reserve Allowances
Schedule 1.1.11 Assumed Liabilities
Schedule 1.1.12 Assumed Obligations
Schedule 1.1.15 Capital Expenditure Budget and Schedule
Schedule 1.1.27 Development Contracts
Schedule 1.1.30 Development Properties
Schedule 1.1.34 Eligible Properties
Schedule 1.1.39 Excluded Assets
Schedule 1.1.40 Existing Mortgage Debt
Schedule 1.1.45 TI Contracts
Schedule 1.1.47 First Midland NOI Threshold
Schedule 1.1.60 King Soopers Joint Ventures
Schedule 1.1.62 Kroger Joint Ventures
Schedule 1.1.65 Leasing Criteria
Schedule 1.1.70 Management Contracts
Schedule 1.1.72 Midland Affiliates
Schedule 1.1.90 OSTRS Committed Eastern Properties
Schedule 1.1.91 OSTRS Committed Western Properties
Schedule 1.1.92 OSTRS Eastern Option Properties
Schedule 1.1.95 OSTRS Western Option Properties
Schedule 1.1.105(c) Permitted Exceptions
Schedule 1.1.110 Property Entities
Schedule 1.1.115 Real Property
Schedule 1.1.124 Rent Roll and Lease Summaries
Schedule 1.1.125 Repair Contracts
Schedule 1.1.131 Second Midland NOI Threshold
Schedule 1.1.134 Service Contracts
Schedule 1.1.143 In Process Real Estate Brokerage and Other Third
Party Transactions Being Retained by Midland
Development
Schedule 1.1.145 TI Budget and Schedule
Schedule 1.1.146 TI Contracts
Schedule 2.1 Contribution Values of Assets as of November 30,
1997
Schedule 2.2(a) Existing Mortgage Debt to be Paid at First Closing
Schedule 2.2(c) Midland Principals' Relative Share of Units Which
Cannot be Redeemed
Schedule 2.4.1 Assumed Liabilities Encumbering Option Properties
Schedule 2.5.2 Unit Recipients for In-Place Earn-Out
Schedule 2.5.4 Worthington Outparcel Earn-Out
Schedule 2.5.5 Evans Crossing Land Earn-Out
Schedule 4.1 Option Properties, Owners and Option Exercise
Prices; Additional Restrictive Covenants
Schedule 4.4 Land Owned by Midland Principals Which Will Not
Be Optioned
Schedule 5.2 Outparcels that May be Sold Prior to Closing
Schedule 5.20 Legal Description of Windmiller Property to be
transferred after Platting
Schedule 6 Persons Whose Knowledge is Attributed to Midland
Schedule 6.1.2(a) Governing Documents of each Property Entity,
Midland Affiliate and Joint Venture
Schedule 6.1.2(b) Midland Consents
Schedule 6.1.3 Defaults Under Existing Mortgage Debt
Schedule 6.1.6 Pending or Threatened Litigation
Schedule 6.1.7 Leased Real Property
Schedule 6.1.8 Leased Personal Property
Schedule 6.1.10 Contracts
Schedule 6.1.11 Insurance Policies
Schedule 6.1.12 Tax Matters
Schedule 6.2.1 Retained Properties
Schedule 6.2.2(f) Unit Recipients' Jurisdictions of Residence
Schedule 6.2.6 Employees of Property Entities and Joint Ventures
Schedule 6.2.7 Brokers
Schedule 6.3.3 Joint Venture as Successor to Liabilities
Schedule 6.4.2 Termination of Management Contracts
Schedule 6.4.3 Absence of Midland Development Permits
Schedule 6.4.5 Employee Benefit Plan Disclosure
Schedule 6.5.1 Encumbrances to Be Discharged
Schedule 6.5.2 Physical Condition
Schedule 6.5.3 Rentable Area and Parking Spaces
Schedule 6.5.4 Non-Compliance with Laws
Schedule 6.5.6 Absence of Utilities; Permits
Schedule 6.5.7 Contract Payments
Schedule 6.5.8 Assessments
Schedule 6.5.10 Matters Relating to Leases
Schedule 6.5.12 Service Contracts
Schedule 6.5.13 Security Deposits
Schedule 6.5.14 Condemnation
Schedule 6.5.15 Environmental Matters
Schedule 6.5.17 Zoning Variances
Schedule 6.5.18 Lack of Access
Schedule 6.5.20 Use of Property
Schedule 6.5.22 Development Properties
Schedule 6.5.24 Work Contracts
Schedule 6.5.25 Budgets and Projections
Schedule 7 Persons Whose Knowledge is Attributed to Regency
Schedule 7.1(b) Regency Non-100% Entities
Schedule 7.2(b) Regency Consents
Schedule 7.3.2 Commitments to Issue Regency Stock
Schedule 7.3.3 Regency's Redemption Obligations
Schedule 7.3.4 Regency Voting Agreements
Schedule 7.9 Regency Litigation
Schedule 7.11 Regency Environmental Matters
Schedule 8.1.7 Mandatory Midland Consents
Schedule 8.2.7 Mandatory Tenant Estoppels
Schedule 8.2.12 Waiver of Tenant Rights of First Refusal
Schedule 10.2.1(g) List of Transfer Documents
Schedule 10.2.1(j) Officers to Sign Non-Compete Agreements
LIST OF EXHIBITS TO CONTRIBUTION AGREEMENT
Exhibit 1.1.102 OTR Redemption Agreement
Exhibit 1.1.104 Partnership Agreement
Exhibit 1.1.118 Redemption Agreement
Exhibit 1.1.123 Registration Rights Agreement
Exhibit 3.1.1 R&M Western Partnership Allocation Provisions
Exhibit 4.1 Memorandum of Option and Form of Purchase
Agreement
Exhibit 5.13 Tenant Estoppel Certificates
Exhibit 5.20 Windmiller Agreement
Exhibit 8.1.9 Additional Indemnity
Exhibit 8.2.11 Regency Letter dated December 4, 1997
Exhibit 10.2.1(j) Non-Compete Agreement
Exhibit 10.2.1(k) Lock-Up Agreement
Schedules and Exhibits omitted pursuant to Section 601(b)(2) of Regulation
S-K.
EXHIBIT 10(a)
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
REGENCY CENTERS, L.P.
(formerly known as Regency Retail Partnership, L.P.)
TABLE OF CONTENTS
ARTICLE 1
DEFINED TERMS
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization; Application of Act . . . . . . . . 14
Section 2.2 Name . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.3 Registered Office and Agent; Principal Office . . 15
Section 2.4 Term . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business . . . . . . . . . . . . . . 15
Section 3.2 Powers . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4
CAPITAL CONTRIBUTIONS; ISSUANCE OF UNITS;
CAPITAL ACCOUNTS
Section 4.1 Capital Contributions of the Partners . . . . . . 16
Section 4.2 Issuances of Additional Partnership Interests . . 17
Section 4.3 No Preemptive Rights . . . . . . . . . . . . . . 18
Section 4.4 Capital Accounts of the Partners . . . . . . . . 18
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of
Distributions . . . . . . . . . . . . . . . . . . 20
Section 5.2 Amounts Withheld . . . . . . . . . . . . . . . . 21
Section 5.3 Withholding . . . . . . . . . . . . . . . . . . . 22
Section 5.4 Distributions Upon Liquidation . . . . . . . . . 23
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations of Net Income and Net Loss . . . . . 23
Section 6.2 Special Allocation Rules . . . . . . . . . . . . 27
Section 6.3 Allocations for Tax Purposes . . . . . . . . . . 28
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management . . . . . . . . . . . . . . . . . . . 30
Section 7.2 Certificate of Limited Partnership . . . . . . . 35
Section 7.3 Restriction on General Partner's Authority . . . 36
Section 7.4 Responsibility for Expenses . . . . . . . . . . . 36
Section 7.5 Outside Activities of the General Partner . . . . 37
Section 7.6 Contracts with Affiliates . . . . . . . . . . . . 37
Section 7.7 Indemnification . . . . . . . . . . . . . . . . . 38
Section 7.8 Liability of the General Partner . . . . . . . . 39
Section 7.9 Other Matters Concerning the General Partner . . 40
Section 7.10 Title to Partnership Assets . . . . . . . . . . . 41
Section 7.11 Reliance by Third Parties . . . . . . . . . . . . 41
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability . . . . . . . . . . . . . 42
Section 8.2 Management of Business . . . . . . . . . . . . . 42
Section 8.3 Outside Activities of Limited Partners . . . . . 42
Section 8.4 Priority Among Partners . . . . . . . . . . . . . 43
Section 8.5 Rights of Limited Partners Relating to the
Partnership . . . . . . . . . . . . . . . . . . . 43
Section 8.6 Redemption of Units . . . . . . . . . . . . . . . 44
Section 8.7 Regency's Assumption of Right . . . . . . . . . . 49
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting . . . . . . . . . . . . . 49
Section 9.2 Fiscal Year . . . . . . . . . . . . . . . . . . . 49
Section 9.3 Reports . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns . . . . . . . . . . . 50
Section 10.2 Tax Elections . . . . . . . . . . . . . . . . . . 50
Section 10.3 Tax Matters Partner . . . . . . . . . . . . . . . 50
Section 10.4 Organizational Expenses . . . . . . . . . . . . . 52
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer . . . . . . . . . . . . . . . . . . . . 52
Section 11.2 Transfer of General Partner's Partnership
Interests . . . . . . . . . . . . . . . . . . . . 52
Section 11.3 Limited Partners' Rights to Transfer . . . . . . 54
Section 11.4 Substituted Limited Partners . . . . . . . . . . 56
Section 11.5 Assignees . . . . . . . . . . . . . . . . . . . . 56
Section 11.6 General Provisions . . . . . . . . . . . . . . . 57
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner . . . . . 58
Section 12.2 Admission of Additional Limited Partners . . . . 58
Section 12.3 Amendment of Agreement and Certificate . . . . . 58
Section 12.4 Representations and Warranties of Additional
Limited Partners . . . . . . . . . . . . . . . . 59
ARTICLE 13
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution . . . . . . . . . . . . . . . . . . . 59
Section 13.2 Winding Up . . . . . . . . . . . . . . . . . . . 60
Section 13.3 Compliance with Timing Requirements of
Regulations; Allowance for Contingent or
Unforeseen Liabilities or Obligations . . . . . . 63
Section 13.4 Deficit Capital Account Restoration . . . . . . . 64
Section 13.5 Deemed Distribution and Recontribution . . . . . 65
Section 13.6 Rights of Limited Partners . . . . . . . . . . . 65
Section 13.7 Notice of Dissolution . . . . . . . . . . . . . . 65
Section 13.8 Cancellation of Certificate of Limited
Partnership . . . . . . . . . . . . . . . . . . . 65
Section 13.9 Reasonable Time for Winding-Up . . . . . . . . . 65
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments . . . . . . . . . . . . . . . . . . . 66
Section 14.2 Meetings of Limited Partners . . . . . . . . . . 68
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice . . . . . . . . . . . . . . 69
Section 15.2 Titles and Captions . . . . . . . . . . . . . . . 69
Section 15.3 Pronouns and Plurals . . . . . . . . . . . . . . 69
Section 15.4 Further Action . . . . . . . . . . . . . . . . . 69
Section 15.5 Binding Effect . . . . . . . . . . . . . . . . . 69
Section 15.6 Waiver of Partition . . . . . . . . . . . . . . . 69
Section 15.7 Entire Agreement . . . . . . . . . . . . . . . . 69
Section 15.8 Remedies Not Exclusive . . . . . . . . . . . . . 70
Section 15.9 Time . . . . . . . . . . . . . . . . . . . . . . 70
Section 15.10 Creditors . . . . . . . . . . . . . . . . . . . . 70
Section 15.11 Waiver . . . . . . . . . . . . . . . . . . . . . 70
Section 15.12 Execution Counterparts . . . . . . . . . . . . . 70
Section 15.13 Applicable Law . . . . . . . . . . . . . . . . . 70
Section 15.14 Invalidity of Provisions . . . . . . . . . . . . 70
ARTICLE 16
POWER OF ATTORNEY
Section 16.1 Power of Attorney . . . . . . . . . . . . . . . . 70
SCHEDULES
Schedule 7.8(b) Regency's PFIC Obligations
Schedule 8.6(a) Transfer Restrictions in Regency's Articles of
Incorporation
Schedule 13.4(a) Electing Partners with Deficit Capital Account
Make-up Requirement
EXHIBITS
Exhibit A Partners, Contributions and Partnership Interests
(addresses)
Exhibit B Notice of Redemption
Exhibit C Security Capital Waiver and Consent Agreement
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
REGENCY CENTERS, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP is dated as of March 5, 1998, by and among Regency Realty
Corporation, a Florida corporation, as general partner (the "General
Partner"), and those additional persons who from time to time agree to be
bound by this Agreement as limited partners (the "Limited Partners"), and
amends and restates the Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of March 7, 1997 (the "Initial
Agreement").
Background
Limited Partners (the "Original Limited Partners") who formerly were
partners of Branch Properties, L.P. or its affiliates were admitted to the
Partnership on March 7, 1997, and certain partners in partnerships
affiliated with Branch Properties, L.P. were admitted to the Partnership
in May and June, 1997) as holders of Class A Units (as defined below).
In connection with the first admission of Class A Unit holders,
Regency Atlanta, Inc., which was then the general partner of the
Partnership, and Security Capital (as defined below) entered into
Amendment No. 1 to the Initial Agreement to permit the holders of Class A
Units to redeem their Units prior to the first Subsequent Closing (as
defined below) with the consent of the General Partner and Security
Capital.
Regency Realty Corporation ("Regency") has merged with Regency
Atlanta, Inc., formerly the General Partner of the Partnership, with
Regency being the surviving corporation in the merger, and Regency has
caused the merger into the Partnership of its subsidiary, Regency Centers,
Inc., which owned at least 35 shopping center properties immediately prior
to the merger. Accordingly, Regency is now the General Partner of the
Partnership. In addition, the name of the Partnership has been changed to
Regency Centers, L.P. Regency intends for the Partnership to be the
primary vehicle through which Regency acquires properties from time to
time in the future.
The General Partner wishes to amend and restate the Initial
Agreement, as amended, pursuant to authority granted to the General
Partner in Section 14.1(b) (i) to provide for admitting Additional Limited
Partners (as defined below) to the Partnership from time to time, (ii) to
make certain changes of an inconsequential nature to the form of the
provisions governing the maintenance of Capital Accounts, and (iii) to
delete matters of historical interest that are no longer relevant.
Pursuant to Section 4.2, the Limited Partnership Interests (as defined
below) of the Additional Limited Partners shall be subordinate to the
Limited Partnership Interests of the Original Limited Partners and the
holders of the Class A Units.
NOW, THEREFORE, the General Partner amends and restates the Initial
Agreement as follows (matters in italics are agreements with the Original
Limited Partners only).
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 hereof and who is
shown as such on the books and records of the Partnership.
"Additional Unit" means a Unit issued to an Original Limited Partner
(but not to any holder of a Class A Unit) at a Subsequent Closing pursuant
to the Contribution Agreement.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Sections 1.704-
2(g)(1) and 1.704-2(i)(5) and (ii) decreased by the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital
Account is intended to comply with the provisions of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital
Account as of the end of the relevant Partnership Year.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such
Person.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended, supplemented or restated from time to time.
"Articles of Incorporation" means the Amended and Restated Articles
of Incorporation of Regency, as filed with the Florida Department of
State, as further amended or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has
not become a Substituted Limited Partner, and who has the rights set forth
in Section 11.5.
"Available Cash" means with respect to any period for which such
calculation is being made,
(a) all cash revenues and funds received by the Partnership
from whatever source (excluding the proceeds of any Capital
Contribution other than a Capital Contribution made by the General
Partner for the purpose of funding distributions to Limited Partners
and excluding Capital Transaction Proceeds) plus the amount of any
reduction (including, without limitation, a reduction resulting
because the General Partner determines such amounts are no longer
necessary) in reserves of the Partnership, which reserves are
referred to in clause (b)(iv) below;
(b) less the sum of the following (except to the extent made
with the proceeds of any Capital Contribution and except to the
extent taken into account in determining Capital Transaction
Proceeds), all of which shall be paid subject to Section 7.1(h):
(i) all interest, principal and other debt payments made
during such period by the Partnership,
(ii) all other cash expenditures (including capital
expenditures) made by the Partnership during such period,
(iii) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise
described in clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves established
during such period which the General Partner determines is
necessary or appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York City, New York are authorized or
required by law to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Section 4.4 hereof.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the value (as set forth by separate agreement) of
property which such Partner contributes or is deemed to contribute to the
Partnership pursuant to Section 4.1 or 4.2 hereof and which shall be
treated as a contribution to the Partnership pursuant to Section 721(a) of
the Code.
"Capital Transaction" means a sale, exchange or other disposition
(other than in liquidation of the Partnership) or a financing or
refinancing by the Partnership (which shall not include any loan or
financing to the General Partner as permitted by Section 7.1(a)(iii)) of a
Partnership asset or any portion thereof.
"Capital Transaction Proceeds" means the net cash proceeds of a
Capital Transaction, after deducting all expenses incurred in connection
therewith and after application of any proceeds, at the sole discretion of
the General Partner, toward the payment of any indebtedness of the
Partnership secured by the property that is the subject of that Capital
Transaction, the purchase, improvement or expansion of Partnership
property, or the establishment of any reserves deemed reasonably necessary
by the General Partner; provided, however, that if the Partnership obtains
financing for Partnership properties for which no permanent financing has
previously been obtained, the proceeds of such financing shall not be
deemed to be Capital Transaction Proceeds if and to the extent that the
General Partner determines to reinvest such proceeds in additional and
existing real property investments of the Partnership.
"Cash Amount" means an amount of cash arrived at by multiplying (i)
the number of Partnership Units that are the subject of a Notice of
Redemption times (ii) the Unit Adjustment Factor times (iii) the Value on
the Valuation Date of a Share.
"Certificate" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the Secretary of State of the
State of Delaware, as amended from time to time in accordance with the
terms hereof and the Act.
"Class A Units" means the Partnership Interest in the Partnership
issued pursuant to Section 4.2 hereof which has the same rights as the
Original Limited Partnership Units (including the right to vote together
with the Original Limited Partners as a class, to receive distributions
pursuant to Article 5 and to receive allocations pursuant to Article 6),
except (i) the holder of such a Class A Unit shall not have the right to
receive Additional Units hereunder and (ii) the Redemption Rights with
respect to Class A Units shall be subordinate as set forth in Sections
8.6(a), 8.6(c)(i) and 8.6(c)(ii) hereof.
"Class B Units" means the Partnership Interest in the Partnership
owned by a Partner (including the General Partner or any Affiliate of
Regency other than a Property Affiliate), other than an Original Limited
Partner, an Additional Limited Partner and the holders of Class A Units.
As provided in Sections 5.1(a) and 5.1(b), the distribution rights for the
Class B Units are subordinate to the distribution rights for the Original
Limited Partnership Units, Class A Units and Class 2 Units.
"Class 2 Units" means the Partnership Interest in the Partnership
issued pursuant to Section 4.2 hereof to a Limited Partner other than an
Original Limited Partner or the holders of the Class A Units. As provided
in Section 5.2, the distribution rights of the Class 2 Units are
subordinate to the distribution rights of the Original Limited Partnership
Units and the Class A Units but senior to distribution rights of the Class
B Units.
"Closing Date" has the meaning set forth in the Contribution
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended. Any
reference herein to a specific section or sections of the Code shall be
deemed to include a reference to any corresponding provision of future
law.
"Common Stock" means the voting Common Stock, $0.01 par value, of
Regency.
"Consent" means with respect to Limited Partners holding any class of
Units, the written consent of those Limited Partners holding a majority of
such Units at the time in question. Consent of the Original Limited
Partners means the written consent of Original Limited Partners holding a
majority of the Original Limited Partnership Units outstanding at the time
in question. Consent of the Limited Partners means the written consent of
the Original Limited Partners and the Additional Limited Partners holding
a majority of the Units outstanding at the time in question.
"Contribution Agreement" means that certain Contribution Agreement
and Plan of Reorganization, dated as of February 10, 1997, by and among
Branch Properties, L.P., Branch Realty Inc. and Regency.
"Cumulative Unpaid Accrued Return Account" means, with respect to any
Original or Additional Limited Partner, an amount equal to (i) the
interest that would accrue at the Prime Rate plus two percent (2%) on such
Partner's Cumulative Unpaid Priority Distribution Account outstanding from
time to time, less (ii) the cumulative amount of Available Cash and the
cumulative amount of any Capital Transaction Proceeds distributed with
respect to the Limited Partnership Units of such Partner in reduction of
such Cumulative Unpaid Accrued Return Account pursuant to Sections
5.1(a)(ii), 5.1(a)(v), 5.1(b)(i) and 5.1(b)(iii).
"Cumulative Unpaid Priority Distribution Account" means, with respect
to any Original or Additional Limited Partner an amount equal to (i) the
aggregate of all Priority Distribution Amounts for Limited Partnership
Units held by such Partner, less (ii) the cumulative amount of Available
Cash and the cumulative amount of any Capital Transaction Proceeds
distributed with respect to such Limited Partnership Units of such Partner
in reduction of such Cumulative Unpaid Priority Distribution Account
pursuant to Sections 5.1(a)(i), 5.1(a)(iii), 5.1(a)(iv), 5.1(a)(vi),
5.1(b)(ii) and 5.1(b)(iv).
"Depreciation" means for each Partnership Year or other period, an
amount equal to the federal income tax depreciation, amortization, or
other cost recovery deduction allowable with respect to an asset for such
year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, Depreciation shall be an amount
which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization, or other cost recovery
deduction for such year bears to such beginning adjusted tax basis;
provided, however, that if the federal income tax depreciation,
amortization, or other cost recovery deduction for such year is zero,
Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner,
except that in the case of a zero basis property contributed by an
Original Limited Partner, such property shall be depreciated for book
purposes over a period of not more than ten years.
"Event of Dissolution" has the meaning set forth in Section 13.1.
"First Closing" has the meaning set forth in the Contribution
Agreement.
"General Partner" means Regency Realty Corporation or its permitted
successors as a general partner of the Partnership.
"General Partnership Interest" means a Partnership Interest held by a
General Partner that is a general partnership interest. A General
Partnership Interest may be expressed as a number of Class B Units.
"Gross Asset Value" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the fair market value (exclusive
of liabilities) of such asset, as determined by the General Partner,
unless required to be determined in some other manner herein;
(b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective fair market values (exclusive of
liabilities), as determined by the General Partner, as of the
following times: (i) the acquisition of an additional interest in
the Partnership by any new or existing Partner in exchange for more
than a de minimis capital contribution; (ii) the distribution by the
Partnership to a Partner of more than a de minimis amount of property
as consideration for an interest in the Partnership; and (iii) the
liquidation of the Partnership within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g); provided, however, that adjustments
pursuant to clauses (i) and (ii) above shall be made only if the
General Partner reasonably determines that such adjustments are
necessary or appropriate to reflect the relative economic interests
of the Partners in the Partnership;
(c) The Gross Asset Value of any Partnership asset distributed
to any Partner shall be adjusted to equal the fair market value
(exclusive of liabilities) of such asset on the date of distribution
as determined by the General Partner; and
(d) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset
Values shall not be adjusted pursuant to this paragraph (d) to the
extent the General Partner determines that an adjustment pursuant to
paragraph (b) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to
this paragraph (d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to paragraphs (a), (b), or (d) above, such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing profits and losses.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parents, descendants, nephews, nieces, brothers
and sisters and trusts for the benefit of any of the foregoing.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his
estate; (ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner,
the dissolution and commencement of winding up of the partnership; (iv) as
to any estate which is a Partner, the distribution by the fiduciary of the
estate's entire interest in the Partnership; (v) as to any trustee of a
trust which is a Partner, the termination of the trust (but not the
substitution of a new trustee); or (vi) as to any Partner, the bankruptcy
of such Partner. For purposes of this definition, bankruptcy of a Partner
shall be deemed to have occurred when the Partner (a) makes an assignment
for the benefit of creditors, (b) files a voluntary petition in
bankruptcy, (c) is adjudged a bankrupt or insolvent, or has entered
against him an order of relief in any bankruptcy or insolvency proceeding,
(d) files a petition or answer seeking for himself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation, (e) files an answer
or other pleading admitting or failing to contest the material allegations
of a petition filed against him in any proceeding of this nature, (f)
seeks, consents to or acquiesces in the appointment of a trustee, receiver
or liquidator of the Partner or of all or any substantial part of his
properties, (g) is the debtor in any proceeding seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation, which has not been
dismissed within 120 days after the commencement thereof, or (h) is the
subject of a proceeding whereby a trustee, receiver or liquidator is
appointed for the Partner or all or any substantial part of its properties
without the Partner's consent or acquiescence of a trustee, receiver or
liquidator, and such appointment has not been vacated or stayed within 90
days after the appointment or such appointment is not vacated within 90
days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of his status as (a) the General Partner, (b) a Limited Partner or
(c) a director or officer of the Partnership or a Partner, and (ii) such
other Persons (including Affiliates of the General Partner or the
Partnership) acting in good faith on behalf of the Partnership as
determined by the General Partner in its good faith judgment other than
for any action by such Person involving fraud, willful misconduct or gross
negligence.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Limited Partner" means any Person named as a Limited Partner in
Exhibit A attached hereto, as such Exhibit may be amended from time to
time in accordance with the terms of this Agreement, or any Substituted
Limited Partner or Additional Limited Partner, in such Person's capacity
as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all
benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of
such Person to comply with the terms and provisions of this Agreement. A
Limited Partnership Interest may be expressed as a number of Original
Limited Partnership Units, Class A Units, Class 2 Units or Class B Units
as provided herein.
"Liquidating Transaction" means any sale or other disposition of all
or substantially all of the assets of the Partnership following the
adoption by the General Partner of a plan of liquidation for the
Partnership.
"Liquidator" has the meaning set forth in Section 13.2.
"Management Business" has the meaning set forth in Section 7.1(g).
"Net Income" and "Net Loss" means for any taxable period, an amount
equal to the Partnership's taxable income or loss for such taxable period
determined in accordance with Section 703(a) of the Code (for this purpose
all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), with the following adjustments:
(a) Except as otherwise provided in Regulations Section 1.704-
1(b)(2)(iv)(m), the computation of all items of income, gain, loss
and deduction shall be made without regard to any election under
Section 754 of the Code which may be made by the Partnership;
provided, that the amounts of any adjustments to the adjusted bases
of the assets of the Partnership made pursuant to Section 734 of the
Code as a result of the distribution of property by the Partnership
to a Partner (to the extent that such adjustments have not previously
been reflected in the Partners' Capital Accounts) shall be reflected
in the Capital Accounts of the Partners in the manner and subject to
the limitations prescribed in Regulations Section 1.704-
1(b)(2)(iv)(m).
(b) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net
Income or Net Loss pursuant to this definition shall be added to such
Net Income or Net Loss.
(c) The computation of all items of income, gain, loss and
deduction shall be made without regard to the fact that items
described in Sections 705(a)(1)(B) or 705(a)(2)(B) of the Code are
not includable in gross income or are neither currently deductible
nor capitalized for federal income tax purposes.
(d) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Gross Asset Value with respect
to such property as of such date.
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such fiscal year.
(f) In the event the Gross Asset Value of any Partnership asset
is adjusted pursuant to clause (b) or (c) of the definition thereof,
the amount of any such adjustment shall be taken into account as gain
or loss from the disposition of such asset and shall be allocated
pursuant to Section 6.2(g).
(g) Any items specially allocated under Sections 6.2 and 6.3
hereof shall not be taken into account.
"Non-U.S. Person" means with respect to the acquisition, ownership or
transfer of any Partnership Interest or Shares, the direct or indirect
acquisition or ownership thereof by or a transfer that results in the
direct or indirect ownership thereof by any Person who is not (i) a
citizen or resident of the United States, (ii) a partnership or
corporation created or organized in the United States or under the laws of
the United States or any state therein (including the District of
Columbia), or (iii) a foreign estate or trust within the meaning of
Section 7701(a)(31) of the Code.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption, Security
Agreement and Investor Questionnaire substantially in the form of Exhibit
B to this Agreement, as it may be amended from time to time by the General
Partner effective upon written notice to the Limited Partners.
"Option Date" means the four hundred twentieth (420th) day after the
date of the First Closing.
"Original Limited Partner" means the Partners who received Original
Limited Partnership Units distributed by Branch Properties, L.P. to its
respective partners pursuant to the Contribution Agreement. The Original
Limited Partners are listed on Exhibit A attached hereto. The term
"Original Limited Partner" shall also include any permitted transferee of
an Original Limited Partner pursuant to Section 11.3 other than the
General Partner or any Affiliate of the General Partner other than a
Property Affiliate.
"Original Limited Partnership Unit" means a Partnership Unit
(including any Additional Units) issued to an Original Limited Partner.
The term "Original Limited Partnership Unit" does not include or refer to
any Class A Units, Class 2 Units or Class B Units.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result
if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership
Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution and includes any and all benefits to
which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person
to comply with the terms and provisions of this Agreement. A Partnership
Interest may be expressed as a number of Original Limited Partnership
Units, Class A Units, Class 2 Units or Class B Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well
as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section
5.1 hereof, which record date shall be the same as the record date
established by Regency for a dividend to the holders of Common Stock.
"Partnership Unit" or "Unit" means the Partnership Interest in the
Partnership to be issued to and held by the Limited Partners pursuant to
Sections 4.1 and 4.2. The ownership of Units may be evidenced by such
form of certificate as the General Partner may determine, in its
discretion, and the transfer of the Units evidenced by such certificates
shall be governed by Article 11.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership as determined by dividing (i) the Original Limited Partnership
Units, Class A Units, Class 2 Units and Class B Units owned by such
Partner by (ii) the total number of Original Limited Partnership Units,
Class A Units, Class 2 Units and Class B Units then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended
from time to time in accordance with the terms of this Agreement.
"Person" means an individual or a corporation, limited liability
company, partnership, trust, unincorporated organization, association or
other entity.
"Pledged Units" has the meaning set forth in Section 8.6(f) with
respect to Original Limited Partnership Units and means any other Units
pledged by an Additional Limited Partner to the Partnership or the General
Partner, whether pursuant to this Agreement or by separate agreement.
"Property Affiliate" means a Person, other than any Subsidiary of
Regency, who contributed property in exchange for a Limited Partnership
Interest and who may be deemed an Affiliate of the General Partner, e.g.,
because such person is a director of Regency or owns a significant number
of Units or shares of Regency stock.
"Prime Rate" means, on any date, a fluctuating rate of interest per
annum equal to the rate of interest most recently established by Wachovia
Bank of Georgia, N.A. at its Atlanta, Georgia office (or, at the General
Partner's election, another major lender to the Partnership, at the office
with which the Partnership deals), as its prime rate of interest for loans
in United States dollars.
"Priority Distribution Amount" means with respect to an Original
Limited Partnership Unit or a Class 2 Unit outstanding on a Partnership
Record Date (i) the cash dividend per share of Common Stock (including any
dividend designated by Regency as capital gain pursuant to Section
857(b)(3)(C) of the Code) declared by Regency on the Partnership Record
Date, multiplied by (ii) the Unit Adjustment Factor in effect on such
Partnership Record Date except that on the first Partnership Record Date
that occurs with respect to a Class 2 Unit, the General Partner may
require that the Priority Distribution Amount be prorated to the extent
that the Unit has not been outstanding each day since the immediately
preceding Partnership Record Date.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or
Section 743 of the Code) upon the disposition of any property or asset of
the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to
such property or asset.
"Recourse Liabilities" has the meaning set forth in Regulations
Section 1.752-1(a)(1).
"Redeeming Partner" means a Limited Partner who duly exercised a
Redemption Right.
"Redemption Amount" means the Share Amount or, as determined by the
General Partner in its sole and absolute discretion after the Option Date,
the Cash Amount or any combination of the Share Amount and the Cash
Amount. As provided in Section 8.6(b), in the event a Specified Redemption
Date occurs on or before the Option Date, then the General Partner shall
be required to cause the Partnership to issue the Share Amount (and not
the Cash Amount) in satisfaction of the Redemption Amount, except as
otherwise provided in Section 8.6(c).
"Redemption Right" with respect to the Original Limited Partners and
the holders of Class A Units has the meaning set forth in Section 8.6(a)
hereof and with respect to Additional Limited Partners means any right
granted to such Partners by separate agreement of the Partnership to
redeem such Partners' Limited Partnership Interests.
"Regency" means Regency Realty Corporation, a Florida corporation.
"Regulations" means the Income Tax Regulations, including the
Temporary Regulations, promulgated under the Code, as such regulations may
be amended from time to time (including corresponding provisions of
succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Capital" means Security Capital U.S. Realty, a Luxembourg
corporation, Security Capital Holdings, S.A., a Luxembourg corporation,
and their Affiliates.
"Share Amount" means a number of Shares arrived at by multiplying (i)
the number of Partnership Units that are the subject of a Notice of
Redemption times (ii) the Unit Adjustment Factor.
"Shares" means (i) the Common Stock of Regency, and (ii) any
securities issuable with respect to Shares as a result of the application
of Section 11.2(b).
"Specified Redemption Date" means the later of (i) 5:00 p.m. Eastern
time, on the date specified by the Redeeming Partner in such Partner's
Notice of Redemption, or (ii) the close of business, Eastern time, on the
first Business Day after the date in clause (i) if such date is not a
Business Day, or (iii) 5:00 p.m. Eastern time, on the tenth Business Day
after receipt by the General Partner of a Notice of Redemption.
"Subsequent Closing" has the meaning set forth in the Contribution
Agreement.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting
equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Transaction" has the meaning set forth in Section 11.2(b).
"Unit Adjustment Factor" means initially 1.0; provided that, in order
to prevent dilution of the Redemption Right, in the event that Regency (i)
declares or pays a dividend on its outstanding Common Stock in Common
Stock or makes a distribution to all holders of its outstanding Common
Stock in Common Stock, (ii) subdivides its outstanding Common Stock, or
(iii) combines its outstanding Common Stock into a smaller number of
shares, the Unit Adjustment Factor shall be adjusted by multiplying the
Unit Adjustment Factor by a fraction, the numerator of which shall be the
number of Shares issued and outstanding on the record date (assuming for
such purposes that such dividend, distribution, subdivision or combination
has occurred as of such time), and the denominator of which shall be the
actual number of Shares (determined without the above assumption) issued
and outstanding on the record date for such dividend, distribution,
subdivision or combination. Any adjustment to the Unit Adjustment Factor
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
"Valuation Date" means the date of receipt by the General Partner of
a Notice of Redemption or, if such date is not a Business Day, the first
Business Day thereafter.
"Value" means, with respect to a Share, the average of the daily
market price of the Common Stock for the ten (10) consecutive trading days
immediately preceding the Valuation Date. The market price for each such
trading day shall be: (i) if the Common Stock is listed or admitted to
trading on any securities exchange or the Nasdaq-National Market, the
closing price, regular way, on such day, or if no such sale takes place on
such day, the average of the closing bid and asked prices on such day,
(ii) if the Common Stock is not listed or admitted to trading on any
securities exchange or the Nasdaq-National Market, the last reported sale
price on such day or, if no sale takes place on such day, the average of
the closing bid and asked prices on such day, as reported by a reliable
quotation source designated by the General Partner, or (iii) if the Common
Stock is not listed or admitted to trading on any securities exchange or
the Nasdaq-National Market and no such last reported sale price or closing
bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and
asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than 10 days
prior to the date in question) for which prices have been so reported;
provided, that if there are no bid and asked prices reported during the 10
days prior to the date in question, the Value of the Common Stock shall be
determined by Regency's board of directors acting in good faith on the
basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization; Application of Act.
(a) Organization and Formation of Partnership. The Partnership
has been formed as a limited partnership under the Act, the initial
general and limited partners have withdrawn from the Partnership and
the General Partner and the Limited Partners do hereby amend and
restate this Agreement to provide for the continuation of the
Partnership according to all of the terms and provisions of this
Agreement and otherwise in accordance with the Act. The General
Partner is the sole general partner and the Limited Partners are the
sole limited partners of the Partnership.
(b) Application of Act. The Partnership is a limited
partnership pursuant to the provisions of the Act and upon the terms
and conditions set forth in this Agreement. Except as expressly
provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership
shall be governed by the Act. No Partner has any interest in any
Partnership property, and the Partnership Interest of each Partner
shall be personal property for all purposes.
Section 2.2 Name. The name of the Partnership is Regency Centers,
L.P. The Partnership's business may be conducted under any other name or
names deemed advisable by the General Partner, including the name of the
General Partner or any Affiliate thereof. The words "Limited
Partnership," "L.P.," "Ltd." or similar words or letters shall be included
in the Partnership's name where necessary for the purposes of complying
with the laws of any jurisdiction that so requires. The General Partner
in its sole and absolute discretion may change the name of the Partnership
at any time and from time to time and shall promptly notify the Limited
Partners of such change; provided, that the name of the Partnership may
not be changed to include the name, or any variant thereof, of any Limited
Partner without the written consent of that Limited Partner.
Section 2.3 Registered Office and Agent; Principal Office. The
address of the registered office of the Partnership in the State of
Delaware is located at 1013 Centre Road, City of Wilmington, County of New
Castle, Delaware 19801, and the registered agent for service of process on
the Partnership in the State of Delaware at such registered office is
Corporation Service Company. The principal office of the Partnership is
121 W. Forsyth Street, Suite 200, Jacksonville, Florida 32202, or such
other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at
such other place or places within or outside the State of Florida as the
General Partner deems advisable.
Section 2.4 Term. The term of the Partnership shall commence on
the date hereof and shall continue until December 31, 2097, unless it is
dissolved sooner pursuant to the provisions of Article 13 or as otherwise
provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business. The purpose and nature of the
business to be conducted by the Partnership is (i) to conduct any business
that may be lawfully conducted by a limited partnership organized pursuant
to the Act and in connection therewith to sell or otherwise dispose of
Partnership assets, (ii) to enter into any partnership, joint venture or
other similar arrangement to engage in any of the foregoing or the
ownership of interests in any entity engaged in any of the foregoing and
(iii) to do anything necessary or incidental to the foregoing which, in
each case, is not in breach of this Agreement; provided, however, that
each of the foregoing clauses (i), (ii), and (iii) shall be limited and
conducted in such a manner as to permit Regency at all times to be
classified as a REIT, unless Regency provides notice to the Partnership
that it intends to cease or has ceased to qualify as a REIT.
Section 3.2 Powers. The Partnership is empowered to do any and
all acts and things necessary, appropriate, proper, advisable, incidental
to or convenient for the furtherance and accomplishment of the purposes
and business described herein and for the protection and benefit of the
Partnership; provided, however, that the Partnership shall not take, or
refrain from taking, any action which, in the judgment of the General
Partner, (i) could adversely affect the ability of Regency to continue to
qualify as a REIT, unless Regency provides notice to the Partnership that
it intends to cease or has ceased to qualify as a REIT, (ii) could subject
Regency to any additional taxes under Section 857 or Section 4981 of the
Code or (iii) could violate any law or regulation of any governmental body
or agency having jurisdiction over the General Partner, Regency or their
securities, unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS; ISSUANCE OF UNITS;
CAPITAL ACCOUNTS
Section 4.1 Capital Contributions of the Partners.
(a) Initial Capital Contributions of Original Limited Partners.
Branch Properties, L.P. has contributed property to the Partnership
which shall be deemed to have been contributed by its respective
partners as Original Limited Partners. The Original Limited Partners
who have not exercised a Redemption Right with respect to all their
Units are set forth on Exhibit A, together with the respective
amounts of the Capital Contributions deemed to have been made by them
and their respective Percentage Interests. The holders of Class A
Units who have not exercised a Redemption Right with respect to all
their Class A Units are set forth on Exhibit A, together with the
respective amounts of the Capital Contributions deemed to have been
made by them and their respective Percentage Interests. Percentage
Interests of the Original Limited Partners and the holders of the
Class A Units shall be adjusted in Exhibit A from time to time by the
General Partner to the extent permitted by this Agreement to reflect
accurately redemptions, Capital Contributions, the issuance of
Additional Units, Class 2 Units or Class B Units, or similar events
having an effect on a Partner's Percentage Interest. The number of
Units (but not the number of Class A Units) shall be increased and
the Percentage Interests adjusted in the event that and each time
that a Subsequent Closing occurs. Any Partnership Interests held by
the General Partner or any Affiliate other than a Property Affiliate
(including Partnership Interests acquired under Sections 4.2, 8.6 and
8.7) shall be Class B Units.
(b) Initial Capital Contributions of Class 2 Unit Holders.
Pursuant to authority granted by Section 4.2, the General Partner may
issue Class 2 Units from time to time to Additional Limited Partners
who contribute property to the Partnership. The distribution rights
for the Class 2 Units shall be subordinate to the distribution rights
of the Original Limited Partnership Units and the Class A Units but
senior to the distribution rights of the Class B Units. Exhibit A
shall be amended from time to time to reflect the admission of such
Additional Limited Partners to the Partnership, the number of Class 2
Units issued to each such Additional Limited Partner and the
respective Capital Contributions and Percentage Interests of each.
(c) Capital Contributions by General Partner. The General
Partner has contributed cash to the Partnership in the amount set
forth on Exhibit A in exchange for the number of Class B Units set
forth thereon. The General Partner also owns the number of Class B
Units set forth on Exhibit A which were acquired by Regency upon the
exchange by Regency of Shares pursuant to the exercise by former
Limited Partners of Redemption Rights.
(d) Additional Capital Contributions or Assessments. No
Partner shall be assessed or be required to contribute additional
funds or other property to the Partnership, except for any such
amounts which a Limited Partner may be obligated to repay under
Section 5.3 or Section 13.4 and such amounts which the General
Partner may be obligated to contribute as provided under Section
7.1(a)(iii). Any additional funds required by the Partnership, as
determined by the General Partner in its reasonable business
judgment, may, at the option of the General Partner and without an
obligation to do so, be contributed by the General Partner as
additional Capital Contributions. If and as the General Partner or
any other Partner makes additional Capital Contributions to the
Partnership, each such Partner shall receive Class 2 Units, Class B
Units or other Partnership Interests, subject to the provisions of
Section 4.2, and such Partner's Capital Account shall be adjusted as
provided in Section 4.4.
(e) Return of Capital Contributions. Except as otherwise
expressly provided herein, the Capital Contribution of each Partner
will be returned to that Partner only in the manner and to the extent
provided in Article 5 and Article 13 hereof, and no Partner may
withdraw from the Partnership or otherwise have any right to demand
or receive the return of its Capital Contribution to the Partnership
(as such), except as specifically provided herein. Under
circumstances requiring a return of any Capital Contribution, no
Partner shall have the right to receive property other than cash,
except as specifically provided herein. No Partner shall be entitled
to interest on any Capital Contribution or Capital Account
notwithstanding any disproportion therein as between the Partners.
Except as specifically provided herein, the General Partner shall not
be liable for the return of any portion of the Capital Contribution
of any Limited Partner, and the return of such Capital Contributions
shall be made solely from Partnership assets. The General Partner
may, but shall not be obligated to, make Capital Contributions for
the purpose of enabling the Partnership to make distributions of
Available Cash to Limited Partners.
(f) Liability of Limited Partners. No Limited Partner shall
have any further personal liability to contribute money to, or in
respect of, the liabilities or the obligations of the Partnership,
nor shall any Limited Partner be personally liable for any
obligations of the Partnership, except as otherwise provided in
Section 4.1(d) or in the Act. No Limited Partner shall be required
to make any contributions to the capital of the Partnership other
than its Capital Contribution.
Section 4.2 Issuances of Additional Partnership Interests. The
Contribution Agreement sets forth the provisions upon which Additional
Units shall be issued to the Original Limited Partners, and separate
agreements relating to the admission of Additional Limited Partners set
forth the provisions, if any, upon which any additional Class 2 Units
shall be issued to Additional Limited Partners in the form of earn-out or
as consideration for additional assets to be contributed by such
Additional Limited Partners to the Partnership. The General Partner and
Regency (i) shall cause the Additional Units to be issued to the Original
Limited Partners as set forth in the Contribution Agreement, (ii) shall
cause the additional Class 2 Units to be issued to the Additional Limited
Partners entitled to receive the same, and (iii) shall cause the amendment
of this Agreement to reflect the issuance of any such Additional Units and
additional Class 2 Units. Subject to the restrictions set forth below,
the General Partner is hereby authorized to cause the Partnership at any
time or from time to time to issue to the Partners or to other Persons
such additional Class B Units or other Partnership Interests in one or
more classes, or one or more series of any such classes, with such
designations, preferences and relative, participating, optional or other
special rights, powers and duties, and for such consideration as shall be
determined by the General Partner in its sole and absolute discretion,
subject to Delaware law, including, without limitation, (i) the
allocations of items of Partnership income, gain, loss, deduction and
credit to each such class or series of Partnership Interests, (ii) the
right of each such class or series of Partnership Interests to share in
Partnership distributions, and (iii) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership; provided, however, that so long as there shall be any
Original Limited Partnership Units outstanding, without the Consent of the
Original Limited Partners, (a) any Partnership Interests issued shall be
subordinate to the Original Limited Partnership Units and will not affect
the priority of distributions with respect to the Original Limited
Partnership Units as set forth in Section 5.1 hereof, (b) no Partnership
Interests other than Class B Units shall be issued to the General Partner
or any Affiliate of the General Partner other than a Property Affiliate,
and (c) no Partnership Interests on a parity with the Original Limited
Partnership Units shall be issued to any Person, and provided, further,
that without the Consent of the Additional Limited Partners holding Class
2 Units, (a) no Partnership Interests other than Class B Units shall be
issued to the General Partner or any Affiliate of the General Partner
other than a Property Affiliate, and (b) except as provided in Section
6.2(g), no Partnership Interests senior to the Class 2 Units shall be
issued to any Person other than Additional Units issued to an Original
Limited Partner at a Subsequent Closing.
Section 4.3 No Preemptive Rights. No Person shall have any
preemptive, preferential or other similar right with respect to (i)
additional Capital Contributions or loans to the Partnership or (ii)
issuance or sale of any Partnership Interests.
Section 4.4 Capital Accounts of the Partners.
(a) General. The Partnership shall maintain for each Partner a
separate Capital Account in accordance with the rules of Regulations
Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased
by (i) the amount of all Capital Contributions made by such Partner
to the Partnership pursuant to this Agreement, (ii) all items of
Partnership income and gain (including income and gain exempt from
tax) allocated to such Partner pursuant to Sections 6.1 and 6.2 of
this Agreement, and (iii) the amount of any Partnership liabilities
assumed by such Partner or which are secured by any property
distributed to such Partner, and decreased by (x) the amount of cash
or Gross Asset Value of all actual and deemed distributions of cash
or property made to such Partner pursuant to this Agreement, (y) all
items of Partnership deduction and loss allocated to such Partner
pursuant to Sections 6.1 and 6.2 of this Agreement, and (z) the
amount of any liabilities of such Partner assumed by the Partnership
or which are secured by any property contributed by such Partner to
the Partnership. Upon the issuance of any Additional Units to an
Original Limited Partner, the aggregate value of the property
contributed by such Partner to the Partnership shall be increased by
the value of such Additional Units (which is agreed to be $22-1/8 per
Additional Unit), and such increase shall be allocated among the
items of property contributed by such Partner in proportion to their
then book values. The increase in the value of such property shall
be credited to such Partner's Capital Account under this Section
4.4(a). Additional Capital Contributions shall be deemed to be made
by reason of the issuance, and the Additional Limited Partner's
Capital Account shall be adjusted by an amount equal to the agreed
value (as set forth by separate agreement), of additional Partnership
Interests issued to an Additional Limited Partner pursuant to any
earn-out provisions in the agreement governing such Additional
Limited Partner's admission to the Partnership. Any such additional
Capital Contributions shall be allocated to the items of contributed
property contributed by each such Additional Limited Partner in
proportion to their book values at the time of issuance of the
additional Partnership Interests.
(b) Transfers of Partnership Units. A transferee of an
Original Limited Partnership Unit, Class A Unit, Class 2 Unit, Class
B Unit or other Partnership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor; provided, however,
that, if the transfer causes a termination of the Partnership under
Section 708(b)(1)(B) of the Code, the Partnership's properties shall
be deemed to have been transferred in accordance with Regulations
Section 1.708-1 and appropriate adjustments resulting from such
deemed transfers shall be made hereunder.
(c) Modification by General Partner. The provisions of this
Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such Regulations.
In the event the General Partner shall determine that it is prudent
to modify the manner in which the Capital Accounts, or any debits or
credits thereto (including, without limitation, debits or credits
relating to liabilities which are secured by contributed or
distributed property or which are assumed by the Partnership, the
General Partner, or any Limited Partners), are computed in order to
comply with such Regulations, the General Partner may make such
modification without regard to Article 14 of this Agreement. The
General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital
Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-
1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the
event unanticipated events might otherwise cause this Agreement not
to comply with Regulations Section 1.704-1(b).
ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions.
(a) The General Partner shall distribute quarterly an amount
equal to 100% of Available Cash generated by the Partnership during
such quarter to the Partners who are Partners on the Partnership
Record Date with respect to such quarter as follows (and for this
purpose, the holders of Class A Units shall be treated as if they
were Original Limited Partners):
(i) First, one hundred percent (100%) to the Original
Limited Partners, pro rata based on the number of Original
Limited Partnership Units held by each such Partner on the
applicable Partnership Record Date, until each has received an
amount equal to the Priority Distribution Amount for the quarter
for each such Unit;
(ii) Next, if any Original Limited Partners have a positive
Cumulative Unpaid Accrued Return Account, one hundred percent
(100%) to such Original Limited Partners, pro rata based on the
relative amounts of their Cumulative Unpaid Accrued Return
Accounts, until each such Cumulative Unpaid Accrued Return
Account reaches zero;
(iii) Next, if any Original Limited Partners have a
positive Cumulative Unpaid Priority Distribution Account, one
hundred percent (100%) to such Original Limited Partners, pro
rata based on the relative amounts of their Cumulative Unpaid
Priority Distribution Accounts, until each such Cumulative
Unpaid Priority Distribution Account reaches zero;
(iv) Next, one hundred percent (100%) to the Additional
Limited Partners, pro rata based on the relative amounts of
their Priority Distribution Amounts, until each has received an
amount equal to the Priority Distribution Amount for the quarter
for each Unit held by such Additional Limited Partner on the
applicable Partnership Record Date;
(v) Next, if any Additional Limited Partners have a
positive Cumulative Unpaid Accrued Return Account, one hundred
percent (100%) to such Limited Partners, pro rata based on the
relative amounts of their Cumulative Unpaid Accrued Return
Accounts, until each such Cumulative Unpaid Accrued Return
Account reaches zero;
(vi) Next, if any Additional Limited Partners have a
positive Cumulative Unpaid Priority Distribution Account, one
hundred percent (100%) to such Additional Limited Partners, pro
rata based on the relative amounts of their Cumulative Unpaid
Priority Distribution Accounts, until each such Cumulative
Unpaid Priority Distribution Account reaches zero; and
(vii) Thereafter, to the General Partner and any other
holders of Class B Units, pro rata in accordance with the
relative number of Class B Units held by each.
(b) The General Partner shall distribute Capital Transaction
Proceeds received by the Partnership within 30 days after the date of
such Capital Transaction, provided that the General Partner has given
the Limited Partners 20 days' prior written notice of the date for
any such distribution (the "Capital Transaction Record Date"), as
follows (and for this purpose, the holders of Class A Units shall be
treated as if they were Original Limited Partners):
(i) First, if any Original Limited Partners have a
positive Cumulative Unpaid Accrued Return Account, one hundred
percent (100%) to such Original Limited Partners, pro rata based
on the relative amounts of their Cumulative Unpaid Accrued
Return Accounts, until each such Cumulative Unpaid Accrued
Return Account reaches zero;
(ii) Next, if any Original Limited Partners have a positive
Cumulative Unpaid Priority Distribution Account, one hundred
percent (100%) to such Original Limited Partners, pro rata based
on the relative amounts of their Cumulative Unpaid Priority
Distribution Accounts, until each such Cumulative Unpaid
Priority Distribution Account reaches zero;
(iii) Next, if any Additional Limited Partners have a
positive Cumulative Unpaid Accrued Return Account, one hundred
percent (100%) to such Additional Limited Partners, pro rata
based on the relative amounts of their Cumulative Unpaid Accrued
Return Accounts, until each such Cumulative Unpaid Accrued
Return Account reaches zero;
(iv) Next, if any Additional Limited Partners have a
positive Cumulative Unpaid Priority Distribution Account, one
hundred percent (100%) to such Additional Limited Partners, pro
rata based on the relative amounts of their Cumulative Unpaid
Priority Distribution Accounts, until each such Cumulative
Unpaid Priority Distribution Account reaches zero; and
(v) Thereafter, to the General Partner and any other
holders of Class B Units, pro rata in accordance with the
relative number of Class B Units held by each.
Section 5.2 Amounts Withheld. All amounts withheld pursuant to
the Code or any provisions of any state or local tax law and Section 5.3
hereof with respect to any allocation, payment or distribution to the
General Partner, or any Limited Partners or Assignees shall be promptly
paid, solely out of funds of the Partnership (except as otherwise provided
in Section 5.3 in connection with the exercise by a Limited Partner of a
Redemption Right), by the General Partner to the appropriate taxing
authority and treated as amounts distributed to the General Partner or
such Limited Partners or Assignees pursuant to Section 5.1 for all
purposes under this Agreement.
Section 5.3 Withholding. Each Limited Partner hereby authorizes
the Partnership to withhold from or pay on behalf of or with respect to
such Limited Partner any amount of federal, state, local, or foreign taxes
that the General Partner determines that the Partnership is required to
withhold or pay with respect to any amount distributable or allocable to
such Limited Partner pursuant to this Agreement or with respect to the
exercise by such Limited Partner of the Redemption Rights set forth in
Section 8.6 or in any separate agreement, including, without limitation,
any taxes required to be withheld or paid by the Partnership pursuant to
Section 1441, 1442, 1445, or 1446 of the Code and Section 48-7-129 of the
Official Code of Georgia Annotated. Any amount paid on behalf of or with
respect to a Limited Partner shall constitute a loan by the Partnership to
such Limited Partner, which loan shall be repaid by such Limited Partner
within 15 days after notice from the General Partner that such payment
must be made unless (i) the Partnership withholds such payment from a
distribution which would otherwise be made to the Limited Partner or (ii)
the General Partner determines, in its sole and absolute discretion, that
such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the
Limited Partner. Any amounts withheld pursuant to the foregoing clauses
(i) or (ii) shall be treated as having been distributed to such Limited
Partner and shall be promptly paid, solely out of funds of the
Partnership, by the General Partner to the appropriate taxing authority.
Each Limited Partner hereby unconditionally and irrevocably grants to the
Partnership a security interest in such Limited Partner's Partnership
Interest as to secure such Limited Partner's obligation to pay to the
Partnership any amounts required to be paid pursuant to this Section 5.3
(together with attorney's fees and other costs in enforcing the
Partnership's rights against the collateral). In the event that a Limited
Partner or Redeeming Partner fails to pay any amounts owed to the
Partnership pursuant to this Section 5.3 when due, the General Partner
may, in its sole and absolute discretion, elect to make the payment on
behalf of such defaulting Partner, and in such event shall be deemed to
have loaned such amount to such defaulting Partner and shall succeed to
all rights and remedies of the Partnership as against such defaulting
Partner (including, without limitation, in the case of a default by other
than a Redeeming Partner the right to receive distributions from the
Partnership). Any amounts payable by a Limited Partner or a Redeeming
Partner hereunder shall bear interest at the Prime Rate, plus two
percentage points (but not higher than the maximum lawful rate) from the
date such amount is due (i.e., 15 days after demand) until such amount is
paid in full. In the event that the Partnership or the General Partner is
required to withhold tax with respect to the exercise by a Limited Partner
of a Redemption Right, the Limited Partner exercising the Redemption Right
shall make arrangements with the Partnership or the General Partner, as
the case may be, to provide the funds to the Partnership necessary to
effect the required withholding. In the event that, pursuant to
applicable laws and regulations, the General Partner may withhold a
reduced amount pending a determination by applicable taxing authorities as
to whether any additional withholding tax must subsequently be deposited,
the General Partner shall have the right to require the Redeeming Partner
to pledge a first priority security interest in a portion of the
Redemption Amount as collateral for the Redeeming Partner's obligation to
provide the funds necessary to effect any subsequent required holding
(together with attorney's fees and other costs in enforcing the
Partnership's rights against the collateral), in an amount in the case of
a Share Amount equal to Shares having a Value on the date of the pledge
equal to 125% of the maximum possible subsequent required withholding (or
100% of the maximum possible subsequent required withholding if the
Redemption Amount is paid in the form of the Cash Amount) (the
"Withholding Collateral"). The General Partner shall be entitled to
retain possession of the Withholding Collateral until either the Redeeming
Partner provides funds to the General Partner sufficient to make any
subsequent required withholding deposit or the General Partner receives a
determination from the applicable authorities that no subsequent
withholding is required. All dividends, distributions, interest or other
income on the Withholding Collateral while subject to the pledge hereunder
shall be paid to the Redeeming Partner pledging the Withholding
Collateral. If the applicable authorities advise that subsequent
withholding is required and the Redeeming Partner does not deliver the
necessary funds to the General Partner within 20 days after receipt of the
General Partner's request therefor, the General Partner shall be entitled
to exercise all rights and remedies of a secured party under the Uniform
Commercial Code with respect to the Withholding Collateral. Each Limited
Partner and each Redeeming Partner shall take such actions as the
Partnership or the General Partner shall request in order to perfect or
enforce the security interest created hereunder.
Section 5.4 Distributions Upon Liquidation. Notwithstanding
anything contained in Section 5.1 to the contrary, proceeds from a
Liquidating Transaction shall be distributed to the Partners in accordance
with Section 13.2.
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations of Net Income and Net Loss. For purposes
of maintaining the Capital Accounts and in determining the rights of the
Partners among themselves, the Partnership's Net Income and Net Loss shall
be allocated among the Partners for each taxable year (or portion thereof)
as provided herein below.
(a) Net Income. After giving effect to the special allocations
set forth in Section 6.2 below, Net Income shall be allocated as
follows (and for this purpose, the holders of Class A Units shall be
treated as if they were Original Limited Partners):
(i) First, one hundred percent (100%) to the General
Partner in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to the General Partner pursuant
to Section 6.1(b)(viii) and the last sentence of Section 6.1(b)
for all prior fiscal years, over (B) the cumulative Net Income
allocated pursuant to this Section 6.1(a)(i) for all prior
fiscal years;
(ii) Second, one hundred percent (100%) to the Original
Limited Partners in an amount equal to the excess, if any, of
(A) the cumulative Net Losses allocated to such Partners
pursuant to Section 6.1(b)(iv) for all prior fiscal years, over
(B) the cumulative Net Income allocated pursuant to this
Section 6.1(a)(ii) for all prior fiscal years, which amount
shall be allocated among the Partners in the same proportions
and in the reverse order as the Net Losses were allocated
pursuant to Section 6.1(b)(iv);
(iii) Third, one hundred percent (100%) to the Original
Limited Partners in an amount equal to the excess, if any, of
(A) the cumulative Net Losses allocated to such Partners
pursuant to Section 6.1(b)(iii) for all prior fiscal years, over
(B) the cumulative Net Income allocated pursuant to this Section
6.1(a)(iii) for all prior fiscal years, which amount shall be
allocated among such Partners in the same proportions and in the
reverse order as the Net Losses were allocated pursuant to
Section 6.1(b)(iii);
(iv) Fourth, one hundred percent (100%) to the Original
Limited Partners until the cumulative allocations of Net Income
to each Original Limited Partner under this Section 6.1(a)(iv)
for the current and all prior fiscal years equal the cumulative
distributions paid to the Original Limited Partner pursuant to
Section 5.1(a)(i) and Section 13.2(a)(iii);
(v) Fifth, one hundred percent (100%) to the Original
Limited Partners until the cumulative allocations of Net Income
to each Original Limited Partner under this Section 6.1(a)(v)
for the current and all prior fiscal years equal the sum of the
cumulative amounts credited to such Partner's Cumulative Unpaid
Priority Distribution Account and Cumulative Unpaid Accrued
Return Account for the current and all prior fiscal years;
(vi) Sixth, one hundred percent (100%) to the Additional
Limited Partners in an amount equal to the excess, if any, of
(A) the cumulative Net Losses allocated to the Additional
Limited Partners pursuant to Section 6.1(b)(vii) for all prior
fiscal years, over (B) the cumulative Net Income allocated
pursuant to this Section 6.1(a)(vi) for all prior fiscal years,
which amount shall be allocated among the Additional Limited
Partners in the same proportions and in the reverse order as the
Net Losses were allocated pursuant to Section 6.1(b)(vii);
(vii) Seventh, one hundred percent (100%) to the
Additional Limited Partners in an amount equal to the excess, if
any, of (A) the cumulative Net Losses allocated to the
Additional Limited Partners pursuant to Section 6.1(b)(vi) for
all prior fiscal years, over (B) the cumulative Net Income
allocated pursuant to this Section 6.1(a)(vii) for all prior
fiscal years, which amount shall be allocated among such
Partners in the same proportions and in the reverse order as the
Net Losses were allocated pursuant to Section 6.1(b)(vi);
(viii) Eighth, one hundred percent (100%) to the
Additional Limited Partners until the cumulative allocations of
Net Income to each Additional Limited Partner under this Section
6.1(a)(viii) for the current and all prior fiscal years equal
the cumulative distributions paid to the Additional Limited
Partners pursuant to Section 5.1(a)(iv) and Section 13.2(a)(iv);
(ix) Ninth, one hundred percent (100%) to the Additional
Limited Partners until the cumulative allocations of Net Income
to each Additional Limited Partner under this Section 6.1(a)(ix)
for the current and all prior fiscal years equal the sum of the
cumulative amounts credited to such Partner's Cumulative Unpaid
Priority Distribution Account and Cumulative Unpaid Accrued
Return Account for the current and all prior fiscal years; and
(x) Thereafter, to the General Partner and any other
holders of Class B Units, pro rata in accordance with the
relative number of Class B Units held by each.
(b) Net Losses. After giving effect to the special allocations
set forth in Section 6.2 below, Net Losses shall be allocated as
follows (and for this purpose, the holders of Class A Units shall be
treated as if they were Original Limited Partners):
(i) First, one hundred percent (100%) to the General
Partner and the Class B Unit holders in an amount equal to the
excess, if any, of (A) the cumulative Net Income allocated
pursuant to Section 6.1(a)(x) hereof for all prior fiscal years,
over (B) the cumulative Net Losses allocated pursuant to this
Section 6.1(b)(i) for all prior fiscal years;
(ii) Second, to the Original Limited Partners until the
cumulative allocations of Net Losses under this Section
6.1(b)(ii) equal the excess, if any, of the cumulative
allocations of Net Income under Section 6.1(a)(v) to such
Partners for all prior fiscal years over the cumulative
distributions to such Partners under Section 5.1(a)(ii) and
(iii) and Section 5.1(b)(i) and (ii) for the current and all
prior fiscal years (such allocation being made in proportion to
such Partners' respective excess amounts);
(iii) Third, to the Original Limited Partners with
positive Adjusted Capital Account balances (determined, solely
for purposes of this Section 6.1(b)(iii), without regard to any
obligation of a Partner to restore a negative Capital Account
under Section 13.4), in proportion to such balances, until such
balances are reduced to zero;
(iv) Fourth, to the Original Limited Partners in proportion
to their relative Percentage Interests; provided, however, that
to the extent that an allocation under this Section 6.1(b)(iv)
would cause or increase an Adjusted Capital Account Deficit for
such Partner, such Net Loss shall be allocated to those Original
Limited Partners (in proportion to their relative Percentage
Interests) for whom such allocation would not cause or increase
an Adjusted Capital Account Deficit; and
(v) Fifth, to the Additional Limited Partners until the
cumulative allocations of Net Losses under this Section
6.1(b)(v) equal the excess, if any, of the cumulative
allocations of Net Income under Section 6.1(a)(ix) to such
Partners for all prior fiscal years over the cumulative
distributions to such Partners under Section 5.1(a)(v) and (vi)
and Section 5.1(b)(iii) and (iv) for the current and all prior
fiscal years (such allocation being made in proportion to such
Partners' respective excess amounts);
(vi) Sixth, to the Additional Limited Partners with
positive Adjusted Capital Accounts balances (determined, solely
for purposes of this Section 6.1(b)(vi), without regard to any
obligation of a Partner to restore a negative Capital Account
under Section 13.4), in proportion to such balances, until such
balances are reduced to zero;
(vii) Seventh, to the Additional Limited Partners in
proportion to their relative Percentage Interests; provided,
however, that to the extent that an allocation under this
Section 6.1(b)(vii) would cause or increase an Adjusted Capital
Account Deficit for such Partner, such Net Loss shall be
allocated to those Additional Limited Partners (in proportion to
their relative Percentage Interests) for whom such allocation
would not cause or increase an Adjusted Capital Account Deficit;
and
(viii) Any remaining Net Loss shall be allocated solely
to the General Partner.
Notwithstanding the foregoing, Net Losses shall not be allocated to any
Limited Partner pursuant to this Section 6.1(b) to the extent that such
allocation would cause such Limited Partner to have an Adjusted Capital
Account Deficit at the end of such taxable year (or increase any existing
Adjusted Capital Account Deficit). All Net Losses in excess of the
limitations set forth in the preceding sentence of this Section 6.1(b)
shall be allocated to the General Partner.
(c) Nonrecourse Liabilities. The Partners agree that excess
Nonrecourse Liabilities of the Partnership (within the meaning of
Section 1.752-3(a)(3) of the Regulations) will be allocated among the
partners for purposes of Section 752 of the Code in accordance with
their respective Percentage Interests.
(d) Gains. Any gain allocated to the Partners upon the sale or
other taxable disposition of any Partnership asset shall to the
extent possible, after taking into account other required allocations
of gain pursuant to Section 6.2 below, be characterized as Recapture
Income in the same proportions and to the same extent as such
Partners have been allocated any deductions directly or indirectly
giving rise to the treatment of such gains as Recapture Income.
Section 6.2 Special Allocation Rules. Notwithstanding any other
provision of the Agreement, the following special allocations shall be
made in the following order:
(a) Minimum Gain Chargeback. Notwithstanding any other
provisions of Article 6, if there is a net decrease in Partnership
Minimum Gain during any Partnership Year, each Partner shall be
specially allocated items of Partnership income and gain for such
year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as
determined under Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant
thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(f)(6). This Section
6.2(a) is intended to comply with the minimum gain chargeback
requirements in Regulations Section 1.704-2(f) and for purposes of
this Section 6.2(a) only, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant
to Section 6.1 of the Agreement with respect to such fiscal year and
without regard to any decrease in Partner Minimum Gain during such
Partnership Year.
(b) Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Article 6 (except Section 6.2(a) hereof), if there is a
net decrease in Partner Minimum Gain attributable to a Partner
Nonrecourse Debt during any Partnership Year, each Partner who has a
share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years)
in an amount equal to such Partner's share of the net decrease in
Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(5).
Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(i)(4).
This Section 6.2(b) is intended to comply with the minimum gain
chargeback requirement in such Section of the Regulations and shall
be interpreted consistently therewith. Solely for purposes of this
Section 6.2(b), each Partner's Adjusted Capital Account Deficit shall
be determined prior to any other allocations pursuant to Article 6 of
this Agreement with respect to such Partnership Year, other than
allocations pursuant to Section 6.2(a) hereof.
(c) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), and after giving
effect to the allocations required under Sections 6.2(a) and 6.2(b)
hereof, such Partner has an Adjusted Capital Account Deficit, items
of Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the
extent required by the Regulations, its Adjusted Capital Account
Deficit created by such adjustments, allocations or distributions as
quickly as possible.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests.
(e) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to
the Partner who bears the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Regulations Section 1.704-
2(i)(2).
(f) Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset pursuant to
Section 734(b) or 743(b) of the Code is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the
Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such item of gain or loss shall
be specially allocated to the Partners in a manner consistent with
the manner in which their Capital Accounts are required to be
adjusted pursuant to such Section of the Regulations.
(g) Capital Account Adjustments. Notwithstanding anything
herein to the contrary, any gain or loss arising from an adjustment
to the Gross Asset Value of any Partnership asset pursuant to clause
(b) or (c) of the definition thereof shall be allocated one hundred
percent (100%) to the General Partner and the Additional Limited
Partners pro-rata in accordance with the relative number of Units
held by each; provided, however, that for this purpose, the General
Partner shall be treated as owning all of the outstanding Class A
Units and all of the outstanding Original Limited Partnership Units
in addition to the actual number of Units which the General Partner
holds. An Additional Limited Partner, at the time of admission to
the Partnership, may elect with the consent of the General Partner to
not receive special allocations of any gain or loss resulting from
such adjustments.
Section 6.3 Allocations for Tax Purposes.
(a) General. Except as otherwise provided in this Section 6.3,
for federal income tax purposes, each item of income, gain, loss and
deduction shall be allocated among the Partners in the same manner as
its correlative item of "book" income, gain, loss or deduction is
allocated pursuant to Sections 6.1 and 6.2 of this Agreement.
(b) Other Allocation Rules.
(i) For purposes of determining Net Income, Net Losses, or
other items allocable to any period, Net Income, Net Losses, and
any such other items shall be determined on a daily, monthly, or
other basis, as determined by the General Partner using any
permissible method under Section 706 of the Code and the
Regulations thereunder.
(ii) In accordance with Code Section 704(c) and the
Regulations thereunder, income, gain, loss and deduction with
respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among
the Partners so as to take account of any variation between the
adjusted basis of such property to the Partnership for federal
income tax purposes and its initial Gross Asset Value.
(iii) To the extent that the fair market value of a
property contributed to the Partnership by Branch Properties,
L.P. differed from its adjusted tax basis at the time it was
originally contributed to Branch Properties, L.P. (the "Original
Book-Tax Disparity"), the allocation of tax items with respect
to such contributed property shall take into account any
remaining Original Book-Tax Disparity at the time such property
is contributed to the Partnership in a manner consistent with
the principles of Section 704(c) of the Code, using the
"traditional method" under Section 1.704-3(b) of the
Regulations, so that the Limited Partners who originally
contributed such property to Branch Properties, L.P. (or their
successors-in-interest) bear the tax burden (or benefit, if
applicable) of the remaining Original Book-Tax Disparity.
(iv) In the event the Gross Asset Value of any Partnership
asset is adjusted, subsequent allocations of income, gain, loss,
and deductions with respect to such asset shall take account of
any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the
same manner as under Code Section 704(c) and the Regulations
thereunder. Any elections or other decisions relating to Code
Section 704(c) allocations shall be made by the General Partner;
provided, however, that the "traditional method" of making
Section 704(c) allocations without curative allocations
described in Section 1.704-3(b) of the Regulations shall be
used. Allocations pursuant to Sections 6.3(b)(ii), (iii) and
(iv) hereof are solely for purposes of federal, state, and local
taxes and shall not affect, or in any way be taken into account
in computing, any Partner's Capital Account or share of Net
Income, Net Losses, other items, or distributions pursuant to
any provision of this Agreement.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management.
(a) Powers of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business
and affairs of the Partnership are exclusively vested in the General
Partner, and no Limited Partner shall have any right to participate
in or exercise control or management power over the business and
affairs of the Partnership. Notwithstanding anything to the contrary
in this Agreement, the General Partner may not be removed by the
Limited Partners with or without cause. In addition to the powers
now or hereafter granted a general partner of a limited partnership
under applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner
shall have full power and authority to do all things deemed necessary
or desirable by it to conduct the business of the Partnership, to
exercise all powers set forth in Section 3.2 hereof and to effectuate
the purposes set forth in Section 3.1 hereof, including, without
limitation:
(i) the making of any expenditures, the lending or
borrowing of money (including, without limitation, borrowing
money to permit the Partnership to make distributions to its
Partners in such amounts as will permit Regency (so long as
Regency desires to qualify as a REIT) to avoid the payment of
any federal income tax (including, for this purpose, any excise
tax pursuant to Section 4981 of the Code) and to make
distributions to its shareholders sufficient to permit Regency
to maintain REIT status), the assumption or guarantee of, or
other contracting for, indebtedness and other liabilities, the
issuance of evidences of indebtedness (including the securing of
same by mortgage, deed of trust or other lien or encumbrance on
the Partnership's assets), the incurring of any obligations it
deems necessary for the conduct of the activities of the
Partnership, and the repayment (including prepayment) of such
indebtedness, liabilities and obligations;
(ii) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the
Partnership;
(iii) the acquisition, disposition, conveyance,
mortgage, pledge, encumbrance, hypothecation or exchange of all
or any assets of the Partnership or the merger or other
combination of the Partnership with or into another entity
(provided that such merger or other combination does not result
in the Partnership recognizing taxable gain or loss for federal
income tax purposes) on such terms as the General Partner deems
proper (subject to Section 7.6 in the case of transactions
between the Partnership and the General Partner or any
Affiliate), and no approval of the Limited Partners shall be
required for the exercise of such powers, which powers shall
include, without limitation, the power to pledge any or all of
the assets of the Partnership to secure a loan or other
financing to the General Partner (the proceeds of which are not
required to be contributed or loaned to the Partnership),
provided, however, that to the extent that any payment of debt
service or closing costs on any such mortgage, pledge,
encumbrance or hypothecation shall result in the Partnership
being unable to pay the maximum amount payable with respect to
any distributions to the Limited Partners pursuant to Section
5.1, then Regency shall cause the General Partner to make such
additional Capital Contributions as are necessary to enable the
Partnership to pay the maximum amount payable with respect to
any distributions to the Limited Partners pursuant to Section
5.1 (provided that the General Partner shall have no obligation
to make such additional Capital Contributions in an amount
exceeding the amount of debt service and closing costs paid),
and provided, further, that the General Partner shall use
reasonable efforts to effect all dispositions of the
Partnership's assets that were contributed by the Limited
Partners in accordance with Section 1031 of the Code although,
except as provided in Section 7.1(c) hereof, it shall not be
required to do so;
(iv) subject to the provisions of Section 7.1(h) hereof,
the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the
terms of this Agreement and on any terms it sees fit, including,
without limitation, the financing of the conduct of the
operations of the General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other
Persons (including Regency or any of the Partnership's
Subsidiaries) and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person in which
it has an equity investment and the making of capital
contributions to its Subsidiaries, the holding of any real,
personal and mixed property of the Partnership in the name of
the Partnership or in the name of a nominee or trustee (subject
to Section 7.10), the creation, by grant or otherwise, of
easements or servitudes, and the performance of any and all acts
necessary or appropriate to the operation of the Partnership
assets including, but not limited to, applications for rezoning,
objections to rezoning, constructing, altering, improving,
repairing, renovating, rehabilitating, razing, demolishing or
condemning any improvements or property of the Partnership;
(v) the negotiation, execution, and performance of any
contracts, conveyances or other instruments (including with
Affiliates of the Partnership to the extent provided in Section
7.6) that the General Partner considers useful or necessary to
the conduct of the Partnership's operations or the
implementation of the General Partner's powers under this
Agreement, including, without limitation, the execution and
delivery of a REIT management agreement on behalf of or in the
name of the Partnership providing for the day-to-day management
and operation of the Partnership and including, without
limitation, the execution and delivery of leases on behalf of or
in the name of the Partnership (including the lease of
Partnership property for any purpose and without limit as to the
term thereof, whether or not such term (including renewal terms)
shall extend beyond the date of termination of the Partnership
and whether or not the portion so leased is to be occupied by
the lessee or, in turn, subleased in whole or in part to
others);
(vi) the opening and closing of bank accounts, the
investment of Partnership funds in securities, certificates of
deposit and other instruments, and the distribution of
Partnership cash or other Partnership assets in accordance with
this Agreement;
(vii) the selection and dismissal of employees of the
Partnership or the General Partner (including, without
limitation, employees having titles such as "president," "vice
president," "secretary" and "treasurer"), and the engagement and
dismissal of agents, outside attorneys, accountants, engineers,
appraisers, consultants, contractors and other professionals on
behalf of the General Partner or the Partnership and the
determination of their compensation and other terms of
employment or hiring;
(viii) the maintenance of such insurance for the benefit
of the Partnership and the Partners as it deems necessary or
appropriate;
(ix) subject to the provisions of Sections 4.2 and 7.1(h)
hereof, the formation of, or acquisition of an interest in, and
the contribution of property to any further limited or general
partnerships, joint ventures or other relationships that it
deems desirable (including, without limitation, the acquisition
of interests in, and the contribution of property to, its
Subsidiaries and any other Person in which it has an equity
investment from time to time) (provided that such transaction
does not result in the Partnership recognizing taxable gain or
loss for federal income tax purposes);
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct of
litigation and the incurring of legal expense and the settlement
of claims and litigation, the submission of any matter to
arbitration, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
(xi) subject to the provisions of Section 7.1(h) hereof,
the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries
or any other Person (including, without limitation, the
contribution or loan of funds by the Partnership to such
Persons) (provided that such action does not result in the
Partnership recognizing taxable gain or loss for federal income
tax purposes);
(xii) the distribution in kind of the Briarcliff
Village property pursuant to Section 13.2(c);
(xiii) the determination of the fair market value of any
Partnership property distributed in kind using such reasonable
method of valuation as it may adopt; and
(xiv) the execution, acknowledgment and delivery of any
and all documents and instruments to effectuate any or all of
the foregoing.
(b) No Approval Required for Above Powers. Subject to any
other restriction set forth in this Agreement, each of the Limited
Partners agrees that the General Partner is authorized to execute,
deliver and perform the above-mentioned agreements and transactions
on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this
Agreement (except where Limited Partner Consent or Original Limited
Partner Consent is expressly required herein), the Act or any
applicable law, rule or regulation. The execution, delivery or
performance by the General Partner or the Partnership of any
agreement authorized or permitted under this Agreement shall not
constitute a breach by the General Partner of any duty that the
General Partner may owe the Partnership or the Limited Partners or
any other Persons under this Agreement or of any duty stated or
implied by law or equity.
(c) Approval of Sale of Briarcliff Village. Except pursuant to
the dissolution and liquidation of the Partnership in accordance with
Article 13 hereof, the property commonly known as Briarcliff Village
(the "Briarcliff Village Property") shall not be sold by the
Partnership or the General Partner on or before December 19, 2005
(other than in a transaction in which the Partnership recognizes no
taxable gain or loss for federal income purposes) without the
approval of a Majority-in-Interest of the Original Briarcliff
Partners (as defined below) who continue, as of such time, to hold
Original Limited Partnership Units attributable to the contribution
of the Briarcliff Village Property to Branch Properties, L.P. and
Branch Properties, L.P.'s subsequent contribution of the Briarcliff
Village Property to the Partnership (the "Original Briarcliff
Partners"). Such approval right of the Original Briarcliff Partners
is personal to the Original Briarcliff Partners and shall terminate
upon the death of an Original Briarcliff Partner or a sale,
assignment, conveyance, or other transfer by an Original Briarcliff
Partner, with respect to that Partner's Original Limited Partnership
Units, and shall not be exercisable by any successor, transferee or
assignee of an Original Briarcliff Partner. In the event of a like-
kind exchange involving the Briarcliff Village Property by the
Partnership, then such approval right for the benefit of the Original
Briarcliff Partners will continue to be enforceable after such like-
kind exchange, but shall relate to the property (whether real,
personal or mixed, tangible or intangible) acquired by the
Partnership in such like-kind exchange. Nothing herein shall be
deemed to require that the Partnership or the General Partner take
any action to avoid or prevent an involuntary disposition of all or
part of said Briarcliff Village pursuant to a condemnation proceeding
or other taking. For purposes of this Section 7.1(c), Majority-In-
Interest of the Original Briarcliff Partners shall mean the Original
Briarcliff Partners who hold, in the aggregate, more than fifty
percent (50%) of the Percentage Interests then allocable to and held
by all of the Original Briarcliff Partners with respect to the
Original Limited Partnership Units received by the Original
Briarcliff Partners as a result of the contribution of the Briarcliff
Village Property to Branch Properties, L.P. and Branch Properties,
L.P.'s subsequent contribution of the Briarcliff Village Property to
the Partnership. The Partnership shall not engage in any merger,
consolidation or other business combination with or into another
Person unless the Partnership has entered into an agreement with such
Person in which such Person expressly agrees to be bound by the
provisions of this Section 7.1(c).
(d) Insurance. At all times from and after the date hereof,
the General Partner may cause the Partnership to obtain and maintain
casualty, liability and other insurance on the properties of the
Partnership and liability insurance for the Indemnitees hereunder.
(e) Working Capital Reserves. At all times from and after the
date hereof, the General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as
the General Partner, in its sole and absolute discretion, deems
appropriate and reasonable from time to time subject to the
provisions of Section 7.1(h) hereof.
(f) No Obligation to Consider Tax Consequences to Limited
Partners. Except as provided in Sections 7.1(c) and 13.2(c) with
respect to Briarcliff Village, except as provided in Section 7.1(g)
with respect to the sale of the Management Business, and except for
the obligation of the General Partner set forth in Section
7.1(a)(iii) to use reasonable efforts to effect all dispositions of
the Partnership's assets that were contributed by the Limited
Partners in accordance with Section 1031 of the Code, (i) in
exercising its authority under this Agreement, the General Partner
may, but shall be under no obligation to, take into account the tax
consequences to any Partner of any action taken by it, and (ii) the
General Partner and the Partnership shall not have liability to a
Limited Partner under any circumstances as a result of an income tax
liability incurred by such Limited Partner as a result of an action
(or inaction) by the General Partner pursuant to its authority under
this Agreement.
(g) Approval of Sale of Management Business. Notwithstanding
anything contained herein to the contrary, the Third Party Management
Business (as defined in the Contribution Agreement) contributed by
Branch Properties, L.P. to the Partnership as part of its initial
Capital Contribution (the "Management Business") shall not be sold by
the Partnership on or before the tenth (10th) anniversary of the
First Closing (other than in a transaction in which the Partnership
recognizes no taxable gain or loss for federal income tax purposes);
provided, however, that the Partnership shall be permitted to
undertake the following transactions: (i) contribution of the
Management Business to a corporation (the "New Management Company")
in which the Partnership owns five percent (5%) of the issued and
outstanding voting common stock and 100% of the issued and
outstanding non-voting preferred stock and in which The Regency
Group, Inc., a Florida corporation, owns ninety-five percent (95%) of
the issued and outstanding voting common stock and in which no other
shares of stock are issued and outstanding following the
contribution; (ii) a distribution by the Partnership of part or all
of the stock of the New Management Company to the General Partner on
or after the fifth (5th) anniversary of the First Closing; or (iii) a
sale of part or all of the stock of the New Management Company if no
Original Limited Partners hold Units which they received on the date
of this Agreement or any Additional Units received by them subsequent
to the date of this Agreement, or with the unanimous written consent
of the Original Limited Partners then holding such Units (but
excluding the holders of any Class A Units).
(h) Distributions. Notwithstanding anything contained in this
Agreement to the contrary, the General Partner, acting as a
fiduciary, shall use its reasonable best efforts and act in good
faith to operate the Partnership's assets and manage the
Partnership's business, including its indebtedness, so as to produce
sufficient Available Cash and Capital Transaction Proceeds to fund to
the Limited Partners the Priority Distribution Amount on a current
basis and any balance in the Cumulative Unpaid Accrued Return
Accounts and Cumulative Unpaid Priority Distribution Accounts of the
Limited Partners pursuant to Section 5.1 hereof.
(i) Designated Properties. Notwithstanding anything contained
in this Agreement to the contrary, the General Partner, acting as a
fiduciary, shall use its reasonable best efforts and act in good
faith to acquire, develop, lease and operate the Designated
Properties (as defined in the Contribution Agreement) in a manner to
maximize the Annualized NOI (as defined in the Contribution
Agreement) for the Designated Properties.
Nothing in Sections 7.1(h) or 7.1(i) shall require the General Partner to
contribute additional capital to the Partnership.
Section 7.2 Certificate of Limited Partnership. To the extent
that such action is determined by the General Partner to be reasonable and
necessary or appropriate, the General Partner shall file amendments to and
restatements of the Certificate and do all the things to maintain the
Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of
Delaware and each other jurisdiction in which the Partnership may elect to
do business or own property. Subject to the terms of Section
8.5(a)(iv)hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Limited Partner. The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or
documents as may be reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the Limited Partners have limited
liability) in the State of Delaware and any other jurisdiction in which
the Partnership may elect to do business or own property.
Section 7.3 Restriction on General Partner's Authority. Without
the consent of all the Limited Partners, the General Partner may not:
(a) Take any action that would make it impossible to carry on
the ordinary business of the Partnership, except as otherwise
provided in this Agreement;
(b) Possess Partnership property for other than a Partnership
purpose;
(c) Admit a Person as a Partner, except as otherwise provided
in this Agreement; or
(d) perform any act that would subject a Limited Partner to
liability as a general partner.
Section 7.4 Responsibility for Expenses.
(a) No Compensation. Except as provided in this Section 7.4
and elsewhere in this Agreement (including the provisions of Articles
5 and 6 regarding distributions, payments, and allocations to which
it may be entitled), the General Partner shall not be compensated for
its services as general partner of the Partnership.
(b) Responsibility for Ownership and Operation Expenses. The
Partnership shall be responsible for and shall pay all expenses
relating to the Partnership's ownership of its assets, and the
operation of, or for the benefit of, the Partnership, and the General
Partner shall be reimbursed on a monthly basis, or such other basis
as the General Partner may determine in its sole and absolute
discretion, for all expenses it incurs relating to the Partnership's
ownership of its assets and the operation of, or for the benefit of,
the Partnership; provided, that the amount of any such reimbursement
shall be reduced by any interest earned by the General Partner with
respect to bank accounts or other instruments held by it as permitted
in Section 7.10. Such reimbursements shall be in addition to any
reimbursement to the General Partner pursuant to Section 10.3(c) and
as a result of indemnification pursuant to Section 7.7. The General
Partner shall determine in good faith the amount of expenses incurred
by it relating to the operation of, or that inure to the benefit of,
the Partnership. In the event that certain expenses are incurred for
the benefit of the Partnership and other Persons (including the
General Partner), such expenses will be allocated to the Partnership
and such other Persons in such a manner as the General partner deems
fair and reasonable, subject to the provisions of Section 7.1(h)
hereof.
(c) Responsibility for Organizational Expenses. The
Partnership shall be responsible for and shall pay all expenses
incurred relating to the organization of the Partnership.
(d) Partnership Interest Issuance Expenses. The General
Partner shall be reimbursed for all expenses either incurs relating
to any issuance of additional Partnership Interests pursuant to
Section 4.2 hereof.
Section 7.5 Outside Activities of the General Partner. Nothing
contained in this Agreement shall prevent or prohibit the General Partner
or any employee, officer, director, agent, shareholder or Affiliate of the
General Partner from entering into, engaging in or conducting any other
activity or performing for a fee any service including (without limiting
the generality of the foregoing) engaging in any business dealing with
real property of any type or location, including, without limitation,
property of a type similar to those properties owned by the Partnership,
its Subsidiaries or any other Person in which the Partnership has an
equity investment; acting as a director, officer or employee of any
corporation, as a trustee of any trust, as a general partner of any
partnership, or as an administrative official of any other business
entity; or receiving compensation for services to, or participating in
profits derived from, the investments of any such corporation, trust,
partnership or other entity, regardless of whether such activities are
competitive, directly or indirectly, with the Partnership. Nothing herein
shall require the General Partner or any employee, agent, shareholder or
Affiliate thereof to offer any interest in such activities or any
particular opportunity to the Partnership or any Partner, and neither the
Partnership nor any Partner shall have any right by virtue of this
Agreement or the partnership relationship established hereby in or to such
other activities or to the income or proceeds derived therefrom. The
pursuit of such activities, even if competitive with the business of the
Partnership (including, without limitation, causing tenants to transfer
from one of the Partnership's properties to other properties in which the
General Partner has an interest, directly or indirectly, without
compensation to the Partnership, or taking other actions for the benefit
of the General Partner or Affiliates of the General Partner that are
detrimental to the Partnership), shall not be deemed wrongful or improper.
Section 7.6 Contracts with Affiliates.
(a) General. The General Partner or any of its Affiliates may
enter into transactions or agreements with the Partnership, including
transactions and agreements (i) to sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly
or indirectly, or (ii) for the provision of services to the
Partnership, provided that such transactions or agreements, including
transactions and agreements with Security Capital Investment
Research, Inc. or any of its Affiliates, are on terms that are fair
and reasonable and no less favorable to the Partnership than would be
obtained from an unaffiliated third party in connection therewith.
In entering into such transactions with Affiliates the General
Partner shall not allocate expenses and similar items
disproportionately between the General Partner and the Partnership.
(b) Employee Benefit Plans. The General Partner may propose
and adopt on behalf of the Partnership employee benefit plans funded
by the Partnership for the benefit of employees of the General
Partner, the Partnership, Subsidiaries of the Partnership or any
Affiliate of any of them in respect of services performed, directly
or indirectly, for the benefit of the Partnership, the General
Partner, or any of the Partnership's Subsidiaries, subject to the
provisions of Section 7.1(h) hereof.
(c) Conflict Avoidance Agreements. The General Partner is
expressly authorized to enter into, in the name and on behalf of the
Partnership, a right of first opportunity arrangement and other
conflict avoidance agreements with various Affiliates of the
Partnership and the General Partner, on such terms as the General
Partner believes are advisable, subject to the provisions of Sections
7.6(a) and 7.1(h) hereof.
Section 7.7 Indemnification.
(a) General. The Partnership shall indemnify an Indemnitee
from and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement in which any Indemnitee
may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established that: (i) the act or omission of
the Indemnitee was material to the matter giving rise to the
proceeding and constituted willful misconduct or fraud; (ii) the
Indemnitee actually received an improper personal benefit in money,
property or services; or (iii) in the case of any criminal
proceeding, the Indemnitee had reasonable cause to believe that the
act or omission was unlawful. The termination of any proceeding by
judgment, order or settlement does not create a presumption that the
Indemnitee did not meet the requisite standard of conduct set forth
in this Section 7.7(a). The termination of any proceeding by
conviction or upon a plea of nolo contendere or its equivalent, or an
entry of an order of probation prior to judgment, creates a
rebuttable presumption that the Indemnitee acted in a manner contrary
to that specified in this Section 7.7(a). Any indemnification
pursuant to this Section 7.7 shall be made only out of the assets of
the Partnership.
(b) Advancement of Expenses. Reasonable expenses incurred by
an Indemnitee who is, or is threatened to be made, a party to a
proceeding may be paid or reimbursed by the Partnership in advance of
the final disposition of the proceeding upon receipt by the
Partnership of (i) a written affirmation by the Indemnitee of the
Indemnitee's good faith belief that the standard of conduct necessary
for indemnification by the Partnership as authorized in this Section
7.7 has been met and (ii) a written undertaking by or on behalf of
the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
(c) No Limitation of Rights. The indemnification provided by
this Section 7.7 shall be in addition to any other rights to which an
Indemnitee or any other Person may be entitled under any agreement,
pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity.
(d) Insurance. The Partnership may purchase and maintain
insurance, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be
asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether
the Partnership would have the power to indemnify such Person against
such liability under the provisions of this Agreement.
(e) No Personal Liability for Partners. In no event may an
Indemnitee subject any Partner to personal liability by reason of the
indemnification provisions set forth in this Agreement.
(f) Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because
the Indemnitee had an interest in the transaction with respect to
which the indemnification applies if the transaction was otherwise
permitted by the terms of this Agreement.
(g) Benefit. The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the
benefit of any other Persons.
Section 7.8 Liability of the General Partner.
(a) General. Notwithstanding anything to the contrary set
forth in this Agreement, the General Partner shall not be liable for
monetary damages to the Partnership, any Partners or any Assignees
for losses sustained or liabilities incurred as a result of errors in
judgment or of any act or omission if the General Partner acted in
good faith.
(b) No Obligation to Consider Interests of Limited Partners.
The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership, the General Partner and
Regency's shareholders collectively, that except as provided in
Section 7.1(e) with respect to the establishment and maintenance of
working capital reserves, except as provided in Section 7.1(f) with
respect to tax consequences, except as provided in Section 7.1(h)
with respect to the generation of funds for distributions and except
as expressly provided otherwise in Sections 7.1(a)(iv), 7.1(a)(ix)
and 7.1(a)(xi) with respect to the powers of the General Partner, the
General Partner is under no obligation to consider the separate
interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners or Assignees except as expressly
provided otherwise in Sections 7.1(f) and 7.1(h)) in deciding whether
to cause the Partnership to take (or decline to take) any actions
which the General Partner has undertaken in good faith on behalf of
the Partnership, and that the General Partner shall not be liable for
monetary damages for losses sustained, liabilities incurred, or
benefits not derived by Limited Partners in connection with such
decisions, provided that the General Partner has acted in good faith
and in accordance with the provisions of this Agreement. For
purposes hereof, a Person acting in a manner which furthers
compliance by Regency with the REIT requirements of the Code, shall
be deemed to satisfy the standards of conduct hereunder. The Limited
Partners further expressly acknowledge that Regency is obligated to
cause the Partnership to take (or decline to take) certain actions in
order to assist Security Capital and its Affiliates in avoiding
classification as a passive foreign investment company within the
meaning of Section 1296 of the Code. Such obligation is set forth on
Schedule 7.8(b).
(c) Acts of Agents. Subject to its obligations and duties as
General Partner set forth in Section 7.1(a) hereof, the General
Partner may exercise any of the powers granted to it by this
Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents. The General Partner
shall not be responsible for any misconduct or negligence on the part
of any such agent appointed by it in good faith.
(d) Effect of Amendment. Any amendment, modification or repeal
of this Section 7.8 or any provision hereof shall be prospective only
and shall not in any way affect the limitations on the General
Partner's liability to the Partnership and the Limited Partners under
this Section 7.8 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner.
(a) Reliance on Documents. The General Partner may rely and
shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture, or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties.
(b) Reliance on Consultants and Advisers. The General Partner
may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers
selected by it, and any act taken or omitted to be taken in reliance
upon and in accordance with the opinion of such Persons as to matters
which such General Partner reasonably believes to be within such
Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance
with such opinion.
(c) Action Through Officers and Attorneys. The General Partner
shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers and a
duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of
attorney, have full power and authority to do and perform all and
every act and duty which is permitted or required to be done by the
General Partner hereunder.
(d) Actions to Maintain REIT Status or Avoid Taxation of the
General Partner. Notwithstanding any other provisions of this
Agreement or the Act, any action of the General Partner on behalf of
the Partnership or any decision of the General Partner to refrain
from acting on behalf of the Partnership, undertaken in the good
faith belief that such action or omission is necessary or advisable
in order (i) to protect the ability of Regency to continue to qualify
as a REIT or (ii) to avoid Regency incurring any taxes under Section
857 or Section 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.
(e) Sales of Assets. In the event that Regency or any of its
Affiliates in which it owns, directly or indirectly, an interest
disposes of properties or assets (other than those properties or
assets owned by the Partnership) in transactions or exchanges which
Regency reasonably believes create capital gains to Regency and a
resulting distribution or dividend to Regency's shareholders, the
General Partner shall provide the Original Limited Partners with at
least 20 days prior written notice of the record date for any
distribution of the proceeds thereof, together with relevant
information concerning such dividend, including the amount, to enable
the Original Limited Partners to exercise the Redemption Right prior
to said record date.
Section 7.10 Title to Partnership Assets. Title to Partnership
assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as an entity,
and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any
or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The
General Partner hereby declares and warrants that any Partnership assets
for which legal title is held in the name of the General Partner or any
nominee or Affiliate of the General Partner shall be held by the General
Partner for the use and benefit of the Partnership in accordance with the
provisions of this Agreement; provided, however, that the General Partner
shall use its best efforts to cause beneficial and record title to such
assets to be vested in the Partnership as soon as reasonably practicable.
All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which
legal title to such Partnership assets is held.
Section 7.11 Reliance by Third Parties. Notwithstanding anything
to the contrary in this Agreement, any Person dealing with the Partnership
shall be entitled to assume that the General Partner has full power and
authority to encumber, sell or otherwise use in any manner any and all
assets of the Partnership (including, without limitation, in connection
with any pledge of Partnership assets to secure a loan or other financing
to the General Partner as provided by Section 7.1(a)(iii)) and to enter
into any contracts on behalf of the Partnership, and such Person shall be
entitled to deal with the General Partner as if it were the Partnership's
sole party in interest, both legally and beneficially. Each Limited
Partner hereby waives any and all defenses or other remedies which may be
available against such Person to contest, negate or disaffirm any action
of the General Partner in connection with any such dealing. In no event
shall any Person dealing with the General Partner or its representatives
be obligated to ascertain that the terms of this Agreement have been
complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (i) at the time of the execution and delivery of
such certificate, document or instrument, this Agreement was in full force
and effect, (ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and
on behalf of the Partnership and (iii) such certificate, document or
instrument was duly executed and delivered in accordance with the terms
and provisions of this Agreement and is binding upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability. The Limited Partners shall
have no liability under this Agreement except as expressly provided in
Section 5.3 hereof, or under the Act.
Section 8.2 Management of Business. No Limited Partner or
Assignee (other than the General Partner, any of its Affiliates or any
officer, director, employee, partner, agent or trustee of the General
Partner, the Partnership or any of their Affiliates, in their capacity as
such) shall take part in the operation, management or control (within the
meaning of the Act) of the Partnership's business, transact any business
in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by
the General Partner, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall
not affect, impair or eliminate the limitations on the liability of the
Limited Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners. Subject to
any agreements entered into by a Limited Partner or its Affiliates with
the General Partner, the Partnership or a Subsidiary or an Affiliate of
any of them, the following rights shall govern outside activities of
Limited Partners: (i) any Limited Partner and any officer, director,
employee, agent, trustee, Affiliate, partner, beneficiary or shareholder
of any such Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating
to the Partnership, including business interests and activities in direct
competition with the Partnership, the General Partner or their Affiliates;
(ii) neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Partner or
Assignee; (iii) none of the Partners nor any other Person shall have any
rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, and such
Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Partner or
any such other Person, even if such opportunity is of a character which,
if presented to the Partnership, any Partner or such other Person, could
be taken by such Person; (iv) the fact that a Partner may encounter
opportunities to purchase, otherwise acquire, lease, sell or otherwise
dispose of real or personal property and may take advantage of such
opportunities himself or introduce such opportunities to entities in which
it has or has not any interest, shall not subject such Partner to
liability to the Partnership or any of the other Partners on account of
the lost opportunity; and (v) except as otherwise specifically provided
herein, nothing contained in this Agreement shall be deemed to prohibit a
Partner or any Affiliate of a Partner from dealing, or otherwise engaging
in business, with Persons transacting business with the Partnership or
from providing services relating to the purchase, sale, rental, management
or operation of real or personal property (including real estate brokerage
services) and receiving compensation therefor, from any Persons who have
transacted business with the Partnership or other third parties.
Section 8.4 Priority Among Partners. Except to the extent
provided by Sections 4.2, 5.1(a), 5.1(b), 6.1, 6.2 or 6.3 hereof (with
respect to the priority of the Original Limited Partnership Units), or
otherwise expressly provided in this Agreement, no Partner (Limited or
General) or Assignee shall have priority over any other Partner (Limited
or General) or Assignee either as to the return of Capital Contributions
or as to profits, losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the
Partnership.
(a) Copies of Business Records. In addition to other rights
provided by this Agreement or by the Act, and except as limited by
Section 8.5(c) hereof, each Limited Partner shall be provided the
following without demand, except as otherwise provided below, at the
Partnership's expense:
(i) promptly after becoming available, a copy of the most
recent annual, quarterly and current reports and proxy
statements filed with the Securities and Exchange Commission by
Regency pursuant to the Securities Exchange Act of 1934, if any;
(ii) promptly after becoming available, a copy of the
Partnership's federal, state and local income tax returns for
each Partnership Year;
(iii) upon written demand and for a purpose reasonably
related to such Limited Partner's interest as a Limited Partner
in the Partnership, a current list of the name and last known
business, residence or mailing address of each Partner;
(iv) a copy of this Agreement and the Certificate and all
amendments hereto and thereto, together with executed copies of
all powers of attorney pursuant to which this Agreement, the
Certificate and all amendments hereto and thereto have been
executed; and
(v) upon written demand, true and full information
regarding the amount of cash and a description and statement of
any other property or services contributed by each Partner and
which each Partner has agreed to contribute in the future, and
the date on which each became a Partner.
(b) Notification of Changes in Unit Adjustment Factor. The
General Partner shall notify each Limited Partner in writing of any
change made to the Unit Adjustment Factor within 10 Business Days of
the date such change becomes effective.
(c) Confidential Information. Notwithstanding any other
provision of this Section 8.5, the General Partner may keep
confidential from the Limited Partners, for such period of time as
the General Partner determines in its discretion to be reasonable,
any information (i) relating to the General Partner or any of its
Affiliates or the conduct of their business that the General Partner
believes, in its good faith judgment, the disclosure of which
information would adversely affect a material financing, acquisition,
disposition of assets or securities or other comparable transaction
to which the General Partner or any of its Affiliates is a party,
(ii) that the General Partner believes to be in the nature of trade
secrets of Regency or its Affiliates or (iii) that the Partnership,
Regency or any of their Affiliates is required by law or by
agreements with unaffiliated third parties to keep confidential.
Nothing contained in this Section 8.5(c) shall permit the General
Partner to keep confidential from the Limited Partners any
information relating to the Partnership or its business.
Section 8.6 Redemption of Units. The Redemption Rights of the
Original Limited Partners (including the holders of Class A Units) are set
forth in this Section 8.6. Any Redemption Rights granted to Additional
Limited Partners shall be set forth in amendments to this Agreement or in
separate redemption agreements and shall be subordinate, to the extent set
forth therein, to the Redemption Rights of the Original Limited Partners
set forth in this Section 8.6.
(a) Exercise. Subject to the provisions of this Section
8.6, the Original Limited Partners shall have the right (the
"Redemption Right") to require the Partnership to redeem any Unit
held by such Original Limited Partner in exchange for the Redemption
Amount to be paid by the Partnership. A Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the General
Partner by the Original Limited Partner who is exercising the
Redemption Right (the "Redeeming Partner"), which shall be
irrevocable except as set forth in this Section 8.6(a). The
redemption shall occur on the Specified Redemption Date; provided,
however, a Specified Redemption Date shall not occur until such later
date as may be specified pursuant to any agreement with an Original
Limited Partner; and provided further that a holder of Class A Units
shall not exercise a Redemption Right until as of the first
Subsequent Closing without the prior written consent of the General
Partner and Security Capital. An Original Limited Partner may
exercise a Redemption Right any time and any number of times;
provided, however, that a holder of Class A Units shall not exercise
a Redemption Right until as of the first Subsequent Closing without
the prior written consent of the General Partner and Security
Capital. A Redeeming Partner may not exercise the Redemption Right
for less than 1,000 Units or, if such Redeeming Partner holds less
than 1,000 Units, all of the Units held by such Redeeming Partner.
If (i) an Original Limited Partner acquires any Units after the First
Closing from another Original Limited Partner or holds or acquires
any Shares otherwise than pursuant to the exercise of a Redemption
Right hereunder and (ii) the issuance of a Share Amount pursuant to
the exercise of a Redemption Right would violate the provisions of
Section 5.2 of the Articles of Incorporation as a result of the
ownership of such additional Units or Shares so acquired by such
Original Limited Partner (the number of Shares in excess of the
number of Shares permitted pursuant to said Section 5.2 is herein
referred to as the "Excess Shares") and (iii) such Original Limited
Partner does not revoke or amend the exercise of such Redemption
Right to comply with the provisions of said Section 5.2 of the
Articles of Incorporation within five days after receipt of written
notice from the General Partner that the redemption would be in
violation thereof, then the Partnership shall pay to such Redeeming
Partner, in lieu of the Share Amount or the Cash Amount attributable
to the Excess Shares, the amount which would be payable to such
Redeeming Partner pursuant to Section 5.3 of the Articles of
Incorporation if such Excess Shares were issued in violation of
Section 5.2 of the Articles of Incorporation and Regency exercised
the remedies pursuant to said Section 5.3 of the Articles of
Incorporation. The relevant provisions of the Articles of
Incorporation as presently in effect are attached hereto as Schedule
8.6(a). This Section 8.6(a) shall in no way or manner be construed
as limiting the application of the Articles of Incorporation or
constitute any form of waiver or exemption thereunder.
(b) Payment. The General Partner shall have the right to
elect to fund the Redemption Amount through the issuance of (i) the
Share Amount or (ii) the Cash Amount; provided, however, in the event
a Specified Redemption Date occurs on or before the Option Date, then
the General Partner shall be required to cause the Partnership to
issue the Share Amount (and not the Cash Amount) in satisfaction of
the Redemption Amount, except as otherwise provided in Section 8.6(c)
below. The Redeeming Partner shall have no right, with respect to
any Unit so redeemed, to receive any distributions paid by the
Partnership after the Specified Redemption Date.
(c) Exceptions for Payment. Notwithstanding anything contained
in this Section 8.6 to the contrary, the following provisions shall
apply with respect to the payment of a Redemption Amount:
(i) If the funding of the Share Amount with respect to the
exercise of a Redemption Right would cause the issuance of the
Shares in connection therewith to violate Article 5.14 of the
Articles of Incorporation of Regency, then the Redeeming Partner
shall not have the right to receive the Share Amount with
respect to the issuance of any Shares resulting in such a
violation, and the balance of any Redemption Amount relating to
the exercise of such Redemption Right shall be paid by a Cash
Amount. A Non-U.S. Person who (i) has signed a Waiver and
Consent Agreement in the form of Exhibit C attached hereto for
the benefit of Regency and Security Capital (the "Security
Capital Waiver and Consent") and (ii) is exercising a Redemption
Right (and will receive a Share Amount) in compliance with the
Security Capital Waiver and Consent, will not be in violation of
the provisions of Article 5.14 of the Articles of Incorporation
if (x) the aggregate number of Shares to be issued on such
Specified Redemption Date to all Redeeming Partners who are Non-
U.S. Persons is equal to or less than (y) the aggregate number
of Shares to be issued on such Specified Redemption Date to all
Redeeming Partners who are other than Non-U.S. Persons (the
maximum number of Shares which may be issued to Redeeming
Partners on a Specified Redemption Date who are Non-U.S. Persons
in order to satisfy the foregoing requirement is herein referred
to as the "Matching Share Amount"). If more than one Redeeming
Partner who is a Non-U.S. Person exercises a Redemption Right
for the same Specified Redemption Date and if the aggregate
Share Amount payable to all such Redeeming Partners would cause
the issuance of Shares to such Non-U.S. Persons to exceed the
Matching Share Amount on such Specified Redemption Date, then
the Matching Share Amount shall be allocated among such
Redeeming Partners who are Non-U.S. Persons pro rata in
proportion to the respective Share Amounts otherwise payable to
such Redeeming Partners, and any balance of a Redemption Amount
payable to any such Redeeming Partner on such Specified
Redemption Date shall be paid by a Cash Amount. If the holders
of any Class A Units who are Non-U.S. Persons are exercising
Redemption Rights on a Specified Redemption Date and the
aggregate Share Amount issuable to all Non-U.S. Persons on such
Specified Redemption Date exceeds the Matching Share Amount,
then the Shares otherwise issuable to the holders of Class A
Units shall be reduced first, pro rata by those holders whose
Class A Units were issued in exchange for interests in Roswell
Village, and next, pro rata by those holders whose Class A Units
were issued in exchange for cash and interests in Peartree
Village until such aggregate Share Amount equals the Matching
Share Amount, and the holders of such Class A Units shall
receive the Cash Amount for any balance of the Redemption Amount
due such holders of the Class A Units.
(ii) If the issuance of Shares for a Share Amount to a
Redeeming Partner would be in violation of the Securities Act
and applicable state securities laws then such Redeeming Partner
shall not have the right to receive the Share Amount, and the
Redemption Amount shall be paid by the Cash Amount; provided,
however, the issuance of Shares for a Share Amount shall not
violate the registration requirements of the Securities Act as
in effect on the date hereof if such Shares are issued to an
"accredited investor" as defined in the Securities Act.
(d) Additional Units. Each Original Limited Partner has the
right to receive certain Additional Units pursuant to the provisions
of the Contribution Agreement. If a Redeeming Partner exercises a
Redemption Right on one or more occasions with respect to Units
issued at the First Closing ("Initial Redeemed Units"), then such
Redeeming Partner shall be deemed to have exercised a Redemption
Right with respect to the corresponding percentage of Additional
Units issuable with respect to such Initial Redeemed Units, based on
the number of Initial Redeemed Units being redeemed as a percentage
of the total number of Units issued to the Redeeming Partner at the
First Closing (the "Redemption Percentage"), all as provided in the
Contribution Agreement. In such event, Regency shall assume the
obligation to pay the Redemption Amount with respect to any such
Additional Units issued with respect to the Initial Redeemed Units,
and if a Share Amount has been funded to a Redeeming Partner with
respect to the Initial Redeemed Units, then Regency shall be required
to pay the Share Amount for a number of Additional Units equal to the
corresponding Redemption Percentage multiplied by the Additional
Units issuable to such Original Limited Partner, subject, however, to
the restrictions set forth in Section 8.6(a) and 8.6(c) above.
(e) Conditions. As a condition to exercising a Redemption
Right, each Redeeming Partner shall execute a Notice of Redemption in
the form attached as Exhibit B and, if a Non-U.S. Person, the
Security Capital Waiver and Consent in the form attached as Exhibit
C; and execute such other documents and take such other actions as
the General Partner may reasonably require, including a Foreign
Investment and Real Property Tax Act ("FIRPTA") or similar state
and/or local affidavit (or make appropriate arrangements for deposit
with the General Partner for payment to the Internal Revenue Service
or any state or local governmental authority of the amount required
for the General Partner to comply with the withholding provisions of
such federal, state and local laws, and if applicable, providing a
withholding certificate evidencing the Redeeming Partner's right to a
reduced rate of FIRPTA withholding). As a further condition to
exercising a Redemption Right, the Units to be redeemed shall be
delivered to the Partnership or Regency, as the case may be, free and
clear of all liens, security interests, deeds of trust, pledges and
other encumbrances of any nature whatsoever (collectively the
"Liens"), subject to the provisions of Sections 5.3 and 8.6(f)
hereof. In the event any Lien exists on the Specified Redemption
Date with respect to the Units to be redeemed, neither the
Partnership nor Regency (if Regency assumes the Redemption Right
pursuant to Section 8.6(d) or Section 8.7) shall have any obligation
to redeem such Units, unless, in connection therewith, the General
Partner has elected to pay a portion of the Redemption Amount in cash
and such cash is sufficient to discharge such Lien, subject to the
provisions of Sections 5.3 and 8.6(f) hereof. Each Redeeming Partner
hereby expressly authorizes the General Partner to apply such portion
of such cash as may be necessary to discharge such Lien in full.
(f) Security Interest. Additional Units issued on the First
Earn-Out Closing Date (as defined in the Contribution Agreement)
pursuant to Section 2.3.2 of the Contribution Agreement may be
required to be pledged to Regency and the Partnership pursuant to
Article 15 of the Contribution Agreement (the "Pledged Units"). In
the event a Redeeming Partner exercises a Redemption Right with
respect to Pledged Units, or in the event a Redeeming Partner has
previously exercised a Redemption Right with respect to Units and the
corresponding Additional Units to be redeemed are Pledged Units, as
described in Section 8.6(d) above, then such Redeeming Partner, as a
condition to the receipt of the Redemption Amount with respect to
such Pledged Units, shall be required to pledge and grant to Regency
and the Partnership a first priority security interest in any and all
Shares and/or cash delivered in payment of the Redemption Amount with
respect to such Pledged Units and shall be required to consent to
Regency holding such Shares and/or cash as "Collateral" under Article
15 of the Contribution Agreement; provided, however, if a Cash Amount
is to be paid to the Redeeming Partner with respect to such Pledged
Units, then such Redeeming Partner shall have the right to substitute
a letter of credit for such Cash Amount as provided in Section
15.7.2(e) of the Contribution Agreement.
(g) Regency Agreement. Regency agrees (i) to perform Regency's
obligations described in this Section 8.6, (ii) to cause the General
Partner to perform the General Partner's obligations described in
this Section 8.6 and (iii) to cause the General Partner to cause the
Partnership to perform the Partnership's obligations described in
this Section 8.6.
(h) Additional Rights. In case Regency shall issue rights,
options or warrants to all holders of its Shares entitling them to
subscribe for or purchase Shares or other securities convertible into
Shares at a price per share less than the current per share market
price as of the day before the "ex date" with respect to the issuance
or distribution requiring such computation, each Original Limited
Partner holding Redemption Rights shall be entitled to receive such
number of such rights, options or warrants, as the case may be, as he
would have been entitled to receive had he exercised all of his then
existing Redemption Rights immediately prior to the record date for
such issuance by Regency. The term "ex date" shall mean the first
date on which Shares trade regularly without the right to receive
such issuance or distribution. In case the Shares shall be changed
into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or
otherwise (other than subdivision or combination of Shares or a stock
dividend described in this definition), then and in each such event
the Original Limited Partners holding Redemption Rights shall have
the right thereafter to exercise their Redemption Rights for the kind
and amount of shares and other securities and property that would
have been received upon such reorganization, reclassification or
other change by holders of the number of Shares with respect to which
such Redemption Rights could have been exercised immediately prior to
such reorganization, reclassification or change.
(i) Distributions. A Redeeming Partner exercising a Redemption
Right with a Specified Redemption Date after a Partnership Record
Date and prior to the payment of the distribution of Available Cash
relating to such Partnership Record Date shall retain the right to
receive such distribution with respect to such Units redeemed on such
Specified Redemption Date.
Section 8.7 Regency's Assumption of Right. Notwithstanding the
provisions of Section 8.6, Regency may, in its sole and absolute
discretion, assume directly and satisfy a Redemption Right by paying to
the Redeeming Partner the Share Amount on the Specified Redemption Date,
whereupon Regency shall acquire the Units offered for redemption by the
Redeeming Partner and shall be treated for all purposes of this Agreement
as the owner of such Units, which shall become Class B Units. In the
event Regency shall exercise its right to satisfy the Redemption Right in
the manner described in the preceding sentence, the Partnership shall have
no obligation to pay any amount to the Redeeming Partner with respect to
such Redeeming Partner's exercise of the Redemption Right, and each of the
Redeeming Partner, the Partnership, the General Partner and Regency shall
treat the transaction between Regency and the Redeeming Partner as a sale
of the Redeeming Partner's Units to Regency for federal income tax
purposes. Regency agrees that it shall assume the General Partner's
obligation to pay the Redemption Amount by the payment of the Share
Amount through the Option Date, and Regency further agrees that if the
General Partner elects to pay the Redemption Amount through the payment of
the Share Amount, Regency shall guarantee the General Partner's payment
thereof.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting. The General Partner shall
keep or cause to be kept at the principal office of the Partnership
appropriate books and records with respect to the Partnership's business,
including, without limitation, all books and records necessary to provide
to the Limited Partners any information, lists and copies of documents
required to be provided pursuant to Sections 8.5 or 9.3 hereof. Any
records maintained by or on behalf of the Partnership in the regular
course of its business may be kept on, or be in the form of, magnetic
tape, photographs, micrographics or any other information storage device;
provided, that the records so maintained are convertible into clearly
legible written form within a reasonable period of time. The books of the
Partnership shall be maintained for financial purposes on an accrual basis
in accordance with generally accepted accounting principles and for tax
reporting purposes on the accrual basis.
Section 9.2 Fiscal Year. The fiscal year of the Partnership shall
be the calendar year.
Section 9.3 Reports.
(a) Annual Reports. As soon as practicable, but in no event
later than the date when mailed to Regency's shareholders, the
General Partner shall cause to be mailed to each Limited Partner as
of the close of the Partnership Year, an annual report containing
financial statements of the Partnership, or of Regency if such
statements are prepared solely on a consolidated basis with Regency
for such Partnership Year, presented in accordance with generally
accepted accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants selected
by the General Partner.
(b) Quarterly Reports. As soon as practicable, but in no event
later than the date when mailed to Regency's shareholders, the
General Partner shall cause to be mailed to each Limited Partner as
of the last day of the calendar quarter (except the last calendar
quarter of each year) who has asked to be placed on the mailing list
for the same, a report containing unaudited financial statements of
the Partnership, or of Regency if such statements are prepared solely
on a consolidated basis with Regency, and such other information as
may be required by applicable law or regulation, or as the General
Partner determines to be appropriate.
(c) Other. During the pendency of the Redemption Rights,
Limited Partners holding Redemption Rights shall receive in a timely
manner all other communications transmitted from time to time by
Regency to its shareholders.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns. The General Partner shall
arrange for the preparation and timely filing of all returns of
Partnership income, gains, deductions, losses and other items required of
the Partnership for federal and state income tax purposes and shall use
all reasonable efforts to furnish, within 90 days of the close of each
taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.
Section 10.2 Tax Elections. Except as otherwise provided herein,
the General Partner shall, in its sole and absolute discretion, determine
whether to make any available election pursuant to the Code; provided,
however, that the General Partner shall make the election under Section
754 of the Code in accordance with applicable Regulations thereunder. The
General Partner shall have the right to seek to revoke any such election
(including, without limitation, the election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.
Section 10.3 Tax Matters Partner.
(a) General. The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes.
Pursuant to Section 6223(c) of the Code, upon receipt of notice from
the IRS of the beginning of an administrative proceeding with respect
to the Partnership, the tax matters partner shall furnish the IRS
with the name, address and profit interest of each of the Limited
Partners; provided, however, that such information is provided to the
Partnership by the Limited Partners.
(b) Powers. The tax matters partner is authorized, but not
required:
(i) to enter into any settlement with the IRS with respect
to any administrative or judicial proceedings for the adjustment
of Partnership items required to be taken into account by a
Partner for income tax purposes (such administrative proceedings
being referred to as a "tax audit" and such judicial proceedings
being referred to as "judicial review"), and in the settlement
agreement the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such settlement
agreement shall not bind any Partner (1) who (within the time
prescribed pursuant to the Code and Regulations) files a
statement with the IRS providing that the tax matters partner
shall not have the authority to enter into a settlement
agreement on behalf of such Partner or (2) who is a "notice
partner" (as defined in Section 6231 of the Code) or a member of
a "notice group" (as defined in Section 6223(b)(2) of the Code),
and, to the extent provided by law, the General Partner shall
cause each Limited Partner to be designated a notice partner;
(ii) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a "final
adjustment") is mailed or otherwise given to the tax matters
partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the Tax
Court or the United States Claims Court, or the filing of a
complaint for refund with the District Court of the United
States for the district in which the Partnership's principal
place of business is located;
(iii) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment
with the IRS at any time and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading (petition,
complaint or other document) for judicial review with respect to
such request;
(v) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to any item
required to be taken into account by a Partner for tax purposes,
or an item affected by such item; and
(vi) to take any other action on behalf of the Partners of
the Partnership in connection with any tax audit or judicial
review proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by the
tax matters partner in connection with any such proceeding, except to
the extent required by law, is a matter in the sole and absolute
discretion of the tax matters partner, and the provisions relating to
indemnification of the General Partner set forth in Section 7.7 of
this Agreement shall be fully applicable to the tax matters partner
in its capacity as such.
(c) Reimbursement. The tax matters partner shall receive no
compensation for its services. All third-party costs and expenses
incurred by the tax matters partner in performing its duties as such
(including legal and accounting fees) shall be borne by the
Partnership. Nothing herein shall be construed to restrict the
Partnership from engaging an accounting firm and a law firm to assist
the tax matters partner in discharging his duties hereunder, so long
as the compensation paid by the Partnership for such services is
reasonable.
Section 10.4 Organizational Expenses. The Partnership shall elect
to deduct expenses, if any, incurred by it in organizing the Partnership
ratably over a 60 month period as provided in Section 709 of the Code.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.
(a) Definition. The term "transfer," when used in this Article
11 with respect to a Partnership Unit, shall be deemed to refer to a
transaction by which the General Partner purports to assign its
General Partnership Interest to another Person or by which a Limited
Partner purports to assign its Limited Partnership Interest to
another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise. The term "transfer" when used in
this Article 11 does not include any redemption of Partnership Units
by a Limited Partner.
(b) Requirements. No Partnership Interest shall be
transferred, in whole or in part, except in accordance with the terms
and conditions set forth in this Article 11. Any transfer or
purported transfer of a Partnership Interest not made in accordance
with this Article 11 shall be null and void.
Section 11.2 Transfer of General Partner's Partnership Interests.
(a) General Partnership Interest. The General Partner may not
transfer any of its General Partnership Interest (other than any
transfer to an Affiliate of the General Partner) or withdraw as
General Partner (other than pursuant to a permitted transfer), other
than in connection with a transaction described in Section 11.2(b).
Any transfer or purported transfer of the General Partner's
Partnership Interest not made in accordance with this Section 11.2
shall be null and void. Notwithstanding any permitted transfer of
its General Partnership Interest or withdrawal as General Partner
hereunder (other than in connection with a transaction described in
Section 11.2(b)), Regency shall remain subject to Sections
7.1(a)(iii), 7.9(e), 8.6 and 8.7 of this Agreement unless such
transferee General Partner provides substantially similar rights to
the Limited Partners and Limited Partner Consent is obtained.
Nothing contained in this Section 11.2(a) shall entitle the General
Partner to withdraw as General Partner unless a successor General
Partner has been appointed and approved by the Original Limited
Partners and the Additional Limited Partners. Any General Partner
other than Regency admitted to the Partnership by reason of being an
Affiliate of Regency shall be a subsidiary of Regency so long as it
is the General Partner, unless (i) the Consent of the Original
Limited Partners and (ii) the Consent of the Additional Limited
Partners is obtained.
(b) Transfer in Connection With Reclassification,
Recapitalization, or Business Combination Involving General Partner.
Neither the General Partner nor Regency shall engage in any merger,
consolidation or other business combination or transaction with or
into another Person or sale of all or substantially all of its
assets, or any reclassification, or recapitalization (other than a
change in par value, or a change in the number of shares of Common
Stock resulting from a subdivision or combination as described in the
definition of Unit Adjustment Factor) ("Transaction"), unless as a
result of the Transaction such other Person (i) agrees that each
Limited Partner who holds a Redemption Right shall thereafter remain
entitled to exchange each Partnership Unit owned by such Limited
Partner (after application of the Unit Adjustment Factor) for an
amount of cash, securities, or other property equal to the greatest
amount of cash, securities or other property paid to a holder of one
Share in consideration of one Share which a Limited Partner would
have received at any time during the period from and after the date
on which the Transaction is consummated, as if the Limited Partner
had exercised its Redemption Right immediately prior to the
Transaction and received the Share Amount, and (ii) agrees to assume
the General Partner's obligations pursuant to Section 8.6 hereof,
provided, that if, in connection with the Transaction, a purchase,
tender or exchange offer shall have been made to and accepted by the
holders of more than 50 percent of the outstanding shares of Common
Stock, the holders of such Partnership Units shall receive the
greatest amount of cash, securities, or other property which a
Limited Partner would have received had it exercised the Redemption
Right and received the Share Amount in redemption of its Partnership
Units immediately prior to the expiration of such purchase, tender or
exchange offer. Prior to consummating any such Transaction, Regency
shall cause appropriate amendments to be made to this Agreement
pursuant to Section 14.1(b) (including the definitions of Shares,
Unit Adjustment Factor and Value) to carry out the intent of the
parties that the rights of the Limited Partners hereunder shall not
be prejudiced as the result of any such Transaction. Notwithstanding
anything contained in this Section 11.2(b) to the contrary, the
General Partner shall not engage in a Transaction that causes the
Original Limited Partners to recognize gain or loss for federal
income tax purposes.
(c) Limited Partnership Interests. The General Partner may
transfer all or any portion of its Limited Partnership Interests
represented by Class B Units, or any of the rights associated with
such Limited Partnership Interests, to any party without the consent
of the Partnership or any Partner (regardless of whether such
transfer triggers a termination of the Partnership for tax purposes
under Section 708 of the Code).
(d) Admission of Additional General Partner. Except as
provided in Sections 11.2(a) and 11.2(b), the General Partner may not
admit an additional general partner other than an Affiliate of the
General Partner pursuant to Section 11.2(a).
Section 11.3 Limited Partners' Rights to Transfer.
(a) General. No transfer of a Limited Partnership Interest by
a Limited Partner is permitted without the prior written consent of
the General Partner, which it may withhold in its sole and absolute
discretion; provided, that a Limited Partner may transfer Units
without the consent of the General Partner: (i) to members of the
Limited Partner's Immediate Family or one or more trusts for their
benefit pursuant to applicable laws of descent and distribution, gift
or otherwise; (ii) among its Affiliates; (iii) to a lender, provided
that the Units are not Pledged Units, where such Units are pledged to
secure a bona fide obligation of the Limited Partner and any transfer
in accordance with the rights of such lender under the instruments
evidencing such obligation (provided that the General Partner
receives 10 days prior written notice of any transfer under this
clause (a)); (iv) if the Limited Partner is a trust, to the
beneficiaries of the Limited Partner or to another trust (1) that is
either established by the same grantor as the Limited Partner or (2)
whose beneficiaries consist of members of the Immediate Family of the
grantor of the Limited Partner or (3) whose beneficiaries consist of
beneficiaries of the transferor trust or members of their Immediate
Family; (v) if the Limited Partner is an entity, to the direct or
indirect equity holders of the Limited Partner; and (vi) to other
Limited Partners. In order to effect any transfer under this Section
11.3, the Limited Partner must deliver to the General Partner a duly
executed copy of the instrument making such transfer and such
instrument must evidence the written acceptance by the assignee of
all of the terms and conditions of this Agreement, including, where
applicable, the security interest, described in Sections 5.3 and
8.6(f), and represent that such assignment was made in accordance
with all applicable laws and regulations. For a period of one year
following the First Closing, each Original Limited Partner agrees not
(A) to request the General Partner to consent to any transfer of
Units requiring the consent of the General Partner or (B) to transfer
any economic or other interest, right or attribute therein except to
a Person to whom such Partner may transfer Units without the consent
of the General Partner.
(b) Incapacitated Limited Partners. If a Limited Partner is
subject to Incapacity, the executor, administrator, trustee,
committee, guardian, conservator or receiver of such Limited
Partner's estate shall have all the rights of a Limited Partner, but
not more rights than those enjoyed by other Limited Partners for the
purpose of settling or managing the estate and such power as the
Incapacitated Limited Partner possessed to transfer all or any part
of his or its interest in the Partnership. The Incapacity of a
Limited Partner, in and of itself, shall not dissolve or terminate
the Partnership.
(c) No Transfers Violating Securities Laws. The General
Partner may prohibit any transfer by a Limited Partner of his
Partnership Units if, in the opinion of legal counsel to the
Partnership, such transfer would require filing of a registration
statement under the Securities Act of 1933 or would otherwise violate
any federal or state securities laws or regulations applicable to the
Partnership or the Partnership Units.
(d) Transfers Resulting in Corporation Status. Regardless of
whether the General Partner is required to provide or has provided
its consent under Section 11.3(a), no transfer by a Limited Partner
of his Partnership Units (or any economic or other interest, right or
attribute therein) may be made to any Person if legal counsel for the
Partnership renders an opinion letter that it creates a substantial
risk that the Partnership would be treated as an association taxable
as a corporation.
(e) Transfers Causing Termination. Regardless of whether the
General Partner is required to provide or has provided its consent
under Section 11.3(a), no transfer of any Partnership Interests other
than the exercise of Redemption Rights shall be effective if such
transfer would, in the opinion of counsel for the Partnership, result
in the termination of the Partnership for federal income tax
purposes, in which event such transfer shall be made effective as of
the first fiscal quarter in which such termination would not occur,
if the Partner making such transfer continues to desire to effect the
transfer.
(f) Transfer to Certain Lenders. Notwithstanding anything
contained herein to the contrary, no transfer of any Partnership
Units may be made to a lender to the Partnership or any Person who is
related (within the meaning of Section 1.752-4(b) of the Regulations)
to any lender to the Partnership whose loan constitutes a Nonrecourse
Liability, without the consent of the General Partner, which consent
may be given or withheld by the General Partner in its sole and
absolute discretion, provided, that as a condition to such consent
the lender will be required to enter into an arrangement with the
Partnership and the General Partner to redeem for the Redemption
Amount any Partnership Units in which a security interest is held,
simultaneously with the time at which such lender would be deemed to
be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code.
(g) Transfers by Additional Limited Partners Requiring 1934 Act
Registration. Regardless of whether the General Partner is required
to provide or has provided its consent under Section 11.3(a), no
transfer by an Additional Limited Partner of his Limited Partnership
Interest (or any economic or other interest, right or attribute
therein) may be made to any Person if such transfer would require the
Partnership to register its equity securities under the Securities
Exchange Act of 1934.
Section 11.4 Substituted Limited Partners.
(a) Consent of General Partner Required. The Limited Partner
shall have the right to substitute a transferee as a Limited Partner
in his place, but only if such transferee is a permitted transferee
under Section 11.3, in which event such substitution shall occur if
the Limited Partner so provides. With respect to any other
transfers, the General Partner shall have the right to consent to the
admission of a transferee of the interest of a Limited Partner
pursuant to this Section 11.4 as a Substituted Limited Partner, which
consent may be given or withheld by the General Partner in its sole
and absolute discretion. The General Partner's failure or refusal to
permit a transferee of any such interests to become a Substituted
Limited Partner shall not give rise to any cause of action against
the Partnership or any Partner.
(b) Rights and Duties of Substituted Limited Partners. A
transferee who has been admitted as a Substituted Limited Partner in
accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited
Partner under this Agreement.
(c) Amendment of Exhibit A. Upon the admission of a
Substituted Limited Partner, the General Partner shall amend Exhibit
A to reflect the name, address, number of Partnership Units, and
Percentage Interest of such Substituted Limited Partner and to
eliminate or adjust, if necessary, the name, address and interest of
the predecessor of such Substituted Limited Partner.
Section 11.5 Assignees. If a transferee is not admitted as a
Substituted Limited Partner in accordance with Section 11.4(a), such
transferee shall be considered an Assignee for purposes of this Agreement.
An Assignee shall be entitled to all the rights of an assignee of a
limited partnership interest under the Act, including (if applicable) the
right to redeem Units under Section 8.6 or any separate redemption
agreement, and the right to receive distributions from the Partnership and
the share of Net Income, Net Losses, gain, loss and Recapture Income
attributable to the Partnership Units assigned to such transferee, but
shall not be deemed to be a holder of Partnership Units for any other
purpose under this Agreement, and shall not be entitled to vote such
Partnership Units in any matter presented to the Limited Partners for a
vote (such Partnership Units being deemed to have been voted on such
matter in the same proportion as all Partnership Units held by Limited
Partners are voted). In the event any such transferee desires to make a
further assignment of any such Partnership Units, such transferee shall be
subject to all the provisions of this Article 11 to the same extent and in
the same manner as any Limited Partner desiring to make an assignment of
Partnership Units.
Section 11.6 General Provisions.
(a) Withdrawal of Limited Partner. No Limited Partner may
withdraw from the Partnership other than as a result of a permitted
transfer of all of such Limited Partner's Partnership Units in
accordance with this Article 11 or pursuant to the redemption of all
of his Partnership Units.
(b) Termination of Status as Limited Partner. Any Limited
Partner who shall transfer all of his Partnership Units in a transfer
permitted pursuant to this Article 11 or pursuant to the redemption
of all of his Partnership Units shall cease to be a Limited Partner.
(c) Timing of Transfers. Transfers pursuant to this Article 11
may only be made on the first day of a fiscal quarter, unless the
General Partner otherwise agrees, or unless resulting by operation of
law.
(d) Allocation When Transfer Occurs. If any Partnership
Interest is transferred during any quarterly segment of the
Partnership's fiscal year in compliance with the provisions of this
Article 11 or redeemed pursuant to Section 8.6, Net Income, Net
Losses, each item thereof and all other items attributable to such
interest for such fiscal year shall be divided and allocated between
the transferor Partner and the transferee Partner by taking into
account their varying interests during the fiscal year in accordance
with Section 706(d) of the Code, using the interim closing of the
books method (other than Net Income or Net Loss attributable to a
Capital Transaction, which shall be allocated as of the Capital
Transaction Record Date). Solely for purposes of making such
allocations, each of such items for the calendar month in which the
transfer or redemption occurs shall be allocated to the Person who is
a Partner as of midnight on the last day of said month. All
distributions of Available Cash with respect to which the Partnership
Record Date is before the date of such transfer or redemption shall
be made to the transferor Partner, and all distributions of Available
Cash thereafter shall be made to the transferee Partner.
(e) Continued Obligations Following Redemption by Certain
Additional Limited Partners. Anything herein to the contrary
notwithstanding, if an Additional Limited Partner is an Electing
Partner (as defined in Section 13.4), and if such Additional Limited
Partner exercises a Redemption Right with respect to such Additional
Limited Partner's entire Limited Partnership Interest, and the
General Partner determines in good faith that such Redeeming Partner
has exercised a Redemption Right in order to avoid such Additional
Limited Partner's deficit Capital Account restoration obligations in
Section 13.4, the General Partner may require, upon delivery of
written notice to the Redeeming Partner no later than thirty (30)
days after the applicable Specified Redemption Date, that the
Redeeming Partner remain liable to restore his "Hypothetical Negative
Capital Account Balance" if the Partnership adopts a plan of
liquidation within three hundred sixty five (365) days following such
applicable Specified Redemption Date. A Redeeming Partner's
Hypothetical Negative Capital Account Balance is the hypothetical
amount such Redeeming Partner would have had to pay to the
Partnership pursuant to his obligations under Section 13.4 hereof if
he had remained as an Additional Limited Partner until the
liquidation of the Partnership.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner. A successor
to all of the General Partner's General Partnership Interest pursuant to
Section 11.2 hereof who is proposed and permitted to be admitted as a
successor General Partner shall be admitted to the Partnership as the
General Partner, effective upon such transfer. Any such transferee shall
assume all of the General Partner's obligations under this Agreement and
shall carry on the business of the Partnership without dissolution. In
each case, the admission shall be subject to the successor General Partner
executing and delivering to the Partnership an acceptance of all of the
terms and conditions of this Agreement and such other documents or
instruments as may be required to effect the admission.
Section 12.2 Admission of Additional Limited Partners.
(a) General. A Person who makes a Capital Contribution to the
Partnership in accordance with Section 4.2 of this Agreement shall be
admitted to the Partnership as an Additional Limited Partner upon
furnishing to the General Partner (i) evidence of acceptance in form
satisfactory to the General Partner of all of the terms and
conditions of this Agreement, including, without limitation, the
power of attorney granted in Article 16 hereof and (ii) such other
documents or instruments as may be required in the sole and absolute
discretion of the General Partner in order to effect such Person's
admission as an Additional Limited Partner.
(b) Consent of General Partner Required. Notwithstanding
anything to the contrary in this Section 12.2, no Person shall be
admitted as an Additional Limited Partner without the consent of the
General Partner (other than a Person to whom a Limited Partner may
transfer Units pursuant to Section 11.3(a) without the consent of the
General Partner), which consent may be given or withheld in the
General Partner's sole and absolute discretion. The admission of any
Person as an Additional Limited Partner shall become effective on the
date upon which the name of such Person is recorded on the books and
records of the Partnership, following the consent of the General
Partner to such admission.
Section 12.3 Amendment of Agreement and Certificate. For the
admission to the Partnership of any Partner, the General Partner shall,
subject to the requirements of Section 4.2, take all steps necessary and
appropriate under the Act to amend the records of the Partnership and, if
necessary, to prepare as soon as practical an amendment of this Agreement
(including an amendment of Exhibit A) and, if required by law, shall
prepare and file an amendment to the Certificate and may for this purpose
exercise the power of attorney granted pursuant to Article 16 hereof.
Section 12.4 Representations and Warranties of Additional Limited
Partners. As inducement for their admission to the Partnership, each
Additional Limited Partner hereby represents and warrants that such
Limited Partner (a) has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
an investment in the Partnership; (b) has been given the opportunity to
examine all documents and to ask questions of, and to receive answers
from, the General Partner and its representatives concerning the terms and
conditions of the acquisition by it of Units in the Partnership, and to
obtain any additional information which it deems necessary to verify the
accuracy of the information with respect thereto; and (c) understands that
there will be no public market for the Units. Such Additional Limited
Partner has received and carefully reviewed copies of the reports filed by
Regency for its two most recent fiscal years and the interim period to
date under the Securities Exchange Act of 1934 and such additional
information concerning Regency and the transactions contemplated by this
Agreement, to the extent that Regency could acquire such information
without unreasonable effort or expense, as such Limited Partner deems
necessary for purposes of making an investment in the Partnership. The
Units in the Partnership acquired by such Additional Limited Partner are
being acquired by such Limited Partner for its own account for investment
and not with a view to, or for resale in connection with, the public
distribution or other disposition thereof. Such Additional Limited
Partner agrees as a condition to the issuance of such Units in its name
that any transfer, sale, assignment, hypothecation, offer or other
disposition of such Units may not be effected except in accordance with
the terms of this Agreement and pursuant to an effective registration
statement under the Securities Act and the rules and regulations
promulgated thereunder, or an exemption therefrom, and in compliance with
all other applicable securities and "blue sky" laws. Each Additional
Limited Partner acknowledges that the Partnership is not required to
register any of the Units under the Securities Act or any other applicable
securities or "blue sky" laws. Each such Additional Limited Partner
represents and warrants that it has relied on its own advisors for advice
in connection with structuring the transactions contemplated by this
Agreement and is not relying on the General Partner or its accountants,
attorneys or other advisors with regard to such matters.
ARTICLE 13
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution. The Partnership shall not be dissolved
by the admission of Substituted Limited Partners or Additional Limited
Partners or by the admission of a successor General Partner in accordance
with the terms of this Agreement. Upon the withdrawal of the General
Partner, any successor General Partner shall continue the business of the
Partnership. Notwithstanding anything contained herein to the contrary,
except as provided below in this Section 13.1, the General Partner and the
Partnership shall not dissolve the Partnership, adopt a plan of
liquidation for the Partnership or sell all or substantially all of the
assets of the Partnership in a Liquidating Transaction or otherwise
without (i) the Consent of the Original Limited Partners and (ii) the
Consent of the Additional Limited Partners. The Partnership shall
dissolve, and its affairs shall be wound up, upon the first to occur of
any of the following (each an "Event of Dissolution"):
(a) Expiration of Term-the expiration of its term as provided
in Section 2.4 hereof;
(b) Withdrawal of General Partner-an event of withdrawal of the
last remaining General Partner, as defined in the Act (other than an
event of bankruptcy), unless, within 90 days after the withdrawal,
all the remaining Original Limited Partners and Additional Limited
Partners agree in writing to continue the business of the Partnership
and to the appointment, effective as of the date of withdrawal, of a
substitute General Partner;
(c) Judicial Dissolution Decree-entry of a decree of judicial
dissolution of the Partnership pursuant to the provisions of the Act;
or
(d) Bankruptcy or Insolvency of General Partner-the last
remaining General Partner shall be Incapacitated by reason of its
bankruptcy unless, within 90 days after the withdrawal, all the
remaining Original Limited Partners and Additional Limited Partners
agree in writing to continue the business of the Partnership and to
the appointment, effective as of the date of withdrawal, of a
substitute General Partner.
Section 13.2 Winding Up.
(a) General. The General Partner shall provide written notice
to the Limited Partners of the occurrence of an Event of Dissolution,
giving them at least 20 days in which to exercise any Redemption
Right prior to the distribution of any proceeds from the liquidation
of the Partnership pursuant to this Section 13.2(a). Upon the
occurrence of an Event of Dissolution, the Partnership shall continue
solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the
winding up of the Partnership's business and affairs. The General
Partner (or, in the event there is no remaining General Partner, any
Person elected by a majority in interest of the Limited Partners (the
"Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property
(subject to Sections 13.2(b) and 13.2(c)) shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and
the proceeds therefrom shall be applied and distributed in the
following order:
(i) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the
Partners;
(ii) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners, pro rata in
accordance with amounts owed to each such Partner;
(iii) Third, one hundred percent (100%) to the Original
Limited Partners, pro rata based on the number of Original
Limited Partnership Units held by such Partners, until each such
Partner has received an amount equal to the aggregate Priority
Distribution Amounts for each Partnership Record Date (if any)
occurring subsequent to the Event of Dissolution;
(iv) Fourth, one hundred percent (100%) to the Additional
Limited Partners, pro rata based on the number of Class 2 Units
held by such Partners, until each such Partner has received an
amount equal to the aggregate Priority Distribution Amounts for
each Partnership Record Date (if any) occurring subsequent to
the Event of Dissolution; and
(v) The balance, if any, to the General Partner and
Limited Partners in accordance with their Capital Accounts,
after giving effect to all contributions, distributions, and
allocations for all periods.
The General Partner shall not receive any additional compensation for
any services performed pursuant to this Article 13.
(b) Deferred Liquidation. Notwithstanding the provisions of
Section 13.2(a) hereof which require liquidation of the assets of the
Partnership, but subject to the order of priorities set forth
therein, and further subject to Section 13.2(c) hereof and any
separate agreement of the Partnership or the General Partner with
respect to the distribution in kind to Additional Limited Partners of
assets contributed by such Additional Limited Partners (or assets
exchanged for such assets), if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part
or all of the Partnership's assets would be impractical or would
cause undue loss to the Partners, the Liquidator may, in its sole and
absolute discretion, defer for a reasonable time the liquidation of
any assets except those necessary to satisfy liabilities of the
Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and
in accordance with the provisions of Section 13.2(a) and Section
13.2(c) hereof and any such separate agreement, undivided interests
in such Partnership assets as the Liquidator deems not suitable for
liquidation. Any such distributions in kind shall be made only if,
in the good faith judgment of the Liquidator, such distributions in
kind are in the best interest of the Partners, and shall be subject
to such conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to
any agreements governing the operation of such properties at such
time. The Liquidator shall determine the fair market value of any
property distributed in kind using such reasonable method of
valuation as it may adopt.
(c) Distribution of Briarcliff Village.
(i) In the event that the Partnership is dissolved in
accordance with this Article 13, the Briarcliff Village Property
(as defined in Section 7.1(c)) will be distributed in-kind to
the Original Briarcliff Partners (as defined in Section 7.1(c))
who continue, as of such time, to hold Original Limited
Partnership Units attributable to the contribution of the
Briarcliff Village Property to Branch Properties, L.P. and
Branch Properties, L.P.'s subsequent contribution of the
Briarcliff Village Property to the Partnership, with such
Partners to take title to the Briarcliff Village Property in any
manner which they are able to agree among themselves. In the
event that such Partners are to receive the Briarcliff Village
Property pursuant to this Section 13.2(c), then the Briarcliff
Village Property shall have the net value agreed upon by the
General Partner and the Partners receiving an interest in the
Briarcliff Village Property, or, if they cannot agree, then the
Briarcliff Village Property shall be valued in accordance with
Section 13.2(d).
(ii) If the net value of the Briarcliff Village Property
determined pursuant to Section 13.2(c)(i) exceeds the amount to
which the Partners receiving the Briarcliff Village Property are
entitled pursuant to this Article 13, then such partners may
contribute to the capital of the Partnership the amount of cash
equal to such excess, pro rata in proportion to the relative
number of Units of each such Partners attributable to the
contribution of the Briarcliff Village Property to Branch
Properties, L.P. and Branch Properties, L.P.'s subsequent
contribution of the Briarcliff Village Property to the
Partnership. If such a contribution is not made in full, then
Section 13.2(c)(i) shall not apply and the Liquidator shall be
entitled to sell the Briarcliff Village Property in connection
with the dissolution of the Partnership.
(d) Appraisal. In the event that the Briarcliff Village
Property is to be distributed to the Original Briarcliff Partners in
liquidation of the Partnership pursuant to the provisions of this
Section 13.2, then the amount of such distribution shall be
determined as follows if the net value thereof has not been agreed on
pursuant to Section 13.2(c)(i):
(i) Within twenty (20) days after the determination that
the Partnership shall distribute the Briarcliff Village Property
to the Original Briarcliff Partners, the General Partner and a
Majority-In-Interest of the Original Briarcliff Partners (as
defined in Section 7.1(c)) shall each select an independent,
regionally or nationally recognized appraiser or appraisal group
which is experienced in valuing separate real estate property
("Appraiser"), and the two Appraisers selected by the parties
shall jointly select a third Appraiser. Each party shall pay
the cost of their respective Appraiser and shall split the cost
of the third Appraiser.
(ii) Within sixty (60) days of selection of the third
Appraiser, each of the three Appraisers shall determine the
gross fair market value of the Briarcliff Village Property as of
the date of the election to liquidate the Partnership,
calculated based on the net fair market value of Briarcliff
Village (net of the loans encumbering Briarcliff Village),
taking into consideration the terms and relative value of the
loans encumbering Briarcliff Village, the fact that Briarcliff
Village is not being sold and the loans are not being repaid.
(iii) Upon receipt of the three appraisals determining
the gross fair market value of the Briarcliff Village Property,
the two closest gross fair market values shall be averaged, with
such average to constitute the distribution value of the
Briarcliff Village Property.
Section 13.3 Compliance with Timing Requirements of Regulations;
Allowance for Contingent or Unforeseen Liabilities or Obligations.
Notwithstanding anything to the contrary in this Agreement, in the event
the Partnership is "liquidated" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article
13 to the General Partner and Limited Partners who have positive Capital
Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2)
(including any timing requirements therein). Except as provided in
Section 13.4, if any Limited Partner has a deficit balance in his Capital
Account (after giving effect to all contributions, distributions and
allocations for all taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such
deficit, and such deficit shall not be considered a debt owed to the
Partnership or to any other Person for any purpose whatsoever. In the
sole and absolute discretion of the General Partner, a pro rata portion of
the distributions that would otherwise be made to the General Partner and
Limited Partners pursuant to this Article 13 may be: (i) distributed to a
liquidating trust established for the benefit of the General Partner and
Limited Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership (the assets
of any such trust shall be distributed to the General Partner and Limited
Partners from time to time, in the reasonable discretion of the General
Partner, in the same proportions as the amount distributed to such trust
by the Partnership would otherwise have been distributed to the General
Partner and Limited Partners pursuant to this Agreement); or (ii) withheld
to provide a reasonable reserve for Partnership liabilities (contingent or
otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Partnership; provided, that such withheld amounts
shall be distributed to the General Partner and Limited Partners as soon
as practicable.
Section 13.4 Deficit Capital Account Restoration.
(a) Subject to Section 13.4(b), if an Original Limited Partner
listed on Schedule 13.4(a) (who constituted an "Electing Partner" of
Branch and is referred to hereinafter as an "Electing Partner") and
any Additional Limited Partner who elects to be added to such
Schedule (also an "Electing Partner"), on the date of the
"liquidation" of his respective interest in the Partnership (within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g)), has a
negative balance in his Capital Account, then such Electing Partner
shall contribute in cash to the capital of the Partnership the lesser
of (i) the maximum amount (if any such maximum amount is stated)
listed beside such Electing Partner's name on Schedule 13.4(a) or
(ii) the amount required to increase his Capital Account as of such
date to zero. Any such contribution required of a Partner hereunder
shall be made on or before the later of (i) the end of the
Partnership fiscal year in which the interest of such Partner is
liquidated or (ii) the ninetieth (90th) day following the date of
such liquidation. Notwithstanding any provision hereof to the
contrary, all amounts so contributed by a partner to the capital of
the Partnership shall, upon the liquidation of the Partnership under
this Article 13, be first paid to any then creditors of the
Partnership, including Partners that are Partnership creditors (in
the order provided in Section 13.2(a)), and any remaining amount
shall be distributed to the other Partners then having positive
balances in their respective Capital Accounts in proportion to such
positive balances.
(b) After the death of an Electing Partner, the executor of the
estate of such an Electing Partner may elect to reduce (or eliminate)
the deficit Capital Account restoration obligation of such an
Electing Partner pursuant to Section 13.4(a). Such election may be
made by such executor by delivering to the General Partner within two
hundred seventy (270) days of the death of such an Electing Partner a
written notice setting forth the maximum deficit balance in his
Capital Account that such executor agrees to restore under Section
13.4(a), if any. If such executor does not make a timely election
pursuant to this Section 13.4(b) (whether or not the balance in his
Capital Account is negative at such time), then such Electing
partner's estate (and the beneficiaries thereof who receive
distribution of Partnership Units therefrom) shall be deemed to have
a deficit Capital Account restoration obligation as set forth
pursuant to the terms of Section 13.4(a).
(c) If the General Partner, on the date of "liquidation" of its
interest in the Partnership, within the meaning of Section 1.704-
1(b)(2)(ii)(g) of the Regulations, has a negative balance in its
Capital Account, then the General Partner shall contribute in cash to
the capital of the Partnership the amount needed to restore its
Capital Account balance to zero. Any such contribution required to
be made by the General Partner shall be made by the General Partner
on or before the later of (i) the end of the Partnership Year in
which the General Partner's interest is liquidated, or (ii) the
ninetieth (90th) calendar day following the date of such liquidation.
Notwithstanding any provision of this Agreement to the contrary, all
amounts so contributed to the capital of the Partnership in
accordance with this Section 13.4 shall be distributed in accordance
with Section 13.2(a). Regency unconditionally guarantees the
obligation of the General Partner under this Section 13.4(c) for the
benefit of the Partnership and the other Partners.
Section 13.5 Deemed Distribution and Recontribution. Notwith-
standing any other provision of this Article 13 (but subject to
Section 13.3), in the event the Partnership is liquidated within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Event of
Dissolution has occurred, the Partnership's property shall not be
liquidated, the Partnership's liabilities shall not be paid or discharged,
and the Partnership's affairs shall not be wound up. Instead, the
Partnership shall be deemed to have distributed the Property in kind to
the General Partner and Limited Partners, who shall be deemed to have
assumed and taken such property subject to all Partnership liabilities,
all in accordance with their respective Capital Accounts. Immediately
thereafter, the General Partner and Limited Partners shall be deemed to
have recontributed the Partnership property in kind to the Partnership,
which shall be deemed to have assumed and taken such property subject to
all such liabilities.
Section 13.6 Rights of Limited Partners. Except as specifically
provided in this Agreement, including Sections 7.1(a)(iii), 8.6, 8.7 and
13.4, each Limited Partner shall look solely to the assets of the
Partnership for the return of his Capital Contribution and shall have no
right or power to demand or receive property other than cash from the
Partnership. Except as specifically provided in this Agreement, no
Limited Partner shall have priority over any other Limited Partner as to
the return of his Capital Contributions, distributions, or allocations.
Section 13.7 Notice of Dissolution. In the event an Event of
Dissolution or an event occurs that would, but for the provisions of
Section 13.1, result in a dissolution of the Partnership, the General
Partner shall, within 30 days thereafter, provide written notice thereof
to each of the Partners and to all other parties with whom the Partnership
regularly conducts business (as determined in the sole and absolute
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the sole and absolute
discretion of the General Partner).
Section 13.8 Cancellation of Certificate of Limited Partnership.
Upon the completion of the liquidation of the Partnership as provided in
Section 13.2 hereof, the Partnership shall be terminated and the
Certificate and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the
Partnership shall be taken.
Section 13.9 Reasonable Time for Winding-Up. A reasonable time
shall be allowed for the orderly winding-up of the business and affairs of
the Partnership and the liquidation of its assets pursuant to Section 13.2
hereof, in order to minimize any losses otherwise attendant upon such
winding-up, and the provisions of this Agreement shall remain in effect
between the Partners during the period of liquidation.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments.
(a) General. Amendments to this Agreement may be proposed only
by the General Partner, who shall submit any proposed amendment
(other than an amendment pursuant to Section 14.1(b)) to the Limited
Partners. The General Partner shall seek the written vote of the
Partners on the proposed amendment or shall call a meeting to vote
thereon and to transact any other business that it may deem
appropriate. Except as provided in Section 14.1(b), 14.1(c),
14.1(d), 14.1(e) or 14.1(f), a proposed amendment shall be adopted
and be effective as an amendment hereto if it is approved by the
General Partner and it receives (i) the Consent of the Original
Limited Partners and (ii) the Consent of the Additional Limited
Partners.
(b) General Partner's Power to Amend. Notwithstanding Section
14.1(a), the General Partner shall have the power, without the
consent of the Limited Partners, to amend this Agreement as may be
required to facilitate or implement any of the following purposes:
(i) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or
any Affiliate of the General Partner for the benefit of the
Limited Partners;
(ii) to add to or change the name of the Partnership;
(iii) to reflect the admission, substitution,
termination, or withdrawal of Partners in accordance with this
Agreement;
(iv) to set forth the rights, powers, duties and
preferences of the holders of any additional Partnership
Interests issued pursuant to Section 4.2;
(v) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited Partners in any
material respect, or to cure any ambiguity, correct or
supplement any provision in this Agreement not inconsistent with
law or with other provisions, or make other changes with respect
to matters arising under this Agreement that will not be
inconsistent with law or with the provisions of this Agreement;
and
(vi) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation
of a federal or state agency or contained in federal or state.
The General Partner will provide 10 days' prior written notice to the
Limited Partners when any action under this Section 14.1(b) is taken.
(c) Consent of Adversely Affected Partner Required.
Notwithstanding Section 14.1(a) hereof, this Agreement shall not be
amended without the consent of each Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the
Partnership into a general partner's interest, (ii) modify the
limited liability of a Limited Partner, (iii) alter rights of the
Partner to receive distributions pursuant to Articles 5 or 13, or the
allocations specified in Article 6 (except as permitted pursuant to
Sections 4.2 or 4.4(c) hereof), (iv) alter or modify the Redemption
Right or Redemption Amount as set forth in Section 8.6 and related
definitions hereof, or (v) amend Sections 4.2 (issuances of
additional Partnership Interests), 7.1(a)(iii) (Section 1031
exchanges), 7.1(h) (distributions), 7.3 (restrictions on General
Partner's authority), or (vi) amend this Section 14.1(c).
(d) When Consent of Limited Partnership Interests Required.
Notwithstanding Section 14.1(a) hereof, the General Partner shall not
amend Sections 4.2 (issuances of additional Partnership Interests),
7.1(h) (distributions), 7.6 (contracts with Affiliates) or 11.2
(transfer of General Partnership Interest) without the Consent of the
Limited Partners and the General Partner shall not amend this Section
14.1(d) without the unanimous consent of the Limited Partners.
(e) When Consent of Other Limited Partners Required.
(i) Matters Relating to Briarcliff. Notwithstanding
Section 14.1(a) hereof, Section 7.1(c) (sale of Briarcliff
Village), 13.2(c) (distribution of Briarcliff Village) and this
Section 14.1(e)(i) may be amended only with the Consent of a
Majority in Interest of the Original Briarcliff Partners (as
defined in Section 7.1(c).
(ii) Matters Relating to Other Classes of Partners.
Notwithstanding Section 14.1(a) hereof, except as provided in
Section 14.1(c), any amendment that would adversely affect only
a class of Limited Partners other than the Original Limited
Partners may be amended with the Consent of such class of
Limited Partners.
(f) Security Capital Consent. So long as the Stockholders
Agreement referred to in Schedule 7.8(b) remains in effect, this
Agreement shall not be amended, modified or supplemented, in any such
case, without the prior written consent of Security Capital. Any
amendment, modification or supplement adopted without Security
Capital's consent shall be void.
Section 14.2 Meetings of Limited Partners.
(a) General. Meetings of the Limited Partners may be called
only by the General Partner. Such meeting shall be held at the
principal office of the Partnership, or at such other place as may be
designated by the General Partner. Notice of any such meeting shall
be given to all Limited Partners not less than fifteen days nor more
than sixty days prior to the date of such meeting. The notice shall
state the purpose or purposes of the meeting. Limited Partners may
vote in person or by proxy at such meeting. Whenever the vote or
consent of Limited Partners is permitted or required under this
Agreement, such vote or consent may be given at a meeting of Limited
Partners or may be given in accordance with the procedure prescribed
in Section 14.1 hereof. Except as otherwise expressly provided in
this Agreement, the consent of holders of a majority of the
Percentage Interests of the Limited Partners (other than Units held
by the General Partner, Regency or any Affiliate of Regency other
than a Property Affiliate) shall control.
(b) Actions Without a Meeting. Any action required or
permitted to be taken at a meeting of the Limited Partners may be
taken without a meeting if a written consent setting forth the action
so taken is signed by a majority of the Percentage Interests of the
Limited Partners (other than Units held by the General Partner,
Regency or any Affiliate of Regency other than a Property Affiliate)
(or such other percentage as is expressly required by this
Agreement). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a
majority of the Percentage Interests of the Original Limited Partners
(other than Units held by the General Partner, Regency or any
Affiliate of Regency other than a Property Affiliate)(or such other
percentage as is expressly required by this Agreement). Such consent
shall be filed with the General Partner. An action so taken shall be
deemed to have been taken at a meeting held on the effective date so
certified.
(c) Proxy. Each Limited Partner may authorize any Person or
Persons to act for him by proxy on all matters in which a Limited
Partner is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. Every proxy must
be signed by the Limited Partner or his attorney-in-fact. No proxy
shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Limited Partner executing it.
(d) Conduct of Meeting. Each meeting of Limited Partners shall
be conducted by the General Partner or such other Person as the
General Partner may appoint pursuant to such rules for the conduct of
the meeting as the General Partner or such other Person deems
appropriate.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 Addresses and Notice. All notices and demands under
this Agreement shall be in writing, and may be either delivered personally
(which shall include deliveries by courier) by U.S. mail or a nationally
recognized overnight courier, by telefax, telex or other wire transmission
(with request for assurance of receipt in a manner appropriate with
respect to communications of that type; provided, that a confirmation copy
is concurrently sent by a nationally recognized express courier for
overnight delivery) or mailed, postage prepaid, by certified or registered
mail, return receipt requested, directed to the parties at their
respective addresses set forth on Exhibit A attached hereto, as it may be
amended from time to time, and, if to the Partnership, such notices and
demands sent in the aforesaid manner must be delivered at its principal
place of business set forth above. Notices and demands shall be effective
upon receipt. Any party hereto may designate a different address to which
notices and demands shall thereafter be directed by written notice given
in the same manner and directed to the Partnership at its office
hereinabove set forth.
Section 15.2 Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be
deemed part of this Agreement and in no way define, limit, extend or
describe the scope or intent of any provisions hereof. Except as
specifically provided otherwise, references to "Articles" and "Sections"
are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals. Whenever the context may
require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form
of nouns, pronouns and verbs shall include the plural and vice versa.
Section 15.4 Further Action. The parties shall execute and deliver
all documents, provide all information and take or refrain from taking
action as may be necessary or appropriate to achieve the purposes of this
Agreement.
Section 15.5 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
Section 14.1(f) shall inure to the benefit of Security Capital.
Section 15.6 Waiver of Partition. The Partners hereby agree that
the Partnership properties are not and will not be suitable for partition.
Accordingly, each of the Partners hereby irrevocably waives any and all
rights (if any) that it may have to maintain any action for partition of
any of the Partnership properties.
Section 15.7 Entire Agreement. This Agreement supersedes any prior
agreements or understandings among the parties with respect to the matters
contained herein and it may not be modified or amended in any manner other
than pursuant to Article 14. Matters (including but not limited to
Redemption Rights) affecting Additional Limited Partners who are admitted
to the Partnership from time to time may be set forth from time to time in
separate agreements, provided that such agreements would not require the
consent of any other Limited Partners if included as part of this
Agreement, and in the event of any inconsistency between this Agreement
and any such separate agreement permitted hereunder, the provisions of the
separate agreement shall control.
Section 15.8 Remedies Not Exclusive. Any remedies herein contained
for breaches of obligations hereunder shall not be deemed to be exclusive
and shall not impair the right of any party to exercise any other right or
remedy, whether for damages, injunction or otherwise.
Section 15.9 Time. Time is of the essence of this Agreement.
Section 15.10 Creditors. None of the provisions of this Agreement
shall be for the benefit of, or shall be enforceable by, any creditor of
the Partnership.
Section 15.11 Waiver. No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach
thereof shall constitute waiver of any such breach or any other covenant,
duty, agreement or condition.
Section 15.12 Execution Counterparts. This Agreement may be
executed in counterparts, all of which together shall constitute one
agreement binding on all the parties hereto, notwithstanding that all such
parties are not signatories to the original or the same counterpart.
Section 15.13 Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws and judicial decisions of the
State of Delaware, without regard to the principles of conflicts of law.
Section 15.14 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected thereby.
ARTICLE 16
POWER OF ATTORNEY
Section 16.1 Power of Attorney.
(a) Scope. Each Limited Partner and each Assignee hereby
constitutes and appoints the General Partner, any Liquidator, and
authorized officers and attorneys-in-fact of each, and each of those
acting singly, in each case with full power of substitution and
resubstitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (1) all certificates,
documents and other instruments (including, without limitation,
this Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify or continue the
existence or qualification of the Partnership as a limited
partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may conduct business or
own property; (2) all instruments that the General Partner deems
appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with
its terms; (3) all conveyances and other instruments or
documents that the General Partner deems appropriate or
necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including,
without limitation, a certificate of cancellation; (4) all
instruments or documents and all certificates and
acknowledgments relating to any mortgage, pledge, or other form
of encumbrance in connection with any loan or other financing to
the General Partner as provided by Section 7.1(a)(iii); (5) all
instruments relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other events
described in, Article 11, 12 or 13 hereof or the Capital
Contribution of any Partner; (6) all certificates, documents and
other instruments relating to the determination of the rights,
preferences and privileges of Partnership Interests; and (7) all
financing statements, continuation statements and similar
documents which the General Partner deems appropriate to perfect
and to continue perfection of the security interest referred to
in Section 5.3; and
(ii) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or necessary, to evidence, confirm or ratify any
vote, consent, approval, agreement or other action which is made
or given by the Partners hereunder or is consistent with the
terms of this Agreement or appropriate or necessary, to
effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with
Article 14 hereof or as may be otherwise expressly provided for in
this Agreement.
(b) Additional Power of Attorney of Limited Partners. Each
Original Limited Partner hereby grants to the General Partner and any
Liquidator and authorizes officers and attorneys-in-fact of such
Persons, and each of those acting singly, in each case with full
power of substitution and resubstitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in its
name, place and stead to execute and file in such Original Limited
Partner's name any financing statements, continuation statements and
similar documents and to perform all other acts which the General
Partner deems appropriate to perfect and to continue perfection of
the security interest in the Pledged Units referred to in Section
8.6(f). Each Additional Limited Partner hereby grants to the General
Partner and any Liquidator and authorizes officers and attorneys-in-
fact of such Persons, and each of those acting singly, in each case
with full power of substitution and resubstitution, as its true and
lawful agent and attorney-in-fact, with full power and authority in
its name, place and stead to execute and file in such Additional
Limited Partner's name any financing statements, continuation
statements and similar documents and to perform all other acts which
the General Partner deems appropriate to perfect and to continue
perfection of the security interest in any Pledged Units owned by
such Additional Limited Partner.
(c) Irrevocability. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in
recognition of the fact that each of the Partners will be relying
upon the power of the General Partner and any Liquidator to act as
contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive and not be affected
by the subsequent Incapacity of any Limited Partner or Assignee and
the transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Units and shall extend to such Limited
Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees
to be bound by any representation made by the General Partner, acting
in good faith pursuant to such power of attorney; and each such
Limited Partner or Assignee hereby waives any and all defenses which
may be available to contest, negate or disaffirm the action of the
General Partner, taken in good faith under such power of attorney.
Each Limited Partner or Assignee shall execute and deliver to the
General Partner or the Liquidator, within 15 days after receipt of
the General Partner's request therefor, such further designations,
powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate
this Agreement and the purposes of the Partnership.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
REGENCY REALTY CORPORATION
By: /s/ Bruce M. Johnson
Name: Bruce M. Johnson
Title: Managing Director
SECURITY CAPITAL U.S. REALTY,
a Luxembourg corporation
By: /s/ Gerald Morgan
Name: Gerald Morgan
Title: Senior Vice President
SECURITY CAPITAL HOLDINGS, S.A.,
a Luxembourg corporation
By: /s/ Gerald Morgan
Name: Gerald Morgan
Title: Senior Vice President
Third Party Management Assets
MIDLAND DEVELOPMENT GROUP, INC.,
a Missouri Corporation
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
OTR Eastern Properties
Bent Tree Plaza (North Carolina)
Westchester Plaza (Ohio)
Hamilton Meadows (Ohio)
Brookville Plaza (Virginia)
Lakeshore (Michigan)
Evans Crossing (Georgia)
Statler Square (Virginia)
Kernersville Marketplace (North Carolina)
Maynard Crossing (North Carolina)
Shoppes at Mason (Ohio)
Lake Pine Plaza (North Carolina)
OTR/MIDLAND REALTY HOLDINGS, LTD.,
an Ohio Limited Liability Company
By: Midland Realty Holdings L.L.C.,
a Missouri Limited Liability Company,
Managing Member
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
Beckett Commons Shopping Center
No. 1712
BECKETT PARTNERS LIMITED PARTNER-
SHIP, an Ohio Limited Partnership
By: Midland-Beckett Limited Partnership,
a Missouri Limited Partnership, General
Partner
By: Beckett Equities, Inc., a Missouri
Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
East Pointe Shopping Center
No. 1709
REYNOLDSBURG PARTNERS,
an Ohio General Partnership
By: Midland Reynoldsburg Development
Company Limited Partnership, a
Missouri Limited Partnership, Managing
General Partner
By: Reynoldsburg Equities, Inc., a
Missouri Corporation, General
Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky
Managing Member
Franklin Square
No. 1705
MIDLAND FRANKFORT DEVELOPMENT CO.
L.L.C., a Kentucky Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
By: /s/ Ned M. Brickman
Ned M. Brickman, Manager
By: /s/ Stephen M. Notestine
Stephen M. Notestine, Manager
Maxtown Road Shopping Center
No. 1710
MAXTOWN PARTNERS, LTD.,
an Ohio Limited Liability Company
By: Maxtown Development Company L.L.C.,
a Missouri Limited Liability Company,
Voting Member
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
By: /s/ Ned M. Brickman
Ned M. Brickman, Managing Member
St. Ann Square
No. 1706
K & M DEVELOPMENT COMPANY,
a Missouri General Partnership
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Partner
Worthington Park Centre
No. 1711
WORTHINGTON DEVELOPMENT COMPANY,
an Ohio General Partnership
By: /s/ Ned M. Brickman
Ned M. Brickman, Managing General
Partner
Acquisition Contracts
MIDLAND ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Acquisition Contracts
MIDLAND RALEIGH ACQUISITIONS, LLC,
a North Carolina Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Acquisition Contracts
MIDLAND DALLAS ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Acquisition Contracts
MIDLAND MICHIGAN ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Monument
MIDLAND MONUMENT DEVELOPMENT
COMPANY, a Colorado Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Cheyenne, WY
MIDLAND CHEYENNE, WY DEVELOPMENT
COMPANY, a Wyoming Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Charlottesville
MIDLAND CHARLOTTESVILLE DEVELOP-
MENT COMPANY, a Virginia Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Waterford
MIDLAND WATERFORD DEVELOPMENT
COMPANY, a Michigan Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Parker/Stroh
MIDLAND PARKER DEVELOPMENT
LLC, a Colorado Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Creekside
Village Center
Garner
Windmiller
MIDLAND REALTY HOLDINGS, L.L.C.,
a Missouri Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
EXHIBIT A
PARTNERS, CONTRIBUTIONS, UNITS AND
PARTNERSHIP INTERESTS
[TO BE ATTACHED]
SCHEDULE 7.8(b)
REGENCY'S PFIC OBLIGATIONS
SCHEDULE 8.6(a)
TRANSFER RESTRICTIONS IN REGENCY'S
ARTICLES OF INCORPORATION
SCHEDULE 13.4(a)
ELECTING PARTNERS WITH DEFICIT
CAPITAL ACCOUNT MAKE-UP REQUIREMENT
[to be completed prior to execution]
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), made as of the
5th day of March, 1998, among REGENCY REALTY CORPORATION, a Florida
corporation (the "Company"), and the investors listed on the signature
pages hereto (referred to collectively as the "Investors" and individually
as an "Investor");
W I T N E S S E T H
WHEREAS, the Company, certain of the Investors and other persons are
parties to that certain Contribution Agreement dated as of January 12,
1998 (the "Contribution Agreement"), pursuant to the terms of which the
Contributors (as defined in the Contribution Agreement) agreed to
contribute certain properties and assets to the Partnership (as
hereinafter defined) in exchange for Units (as hereinafter defined) of
limited partnership interest in the Partnership which the Contributors are
distributing to their equity owners; and
WHEREAS, the Units held by Investors will be exchangeable for common
stock of the Company in accordance with the Partnership Agreement; and
WHEREAS, pursuant to the Contribution Agreement, the Company and
Investors agreed to execute and deliver this Agreement at the First
Closing (as defined in the Contribution Agreement).
NOW, THEREFORE, in consideration of the premises, TEN DOLLARS
($10.00) in hand paid by Investors to the Company and other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged by the parties, the parties intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"Affiliate" means, with regard to a Person, a Person that controls,
is controlled by, or is under common control with, such Person. For
purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "affiliated,"
"controlling" and "controlled" having meanings correlative to the
foregoing.
"Commission" means the Securities and Exchange Commission or any
other applicable federal agency at the time administering the Securities
Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Investor" means the Persons who are listed on the signature pages
hereto and their Permitted Transferees, including the Permitted
Transferees listed on Exhibit 1, but shall not include any Investor who no
longer holds Registrable Securities.
"Partnership" means Regency Centers, L.P., a Delaware limited
partnership.
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, executed of even date herewith, as
the same may be hereafter further amended.
"Permitted Transferee" means any Affiliate or a member of the
undersigned's Immediate Family, provided that such transferee agrees in
writing to be bound by the provisions of the Partnership Agreement.
Immediate Family means the undersigned's spouse, parents, descendants,
nephews, nieces, brothers and sisters and trusts for the benefit of any of
the foregoing.
"Person" means an individual, partnership, corporation, limited
liability company, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
"Registrable Security" means (i) any Shares issued to an Investor
pursuant to the Contribution Agreement, and any Shares issuable to an
Investor upon redemption of Units pursuant to the Redemption Agreement,
(ii) any other securities issued by the Company in exchange for any such
Shares and (iii) any securities issued by the Company as a dividend or
distribution on account of Registrable Securities or resulting from a
subdivision of the outstanding Registrable Securities into a greater
number of Shares (by reclassification, stock split or otherwise). As to
any particular Registrable Securities, such securities will cease to be
Registrable Securities when (a) they have been distributed to the public
pursuant to an offering registered under the Securities Act or (b) they
have been sold to the public through a broker, dealer or market-maker in
compliance with Rule 144 under the Securities Act or (c) they have been
transferred to any Person who is not a Permitted Transferee or (d) one
year shall have passed after the date of death of an Investor who is a
natural person, at which time the Registrable Securities held by such
Investor at the date of his or her death shall cease to be Registrable
Securities, (e) the Company has delivered a new certificate or other
evidence of ownership not bearing the legend set forth on the Shares upon
the initial issuance thereof, and, in the opinion of counsel to the
Company, the subsequent disposition of such security shall not require the
registration or qualification under the Securities Act, or (f) such
security has ceased to be outstanding.
"Redemption Agreement" means the Redemption Agreement of even date
herewith, as the same may hereafter be amended, providing for the
Partnership to redeem Units.
"Resale Rules" means Rule 144 promulgated by the Commission or any
successor to such rule or any other rule or regulation of the Commission
that may at any time permit the Investor to sell its Shares to the public
without registration.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Shares" mean the Company's shares of voting Common Stock, $0.01 par
value per share.
"Shelf Prospectus" shall mean the prospectus included in the Shelf
Registration Statement, including any preliminary prospectus, and any
amendment or supplement thereto, including any supplement relating to the
terms of the offering of any portion of the Registrable Securities covered
by the Shelf Registration Statement, and in each case including all
material incorporated by reference therein.
"Shelf Registration Statement" shall mean a registration statement of
the Company (and any other entity required to be a registrant with respect
to such registration statement pursuant to the requirements of the
Securities Act) that covers all of the Registrable Securities to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, or any similar rule that may be adopted by the Commission,
and all amendments (including post-effective amendments) to such
registration statement, and all exhibits thereto and materials
incorporated by reference therein.
"Unit" shall have the meaning given to such term in the Partnership
Agreement and shall include any Additional Unit (as defined in the
Contribution Agreement).
2. SHELF REGISTRATION RIGHTS.
2.1 Shelf Registration.
2.1.1 Request. The Company shall cause to be filed on the
later of (a) the first business day following the 15th day after the
First Closing Date (as defined in the Contribution Agreement), or (b)
May 1, 1998, or as soon as practicable thereafter, a Shelf
Registration Statement providing for the sale by the Investors of all
of the Registrable Securities in accordance with the terms hereof and
will use its reasonable efforts to cause such Shelf Registration
Statement to be declared effective by the Commission as soon as
practicable thereafter. The Company agrees to use its reasonable
efforts to keep the Shelf Registration Statement with respect to the
Registrable Securities continuously effective so long as any Investor
holds Registrable Securities; provided, however, that at any time
after the Shelf Registration Statement becomes effective the number
of Registrable Securities outstanding is less than 12,500, then the
Investors owning the remaining Registrable Securities shall be given
notice that the Shelf Registration will be permitted to lapse in not
less than 90 days, after which 90-day period, the Company's
obligations under this Section 2.1.1 shall cease. Subject to Section
2.2.2 and Section 2.2.11, the Company further agrees to amend the
Shelf Registration Statement if and as required by the rules,
regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration Statement or by the
Securities Act or any rules and regulations thereunder; provided,
however, that the Company shall not be deemed to have used its
reasonable efforts to keep the Shelf Registration Statement effective
during the applicable period if it voluntarily takes any action that
would result in the Investors not being able to sell Registrable
Securities covered thereby during that period, unless such action is
required under applicable law or the Company has filed a post-
effective amendment to the Shelf Registration Statement and the
Commission has not declared it effective or except as otherwise
permitted by the last three sentences of Section 2.2.2. In the event
that all the Subsequent Closings (as defined in the Contribution
Agreement) have not yet occurred at the time of the filing of a Shelf
Registration Statement hereunder, such registration statement also
shall include the maximum estimated number of Shares that Regency
reasonably anticipates could constitute Registrable Securities as a
result of the remaining Subsequent Closings, and if the number of
Registrable Securities actually issued at all Subsequent Closings
exceeds the number of shares covered by the registration statement,
Regency shall file an amendment increasing the number of Shares
covered by the Shelf Registration Statement, or shall file a new
registration statement for the additional Shares.
2.2 Registration Procedures. In connection with the obligations of
the Company with respect to the Shelf Registration Statement contemplated
by this Article 2, the Company shall:
2.2.1 prepare and file with the Commission a Shelf
Registration Statement with respect to such securities, which Shelf
Registration Statement (i) shall be available for the sale of the
Registrable Securities in accordance with the intended method or
methods of distribution by the Investors and (ii) shall comply as to
form in all material respects with the requirements of the applicable
form and include all financial statements required by the Commission
to be filed therewith;
2.2.2 subject to Section 2.2.11 hereof, (i) prepare and file
with the Commission such amendments to such Registration Statement as
may be necessary to keep such Registration Statement effective for
the applicable period; (ii) cause the Shelf Prospectus to be amended
or supplemented as required and to be filed as required by Rule 424
or any similar rule that may be adopted under the Securities Act;
(iii) respond as promptly as practicable to any comments received
from the Commission with respect to the Shelf Registration Statement
or any amendment thereto; and (iv) comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such Shelf Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the Investors. Notwithstanding anything to the
contrary contained herein, the Company shall not be required to take
any of the actions described in clauses (i), (ii) or (iii) in this
Section 2.2.2 or Section 2.2.11 with respect to the Registrable
Securities (other than by means of filing its 1934 Act reports that
are incorporated by reference in the registration statement) to the
extent that the Company is in possession of material non-public
information that it deems advisable not to disclose eg., it is
engaged in active negotiations or planning for a material merger or
acquisition or disposition transaction, and it delivers written
notice to the Investors to the effect that the Investors may not make
offers or sales under the Shelf Registration Statement for a period
not to exceed ninety (90) days from the date of such notice (and not
to exceed 90 days during any twelve-month period);
2.2.3 furnish to the Investors, without charge, such numbers
of copies of the Shelf Registration Statement, the Shelf Prospectus
and such other documents, as the Investors may reasonably request in
order to facilitate the sale or other disposition of the Registrable
Securities owned by the Investors; the Company consents to the use of
the most recent Shelf Prospectus and any amendment or supplement
thereto by the Investors of Registrable Securities in connection with
the offering and sale of the Registrable Securities covered by the
Shelf Prospectus or amendment or supplement thereto;
2.2.4 otherwise use its reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earning statement covering the period of at least twelve months,
beginning with the first fiscal quarter beginning after the effective
date of the Shelf Registration Statement, which earning statement
shall satisfy the provisions of Section 11(a) of the Securities Act;
2.2.5 use its reasonable efforts to list such securities on
any securities exchange on which any Shares are then listed, if the
listing of such securities is then permitted under the rules of such
exchange;
2.2.6 if the Investors intend to dispose of their securities
through an underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter or underwriters of such
underwritten offering provided that such underwriter(s) are
reasonably acceptable to the Company, including, without limitation,
obtaining an opinion of counsel to the Company and a "comfort letter"
from the independent public accountants to the Company in the usual
and customary form for such underwritten offering;
2.2.7 notify the Investors promptly and, if requested by the
Investors, confirm in writing, (i) when the Shelf Registration
Statement and any post-effective amendments thereto have become
effective, (ii) when any amendment or supplement to the Shelf
Prospectus has been filed with the Commission, (iii) of the issuance
by the Commission or any state securities authority of any stop order
suspending the effectiveness of the Shelf Registration Statement or
any part thereof or the initiation of any proceedings for that
purpose, (iv) if the Company receives any notification with respect
to the suspension of the qualification of the Registrable Securities
for offer or sale in any jurisdiction or the initiation of any
proceeding for such purpose, and (v) at any time when a Shelf
Prospectus is required to be delivered under the Securities Act, of
the happening of any event of which it has knowledge as a result of
which the Shelf Registration Statement or the Shelf Prospectus, as
then in effect, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing;
2.2.8 make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Shelf Registration
Statement or any part thereof as promptly as possible;
2.2.9 furnish to the Investors after they have delivered a
Shelf Registration Notice to the Company, without charge, at least
one conformed copy of the Shelf Registration Statement and any post-
effective amendment thereto (without documents incorporated therein
by reference or exhibits thereto, unless requested);
2.2.10 cooperate with the Investors to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any Securities Act legend; and
enable certificates for such Registrable Securities to be issued for
such numbers of shares as the Investors may reasonably request at
least two business days prior to any sale of Registrable Securities;
2.2.11 subject to the last three sentences of Section 2.2.2
hereof, upon the occurrence of any event contemplated by clause (x)
of Section 2.2.2 or clause (v) of Section 2.2.7 hereof, use its
reasonable efforts promptly to prepare and file an amendment or a
supplement to the Shelf Prospectus or any document incorporated
therein by reference or prepare, file and obtain effectiveness of a
post-effective amendment to the Shelf Registration Statement, or file
any other required document, in any such case to the extent necessary
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Shelf Prospectus as then amended or supplemented
will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
2.2.12 make available for inspection by the Investors after
they have provided a Shelf Registration Notice to the Company and any
counsel, accountants or other representatives retained by the
Investors during normal business hours and upon reasonable prior
notice all financial and other records, pertinent corporate documents
and properties of the Company and cause the officers, directors and
employees of the Company to supply all such records, documents or
information reasonably requested by the Investors, counsel,
accountants or representatives in connection with the Shelf
Registration Statement; provided, however, that such records,
documents or information which the Company determines in good faith
to be confidential and notifies the Investors, counsel, accountants
or representatives in writing that such records, documents or
information are confidential shall not be disclosed by the Investors,
counsel, accountants or representatives unless (i) such disclosure is
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, or (ii) such records, documents or
information become generally available to the public other than
through a breach of this Agreement; and
2.2.13 a reasonable time prior to the filing of any Shelf
Registration Statement or any amendment thereto, or any Shelf
Prospectus or any amendment or supplement thereto, provide copies of
such document (not including any documents incorporated by reference
therein unless requested) to the Investors after they have provided a
Shelf Registration Notice to the Company.
2.3 Expenses.
2.3.1 Except as set forth in Section 2.3.2, all expense
incurred in the registration of Registrable Securities in accordance
with this Agreement shall be paid by the Company. The expenses shall
include, without limitation, printing and photocopying expenses, all
registration and filing fees under federal and state securities laws,
expenses of complying with the securities or blue sky laws of any
jurisdictions, fees and expenses of Company counsel, and the fees and
expenses of the Company's independent auditors in connection with any
comfort letter required by any underwriters.
2.3.2 The Investors shall be responsible for underwriting
and brokerage discounts and commissions, stock transfer taxes and
fees and disbursements of any counsel for the holders of Registrable
Securities.
2.4 Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Section 2:
2.4.1 Indemnity by Company. Without limitation of any other
indemnity provided to any Investor, to the extent permitted by law,
the Company will indemnify and hold harmless each Investor and, as
applicable, its directors, officers, employees, agents and partners
and each Person, if any, who controls such Investor (within the
meaning of the Securities Act), against any losses, claims, damages,
liabilities and expenses (joint or several) to which they may become
subject under the Securities Act or other federal or state law,
insofar as such losses, claims, damages, liabilities and expenses (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement
of a material fact contained in any registration statement (including
any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto), (ii) the 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 under which they were made, not misleading, (iii) any
violation or alleged violation by the Company of the Securities Act,
any state securities law or any rule or regulation promulgated under
the Securities Act or any state securities law, (iv) any and all
loss, liability, claim, damage and expense whatsoever, as reasonably
incurred, to the extent of the aggregate amount paid in settlement of
any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or alleged untrue statement or
any omission or alleged omission, if such settlement is effected with
the written consent of the Company, or (v) subject to the limitations
set forth in Section 2.4.3, any and all reasonable expense
whatsoever, as incurred (including reasonable fees and disbursements
of counsel), in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, in each case whether or not a
party, or any claim whatsoever based upon any such untrue statement
or alleged untrue statement or omission or alleged omission, to the
extent that any such expense is not paid under subparagraphs (i)
through (v) above, and the Company will reimburse such Investor and
its directors, officers, employees, agents and partners, and any
controlling person thereof, for any reasonable legal or other
expenses incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, expense or action;
provided, however, that the Company shall not be liable in any such
case for any such loss, claim, damage, liability, expense or action
to the extent that it arises out of or is based upon a Violation that
occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by
any such Investor or controlling person thereof, and provided,
further, that the Company shall not be liable to the extent that any
such loss, claim, damage, liability, expense or action arises out of
such person's failure to send or give a copy of the final prospectus
or supplement to the persons asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Registrable Securities to such
person if such statement or omission was corrected in such final
prospectus or supplement. In connection with an underwritten
offering, the Company will indemnify such underwriters and their
directors, officers and each Person, if any, who controls such
underwriters (within the meaning of the Securities Act) to the same
extent as indemnification is provided to the Investors.
2.4.2 Indemnity by Investors. In connection with any
registration statement in which an Investor is participating, each
such Investor will furnish to the Company in writing such information
and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to
the extent permitted by law, will indemnify the Company, its
trustees, officers, employees and agents and each Person who controls
the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from any
Violation which occurs solely in reliance upon and in conformity with
any information or affidavit so furnished in writing by such Investor
expressly for use in connection with such registration; provided,
that the obligation to indemnify will be several and not joint and
several with any other Person and will be limited to the net amount
received by such Investor from the sale of Registrable Securities
pursuant to such registration statement.
2.4.3 Notice; Right to Defend. Promptly after receipt by an
indemnified party under this Section 2.4 of notice of the
commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 2.4, deliver to the
indemnifying party a written notice of the commencement thereof and
the indemnifying party shall have the right to participate in, and,
if the indemnifying party agrees in writing that it will be
responsible for any costs, expenses, judgments, damages and losses
incurred by the indemnified party with respect to such claim, jointly
with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to
retain its own counsel, with reasonable fees and expenses to be paid
by the indemnifying party, if the indemnified party reasonably
believes that representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified
party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Section 2.4 only if and
to the extent that such failure is prejudicial to its ability to
defend such action, and the omission so to deliver written notice to
the indemnifying party will not relieve it of any liability that it
may have to any indemnified party other than under this Section 2.4.
If the indemnifying party does not assume the defense of any such
action or proceeding, after having received the notice referred to in
the first sentence of this paragraph, the indemnifying party will pay
the reasonable fees and expenses of counsel (which shall be limited
to a single law firm) for the indemnified party. In such event,
however, the indemnifying party will be liable for any settlement
effected without the written consent of such indemnifying party. If
the indemnifying party assumes the defense of any such action or
proceeding in accordance with this paragraph, such indemnifying party
shall not be liable for any fees and expenses of counsel for the
indemnified party incurred thereafter in connection with such action
or proceeding, except as set forth in the proviso in the first
sentence of this Section 2.4.3.
2.4.4 Contribution. If the indemnification provided for in
this Section 2.4 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage
or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified party on the other hand in connection with the statements
or omissions which resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations. The
relevant fault of the indemnifying party and the indemnified party
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. Notwithstanding the
foregoing, the amount any Investor shall be obligated to contribute
pursuant to this Section 2.4.4 shall be limited to an amount equal to
the net proceeds to such Investor of the Registrable Securities sold
pursuant to the registration statement which gives rise to such
obligation to contribute (less the aggregate amount of any damages
which the Investor has otherwise been required to pay in respect of
such loss, claim, damage, liability or action or any substantially
similar loss, claim, damage, liability or action arising from the
sale of such Registrable Securities). Notwithstanding the foregoing,
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. For purposes of this Section 2.4.4. each person,
if any, who controls any Investor within the meaning of Section 15 of
the Securities Act and partners, directors and officers of any
Investor, as applicable, shall have the same rights to contribution
as that Investor, and each director of the Company, each officer of
the Company who signed the Shelf Registration Statement, and each
person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act shall have the same rights to
contribution as the Company.
2.4.5 Survival of Indemnity. The indemnification provided
by this Section 2.4 shall be a continuing right to indemnification
and shall survive the registration and sale of any securities by any
Person entitled to indemnification hereunder and the expiration or
termination of this Agreement.
2.5 Rule 144. In order to permit the Investors to sell the
Registrable Securities they hold, if they so desire, from time to time
pursuant to Rule 144 under the Securities Act, or any successor to such
rule, the Company shall use reasonable efforts to (i) make available
adequate current public information and (ii) file with the Commission in a
timely manner all reports and other documents required of the Company
under the Exchange Act. In connection with any sale, transfer or other
disposition by any Investor of Registrable Securities pursuant to Rule 144
under the Securities Act, the Company shall cooperate with such Investor
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
Securities Act legend, and enable certificates for such Registrable
Securities to be sold for such number of shares and registered in such
names as the selling Investors may reasonably request at least two
business days prior to any sale of Registrable Securities, provided that
such Investors provide counsel to the Company with seller's and broker's
representation letters customary for Rule 144 sales.
2.6 Limitations.
2.6.1 The Investors shall not, without prior written consent
of the Company, effect any public sale or distribution of securities of
the Company during any period commencing upon written notice of (but in no
event sooner than 15 days prior to) the proposed filing date of a
preliminary prospectus supplement for a shelf registration for an
underwritten offering and ending 60 days following the date of filing of
the final prospectus supplement (or 75 days following the date of filing
of the preliminary prospectus, if sooner) filed by the Company for the
benefit of Security Capital Holdings, S.A., its assigns or pledgees
(collectively, "Security Capital"), provided, however, that the Investors'
obligations under this Section 2.6.1 shall be limited to two occasions and
provided, further, that such obligation shall apply only to the extent
that the Company is prohibited from selling its securities during such
period pursuant to Section 2(c) of its Registration Rights Agreement dated
as of July 10, 1996, a copy of which is attached as Exhibit 2.6.1.
2.6.2 As a condition to the inclusion of such Investor's
Registrable Securities in a registration statement hereunder, each
Investor agrees to provide written notice to the Company within ten days
after the end of any calendar quarter in which the Investor has made any
transfers of Registrable Securities, stating the number transferred during
such quarter and the date and type (e.g., open market sale) of each
transfer.
3. MISCELLANEOUS.
3.1 Notices.
3.1.1 All communications under this Agreement shall be in
writing and shall be delivered by telefax (with appropriate request
for assurance of receipt, and a confirmation copy sent concurrently
by mail), reputable overnight courier or shall be mailed by
registered or certified mail, postage prepaid,
(a) if to the Company, at:
Regency Realty Corporation
121 W. Forsyth Street, Suite 200
Jacksonville, Florida 32202
Attention: Mr. Martin E. Stein, Jr.
or at such other address as it may have furnished in writing to
the holders of Registrable Securities at the time outstanding,
or
(b) if to any Person who is the registered holder of
Registrable Securities, to the address of such Investor as it
appears in the stock ledger of the Company or in the records of
the Partnership.
3.1.2 Any notice so addressed shall be deemed given when
received.
3.2 Notices of Sale. Investors shall, promptly upon the
Company's written request from time to time advise the Company of the
number of Registrable Securities they continue to hold.
3.3 Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company and each of the Investors.
Without the prior written consent of the Company, the rights of the
Investors may not be transferred other than to a Permitted Transferee.
3.4 Amendment and Waiver. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, but only with the
written consent of the Company and the Investors holding a majority of the
Registrable Securities; provided, however, that no such amendment or
waiver shall take away any registration right of any Investor or reduce
the amount of reimbursable costs to any Investor in connection with any
registration hereunder without the consent of such Investor; further
provided, however, that without the consent of any other Investor, any
Investor may from time to time enter into one or more agreements amending,
modifying or waiving the provisions of this Agreement if such action does
not adversely affect the rights or interest of any other Investor. No
delay on the part of any party in the exercise of any right, power or
remedy shall operate as a waiver thereof, nor shall any single or partial
exercise by any party of any right, power or remedy preclude other or
further exercise thereof, or the exercise of any other right, power or
remedy.
3.5 Counterparts. One or more counterparts of this Agreement may be
signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument.
3.6 Governing Law. This Agreement shall be construed in accordance
with and governed by the internal laws of the State of Florida, which
shall prevail in all matters arising under or in connection with this
Agreement.
3.7 Invalidity of Provisions. If any provision of this Agreement is
or becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein
shall not be affected thereby.
3.8 Headings. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
3.9 Time of the Essence. Time is of the essence to this Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date and year first above written.
COMPANY:
REGENCY REALTY CORPORATION
By: /s/ Bruce M. Johnson
Bruce M. Johnson, Managing Director
Third Party Management Assets
MIDLAND DEVELOPMENT GROUP, INC.,
a Missouri Corporation
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
OTR Eastern Properties
Bent Tree Plaza (North Carolina)
Westchester Plaza (Ohio)
Hamilton Meadows (Ohio)
Brookville Plaza (Virginia)
Lakeshore (Michigan)
Evans Crossing (Georgia)
Statler Square (Virginia)
Kernersville Marketplace (North Carolina)
Maynard Crossing (North Carolina)
Shoppes at Mason (Ohio)
Lake Pine Plaza (North Carolina)
OTR/MIDLAND REALTY HOLDINGS, LTD.,
an Ohio Limited Liability Company
By: Midland Realty Holdings L.L.C.,
a Missouri Limited Liability Company,
Managing Member
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
Beckett Commons Shopping Center
No. 1712
BECKETT PARTNERS LIMITED PARTNER-
SHIP, an Ohio Limited Partnership
By: Midland-Beckett Limited Partnership,
a Missouri Limited Partnership, General
Partner
By: Beckett Equities, Inc., a Missouri
Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
East Pointe Shopping Center
No. 1709
REYNOLDSBURG PARTNERS,
an Ohio General Partnership
By: Midland Reynoldsburg Development
Company Limited Partnership, a
Missouri Limited Partnership, Managing
General Partner
By: Reynoldsburg Equities, Inc., a
Missouri Corporation, General
Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky
Managing Member
Franklin Square
No. 1705
MIDLAND FRANKFORT DEVELOPMENT CO.
L.L.C., a Kentucky Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
By: /s/ Ned M. Brickman
Ned M. Brickman, Manager
By: /s/ Stephen M. Notestine
Stephen M. Notestine, Manager
Maxtown Road Shopping Center
No. 1710
MAXTOWN PARTNERS, LTD.,
an Ohio Limited Liability Company
By: Maxtown Development Company L.L.C.,
a Missouri Limited Liability Company,
Voting Member
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
By: /s/ Ned M. Brickman
Ned M. Brickman, Managing Member
St. Ann Square
No. 1706
K & M DEVELOPMENT COMPANY,
a Missouri General Partnership
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Partner
Worthington Park Centre
No. 1711
WORTHINGTON DEVELOPMENT COMPANY,
an Ohio General Partnership
By: /s/ Ned M. Brickman
Ned M. Brickman, Managing General
Partner
Acquisition Contracts
MIDLAND ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Acquisition Contracts
MIDLAND RALEIGH ACQUISITIONS, LLC,
a North Carolina Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Acquisition Contracts
MIDLAND DALLAS ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Acquisition Contracts
MIDLAND MICHIGAN ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Monument
MIDLAND MONUMENT DEVELOPMENT
COMPANY, a Colorado Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Cheyenne, WY
MIDLAND CHEYENNE, WY DEVELOPMENT
COMPANY, a Wyoming Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Charlottesville
MIDLAND CHARLOTTESVILLE DEVELOP-
MENT COMPANY, a Virginia Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Waterford
MIDLAND WATERFORD DEVELOPMENT
COMPANY, a Michigan Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Parker/Stroh
MIDLAND PARKER DEVELOPMENT
LLC, a Colorado Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Creekside
Village Center
Garner
Windmiller
MIDLAND REALTY HOLDINGS, L.L.C.,
a Missouri Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
EXHIBIT 1
PERMITTED TRANSFEREES
EXHIBIT 2.6.1
EXHIBIT 10(c)
AMENDED AND RESTATED REDEMPTION AGREEMENT
(Midland)
THIS AMENDED AND RESTATED REDEMPTION AGREEMENT (the "Agreement"),
executed as of the 5th day of March 1998, is made effective as of the 12th
day of January, 1998, among REGENCY CENTERS, L.P., a Delaware limited
partnership (the "Partnership"), REGENCY REALTY CORPORATION, a Florida
corporation and the general partner of the Partnership ("Regency" or the
"General Partner"), the persons listed on the signature pages hereto, and
their permitted transferees.
Background
Pursuant to the terms of the Contribution Agreement (as defined
below), certain properties and assets will be contributed to the
Partnership in exchange for units of limited partnership interest in the
Partnership (the "Units"). Regency has agreed, pursuant to the
Contribution Agreement, that the Units issued to the Limited Partners will
be redeemable for Common Stock of Regency.
The parties wish to amend and restate the Redemption Agreement that
was signed on January 12, 1998 in order to (i) add additional Contributors
(as defined herein) and (ii) to amend the notice provisions hereof to
provide for notice under certain circumstances to the Limited Partners of
a sale event that will trigger income tax liability.
Accordingly, the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
Additional Units has the meaning given to such term in the
Contribution Agreement.
Affiliate means any person controlling, controlled by or under
common control with the person in question.
Business Day has the meaning given to that term in the
Partnership Agreement.
Cash Amount means an amount of cash arrived at by multiplying
(i) the number of Units that are the subject of a Notice of Redemption
times (ii) the Unit Adjustment Factor times (iii) the Value on the
Valuation Date of a Share.
Common Stock means the voting common stock, $0.01 par value, of
Regency.
Contribution Agreement means the Contribution Agreement of even
date herewith to which Regency, Midland Development Group, Inc. and others
are parties, as it may be amended from time to time.
First Closing has the meaning given to such term in the
Contribution Agreement.
First Closing Cash Amount means an amount in cash for each Unit
being redeemed equal to (i) $26.5813 times (ii) the Unit Adjustment
Factor.
First Closing Redemption means a redemption, effective at the
First Closing, involving the redemption of Units issued at the First
Closing immediately following such issuance, in exchange for the First
Closing Cash Amount.
Limited Partners means (i) the Contributors (as defined in the
Contribution Agreement and also including the entities shown on the
signature pages hereto as Intervening Contributors), and (ii) the Unit
Recipients (as defined in the Contribution Agreement) to whom the
Contributors will distribute Units, whose names are set forth on Schedule
A to this Agreement, and their Permitted Transferees. A Limited Partner
shall cease to be a party to this Agreement if it no longer holds any
Units and has no right to receive Additional Units.
Mandatory Subsequent Closing Redemption means a mandatory
redemption pursuant to Section 2.3 of Additional Units issued to a Limited
Partner who has exercised a First Closing Redemption.
Notice of Redemption means the Notice of Redemption and Investor
Questionnaire substantially in the form of Exhibit A to this Agreement, as
it may be amended from time to time by the General Partner effective upon
written notice to the Limited Partners.
Partnership means Regency Centers, L.P., a Delaware limited
partnership.
Partnership Agreement means the Agreement of Limited Partnership
of the Partnership, as it may be amended from time to time.
Permitted Transferees means as to a Limited Partner (i) any
Affiliate of the Limited Partner, (ii) in the case of a Limited Partner
who is a natural person, such natural person's spouse, parents,
descendants, nephews, nieces, brothers and sisters, and one or more trusts
for the benefit of any of the foregoing, (iii) in the case of a Limited
Partner that is a trust, any beneficiary of the trust, or if the Limited
Partner is another form of entity, the direct or indirect equity owners of
the Limited Partner, and (iv) in the case of Units that are not Pledged
Units, a lender to which such Units are pledged to secure a bona fide
obligation of the Limited Partner and any transferee who takes title in
accordance with the rights of such lender under the instruments evidencing
such obligation.
Pledged Units has the meaning set forth in Section 2.6.
Redeeming Partner means a Limited Partner who duly exercises a
Redemption Right pursuant to this Agreement.
Redemption Amount means the Share Amount or, as determined by
the General Partner in its sole and absolute discretion, the Cash Amount.
Redemption Right has the meaning set forth in Section 2.1
hereof.
Regency means Regency Realty Corporation, a Florida corporation,
together with any successor.
Securities Act means the Securities Act of 1933, as amended.
Share Amount means a number of Shares arrived at by multiplying
(i) the number of Units that are the subject of a Notice of Redemption
times (ii) the Unit Adjustment Factor.
Shares means (i) the Common Stock of Regency, and (ii) any
securities issuable with respect to Shares as a result of the application
of Section 4.
Specified Redemption Date means the later of (i) the close of
business, Eastern Time, on the date specified by the Redeeming Partner in
such Partner's Notice of Redemption, or (ii) the close of business,
Eastern Time, on the first Business Day after the date in clause (i) if
such date is not a Business Day, or (iii) the close of business, Eastern
Time, on the tenth Business Day after receipt by the General Partner of a
Notice of Redemption.
Subsequent Closing has the meaning given to such term in the
Contribution Agreement.
Unit means a Class 2 unit of interest in the Partnership
acquired by a Limited Partner pursuant to the Contribution Agreement, and
includes any Additional Unit.
Unit Adjustment Factor means initially 1.0; provided that, in
order to prevent dilution or enlargement of distribution rights, in the
event that Regency (i) declares or pays a dividend on its outstanding
Common Stock in Common Stock or makes a distribution to all holders of its
outstanding Common Stock in Common Stock, (ii) subdivides its outstanding
Common Stock, or (iii) combines its outstanding Common Stock into a
smaller number of shares, the Unit Adjustment Factor shall be adjusted by
multiplying the Unit Adjustment Factor by a fraction, the numerator of
which shall be the number of Shares issued and outstanding on the record
date (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time), and the
denominator of which shall be the actual number of Shares (determined
without the above assumption) issued and outstanding on the record date
for such dividend, distribution, subdivision or combination. Any
adjustment to the Unit Adjustment Factor shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
Value means, with respect to a Share, the average of the daily
market price of the Common Stock for the ten (10) consecutive trading days
immediately preceding the Valuation Date. The market price for each such
trading day shall be: (i) if the Common Stock is listed or admitted to
trading on any securities exchange or the Nasdaq National Market, the
closing price, regular way, on such day, or if no such sale takes place on
such day, the average of the closing bid and asked prices on such day,
(ii) if the Common Stock is not listed or admitted to trading on any
securities exchange or the Nasdaq National Market, the last reported sale
price on such day or, if no sale takes place on such day, the average of
the closing bid and asked prices on such day, as reported by a reliable
quotation source designated by Regency, or (iii) if the Common Stock is
not listed or admitted to trading on any securities exchange or the Nasdaq
National Market and no such last reported sale price or closing bid and
asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reliable quotation source
designated by Regency, or if there shall be no bid and asked prices on
such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than 10 days prior to the date
in question) for which prices have been so reported; provided, that if
there are no bid and asked prices reported during the 10 days prior to the
date in question, the Value of the Common Stock shall be determined by
Regency's board of directors acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable
judgment, appropriate.
Valuation Date means, except as provided in Section 2.3 with
respect to a Mandatory Subsequent Closing Redemption, the date of receipt
by the General Partner of a Notice of Redemption or, if such date is not a
Business Day, the first Business Day thereafter.
Windfall Distribution Amount has the meaning given to such term
in the Contribution Agreement.
2. Redemption of Units.
2.1. Exercise; Subordination to Original Limited Partners.
Subject to the provisions of this Agreement and to the redemption
rights set forth in the Partnership Agreement of the Original Limited
Partners (including the holders of Class A Units) (as those terms are
defined in the Partnership Agreement), each Limited Partner shall
have the right (the "Redemption Right") to require the Partnership to
redeem any Unit held by such Limited Partner (the "Redeeming
Partner"). A Redeeming Partner may not exercise the Redemption Right
for less than 1,000 Units or, if such Redeeming Partner holds less
than 1,000 Units, all of the Units held by such Redeeming Partner.
If on any Specified Redemption Date it is impossible to satisfy the
Redemption Rights of Limited Partners exercising Redemption Rights
pursuant to this Agreement and the rights of the Original Limited
Partners exercising redemption rights pursuant to the Partnership
Agreement (e.g., because payment of the Cash Amount would violate
applicable law and payment of the Share Amount would violate the REIT
transfer restrictions in the Company's Articles of Incorporation), in
such event the Original Limited Partnership or Class A Units
submitted for redemption by the Original Limited Partners shall be
redeemed first, before the Units submitted for redemption by the
Limited Partners shall be redeemed. Regency covenants that it will
not amend its Articles of Incorporation in a manner that would
adversely affect the Redemption Rights of the Limited Partners except
where the amendment is for the purpose of preserving the Company's
status as a REIT or a domestically controlled REIT.
2.1.1. First Closing Redemption. A Limited Partner who
has elected to exercise the Redemption Right at the First Closing, by
so electing at least seven (7) Business Days prior to the First
Closing on election forms distributed by Midland Development Group,
Inc., its Affiliates and Regency, shall be entitled to receive at the
First Closing the First Closing Cash Amount for each Unit as to which
such Redeeming Partner has elected to make a First Closing
Redemption, plus the applicable portion of any Windfall Distribution
Amount as provided in Section 2.2.3. A Limited Partner who fails to
submit such election forms or who fails to affirmatively specify on
such election forms that he does not wish to exercise the Redemption
Right as to all or any portion of his Units at the First Closing
shall be deemed to have exercised the Redemption Right at the First
Closing with respect to all his Units. In addition, even though a
Limited Partner has affirmatively elected not to exercise the
Redemption Right at the First Closing, in the event that the closing
price of the Common Stock on the New York Stock Exchange is less than
$24 per Share on the Business Day immediately preceding the date of
the First Closing, each such Limited Partner shall have the right, by
telecopied written notice delivered to the General Partner (the
receipt of which shall be confirmed by telephone) on the date of the
First Closing, to elect to immediately redeem all or any Units issued
to such Limited Partner at the First Closing for the First Closing
Cash Amount, plus the applicable portion of any Windfall Distribution
Amount as provided in Section 2.2.3, which shall be payable no later
than seven (7) Business Days after the First Closing. The
Contribution Agreement contemplates that Units will be issued at the
First Closing directly to the Unit Recipients (as defined in the
Contribution Agreement) listed on Schedule A, rather than to the
Contributors (as defined in the Contribution Agreement) who are
parties hereto for distribution in turn to the Unit Recipients.
Accordingly, it is contemplated that such Unit Recipients, rather
than the Contributors, will have the right to make the elections set
forth in this section, and all references herein to the Limited
Partners means the Unit Recipients rather than the Contributors.
2.1.2. Other Redemptions. A Redemption Right other than
pursuant to a First Closing Redemption shall be exercised pursuant to
a Notice of Redemption delivered to the General Partner by the
Redeeming Partner. Such redemption shall occur on the Specified
Redemption Date. A Redeeming Partner may exercise a Redemption Right
any time and any number of times.
2.2. Payment.
2.2.1. First Closing Redemption. If a Limited Partner
has duly elected (or been deemed to have elected) to make a First
Closing Redemption with respect to all or any portion of the Units
issuable to the Limited Partner at the First Closing, Regency, and
not the Partnership, shall be required to pay the First Closing Cash
Amount at the First Closing for each Unit that is the subject of such
First Closing Redemption, plus the applicable portion of any Windfall
Distribution Amount as provided in Section 2.2.3 (or on the date
specified in Section 2.1.1 in the event of a First Closing Redemption
duly made on the date of the First Closing by reason of the closing
price of the Common Stock being less than $24 per Share on the
preceding Business Day). Regency, and not the Partnership, shall be
required to pay such redemption price.
2.2.2. Other Redemptions. Except with respect to a
First Closing Redemption or a Mandatory Subsequent Closing Redemption
and except as provided in Section 2.4, the General Partner shall have
the right to elect to fund the Redemption Amount through the issuance
of (i) the Share Amount or (ii) the Cash Amount.
2.2.3. Additional Redemption Price. Anything in this
Agreement to the contrary notwithstanding, in the event that (i) a
Specified Redemption Date occurs prior to the first Partnership
Record Date (as defined in the Partnership Agreement) to occur after
the Units being redeemed were issued, (ii) such Units were not issued
on the day immediately following a Partnership Record Date (as
defined in the Partnership Agreement), and (iii) such Units are being
redeemed for the First Closing Cash Amount or the Cash Amount, the
redemption price payable for the Units being redeemed shall be
increased by that portion of the Windfall Distribution Amount
allocable to the Units being redeemed.
2.3. Mandatory Subsequent Closing Redemption. Certain Limited
Partners have the right to receive certain Additional Units pursuant
to the provisions of the Contribution Agreement. If a Redeeming
Partner entitled to Additional Units exercises a Redemption Right on
one or more occasions with respect to Units issued at the First
Closing or is deemed to exercise a Redemption Right as to all the
Units issued to such Limited Partner at the First Closing ("Initial
Redeemed Units") and before Additional Units are issued, then such
Redeeming Partner shall be deemed to have exercised a Mandatory
Subsequent Closing Redemption with respect to the corresponding
percentage of Additional Units thereafter issuable with respect to
such Initial Redeemed Units, based on the number of Initial Redeemed
Units redeemed as a percentage of the total number of Units issued to
the Redeeming Partner at the First Closing. Additionally, to the
extent that subsequent to the First Closing a Limited Partner ceases
to be a Limited Partner by reason of having redeemed all his or her
Units, such person shall be deemed to have exercised a Mandatory
Subsequent Closing Redemption with respect to all the Additional
Units thereafter issuable to such person. To the extent that (i) the
Initial Redeemed Units were redeemed for the First Closing Cash
Amount, with respect to the corresponding percentage of the
Additional Units required to be redeemed hereunder, and (ii) to the
extent that subsequent to the First Closing a Limited Partner ceases
to be a Limited Partner by reason of having redeem all his or her
Units, with respect to all the Additional Units issuable to the
former Limited Partner,Regency, and not the General Partner, shall be
required to pay the Redemption Amount in the form of the Cash Amount,
plus the applicable portion of any Windfall Distribution Amount as
provided in Section 2.2.3. Regency, and not the General Partner,
shall be required to pay such redemption price. For purposes of
computing such Cash Amount, the Value shall be the value required by
the Contribution Agreement to be used in calculating the number of
Additional Units to be issued at the Subsequent Closing. For
example, if Additional Units are issued at a Subsequent Closing based
on a valuation of $26.5813 per Unit, $26.5813 shall be deemed to be
the Value for computing such Cash Amount rather than the Value as of
the date of the Subsequent Closing.
2.4. Redemption of Units Issued in Respect of Hamilton and St.
Ann, the Midland Group Earn-Out and Evans Crossing Land Earn-Out.
Anything in this Agreement to the contrary notwithstanding (including
but not limited to Sections 4 and 5), Regency shall have the right to
require that (i) any Units issued to persons holding interests in the
Hamilton Meadows and St. Ann Escrows (as defined in the Contribution
Agreement), and (ii) any Additional Units issued with respect to the
Midland Group Earn-Out or the Evans Crossing Land Earn-Out (as those
terms are defined in the Contribution Agreement) be redeemed at the
Closing at which such Units are issued, at a redemption price equal
to the First Closing Cash Amount, plus the applicable portion of any
Windfall Distribution Amount as provided in Section 2.2.3. If
Regency does not exercise such right by delivering written notice
thereof at least seven (7) Business Days prior to the Closing, any
Limited Partner entitled to receive such Units shall have the right
to require Regency to redeem all or any portion of such Units at the
Closing at which they are issued, for the redemption price set forth
in the foregoing sentence, by delivering written notice of such
exercise to Regency within seven (7) Business Days prior to the date
of the Closing.
2.5. Conditions. As a condition to exercising a Redemption
Right, each Redeeming Partner shall execute a Notice of Redemption in
the form attached as Exhibit B and execute such other documents and
take such other actions as the General Partner may reasonably
require, including a Foreign Investment and Real Property Tax Act
("FIRPTA") or similar state and/or local affidavit (or make
appropriate arrangements for deposit with the General Partner for
payment to the Internal Revenue Service or any state or local
governmental authority of the amount required for the General Partner
to comply with the withholding provisions of such federal, state and
local laws, and if applicable, providing a withholding certificate
evidencing the Redeeming Partner's right to a reduced rate of FIRPTA
withholding). As a further condition to exercising a Redemption
Right, the Units to be redeemed shall be delivered to the Partnership
or Regency, as the case may be, free and clear of all liens, security
interests, deeds of trust, pledges and other encumbrances of any
nature whatsoever (collectively the "Liens"), subject to the
provisions of Section 6.3 of the Partnership Agreement (withholding).
In the event any Lien exists with respect to the Units to be
redeemed, neither the Partnership nor Regency (if Regency assumes the
Redemption Right pursuant to Section 3) shall have any obligation to
redeem such Units, unless, in connection therewith, the General
Partner has elected or is required to pay a portion of the Redemption
Amount in cash and such cash is sufficient to discharge such Lien.
Each Redeeming Partner hereby expressly authorizes the General
Partner to apply such portion of such cash as may be necessary to
discharge such Lien in full.
2.6. Security Interest. Adjustment Units (as defined in the
Contribution Agreement) issued in a private placement at the First
Closing are required to be pledged to Regency, and additional Units
issued pursuant to the Contribution Agreement may be required to be
pledged by the Midland Principals (as defined in the Contribution
Agreement) to Regency and the Partnership pursuant to Article 13 of
the Contribution Agreement (collectively, the "Pledged Units"). A
Limited Partner may not exercise a Redemption Right with respect to
Pledged Units that constitute Adjustment Units unless and until such
Units have been released from the Liens encumbering such Units. In
the event a Redeeming Partner exercises a Redemption Right with
respect to Pledged Units other than Adjustment Units, or in the event
a Redeeming Partner has previously exercised a Redemption Right with
respect to Units and the corresponding Additional Units to be
redeemed are Pledged Units, then such Redeeming Partner, as a
condition to the receipt of the Redemption Amount with respect to
such Pledged Units, shall be required to pledge and grant to Regency
and the Partnership a first priority security interest in any and all
Shares and/or cash delivered in payment of the redemption price with
respect to such Pledged Units and shall be required to consent to
Regency holding such Shares and/or cash as "Collateral" under Article
13 of the Contribution Agreement; provided, however, if cash is to be
paid to the Redeeming Partner with respect to such Pledged Units,
then such Redeeming Partner shall have the right to substitute a
letter of credit for such cash price as provided in Section 13.7.2(f)
of the Contribution Agreement.
2.7. Additional Rights. In case Regency shall issue rights,
options or warrants to all holders of its Shares entitling them to
subscribe for or purchase Shares or other securities convertible into
Shares at a price per share less than the current per share market
price as of the day before the "ex date" with respect to the issuance
or distribution requiring such computation, each Limited Partner
holding Redemption Rights shall be entitled to receive such number of
such rights, options or warrants, as the case may be, as he would
have been entitled to receive had he exercised all of his then
existing Redemption Rights immediately prior to the record date for
such issuance by Regency. The term "ex date" shall mean the first
date on which Shares trade regularly without the right to receive
such issuance or distribution. In case the Shares shall be changed
into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or
otherwise (other than subdivision or combination of Shares or a stock
dividend described in the definition of Unit Adjustment Factor), then
and in each such event the Limited Partners holding Redemption Rights
shall have the right thereafter to exercise their Redemption Rights
for the kind and amount of shares and other securities and property
that would have been received upon such reorganization,
reclassification or other change by holders of the number of Shares
with respect to which such Redemption Rights could have been
exercised immediately prior to such reorganization, reclassification
or change.
2.8. Distributions. A Redeeming Partner exercising a Redemption
Right with a Specified Redemption Date after a Partnership Record
Date on which the Redeeming Partner held the Units being redeemed and
prior to the payment of the distribution of Available Cash relating
to such Partnership Record Date shall retain the right to receive
such distribution with respect to such Units redeemed on such
Specified Redemption Date. Except as provided in the preceding
sentence, anything in the Partnership Agreement to the contrary
notwithstanding, the Redeeming Partner shall have no right, with
respect to any Unit so redeemed, to receive any distributions paid by
the Partnership after the Specified Redemption Date.
2.9. Limitation on Redemption Rights of Midland Principals.
Anything herein to the contrary notwithstanding, the Midland
Principals (as defined in the Contribution Agreement) may redeem
Units at a Closing for the First Closing Amount only to the extent
that they collectively hold at least 67% of the aggregate
consideration they receive at such Closing (other than Units they
receive for their interests in the Hamilton Meadows and St. Ann
Properties and other than Units representing the Midland Group Earn-
Out (as defined in the Contribution Agreement)) in the form of Units
not so redeemed (the "Minimum Unit Requirement"). In the event that
the elections of the Midland Principals to immediately redeem Units
for the First Closing Amount do not in the aggregate satisfy the
Minimum Unit Requirement, each Midland Principal will be deemed to
elect to retain a pro rata number of Units based on the percentage
allocations set forth on Schedule 2.2(c) to the Contribution
Agreement sufficient in the aggregate to satisfy the Minimum Unit
Requirement.
3. Regency's Assumption of Right. Notwithstanding the provisions
of Section 2, Regency may, in its sole and absolute discretion, assume
directly and satisfy a Redemption Right by paying to the Redeeming Partner
the applicable redemption price on the Specified Redemption Date,
whereupon Regency shall acquire the Units offered for redemption by the
Redeeming Partner. In the event Regency shall exercise its right to
satisfy the Redemption Right in the manner described in the preceding
sentence, the Partnership shall have no obligation to pay any amount to
the Redeeming Partner with respect to such Redeeming Partner's exercise of
the Redemption Right, and each of the Redeeming Partner, the Partnership
and Regency shall treat the transaction between Regency and the Redeeming
Partner as a sale of the Redeeming Partner's Units to Regency for federal
income tax purposes. Regency agrees that whenever the Partnership elects
to pay the Share Amount, Regency shall guarantee the Partnership's
obligation to pay the Share Amount.
4. Business Combinations. Regency shall not engage in any merger,
consolidation or other business combination or transaction with or into
another person or sale of all or substantially all of its assets, or any
reclassification, or recapitalization (other than a change in par value,
or a change in the number of shares of Common Stock resulting from a
subdivision or combination as described in the definition of Unit
Adjustment Factor) ("Transaction"), unless as a result of the Transaction
such other person (i) agrees that each Limited Partner shall thereafter
remain entitled to exchange each Unit owned by such Limited Partner (after
application of the Unit Adjustment Factor) for an amount of cash,
securities, or other property equal to the greatest amount of cash,
securities or other property paid to a holder of one Share in
consideration of one Share which a Limited Partner would have received at
any time during the period from and after the date on which the
Transaction is consummated, as if the Limited Partner had exercised its
Redemption Right immediately prior to the Transaction and received the
Share Amount, and (ii) agrees to assume the General Partner's obligations
under this Agreement, provided, that if, in connection with the
Transaction, a purchase, tender or exchange offer shall have been made to
and accepted by the holders of more than 50 percent of the outstanding
shares of Common Stock, the holders of Units shall receive the greatest
amount of cash, securities, or other property which a Limited Partner
would have received had it exercised the Redemption Right and received the
Share Amount in redemption of its Units immediately prior to the
expiration of such purchase, tender or exchange offer. Prior to
consummating any such Transaction, Regency shall cause appropriate
amendments to be made to this Agreement pursuant to Article 4 (including
the definitions of Shares, Unit Adjustment Factor and Value) to carry out
the intent of the parties that the rights of the Limited Partners
hereunder shall not be prejudiced as the result of any such Transaction.
5. Notices From Regency.
5.1. Sales of Assets. The General Partner agrees that (a) so
long as there remain outstanding fifty percent (50%) of the total number
of Units (i) which were issued at Closings theretofore held pursuant to
the Contribution Agreement and (ii) which were not redeemed pursuant to a
First Closing Redemption or a Mandatory Subsequent Closing Redemption
(such Units are referred to hereinafter as the "Remaining Units"), or (b)
until March 1, 2003, if later, the General Partner shall provide each
holder of Remaining Units with notice of any sale or other taxable
transfer of a Property deemed to be contributed by such holder (or such
holder's predecessor in interest) to the Partnership pursuant to the
Contribution Agreement, within 60 days after the closing of such sale or
other transfer, in order to enable such holder to plan for the cash it
will need to pay the income tax liability it will incur as a result of
such transaction. Such notice obligation shall not apply to any transfer
of a Property in a tax-deferred exchange.
5.2. Periodic Reports. Regency shall promptly furnish to the
Limited Partners all periodic reports and other communications that
Regency sends to its own shareholders from time to time.
5.3. Changes in Unit Adjustment Factor. The General Partner
shall notify each Limited Partner in writing of any change made to the
Unit Adjustment Factor within ten (10) business days of the date such
change becomes effective.
5.4. Partnership Dissolution. Upon the occurrence of any event
causing the termination and dissolution of the Partnership pursuant to
Section 13.1 of the Partnership Agreement prior to the end of its stated
term, the General Partner shall provide written notice to the Limited
Partners, giving them at least 20 days in which to exercise their
Redemption Right prior to the distribution of any proceeds from the
liquidation of the Partnership.
6. Amendments. This Agreement may be amended with the written
consent of the Partnership, the General Partner and Limited Partners
holding a majority of the Units then outstanding (exclusive of Units held
by the General Partner, Regency or any of their Affiliates). In addition,
Regency may amend this Agreement without the consent of any other person
to carry out the intent of Section 4.
7. Notices. All notices hereunder shall be sent in the manner set
forth in Section 15.1 of the Partnership Agreement.
8. Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws and judicial decisions of the State of
Delaware, without regard to the principles of conflicts of law.
9. Miscellaneous. All captions in this Agreement are for
convenience only and shall in no way define, limit, extend or describe the
scope or intent of any provisions hereof. This Agreement constitutes the
entire agreement among the parties with respect to the matters contained
herein and may not be modified or amended in any matter other than
pursuant to Section 4. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not
be affected thereby. This Agreement shall terminate simultaneously with
any termination prior to the First Closing of the Contribution Agreement.
10. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
THE MIDLAND PRINCIPALS: REGENCY REALTY CORPORATION
/s/ Lee S. Wielansky By: /s/ Bruce M. Johnson
Lee S. Wielansky Bruce M. Johnson
Managing Director and CFO
/s/ Stephen M. Notestine
Stephen M. Notestine
REGENCY CENTERS, L.P.
/s/ Joseph H. Apter
Joseph H. Apter By: Regency Realty Corporation
Its General Partner
/s/ Rodney K. Jones
Rodney K. Jones By: /s/ Bruce M. Johnson
Bruce M. Johnson
/s/ Ned M. Brickman Managing Director and CFO
Ned M. Brickman
Third Party Management Assets
MIDLAND DEVELOPMENT GROUP, INC.,
a Missouri Corporation
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
OTR Eastern Properties
Bent Tree Plaza (North Carolina)
Westchester Plaza (Ohio)
Hamilton Meadows (Ohio)
Brookville Plaza (Virginia)
Lakeshore (Michigan)
Evans Crossing (Georgia)
Statler Square (Virginia)
Kernersville Marketplace (North Carolina)
Maynard Crossing (North Carolina)
Shoppes at Mason (Ohio)
Lake Pine Plaza (North Carolina)
OTR/MIDLAND REALTY HOLDINGS, LTD.,
an Ohio Limited Liability Company
By: Midland Realty Holdings L.L.C.,
a Missouri Limited Liability Company,
Managing Member
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
Beckett Commons Shopping Center
No. 1712
BECKETT PARTNERS LIMITED PARTNER-
SHIP, an Ohio Limited Partnership
By: Midland-Beckett Limited Partnership,
a Missouri Limited Partnership, General
Partner
By: Beckett Equities, Inc., a Missouri
Corporation, General Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
East Pointe Shopping Center
No. 1709
REYNOLDSBURG PARTNERS,
an Ohio General Partnership
By: Midland Reynoldsburg Development
Company Limited Partnership, a
Missouri Limited Partnership, Managing
General Partner
By: Reynoldsburg Equities, Inc., a
Missouri Corporation, General
Partner
By: /s/ Lee S. Wielansky
Lee S. Wielansky
Managing Member
Franklin Square
No. 1705
MIDLAND FRANKFORT DEVELOPMENT CO.
L.L.C., a Kentucky Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
By: /s/ Ned M. Brickman
Ned M. Brickman, Manager
By: /s/ Stephen M. Notestine
Stephen M. Notestine, Manager
Maxtown Road Shopping Center
No. 1710
MAXTOWN PARTNERS, LTD.,
an Ohio Limited Liability Company
By: Maxtown Development Company L.L.C.,
a Missouri Limited Liability Company,
Voting Member
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
By: /s/ Ned M. Brickman
Ned M. Brickman, Managing Member
St. Ann Square
No. 1706
K & M DEVELOPMENT COMPANY,
a Missouri General Partnership
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Partner
Worthington Park Centre
No. 1711
WORTHINGTON DEVELOPMENT COMPANY,
an Ohio General Partnership
By: /s/ Ned M. Brickman
Ned M. Brickman, Managing General
Partner
Acquisition Contracts
MIDLAND ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Acquisition Contracts
MIDLAND RALEIGH ACQUISITIONS, LLC,
a North Carolina Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Acquisition Contracts
MIDLAND DALLAS ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Acquisition Contracts
MIDLAND MICHIGAN ACQUISITIONS, INC.
By: /s/ Lee S. Wielansky
Lee S. Wielansky, President
Monument
MIDLAND MONUMENT DEVELOPMENT
COMPANY, a Colorado Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Cheyenne, WY
MIDLAND CHEYENNE, WY DEVELOPMENT
COMPANY, a Wyoming Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Charlottesville
MIDLAND CHARLOTTESVILLE DEVELOP-
MENT COMPANY, a Virginia Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Waterford
MIDLAND WATERFORD DEVELOPMENT
COMPANY, a Michigan Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Parker/Stroh
MIDLAND PARKER DEVELOPMENT
LLC, a Colorado Limited
Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Manager
Creekside
Village Center
Garner
Windmiller
MIDLAND REALTY HOLDINGS, L.L.C.,
a Missouri Limited Liability Company
By: /s/ Lee S. Wielansky
Lee S. Wielansky, Managing Member
SCHEDULE A
Unit Recipients
[to be added]
EXHIBIT A
NOTICE OF REDEMPTION AND INVESTOR QUESTIONNAIRE
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Redemption Agreement to which the undersigned,
Regency Centers, L.P. and Regency Realty Corporation are parties (the
"Agreement").
1. Notice of Redemption. The undersigned, being the record owner
of Units (not giving effect to the application of the Unit Adjustment
Factor) in the Partnership, in accordance with the terms of the Agreement,
hereby irrevocably (a) exercises the option to redeem the number of Units
set forth below for Shares (after giving effect to the application of the
Unit Adjustment Factor) or into such other cash, securities or other
property as shall be authorized under the terms of the Agreement, (b)
surrenders such Units and all right, title and interest therein, subject
to the provisions of the Agreement, and (c) directs that the Shares
issuable or other consideration deliverable upon exercise of the
Redemption Right be delivered to the undersigned at the address specified
below, and, if applicable, that a new certificate representing ownership
of Units not so redeemed be issued and delivered to the undersigned. The
undersigned directs that the Specified Redemption Date be the date set
forth below (or 5:00 p.m., Eastern time, on the First Business Day after
such date if such date is not a Business Day), or 5:00 p.m., Eastern Time,
on the tenth Business Day after receipt by the General Partner of this
Notice of Redemption, if later. The undersigned hereby appoints the
General Partner, with full power of substitution, as the undersigned's
attorney-in- fact to coordinate the exact time of the redemption on behalf
of the undersigned and any other Limited Partners exercising an option to
redeem effective as of the same Specified Redemption Date as that of the
undersigned.
2. Investor Questionnaire. The undersigned has completed an
Investor Questionnaire, the original of which is attached as Attachment A.
3. Withholding Tax of Non-U.S. Persons. If the undersigned is a
Non-U.S. Person, the undersigned will comply with the provisions of
Section 6.3 of the Partnership Agreement with respect to the withholding
obligations described therein.
4. Representation. The undersigned represents and warrants that
such Units being redeemed are free and clear of all liens, security
interests, deeds of trust, pledges and other encumbrances, subject to the
provisions of Section 6.3 of the Agreement.
1. Name and address of Redeeming Partner exercising the Redemption
Right:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
2. Signature of Redeeming Partner:
_________________________________________ __________________________
Date
3. Date of Execution:
______________________________________________
4. Number of Units owned by the Redeeming Partner being redeemed
pursuant to this Notice of Redemption (check one):
[_] All Units owned by the undersigned
[_] Other (specify number if less than all): __________________ Units
5. Specified Redemption Date (which is the effective date of the
issuance of the Shares or payment of cash for this Notice of
Redemption):
_______________________________________
6. Shares issued or cash paid pursuant to the exercise of the Redemption
Right hereby should be sent to the address set forth in Paragraph 1
above, unless a different address is specified below. (If a
different address is requested, insert below.)
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
ATTACHMENT A
INVESTOR QUESTIONNAIRE
This Investor Questionnaire is to be completed by partners of Regency
Centers, L.P. (the "Partnership") redeeming limited partnership interests
in the Partnership into shares of voting common stock (collectively,
"Shares") of Regency Realty Corporation ("Regency"). The following
information is needed in order to ensure compliance with the requirements
of the private placement exemptions and applicable state exemptions, to
determine whether the undersigned is an accredited investor and to
determine whether the acquisition of Shares by the undersigned, if
applicable, will be in compliance with Article 5.2 of Regency's Articles
of Incorporation. The undersigned understands that Regency will rely upon
the information contained herein for purposes of such determination.
The undersigned also understands and agrees that, although Regency
will use its best efforts to keep the information provided in the answers
to this questionnaire strictly confidential, Regency may present this
questionnaire and the information provided in answers to it to such parties
as it deems advisable if called upon to establish the availability under
any federal or state securities laws of an exemption from registration of a
private placement or if the contents hereof are relevant to any issue in
any investigation, action, suit, or proceeding to which Regency is a party
or by which it is or may be bound.
The undersigned further understands that this questionnaire does not
constitute an offer by Regency to sell any securities but merely is a
request for information.
In accordance with the foregoing, the following representations and
information are hereby made and furnished.
I. I have read the reports and other documents filed by Regency under
Sections 13 and 14 of the Securities Exchange Act of 1934 during
the most recent fiscal year of Regency and the current year to date.
II. Except as indicated below, ownership of any Shares will be solely
for my own account, for investment, and not for the account of any
other person, or with a view to any resale, fractionalization, or
distribution thereof.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
III. I am an "Accredited Investor" as defined in Rule 501(a) of Regulation
D promulgated under the Securities Act of 1933, as amended (the
"Act"), by virtue of meeting the standard(s) which I have initialed
below (please complete, if applicable):
(Please initial, in the space provided, the statement(s) applicable to
you.)
________ 1. I am a natural person and I have, or my spouse and I
jointly have, a net worth (i.e., total assets in excess
of total liabilities) in excess of $1,000,000.
or
--
________ 2. I am a natural person and have had an individual annual
income (exclusive of my spouse's income, regardless of
whether this is a joint investment with my spouse) in
excess of $200,000, or joint annual income with my
spouse in excess of $300,000, in each of the two most
recent years and reasonably expect to reach the same
income level in the current year.
or
--
________ 3. I am a corporation or a partnership with total assets in
excess of $5,000,000 not formed for the specific purpose
of acquiring an interest in the Partnership or Regency.
or
--
________ 4. I am a trust with total assets in excess of $5,000,000
not formed for the specific purpose of acquiring an
interest in the Partnership or Regency and investment
decisions for the trust are and will be directed by a
sophisticated person as described in Rule 506(b)(2)(ii)
of Regulation D promulgated under the Act.
or
--
________ 5. I am a bank as defined in Section 3(a)(2) of the Act or
a savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Act, either acting
in my individual capacity or in a fiduciary capacity.
or
--
________ 6. I am an insurance company as defined in Section 2(13)
of the Act.
or
--
________ 7. I am either an investment company registered under the
Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of the Investment
Company Act of 1940.
or
--
________ 8. I am a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section
301(c) or 301(d) of the Small Business Investment Act
of 1958.
or
--
________ 9. I am a plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality
of a state or its political subdivisions, for the
benefit of its employees, and the plan's total assets
exceed $5,000,000.
or
--
________ 10. I am an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, and the
investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a
bank, savings and loan association, insurance company, or
registered investment adviser, or the employee benefit
plan has total assets in excess of $5,000,000, or, if a
self-directed plan, the investment decisions are made
solely by persons that are "Accredited Investors".
or
--
________ 11. I am a private business development company as defined
in Section 202(a)(22) of the Investment Advisers Act
of 1940.
or
--
________ 12. I am a broker dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934.
or
--
______ 13. I am an entity in which all of the equity owners qualify
as "Accredited Investors" under the standards set forth
in paragraphs 1 through 12 above.(1)
IV. I hereby represent and warrant that following the redemption, if I am an
individual, I will not Beneficially Own any shares of capital stock of
Regency ("Capital Stock") in excess of the Ownership Limit, and if the
undersigned is a Person other than an individual, no ultimate
individual owner of the Person will Beneficially own any shares of
Capital Stock of Regency in excess of the Ownership Limit. For
purposes of this representation, capitalized terms shall have the
following meanings:
_________________________________
(1) IF STATEMENT 13 ABOVE HAS BEEN INITIALED, EACH EQUITY OWNER OF THE
ENTITY MUST COMPLETE AN INVESTOR QUESTIONNAIRE.
(a) "Beneficial Ownership" shall mean ownership of Capital Stock
by a Person who would be treated as an owner of such shares of Capital
Stock, either directly or indirectly, under Section 542(a)(2) of the
Code, taking into account for this purpose (i) constructive ownership
determined under Section 544 of the Code, as modified by Sections
856(h)(1)(B) and 856(h)(3) of the Code; and (ii) any future amendment
to the Code which has the effect of modifying the ownership rules
under Section 542(a)(2) of the Code. The terms "Beneficial Owner,"
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Ownership Limit" shall mean 7% by value of the outstanding
Capital Stock of Regency.
(d) "Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside
for or to be used exclusively for the purposes described in Section
642(c) of the Code, association, private foundation within the meaning
of Section 509(a) of the Code, joint stock company or other entity,
and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
V. Please Indicate Type of Ownership:
________ INDIVIDUAL (one signature requred)
________ PARTNERSHIP (an authorized general partner must sign)
________ CORPORATION (an authorized corporate officer must sign)
________ JOINT TENANTS WITH RIGHT OR SURVIVORSHIP (both or all
parties must sign)
________ COMMUNITY PROPERTY (one signature required if Shares are
to be held in one name, i.e., managing spouses; two
signatures required if Shares are to be held in both
names)
________ TENANTS IN COMMON (both or all parties must sign)
________ OTHER - Trust, etc.
VI. Please complete the following if an individual:
Residence address: __________________________________
__________________________________
__________________________________
Citizenship (check one): [_] USA [_] Other
VII. If the undersigned is not a natural person, please provide the
following information with respect to the entity that will be a
holder, directly or indirectly, of the Shares:
1. The name and relationship to the undersigned entity of the
person who will make the investment decision on behalf of the
entity:
Name:___________________________________________________________
Relationship to Entity:_________________________________________
2. Address of Principal
Place of Business:______________________________________________
Number and Street (Post Office Box Unacceptable)
________________________________________________________________
City State or Province Country Zip or Postal Code
3. Date of Formation:______________________________________________
4. Jurisdiction of Organization:___________________________________
5. I.R.S. Tax Identification Number:_______________________________
6. Number of Shareholders, Partners or Beneficiaries:______________
7. Are any direct or indirect shareholders, partners or
beneficiaries Non-U.S. Persons?
_____ Yes _____ No
VIII. I represent to Regency that (a) the information contained herein
is complete and accurate and may be relied upon by Regency and
(b) I will notify Regency immediately of any material change in
any of such information prior to the redemption.
IN WITNESS WHEREOF, I have executed this Investor Questionnaire this
___ day of __________________, 199__.
_________________________________________
Type or Print Name
_________________________________________
Signature
_________________________________________
Type or Print Name of Spouse if interests
are held as Joint Tenants, Tenants in
Common, or Community Property
_________________________________________
Signature of Spouse if interests are
held as Joint Tenants, Tenants in
Common or Community Property
_________________________________________
If Applicable, Print Name of Entity
_________________________________________
Capacity of Individual Signing on Behalf
of Entity
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (the "Agreement") is made as of the
1st day of March, 1998 by and among REGENCY CENTERS, L.P., a Delaware
limited partnership (the "Partnership"), REGENCY REALTY GROUP, INC., a
Florida corporation (the "Third Party Management Company"), REGENCY REALTY
CORPORATION, a Florida corporation ("Regency") and Lee S. Wielansky, an
individual (the "Midland Principal"), under the following circumstances:
A. Pursuant to the terms and conditions of that certain
Contribution Agreement, dated as of January 12, 1998 (the "Contribution
Agreement"), by and among Midland Development Group, Inc., a Missouri
corporation ("Midland Development"), the Property Entities, the Midland
Principals, the Midland Affiliates and Regency, the Contributors are
contributing, as applicable, shopping center properties and other assets
used in their real estate businesses, ownership interests in the Joint
Ventures or the Third Party Management Assets to the Partnership or the
applicable Transferee (collectively, the "Assets").
B. The Midland Principal is an equity owner in certain Contributors
as well as an executive officer of Midland Development and is receiving
limited partnership interests in the Partnership and/or cash which such
Contributors (i) are receiving in exchange for the Assets and (ii) are
distributing to their equity owners.
C. To induce Regency to enter into the Contribution Agreement and
as a condition to closing the transfer of Assets and other transactions
contemplated thereby, the Midland Principal has agreed to enter into this
Agreement.
D. Capitalized terms used and not otherwise defined herein shall
have the meaning assigned thereto in the Contribution Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1: DEFINITIONS
1.1 "Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under common control
with such Person.
1.2 "Business" means the direct or indirect acquisition, ownership,
operation, control or development of Grocery Properties.
1.3 "Employee" means an individual who works at least an average of
35 hours per week as an employee, or who performs substantially the same
functions as such an employee, whether as a direct or indirect owner,
partner, director, officer, agent, consultant, independent contractor or
otherwise.
1.4 "Grocery Property" means a grocery-anchored shopping center or a
free-standing grocery store located in the Territory.
1.5 "Immediate Family" means a Person's spouse, parents, lineal
ascendants or descendants and their spouses, and trusts for the benefit of
any of the foregoing.
1.6 "In Conjunction with Another Midland Principal" means with (i)
any other Midland Principal or (ii) an entity in which the Midland
Principal or any other Midland Principal or Principals or any of his or
their Affiliates owns an equity interest, or (iii) any combination of the
foregoing.
1.7 "Indirectly" means through (i) an entity in which the Midland
Principal or any of his Affiliates has any material direct or indirect
equity interest or (ii) any member of the Midland Principal's Immediate
Family or an entity in which any member of the Midland Principal's
Immediate Family has any material direct or indirect equity interest if
the applicable action is taken or equity interest is owned by such member
for the purpose of circumventing the restrictions of this Agreement.
1.8 "Midland Principals" means Lee S. Wielansky, Stephen M.
Notestine, Joseph H. Apter, Rodney K. Jones, and Ned M. Brickman.
1.9 "NonCompete Period" means a period of three years from the date
of this Agreement.
1.10 "Nonsolicitation Period" means a period of one year from the
later of the date of this Agreement or the termination of the Midland
Principal's status as an Employee of Regency, or any Affiliate of Regency,
for any reason whatsoever, whether terminated voluntarily or
involuntarily.
1.11 "Person" means an individual or a corporation, partnership,
limited liability company, joint venture, trust, unincorporated
organization, association or other form of business or legal entity.
1.12 "Territory" means Colorado, Georgia, Illinois, Indiana,
Kentucky, Michigan, Missouri, North Carolina, Ohio, Tennessee, Texas,
Virginia and Wyoming and any other state in which the Midland Principal
engages in the Business on behalf of Regency or any Affiliate of Regency.
1.13 "Third Party Business" means acting as leasing agent for and/or
managing Grocery Properties that are owned by third parties.
ARTICLE 2: COVENANTS NOT TO COMPETE
AND NOT TO SOLICIT
2.1 Protection of Business Interest. For purposes of this Article
2, 2.6, the parties hereto agree that:
(a) The Midland Principal has substantial relationships with
existing customers of the Property Entities and Joint Ventures, including
the Kroger Co. and its Affiliates, and will continue to have such
relationships with customers in the course of his employment with Regency
or its Affiliates;
(b) Such relationships with customers will constitute a
legitimate business interest of Regency and/or its Affiliates and are a
critical inducement to entering the Contribution Agreement; and
(c) The restrictive covenants contained in this Article 2, 2.6
support such legitimate business interest, are reasonable in time and
place, are not overly broad, are reasonably necessary to protect such
interest, do not impose an unreasonable restraint on the Midland Principal
and are supported by adequate consideration.
2.2 Agreement to Not Compete. (a) At any time that the Midland
Principal is an Employee of Regency or any Affiliate of Regency, the
Midland Principal shall not directly or Indirectly engage in the Business
or Third Party Business other than on behalf of Regency or any such
Affiliate of Regency and (b) during the NonCompete Period, the Midland
Principal shall not directly or Indirectly engage in the Business in the
Territory In Conjunction With Another Midland Principal, other than in the
course of their employment by Regency or any Affiliate of Regency on
behalf of Regency or such Affiliate of Regency. Notwithstanding the
foregoing, if the Midland Principal is not an Employee of Regency or any
Affiliate of Regency at the time, the Midland Principal may engage during
the NonCompete Period in the Business in the Territory with respect to
supercenters of mass merchandisers (including but not limited to Walmart,
K-Mart and Target supercenters) In Conjunction With Another Midland
Principal who is not an Employee of Regency or any Affiliate of Regency at
the time.
2.3 Limitations. The obligations described in Section 2.2 shall not
preclude the Midland Principal from (i) owning publicly-traded securities
for investment purposes of any entity engaged in the Business or Third
Party Business in the Territory, in an amount not exceeding five percent
of the total number of outstanding securities of the same class, and (ii)
owning, developing or operating any Excluded Property that is listed on
Schedule 1.1.39 to the Contribution Agreement even though it constitutes a
Grocery Property.
2.4 No Solicitation. At any time that the Midland Principal is an
Employee of Regency or any Affiliate of Regency and during the
Nonsolicitation Period, the Midland Principal shall not directly or
Indirectly, on behalf of himself or any person, entity, corporation,
partnership, association, joint venture or other organization, hire,
solicit, attempt to solicit, induce, attempt to induce or assist others in
attempting to solicit (i) any employee of Regency, the Partnership, the
Third Party Management Company and/or any of their respective Affiliates
(collectively, the "Regency Entities") for the purpose of persuading such
employee to leave as an employee of any Regency Entity or (ii) The Kroger
Co. and any of its Affiliates for the purpose of persuading such client to
leave as a client of any Regency Entity or terminate any joint venture,
management, development or other contract with any Regency Entity, or
(iii) any Third Party Business client for which any Regency Entities
perform management and/or leasing services for more than one property, for
the purpose of inducing such client to terminate such services.
2.5 Remedies. The parties hereby declare and agree that any breach
by the Midland Principal of this Article 2, 2.6 will cause Regency and/or
the applicable Regency Entity irreparable injury and damage, and further
agree that it would be difficult, if not impossible, to calculate the
monetary damages that might accrue to Regency and/or the applicable
Regency Entity as a result of such breach. Accordingly, the Midland
Principal agrees that in the event of any breach or anticipated breach of
the terms or provisions of this Article 2, 2.6 Regency and/or the
applicable Regency Entity shall be entitled to injunctive or similar
equitable relief to prevent a breach of this Article, and the Midland
Principal waives the claim or defense that Regency and/or the applicable
Regency Entity have an adequate remedy at law. Nothing herein shall be
construed as prohibiting Regency and/or the applicable Regency Entity from
pursuing any other remedies available for such breach, including the
recovery of monetary damages to the extent calculable.
2.6 Blue Pencil. If any court of competent jurisdiction shall hold
that any restriction contained in this Article is unreasonable in duration
or geographic scope, such restriction shall be reduced to the extent
necessary in the opinion of such court to make it reasonable, the
intention of the parties being that Regency and the Regency Entities be
given the broadest protection allowed by law or equity with respect to
such provision in connection with their acquisition of the Assets.
ARTICLE 3: MISCELLANEOUS
3.1 Headings. The headings contained in this Agreement are for
reference purposes only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any
provision hereof.
3.2 Pronouns and Plurals. Whenever required by the context, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa.
3.3 Costs of Litigation. The parties agree that the prevailing
party in any action brought with respect to or to enforce any right or
remedy under this Agreement shall be entitled to recover from the other
party or parties all reasonable costs and expenses of any nature
whatsoever actually incurred by the prevailing party in connection with
such action, including, without limitation, attorneys' fees (whether
incurred before or at trial or on appeal) and prejudgment interest.
3.4 Remedies Cumulative. The remedies provided in this Agreement
shall be cumulative and, except as otherwise expressly provided shall not
preclude the assertion or exercise of any other rights or remedies
available by law, in equity or otherwise.
3.5 Amendment and Modification. No amendment, modification or
discharge of, or supplement to, this Agreement shall be valid or binding
unless set forth in writing and duly executed and delivered by the party
against whom enforcement of the amendment, modification, or discharge is
sought.
3.6 Notices. All notices, demands, requests, and other
communications which may be or are required to be given, served, or sent
by any party to any other party pursuant to this Agreement shall be in
writing and shall be hand delivered, sent by overnight courier or mailed
by first-class, registered or certified U.S. mail, return receipt
requested and postage prepaid, or transmitted by facsimile, telegram,
telecopy or telex, addressed as follows:
(i) If to the Partnership: (ii) If to the Midland
Principal:
c/o Regency Realty Corporation Lee S. Wielansky
121 W. Forsyth Street, Suite 200 13462 Maple Ridge Ct.
Jacksonville, FL 32202 Creve Coeur, MO 63141
Attn: Bruce M. Johnson Telephone: 314/469-3663
Telephone: (904) 356-7000
Facsimile: (904) 634-3428
or to such other person or address as a party shall furnish to the other
parties in writing.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted, such communication
shall be deemed delivered the next business day after transmission (and
sender shall bear the burden of proof of delivery); if sent by overnight
courier, such communication shall be deemed delivered upon receipt; and if
sent by U.S. mail, such communication shall be deemed delivered as of the
date of delivery indicated on the receipt issued by the relevant postal
service, or, if the addressee fails or refuses to accept delivery, as of
the date of such failure or refusal. Any party to this Agreement may
change its address for the purposes of this Agreement by giving notice
thereof in accordance with this Section 3.6.
3.7 Waivers. No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any
other documents furnished in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exercise of such right, power or privilege, or the exercise of any other
right, power or privilege. No waiver shall be valid against any party
hereto unless made in writing and signed by the party against whom
enforcement of such waiver is sought and then only to the extent expressly
specified therein.
3.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.9 Governing Law. This Agreement, the rights and obligations of
the parties hereto, and any claim or disputes relating thereto, shall be
governed by and construed and enforced in accordance with the laws and
judicial decisions of the State of Missouri, without regard to conflict of
law principles and excluding the choice of law rules thereof.
3.10 Jurisdiction. The parties agree that any action hereunder shall
be taken in a state court of competent jurisdiction in St. Louis,
Missouri. The parties agree that should any action in enforcement of this
Agreement be undertaken in any federal court or in any other court outside
of St. Louis, Missouri, this Agreement shall serve as the filing party's
unconditional agreement to transfer said action, or dismiss it without
prejudice for refiling, to a proper state court in St. Louis, Missouri.
3.11 Assignment; Parties in Interest.
3.11.1 No party hereto shall assign its rights and/or
obligations under this Agreement, in whole or in part, whether by
operation of law or otherwise, without the prior written consent of
the other parties hereto; provided, that any of Regency, the
Partnership, or the Third Party Management Company, without the
consent of the Midland Principal, may assign its rights and/or
obligations under this Agreement, in whole or in part, to any of
their respective Affiliates.
3.11.2 Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
heirs, executors, administrators, successors, legal representatives
and permitted assigns of the parties hereto. Nothing contained
herein shall be deemed to confer upon any other person any right or
remedy under or by reason of this Agreement.
3.12 Severability. Every provision of this Agreement is intended to
be severable. If any provision or term of this Agreement, or the
application of a provision or term to any person or circumstance, shall be
held invalid, illegal or unenforceable, the validity, legality or
enforceability of the other provisions and terms hereof, or the
application of such provision of such provision or term to persons or
circumstances other than those to which it is held invalid, illegal or
enforceable, shall not be affected thereby, and there shall be deemed
substituted for the provision or term at issue a valid, legal and
enforceable provision as similar as possible to the provision or term at
issue.
3.13 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
THE PROVISIONS OF THIS SECTION 3.13 SHALL SURVIVE ANY TERMINATION OF THIS
AGREEMENT.
3.14 Entire Agreement. This Agreement, including the exhibits and
other documents referred to herein or furnished pursuant hereto,
constitutes the entire understanding and agreement among the parties
hereto with respect to the transactions contemplated herein, and
supersedes all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have executed this Agreement on the date first written above.
REGENCY CENTERS, L.P. REGENCY REALTY GROUP, INC.
By: Regency Realty By: /s/ Bruce M. Johnson
Corporation, Bruce M. Johnson
Its General Partner Executive Vice President
/s/ Bruce M. Johnson
Bruce M. Johnson
Managing Director,
Executive Vice
President and CFO
REGENCY REALTY CORPORATION
By: /s/ Bruce M. Johnson
Bruce M. Johnson
Managing Director,
Executive Vice
President and CFO
MIDLAND PRINCIPAL
By: /s/ Lee S. Wielansky
Lee S. Wielansky
EXHIBIT 10(e)
March 1, 1998
Regency Realty Corporation
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
Re: Partnership Units and Shares of Common Stock
Ladies and Gentlemen:
The undersigned, Midland Development Group, Inc. and Regency Realty
Corporation, a Florida corporation ("Regency"), among others, have entered
into a Contribution Agreement, dated January 12, 1998 (the "Contribution
Agreement"), regarding the contribution to Regency Centers, L.P., a
Delaware limited partnership (the "Partnership"), of (a) cash by Regency,
and (b) shopping center properties and other assets by the Contributors.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Contribution Agreement or the Redemption
Agreement. Pursuant to the terms of the Contribution Agreement, the
undersigned is receiving Units (including Additional Units) which may be
redeemed for Shares of Common Stock pursuant to the terms of the
Partnership Agreement.
In consideration of the foregoing, the undersigned hereby agrees that
for a period of one year from the First Closing Date, he will not, without
the express written consent of Regency or except as provided below,
(i) offer for sale, sell, transfer, give, pledge (except as contemplated
by the Contribution Agreement), assign, irrevocably hypothecate or
otherwise dispose of, directly or indirectly, any of the Units, or enter
into any contract, option or other agreement or understanding regarding
the same, other than a pledge pursuant to a bona fide hedging transaction
(collectively, a "Transfer"), or (ii) exercise a Redemption Right with
respect to any Units issued at the First Closing or any Subsequent Closing
other than Units as to which the undersigned elects a First Closing
Redemption in accordance with the Contribution Agreement or is required to
redeem pursuant to the Redemption Agreement (the "Retained Units"). In
addition, the undersigned agrees that during any three-month period during
the two years ending on the third anniversary date of the First Closing,
without the express written consent of Regency or except as provided
below, he will neither Transfer nor exercise a Redemption Right with
respect to such number of Units, which together in the aggregate are
greater than the number arrived at by multiplying 12.5% times the Base
Amount. "Base Amount" equals the sum of the number of Retained Units and
the number of Units ("Retained Additional Units") issued to the
undersigned at any Subsequent Closing other than Units which are subject
to a Mandatory Subsequent Closing Redemption.
Nothing herein shall prevent the undersigned from making a Transfer
(a "Permitted Transfer") to an Affiliate, a member of the undersigned's
Immediate Family or a charitable trust, provided that such transferee
agrees in writing to be bound by the provisions of this Agreement.
Immediate Family means the undersigned's spouse, parents, descendants,
nephews, nieces, brothers and sisters and trusts for the benefit of any of
the foregoing. In order to effect any Permitted Transfer, the undersigned
must deliver to Regency a duly executed copy of the instrument making such
Permitted Transfer within 10 days after such Permitted Transfer and such
instrument must evidence the written acceptance by the assignee of all of
the terms and conditions of this Agreement and represent that such
assignment was made in accordance with all applicable laws and
regulations.
In addition, the foregoing restrictions shall not prohibit the
undersigned from exercising Redemption Rights with respect to Units at any
time prior to the third anniversary of the First Closing to the extent
that (i) the Partnership disposes of a Property, (ii) the undersigned is
required to pay tax prior to such anniversary date as a result of such
sale, and (iii) the net proceeds (after brokerage commissions) from the
sale of Shares issued upon such exercise pursuant to this paragraph do not
exceed the sum of (i) such tax liability plus (ii) the tax liability
incurred with respect to the sale of such Shares.
The foregoing agreements shall be binding on the undersigned and the
undersigned's respective heirs, personal representatives, successors and
permitted assigns. The foregoing agreements shall apply to Units
beneficially owned by the undersigned over which the undersigned has
investment power as well as to Units owned by the undersigned in the
undersigned's own name.
Very truly yours,
/s/ Lee S. Wielansky
Lee S. Wielansky