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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 7)
REGENCY REALTY CORPORATION
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(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
------------------------------------------------------------
(Title of Class of Securities)
758939 10 2
------------------------------------------------
(CUSIP Number)
ARIEL AMIR
SECURITY CAPITAL U.S. REALTY
69, ROUTE D'ESCH
LUXEMBOURG L-1470
(44-352) 487878
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(Name, Address and Telephone Number of Person
Authorized
to Receive Notices and Communications)
JUNE 29, 1998
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(Date of Event Which Requires Filing of This
Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box: |_|.
Check the following box if a fee is being paid with this statement |_|. (A
fee is not required only if the reporting person:
(1) has a previous statement on file reporting beneficial ownership of more than
five percent of the class of securities described in Item 1; and (2) has filed
no amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
This Amendment No. 7 to Schedule 13D contains 28 pages including Exhibits.
The Exhibit Index appears on page 7.
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SCHEDULE 13D
- ---------------------------- ------------------------
CUSIP NO. 758939 10 2 Page 2 of 6
- ---------------------------- ------------------------
- --------------------------------------------------------------------------------
1 NAME OF PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SECURITY CAPITAL U.S. REALTY
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY |_|
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
BK, OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE ORGANIZATION
LUXEMBOURG
- --------------------------------------------------------------------------------
7
SOLE VOTING POWER
11,720,216
NUMBER OF
-------------------------------------------------------------------
8
SHARES SHARED VOTING POWER
-0-
BENEFICIALLY
-------------------------------------------------------------------
9
OWNED BY SOLE DISPOSITIVE POWER
11,720,216
EACH
-------------------------------------------------------------------
10
REPORTING SHARED DISPOSITIVE POWER
-0-
PERSON WITH
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,720,216 (SEE ITEM 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 46.1% (SEE
ITEM 5)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
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SCHEDULE 13D
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CUSIP NO. 758939 10 2 Page 3 of 6
- ---------------------------- ------------------------
- --------------------------------------------------------------------------------
1 NAME OF PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SECURITY CAPITAL HOLDINGS S.A.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY |_|
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
BK, OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE ORGANIZATION
LUXEMBOURG
- --------------------------------------------------------------------------------
7
SOLE VOTING POWER
11,720,216
NUMBER OF
-------------------------------------------------------------------
8
SHARES SHARED VOTING POWER
-0-
BENEFICIALLY
-------------------------------------------------------------------
9
OWNED BY SOLE DISPOSITIVE POWER
11,720,216
EACH
-------------------------------------------------------------------
10
REPORTING SHARED DISPOSITIVE POWER
-0-
PERSON WITH
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,720,216 (SEE ITEM 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 46.1% (SEE
ITEM 5)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
This Amendment No. 7 is filed by Security Capital U.S. Realty
("Security Capital U.S. Realty"), a corporation organized and existing under the
laws of Luxembourg, and by Security Capital Holdings S.A. ("Holdings"), a
corporation organized and existing under the laws of Luxembourg and a wholly
owned subsidiary of Security Capital U.S. Realty (together with Security Capital
U.S. Realty, "SC-USREALTY"), and amends the Schedule 13D originally filed on
June 21, 1996 (as previously amended, the "Schedule 13D"). This Amendment No. 7
relates to shares of common stock, par value $0.01 per share ("Common Stock"),
of Regency Realty Corporation, a Florida corporation ("Regency"). Capitalized
terms used herein without definition shall have the meanings ascribed thereto in
the Schedule 13D.
On June 29, 1998, SC-USREALTY purchased 435,777 shares of Common
Stock directly from Regency for an aggregate purchase price of $9,641,566.12,
pursuant to a Subscription Agreement, dated as of June 29, 1998, by and among
Regency, Holdings and Security Capital U.S. Realty (the "Subscription
Agreement").
The purchase of the 435,777 shares of Common Stock pursuant to the
Subscription Agreement was at a price per share of $22.125 and was pursuant to
SC-USREALTY's rights under Section 4.2 of the Stockholders Agreement to purchase
shares of capital stock of Regency from time to time in connection with
issuances of shares of capital stock by Regency (each such right, a
"Participation Right"). Regency triggered SC-USREALTY's Participation Right when
Regency issued shares of Common Stock and limited partnership units redeemable
for Common Stock on April 23, 1998, pursuant to a Contribution Agreement and
Plan of Reorganization, dated as of February 10, 1997. Regency extended the time
in which SC-USREALTY had to exercise such Participation Right to no later than
June 30, 1998.
A copy of the Subscription Agreement is attached hereto as Exhibit
7.1, and such agreement is specifically incorporated herein by reference, and
the description herein of such agreement is qualified in its entirety by
reference to such agreement.
ITEM 1. SECURITY AND ISSUER.
No material change.
ITEM 2. IDENTITY AND BACKGROUND.
No material change except as set forth above.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
No material change except as set forth above.
Page 4 of 6 Pages
ITEM 4. PURPOSE OF TRANSACTION.
No material change except as set forth above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
No material change except as set forth above and below.
As of June 29, 1998, SC-USREALTY beneficially owns 11,720,216 shares
of Common Stock as a result of its acquisition of 435,777 shares of Common
Stock. Based on SC-USREALTY's ownership of 11,720,216 shares of Common Stock, it
owns approximately 46.1 % of the outstanding Common Stock, and approximately
37.8 % on a fully diluted basis, based on the number of outstanding shares of
Common Stock and the number of outstanding options and other securities
convertible into Common Stock.
Except as set forth herein and as described in prior filings, to the
best knowledge and belief of SC-USREALTY, no transactions involving Common Stock
have been effected during the past 60 days by SC-USREALTY or by its directors,
executive officers or controlling persons.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
No material change except as described above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed as part of this Schedule 13D:
Exhibit 7.1 Subscription Agreement, dated as of June 29, 1998, by and
among Regency Realty Corporation, Security Capital Holdings
S.A. and Security Capital U.S. Realty.
Page 5 of 6 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated as of: July 2, 1998
SECURITY CAPITAL U.S. REALTY
By: /s/Ariel Amir
-----------------------------------
Name: Ariel Amir
Title: Vice President
SECURITY CAPITAL HOLDINGS S.A.
By: /s/Ariel Amir
-----------------------------------
Name: Ariel Amir
Title: Vice President
Page 6 of 6 Pages
EXHIBIT INDEX
EXHIBIT DESCRIPTION SEQUENTIAL
PAGE NO.
7.1 Subscription Agreement, dated as of June 29,
1998, by and among Regency Realty
Corporation, Security Capital Holdings S.A.
and Security Capital U.S. Realty.
SUBSCRIPTION AGREEMENT
BY AND AMONG
REGENCY REALTY CORPORATION
SECURITY CAPITAL HOLDINGS S.A.
AND
SECURITY CAPITAL U.S. REALTY
DATED AS OF
JUNE 29, 1998
TABLE OF CONTENTS
SECTION Page
1. SUBSCRIPTION; CLOSING..................................................2
1.1 Subscription for Company Common Stock............................2
1.2 Acceptance of Subscription.......................................2
1.3 Purchase Price...................................................2
1.4 Closing..........................................................2
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................3
2.1 Due Incorporation, etc...........................................3
2.2 Due Authorization; Consents; No Violations.......................3
2.3 Capitalization...................................................4
2.4 Valid Issuance of Shares.........................................5
2.5 Regency Exchange Act Reports.....................................5
2.6 Permits..........................................................6
2.7 No Adverse Change................................................6
2.8 No Defaults or Violations........................................6
2.9 Litigation.......................................................7
2.10 Title to Properties; Leasehold Interests.........................7
2.11 Environmental Matters........................................... 7
2.12 Taxes........................................................... 9
2.13 Employees: ERISA................................................ 9
2.14 Accuracy of Statements.......................................... 9
2.15 Tax Matters; REIT and Partnership Status........................10
2.16 Compliance with Organization Documents..........................10
2.17 Florida Takeover Law............................................10
2.18 Brokers or Finders..............................................11
2.19 Shareholder Approval............................................11
2.20 Amended Company Charter; Modification of Transfer Restrictions..11
2.21 Consents........................................................11
2.22 HSR Act.........................................................11
2.23 Related Tenant Limit Waiver.....................................11
3. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER AND THE ADVANCING PARTY..12
3.1 Organization and Standing.......................................12
3.2 Due Authorization...............................................12
3.3 Conflicting Agreements and Other Matters........................12
3.4 Source of Funds.................................................13
3.5 Brokers or Finders..............................................13
3.6 REIT Qualification Matters......................................13
3.7 Investment Company Matters......................................13
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3.8 Investment Representations......................................13
3.9 No Substantial Investment in Company's Tenants..................14
4. SURVIVAL; INDEMNIFICATION.............................................14
4.1 Survival........................................................14
4.2 Indemnification by Subscriber or the Company....................14
5. MISCELLANEOUS.........................................................16
5.1 Counterparts....................................................16
5.2 Governing Law...................................................16
5.3 Entire Agreement................................................16
5.4 Notices.........................................................16
5.5 Successors and Assigns..........................................17
5.6 Headings........................................................17
5.7 Amendments and Waivers..........................................18
5.8 Expenses........................................................18
5.9 Severability....................................................18
5.10 Further Assurances..............................................18
5.11 Joint and Several Liability; Guaranty...........................18
ii
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is entered into as of June
29, 1998 by and among Regency Realty Corporation, a Florida corporation (the
"Company"), Security Capital U.S. Realty, a Luxembourg corporation (the
"Advancing Party"), and Security Capital Holdings S.A., a Luxembourg corporation
and a wholly-owned subsidiary of the Advancing Party ("Subscriber" or
"Investor"). Capitalized terms not otherwise defined herein have the meanings
ascribed to them in the Stock Purchase Agreement (as hereinafter defined).
WHEREAS, in connection with the Company's initial issuance and sale to
Subscriber of shares of the Company's common stock, par value $0.01 per share
(the "Company Common Stock"), pursuant to a Stock Purchase Agreement dated as of
June 11, 1996, as amended (the "Stock Purchase Agreement"), the Company, the
Advancing Party and Subscriber entered into a Stockholders Agreement on July 10,
1996 (as amended, the "Stockholders Agreement");
WHEREAS, pursuant to the terms of the Stockholders Agreement, in the event
that the Company issues or sells shares of capital stock of the Company,
Investor is, during a specified term, entitled (except in certain limited
circumstances) to a participation right to purchase, or subscribe for, a total
number of shares equal to up to 42.5% of the total number of shares of capital
stock proposed to be issued by the Company in its first offering after the final
closing under the above-referenced Stock Purchase Agreement and up to 37.5%
thereafter (the "Participation Rights");
WHEREAS, the Company entered into a Contribution Agreement and Plan of
Reorganization (the "Contribution Agreement"), dated as of February 10, 1997, by
and among Branch Properties, L. P., Branch Realty, Inc. (together, "Branch") and
the Company (the "Branch Transaction"), which provided, in part, for subsequent
closings at which additional shares of Common Stock and limited partnership
units of Regency Centers, L.P. redeemable for shares of Common Stock would be
issued based on the assets acquired from Branch attaining certain specified
levels of performance (the "Earn-Out Closings");
WHEREAS, on March 23, 1998, at the first Earn-Out Closing, the Company
issued 560,629 shares of Common Stock and 171,932 limited partnership units
redeemable for Common Stock;
WHEREAS, pursuant to Section 4.2 of the Stockholders Agreement, the first
Earn-Out Closing triggered a participation right of Investor to purchase or
subscribe for up to 435,777 shares of Company Common Stock at a purchase price
of $22 1/8 per share;
WHEREAS, by Letter Agreement dated April 23, 1998, a copy of which is
attached as Exhibit A hereto, the Company and Investor agreed to an extension of
Investor's Participation Right with respect to the shares of Common Stock issued
on March 23, 1998 as earn-out in connection with the Branch Transaction to
June 30, 1998;
WHEREAS, in accordance with Investor's desire to exercise its
Participation Right, the Company desires to issue and sell to Subscriber shares
of Company Common Stock in an offering from the Company to Subscriber.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. SUBSCRIPTION; CLOSING
1.1 SUBSCRIPTION FOR COMPANY COMMON STOCK
Subject to the terms and conditions hereof, Subscriber hereby
subscribes (the "Subscription") to purchase 435,777 shares of Company
Common Stock (the "Shares"). Subscriber acknowledges receipt of a
Participation Notice (as defined in Section 4.2 of the Stockholders
Agreement) from the Company. The Company acknowledges receipt of an oral
Exercise Notice (as defined in Section 4.2 of the Stockholders Agreement)
and hereby waives the requirement that such notices have been in writing.
1.2 ACCEPTANCE OF SUBSCRIPTION
Subject to the terms and conditions hereof, the Company
hereby accepts the Subscription. With respect to the Shares, the Company
has previously delivered a Participation Notice to Subscriber and
Subscriber has previously delivered an oral Exercise Notice to the
Company, which Subscriber hereby confirms in writing, and the Company
hereby confirms that the Company intends to use the proceeds from the sale
of the Shares to reduce outstanding indebtedness of the Company.
1.3 PURCHASE PRICE
The per share purchase price for the 435,777 Shares shall be
$22 1/8 per share for an aggregate purchase price of $9,641,566.12 (the
"Purchase Price").
1.4 CLOSING
Subject to the terms and conditions hereof, the closing (the
"Closing") shall occur on the date hereof. At the Closing, the Company
will sell, convey, assign, transfer and deliver, and Subscriber will
purchase and acquire (and the Advancing Party shall advance sufficient
funds for such purchase) from the Company, the Shares, and Subscriber will
pay to the Company the Purchase Price by wire transfer of immediately-
available funds in U.S. dollars to the account or accounts specified by
the Company.
2
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Subscriber as follows:
2.1 DUE INCORPORATION, ETC.
(a) The Company 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. The Company 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) Except as otherwise noted on Exhibit 21 of the Company's
Form 10-K annual report filed with the SEC for the fiscal year ended
December 31, 1997 (the "Form 10-K"), the Company owns all of the
outstanding capital stock of its subsidiaries listed on Exhibit 21 of the
Form 10-K. Except for its interests in its subsidiaries and minority
interests in certain partnerships as noted on Exhibit 21 to the Form 10-K,
the Company does not hold any interest in any security issued by any other
person.
2.2 DUE AUTHORIZATION; CONSENTS; NO VIOLATIONS
(a) The Company has full power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by the Company of this Agreement have
been duly and validly approved by the Company, and no other proceeding on
the part of the Company is necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming due authorization,
execution and delivery of this Agreement by Investor, this Agreement
constitutes a valid and binding obligation of the Company enforceable in
accordance with its 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) No consents, waivers, exemptions or approvals of, or
filings or registrations by the Company with, any Government Authority or
any other person not a party to this Agreement are necessary in connection
with the execution, delivery and performance by the Company 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 the Company or
the transactions contemplated by this Agreement except for the consents
obtained pursuant to Section 7.1(d) of the Stock Purchase Agreement.
3
(c) 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 the Company of this Agreement and the
consummation of the transactions contemplated hereby and thereby, do not
and will not (i) violate any Order applicable to or binding on the Company
or its assets; (ii) violate any statute, law, ordinance, rule, regulation
or judicial decision ("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 the Company's assets under, any
contract or other arrangement of any kind or character to which the
Company is a party or by which the Company or any of its assets are bound;
(iv) permit the acceleration of the maturity of any indebtedness of the
Company, or any indebtedness secured by any of the Company's assets; or
(v) violate or conflict with any provision of the Company's Articles of
Incorporation or Bylaws.
2.3 CAPITALIZATION
(a) The authorized capital stock of the Company consists of
(i) 150,000,000 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, including 1,600,000 shares of 8.125% Cumulative
Redeemable Preferred Stock. As of June 9, 1998, there were 24,987,093
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.
(b) No shares of the Company's stock are entitled to
preemptive rights. Except as disclosed in the Company's reports filed with
the Securities and Exchange Commission ("SEC") under the Securities
Exchange Act of 1934 ("Regency Exchange Act Reports"), in the Articles of
Incorporation relating to the Class B Non-voting Common Stock, or on
Schedule 2.3(b), 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 the Company or any of its subsidiaries, or contracts or other
arrangements by which the Company or any of its subsidiaries is or may
become bound to issue additional shares of capital stock of the Company or
any of its subsidiaries. The Company has furnished to Investor true and
correct copies of the Articles of Incorporation and the Company's Bylaws,
as in effect on the date hereof.
(c) Except as set forth on Schedule 2.3(c), the Company 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.
4
(d) Except for the agreements listed on Schedule 2.3(d), the
Company 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 the Company.
(e) All of the outstanding securities of the Company were
issued in compliance with all applicable federal and state securities
laws.
2.4 VALID ISSUANCE OF SHARES
The Shares which are being issued hereunder, when issued and
delivered in accordance with the terms hereof for the consideration
expressed herein, will be duly and validly issued, fully paid and
nonassessable and, based upon the representations of Investor in this
Agreement, will be issued in compliance with all applicable federal and
state securities laws.
2.5 REGENCY EXCHANGE ACT REPORTS
(a) Since November 5, 1993, the Company has timely filed all
the 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 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.
(b) The financial statements of the Company 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 (including the
Company's subsidiaries) 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 (including the Company's subsidiaries), 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,
5
and provision for all material Liabilities of the entities included
therein (including the Company'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.
2.6 PERMITS
The Company 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 the Company'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 the Company.
2.7 NO ADVERSE CHANGE
Since December 4, 1997, there has not been (i) any change in
the Company which would cause or reasonably be expected to result in a
Material Adverse Effect on the Company, (ii) any material loss, damage or
destruction to any of the Company's assets (whether or not covered by
insurance) or any other event or condition which has had or could have a
Material Adverse Effect on the Company, (iii) any contract or other
transaction entered into by the Company 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 the Company's assets, or any cancellation of any
debts or claim of the Company, except in the ordinary course of business,
and (v) any changes in the accounting systems, policies or practices of
the Company. Since December 4, 1997, the Company's business has been
conducted in all material respects only in the ordinary course and
consistent with past practices.
2.8 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 the Company: (a) the Company 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 the Company'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 the Company 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 the Company, or to the
Company's knowledge, by any such other party, or give right to an
automatic termination or the right of discretionary termination thereof;
(b) the Company is in
6
material compliance with, and no Liability or material violation
exists under, any Law or order applicable in any way to the Company; and
(c) no notice from any Government Authority has been received by the
Company claiming any violation of any Law (including any building, zone or
other ordinance) or order, or requiring any work, construction or
expenditure.
2.9 LITIGATION
Except for certain matters which, to the Company's knowledge,
do not have a Material Adverse Effect on the Company or the transactions
contemplated by this Agreement, there is no litigation pending or, to the
Company's knowledge, threatened against any of the properties or
businesses of the Company or relating to its assets or the transactions
contemplated by this Agreement. Neither the Company nor any of its assets
are subject to any order which has had or could have had a Material
Adverse Effect on the Company.
2.10 TITLE TO PROPERTIES; LEASEHOLD INTERESTS
The Company has good and marketable title to each of the
properties and assets owned by it. Certain real and personal property used
by the Company in the conduct of its business is held under lease, and, to
the Company'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 the Company 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 the Company. Each lease
or agreement to which the Company 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 the Company thereunder and, to the best of
the Company'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 the Company under any such lease or agreement or, to the
best of the Company's knowledge, by any party thereto, except for such
defaults that would not individually or in the aggregate have a Material
Adverse Effect on the Company. The Company's possession of such property
has not been disturbed and, to the best of the Company's knowledge, no
claim has been asserted against it adverse to its rights in such leasehold
interests.
2.11 ENVIRONMENTAL MATTERS
For purposes of this Section 2.11, the term "Regency" means
the Company and its Affiliates, and the term "Regency Property" means a
property owned or leased by the Company or its Affiliates and any property
in which the Company or its Affiliates has an interest. The parties
acknowledge that Regency does not possess any expertise
7
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) Except for those matters described in Schedule 2.11 with
respect to Bolton Plaza, 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
Environmental 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 they are responsible (or potentially
responsible) for the assessment or remediation of any release of any
Material of Environmental Concern at, on or beneath any Regency Property;
(d) Regency is not the subject of any actual or 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 2.11 with
respect to Bolton Plaza, 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 2.11,
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.
8
2.12 TAXES
The Company 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 Authority, required to be filed by it. The Company 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. The Company 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 the Company have not been audited by the IRS
or any state authority. No deficiency assessment with respect to or
proposed adjustment of the Company's federal, state, local or other Tax
returns is pending or, to the best of the Company'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 the Company. There are no applicable Taxes, fees or other governmental
charges payable by the Company in connection with the execution and
delivery of this Agreement.
2.13 EMPLOYEES: ERISA
The Company has good relationships with its employees and has
not had and does not expect any substantial labor problems. The Company
does not have any knowledge as to any intentions of any key employee or
any group of employees to leave the employ of the Company. Other than as
disclosed in the Regency Exchange Act Reports and materials provided to
Investor, the Company 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." The Company 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.
2.14 ACCURACY OF STATEMENTS
To the Company's knowledge, neither this Agreement nor any
document, instrument, schedule, exhibit, statement, list, certificate or
other information furnished or to be furnished by or on behalf of the
Company to Investor in connection with this Agreement or any of the
transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary
9
to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
2.15 TAX MATTERS; REIT AND PARTNERSHIP STATUS
(a) The Company (i) intends in its federal income tax return
for the tax year that will end on December 31, 1998, to elect to be taxed
as a REIT within the meaning of Section 856 of the Code, and has complied
(or will comply) with all applicable provisions of the Code relating to a
REIT for 1998, (ii) has operated, and intends to continue to operate, in
such a manner as to qualify as a REIT for 1998, (iii) has not taken or
omitted to take any action which would reasonably be expected to result in
a challenge to its status as a REIT, and, to the Company's knowledge, no
such challenge is pending or threatened, and (iv) to the Company's
knowledge, and assuming the accuracy of Subscriber's representation in
Section 3.7, 3.8, will not be rendered unable to qualify as a REIT for
federal income tax purposes as a consequence of the transactions
contemplated hereby.
(b) The Company was eligible to and did validly elect to be
taxed as a REIT for federal income tax purposes for calendar years 1993,
1994, 1995 and 1996, and is eligible to and intends to make such election
for calendar year 1997. Each Partnership and each subsidiary of the
Company organized as a partnership (and any other subsidiary of the
Company that files tax returns as a partnership for federal income tax
purposes) was and continues to be classified as a partnership for federal
income tax purposes.
(c) For purposes of this Section 2.15, no representation set
forth in Section 2.15 shall be deemed to be untrue unless such untruths
would, individually or in the aggregate, be reasonably expected to result
in a Material Adverse Effect.
2.16 COMPLIANCE WITH ORGANIZATION DOCUMENTS
Neither the Company nor any of its Subsidiaries is in default
under or in violation of any provision of its charter, bylaws or
partnership agreement (or equivalent organizational documents), except for
such defaults or violations which would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
2.17 FLORIDA TAKEOVER LAW
The terms of Sections 607.0901 and 607.0902 of the Florida
Business Corporation Act will not apply to Subscriber, the Subscription or
any other transaction contemplated hereby.
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2.18 BROKERS OR FINDERS
No agent, broker, investment banker or other firm or person,
including any of the foregoing that is an Affiliate of the Company, is or
will be entitled to any broker's or finder's fee or any other commission
or similar fee from the Company in connection with this Agreement or any
of the transactions contemplated hereby for which Subscriber will be
responsible.
2.19 SHAREHOLDER APPROVAL
The issuance of Company Common Stock pursuant to this
Agreement has been approved by the requisite vote of the Company's
Shareholders.
2.20 AMENDED COMPANY CHARTER; MODIFICATION OF TRANSFER
RESTRICTIONS
The amendments to the Company Charter in the forms attached
as Exhibit B and Exhibit C hereto have been approved by the requisite vote
of holders of Company Common Stock, all as required by and in accordance
with the Company Charter, and duly filed with the Secretary of State of
Florida and are in full force and effect.
2.21 CONSENTS
Company has obtained the consents required by Section 7.1(d)
of the Stock Purchase Agreement (other than that of Fortis Benefits
Insurance Co., which was waived by the Parties).
2.22 HSR ACT
No action has been instituted by the United States Department
of Justice or the United States Federal Trade Commission challenging the
consummation of the transactions contemplated by the Stock Purchase
Agreement or the transactions contemplated hereby, and no filing under the
HSR Act is required with respect to the transactions contemplated thereby
or hereby.
2.23 RELATED TENANT LIMIT WAIVER
The Board of Directors of the Company has granted a waiver
of the Related Tenant Limit (as such term is defined in the Company
Charter) to Investor.
11
2.24 NO INJUNCTION
There is no order, decree or injunction of a court or agency
of competent jurisdiction which enjoins or prohibits consummation of the
transactions contemplated hereby and there are no pending Actions which
would reasonably be expected to have a material adverse effect on the
ability of the Company to consummate the transactions contemplated hereby
or to issue the Special Purchase Shares.
2.25 DOMESTICALLY-CONTROLLED REIT
To the best of the Company's knowledge, the Company is, and
after giving effect to the Closing will be, a "domestically-controlled"
REIT within the meaning of Code Section 897(h)(4)(B).
3. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER AND THE ADVANCING
PARTY
Subscriber and the Advancing Party hereby jointly and
severally represent and warrant to the Company as follows:
3.1 ORGANIZATION AND STANDING
Each of Subscriber and the Advancing Party is a corporation
duly incorporated, validly existing and in good standing under the laws of
Luxembourg. Subscriber has all requisite corporate power and authority to
own, operate, lease and encumber its properties and carry on its business
as now conducted, and to enter into this Agreement and to perform its
obligations hereunder.
3.2 DUE AUTHORIZATION
The execution, delivery and performance of this Agreement
have been duly and validly authorized by all necessary corporate action on
the part of Subscriber and the Advancing Party. This Agreement has been
duly executed and delivered by each of Subscriber and the Advancing Party
for itself and constitutes the valid and legally binding obligations of
Subscriber and the Advancing party, enforceable against Subscriber or the
Advancing Party, as the case may be, in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights or general principles of equity.
3.3 CONFLICTING AGREEMENTS AND OTHER MATTERS
Neither the execution and delivery of this Agreement nor the
performance by Subscriber or the Advancing Party, as the case may be, of
its obligations hereunder will conflict with, result in a breach of the
terms, conditions or provisions of, constitute
12
a default under, result in the creation of any mortgage, security
interest, encumbrance, lien or charge of any kind upon any of the
properties or assets of Subscriber or the Advancing Party, as the case may
be, pursuant to, or require any consent, approval or other action by or
any notice to or filing with any Government Authority pursuant to, the
organization documents or agreements of Subscriber or the Advancing Party,
as the case may be, or any agreement, instrument, order, judgment, decree,
statute, law, rule or regulation by which Subscriber or the Advancing
Party, as the case may be, is bound, except for filings after the Closing
under Section 13(d) of the Exchange Act.
3.4 SOURCE OF FUNDS
At the Closing, the Advancing Party shall have available and
shall advance to Subscriber all of the funds necessary to satisfy
Subscriber's obligations hereunder and to pay any related fees and
expenses in connection with the foregoing.
3.5 BROKERS OR FINDERS
No agent, broker, investment banker or other firm or person,
including any of the foregoing that is an Affiliate of Subscriber or the
Advancing Party, is or will be entitled to any broker's or finder's fee or
any other commission or similar fee from Subscriber or the Advancing Party
in connection with this Agreement or the transactions contemplated hereby
for which the Company will be responsible.
3.6 REIT QUALIFICATION MATTERS
To Subscriber's knowledge, no person which would be treated
as an "individual" for purposes of Section 542(a)(2) of the Code (as
modified by Section 856(h) of the Code) owns or would be considered to own
(taking into account the ownership attribution rules under Section 544 of
the Code, as modified by Section 856(h) of the Code) in excess of 9.8% of
the value of the outstanding equity interest in Subscriber or the
Advancing Party.
3.7 INVESTMENT COMPANY MATTERS
Neither the Advancing Party nor Subscriber is, and after
giving effect to the purchase of the Special Purchase Shares, neither will
be, an "investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of 1940,
as amended.
3.8 INVESTMENT REPRESENTATIONS
Investor is acquiring the Special Purchase Shares for
investment purposes and not with a view to the distribution thereof.
Investor acknowledges and agrees that the Special Purchase Shares may
only be sold or otherwise disposed of in one or more
13
transactions registered under the Security Act and, where applicable,
relevant state securities laws or as to which an exemption from the
registration requirements of the Securities Act and, where applicable,
such state securities laws is applicable, and Investor agrees that the
Certificates representing such Company Common Stock will bear a legend to
that effect.
3.9 NO SUBSTANTIAL INVESTMENT IN COMPANY'S TENANTS
As of the date hereof, Investor does not own, directly or
indirectly, an interest in a tenant listed on Schedule 3.9 attached
hereto, which interest is equal to or greater than (i) 10% of the combined
voting power of all classes of stock of such tenant, (ii) 10% of the total
number of shares in all classes of stock of such tenant, or (iii) if such
tenant is not a corporation, 10% of the assets or net profits of such
tenant. For purposes of this section, the rules prescribed by Section
318(a) of the Code, for determining the ownership of stock, as modified by
Section 856(d)(5) of the Code, shall apply in determining direct and
indirect ownership of stock, assets, or net profits.
4. SURVIVAL; INDEMNIFICATION
4.1 SURVIVAL
All representations, warranties, covenants and agreements of
the parties contained herein, including indemnity or indemnification
agreements contained herein, shall survive the Closing until the first
anniversary of the Closing. No Action or proceeding may be brought with
respect to any of the representations, warranties, covenants or agreements
unless written notice thereof, setting forth in reasonable details the
claimed misrepresentations or breach of warranty or breach of covenant or
agreement, shall have been delivered to the party alleged to have breached
such representation or warranty or such covenant or agreement prior to the
first anniversary of the Closing. Those covenants or agreements that
contemplate or may involve actions to be taken or obligations in effect
after the Closing shall survive in accordance with their terms.
4.2 INDEMNIFICATION BY SUBSCRIBER OR THE COMPANY
(a) Subject to Section 4.1, from and after the Closing,
Subscriber shall indemnify and hold harmless the Company, its successors
and assigns, from and against any and all Loss and Expenses suffered,
directly or indirectly, by the Company by reason of, or arising out of (i)
any breach as of the date made or deemed made or required to be true of
any representations or warranty made by Subscriber in or pursuant to this
Agreement, or (ii) any failure by Subscriber to perform or fulfill any of
its covenants or agreements set forth herein. Notwithstanding any other
provision of this Agreement to
14
the contrary, in no event shall Loss and Expenses include a party's
incidental or consequential damages.
(b) Subject to Section 4.1, from and after the Closing, the
Company shall indemnify and hold harmless Subscriber, its successors and
assigns, from and against any and all Loss and Expenses, suffered,
directly or indirectly, by Subscriber by reason of, or arising out of, any
breach as of the date made or deemed made or required to be true of any
representations or warranty made by the Company in or pursuant to this
Agreement and any statements made in any certificate delivered pursuant to
this Agreement, or (ii) any failure by the Company to perform or fulfill
any of its covenants or agreements set forth herein. Notwithstanding any
other provision of this Agreement to the contrary, in no event shall Loss
and Expenses include a party's incidental or consequential damages.
(c) Notwithstanding the foregoing, (i) neither Subscriber
nor the Company shall be responsible for any Loss and Expenses as provided
by paragraphs (a) and (b), respectively, of this Section 4.2, until the
cumulative aggregate amount of such Loss and Expenses suffered by
Subscriber or the Company, as the case may be, exceeds $500,000, in which
case Subscriber or the Company, as the case may be, shall then be liable
for all such Loss and Expenses, and (ii) the cumulative aggregate
indemnity obligations of each of Subscriber and the Company under this
Section 4.2 shall in no event exceed the Purchase Price. Except with
respect to third-party claims being defended in good faith or claims for
indemnification with respect to which there exists a good faith dispute,
the indemnifying party shall satisfy its obligations hereunder within 30
days of receipt of a notice of claim under this Section 4.
4.3 THIRD-PARTY CLAIMS
If a claim by a third party is made against Subscriber or the
Advancing Party or the Company (each, an "Indemnified Party") and if such
Indemnified Party intends to seek indemnity with respect thereto under
this Section 4, such Indemnified Party shall promptly notify the
indemnifying party in writing of such claims setting forth such claims in
reasonable detail. The indemnifying party shall have 20 days after receipt
of such notice to undertake, through counsel of its own choosing and at
its own expense, the settlement or defense thereof, and the Indemnified
Party shall cooperate with it in connection therewith; provided, however,
that the Indemnified Party may participate in such settlement or defense
through counsel chosen by such Indemnified Party, provided that the fees
and expenses of such counsel shall be borne by such Indemnified Party. The
Indemnified Party shall not pay or settle any claim which the indemnifying
party is contesting. Notwithstanding the foregoing, the Indemnified Party
shall have the right to pay or settle any such claim, provided that in
such event it shall waive any right to indemnity therefor by the
indemnifying party. If the indemnifying party does not notify the
Indemnified Party within 20 days after the receipt of the Indemnified
Party's notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof, the
15
Indemnified Party shall have the right to contest, settle or compromise
the claim but shall not thereby waive any right to indemnity therefor
pursuant to this Agreement.
5. MISCELLANEOUS
5.1 COUNTERPARTS
This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall be
effective when one or more counterparts have been signed by each party
hereto and delivered to the other party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service
shall be considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is confirmed.
5.2 GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA WITHOUT REFERENCE TO THE
CHOICE OF LAW PRINCIPLES THEREOF.
5.3 ENTIRE AGREEMENT
This Agreement contains the entire agreement between the
parties hereto with respect to the subject matter hereof and there are no
agreements, understandings, representations or warranties between the
parties other than those set forth or referred to herein. This Agreement
is not intended to confer upon any person not a party hereto (and their
successors and assigns) any rights or remedies hereunder.
5.4 NOTICES
All notices and other communications hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic
transmission service to the appropriate address or numbers as set forth
below. Notices to the Company shall be addressed to:
Regency Realty Corporation
121 W. Forsyth Street, Suite 200
Jacksonville, Florida 32202
Attention: Martin E. Stein, Jr.
Telecopy Number: (904) 354-3448
16
with a copy (which shall not constitute notice) to:
Foley & Lardner
Greenleaf Building
200 Laura Street
Jacksonville, Florida 32202
Attention: Charles E. Commander, III, Esq.
Telecopy Number: (904) 359-8700
Notices to Subscriber or the Advancing Party shall be
addressed to:
Security Capital Holdings S.A.
69, route d'Esch
L-2953 Luxembourg
Attention: David A. Roth, Vice President
Telecopy Number: (352) 4590-3331
with a copy (which shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 W. 52nd Street
New York, New York 10018
Attention: Adam O. Emmerich, Esq.
Telecopy Number: (212) 403-2000
5.5 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and insure to the
benefit of the parties hereto and their respective successors. Neither
Subscriber nor the Advancing Party shall be permitted to assign any of its
rights hereunder to any third party; provided, however, that Subscriber
and the Advancing Party may assign all (but not less than all) of their
rights hereunder to any other Investor so long as such other Investor
agrees in writing, in a form reasonably acceptable to the Company, to be
bound by all the terms and conditions of this Agreement.
5.6 HEADINGS
The Section and other headings contained in this Agreement
are inserted for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.
17
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement or have caused this Agreement to be duly executed on their
behalf, as of the day and year first above written.
REGENCY REALTY CORPORATION
By: /s/ Bruce M. Johnson
----------------------
Name: Bruce M. Johnson
Title: Managing Director
SECURITY CAPITAL HOLDINGS S.A.
By: /s/ Ariel Amir
----------------------
Name: Ariel Amir
Title: Vice President
SECURITY CAPITAL U.S. REALTY
By: /s/ Ariel Amir
----------------------
Name: Ariel Amir
Title: Vice President