UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transaction period from _________ to ____________
Commission File No. 1-12298
REGENCY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Florida
59-3191743
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
121 West Forsyth Street, Suite 200 (904) 356-7000
Jacksonville, Florida 32202 (Registrant's Telephone No.)
(Address of principal executive offices)
(zip code)
Securities registered under Section 12(b) of the Act:
Common Stock, $.01 par value
(Title of Class)
New York Stock Exchange
(Name of exchange on which registered)
Securities registered pursuant to Section(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. YES (X) NO ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K/A or
any amendment to this Form 10-K/A. (X)
The aggregate market value of the voting stock held by non-affiliates of
the Registrant was approximately $165,638,487 based on the closing price
on the New York Stock Exchange for such stock on March 20, 1997. The
approximate number of shares of Registrant's Common Stock outstanding was
12,323,183 as of March 21, 1997.
Documents Incorporated by Reference
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Company's Amended and Restated Articles of Incorporation divide
the Board of Directors into three classes, as nearly equal in number as
possible. Information concerning all incumbent directors and all nominees
for director who will stand for election at the Company's 1997 annual
meeting of shareholders, based on data furnished by them, is set forth
below. Martin E. Stein, Jr. and Richard W. Stein are brothers, and Joan
W. Stein is their mother. Mr. Underhill and Ms. Rogers have been
nominated by Security Capital as its representatives to the Company's
Board of Directors pursuant to a Stockholders Agreement between the
Company and Security Capital, which gives Security Capital the right,
under certain circumstances, to nominate for election by shareholders its
proportionate share of the members of the Board (but generally not fewer
than two, nor more than 49% of the directors).
Shares of
Company
Common
Stock
Owned
Year Beneficially
Positions with the First as of
Class/ Company; Principal Became March 1,
Term Occupations During Director 1997
Expires Past Five Years; of the (% of
Name Age (1) Other Directorships Company Class)(2)
Joan W. Class Chairman of the Board 1993 586,461(3)
Stein*+ III and Director of the (4.8%)
(68) 1999 Company; Chairman
since 1968 of The
Regency Group, Inc.
("TRG"), which
transferred
substantially all the
assets of its real
estate division to
the Company upon the
closing of the
Company's initial
public offering in
November 1993;
retired as a director
of Barnett Bank of
Jacksonville, N.A. in
1995.
Martin E. Class President, Chief 1993 712,216(3)(4)
Stein, Jr.*+ II Executive Officer and (5.8%)
(44) 1998 Director of the
Company; President
and Chief Executive
Officer of TRG since
1988 and President of
TRG's real estate
division since 1981;
director of FRP
Properties, Inc., a
publicly held
transportation and
real estate company.
Richard W. Class I President and Chief 578,146(3)
Stein nominee Executive Officer of
(41) Palmer & Cay of (4.7%)
Florida, Inc., an
insurance agency,
since 1993; Executive
Vice President and
director of TRG, 1989
to present.
Douglas S. Class I Director of the 1993 12,123(5)
Luke= 1997 Company; President
(55) and Chief Executive
Officer since 1991 of
WLD Enterprises,
Inc., a Ft.
Lauderdale, Florida
based diversified
private investment
and management
company with
interests in
securities, real
estate and operating
businesses; managing
director of
Rothschild
Inc./Rothschild
Ventures from 1987 to
1990; director of DNA
Plant Technology
Corporation, an
agricultural
biotechnology
corporation, Orbital
Sciences Corporation,
a space systems
company, and Westvaco
Corporation, a
diversified paper and
chemicals
manufacturing
company.
Mary Lou Class I Managing Director of N/A --
Rogers nominee Security Capital
(45) Strategic Group
Incorporated, an
affiliate of Security
Capital, since March
1997, responsible for
developing retail
operating systems for
Security Capital
retailing-related
initiatives; Senior
Vice President,
Director of Stores-
New England, for
Macy's East/Federated
Department Stores
from 1994 to March
1997; Senior Vice
President, Director
of Stores for Henri
Bendels from 1993 to
1994; Senior Vice
President, Regional
Director of Stores
for the Burdines
Division of Federated
Department Stores,
from 1991 to 1993.
A. R. Class Director of the 1993 10,623(5)
Carpenter#+ II Company; President
(55) 1998 and Chief Executive
Officer (since
January 1992) of CSX
Transportation, Inc.,
with which he has
held a variety of
positions since 1962,
including Executive
Vice President-Sales
and Marketing (from
1989 to 1992);
director of Barnett
Banks, Inc., a
Jacksonville based
bank holding company,
and its affiliate,
Barnett Bank of
Jacksonville, N.A.,
Florida Rock
Industries, Inc.,
Stein Mart, Inc., a
Jacksonville based
discount retailer,
and American Heritage
Life Insurance
Company.
J. Dix Druce, Class Director of the 1993 10,039(5)
Jr.= II Company; President
(49) 1998 and director of Life
Service Corp., Inc.,
a life insurance
management company,
since 1988; Chairman
of the Board and
President of American
Merchants Life
Insurance Company and
its parent, AML
Acquisition Company,
since October 1992;
President and
director (Chairman
from May 1989 to July
1991) of National
Farmers Union Life
Insurance Company
from 1987 to 1991;
President and
director of Loyalty
Life Insurance
Company and NFU
Acquisition Company
from 1987 to 1991;
director of American
National Bank of
Florida.
Edward L. Class Director of the 1993 12,271(5)
Baker#+ III Company; Chairman of
(62) 1999 the Board of Florida
Rock Industries,
Inc., a publicly held
construction
materials company
listed on the
American Stock
Exchange, and its
affiliate, FRP
Properties, Inc.,
since May 1989 and
President from 1967
to May 1989; director
of American Heritage
Life Insurance
Company, based in
Jacksonville,
Florida, and Flowers
Industries, a
producer of baked
goods located in
Thomasville, Georgia.
J. Alexander Class Founder, Chairman and 1997 67,616
Branch III III Chief Executive
(55) nominee Officer for more than
five years of Branch
Properties, L.P. and
predecessors, prior
to the transfer by it
of substantially all
its assets to a
partnership
controlled by the
Company.
Albert Class Director of the 1993 9,617(5)
Ernest, Jr.#+ III Company; President of
(66) 1999 Albert Ernest
Enterprises, a
consulting and
investment firm;
director of Barnett
Banks, Inc., from
1982 until 1991,
President and Chief
Operating Officer
from November 1988
until his retirement
in 1991, and Vice
Chairman from 1984 to
1988; director of
Florida Rock
Industries, Inc., and
its affiliate, FRP
Properties, Inc.,
Stein Mart, Inc., a
publicly held
discount apparel
chain based in
Jacksonville,
Florida, Emerald
Funds and Wickes
Lumber Co., a
publicly held
retailer and
distributor of
building materials.
Robert S. Class Senior Vice President N/A --
Underhill III of Security Capital
(41) nominee Strategic
Group, Inc., from
1995 to present,
where he is
responsible for
researching corporate
and portfolio
acquisitions; Senior
Vice President,
LaSalle Partners
Limited, a real
estate investment
firm, from 1993 to
1994; and Vice
President of its
affiliate, LaSalle
Partners
International, from
1990 to 1993.
_________________________
* Member of the Executive Committee, any meeting of which also must
include any one of the outside directors.
= Member of the Audit Committee.
# Member of the Compensation Committee.
+ Member of the Nominating Committee.
(1) The Company's Amended and Restated Articles of Incorporation divide
the Board of Directors into three classes, as nearly equal in number
as possible, with directors elected for three-year terms.
(2) Where percentage is not indicated, amount is less than 0.1% of total
outstanding Common Stock. Unless otherwise noted, all shares are
owned directly, with sole voting and dispositive powers.
(3) Includes 160,263 shares held through The Regency Group, Inc. The
named individual is deemed to have shared voting and investment power
over these shares by virtue of testamentary trusts and a voting trust
of which the Steins and John D. Baker, II are trustees, which trusts
own 100% of the voting stock of The Regency Group, Inc. Also
includes 307,147 shares and 108,235 shares held through two family
partnerships, The Regency Group II and Regency Square II,
respectively. The general partners of The Regency Group II and
Regency Square II are the Steins, and a testamentary trust of which
the Steins and Mr. Baker are trustees.
(4) Includes 40,000 shares subject to presently exercisable options.
(5) Includes 5,000 shares subject to presently exercisable options.
Item 11. Executive Compensation
The following table summarizes the compensation paid or accrued by
the Company for services rendered during fiscal 1996, 1995 and 1994 to the
Company's Chief Executive Officer and to the Company's four most highly
compensated executive officers whose total salary and bonus exceeded
$100,000 during the year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Restricted Securities
Name & Principal Cash Stock Stock Underlying SPP Loan All Other
Position Year Salary(1) Bonus(2) Bonus(2) Awards(3) Options/SARs Awards(4) Compensation(5)
Martin E. Stein, Jr. 1996 $252,391 $102,250 $123,750 $168,000 0 $186,338 $34,439
President and Chief 1995 240,000 56,760 86,640 0 0 103,950 23,331
Executive Officer 1994 230,000 1,000 94,500 0 0 69,300 11,868
Bruce M. Johnson 1996 145,076 52,750 63,250 84,000 0 84,083 19,753
Executive Vice 1995 135,000 29,560 42,840 0 0 41,580 14,142
President and Chief 1994 123,000 1,000 46,370 0 0 27,720 12,019
Financial Officer
Robert C. Gillander, Jr. 1996 137,500 50,005 59,895 73,500 0 80,502 18,266
Executive Vice 1995 125,000 25,000 36,000 0 0 41,580 13,175
President, Investments 1994 116,000 1,000 40,320 0 0 27,720 11,736
James D. Thompson 1996 129,826 47,350 56,650 68,250 0 71,185 17,929
Executive Vice 1995 121,000 25,840 37,260 0 0 36,383 12,930
President, Operations 1994 116,000 1,000 40,320 0 0 24,256 11,648
Richard E. Cook 1996 125,114 31,000 30,000 68,250 0 74,535 17,038
Senior Vice President, 1995 121,000 23,560 33,840 0 0 41,580 12,930
Development(6) 1994 116,000 1,000 40,320 0 0 27,720 12,040
_________________________
(1) Includes amounts deferred under the 401(k) feature of the Company's
profit sharing plan.
(2) Bonuses for the year ended December 31, 1996 were paid 45% in cash
and 55% in stock; for the year ended December 31, 1995 were paid 40%
in cash and 60% in stock; and for the year ended December 31, 1994
were paid 100% in stock.
(3) Consists of the fair market value of restricted stock awards on
December 31, 1996, the date of grant. Awards vest 34%, 33% and 33%
on the first, second and third anniversary date of the grant provided
that the executive is employed by the Company or any affiliate on the
date of vesting, except that Mr. Cook's award could vest in full in
January 1998, subject to the provisions of his termination agreement.
The executive is entitled to dividends and voting rights on unvested
shares. Unvested shares, representing the full amount of the awards
listed above, held by the named executives as of the date of this
Proxy Statement are as follows: Mr. Stein, 6,400 shares; Mr.
Johnson, 3,200 shares; Mr. Gillander, 2,800 shares; Mr. Thompson,
2,600 shares; and Mr. Cook, 6,500 shares.
(4) Represents amounts earned by the named executive officers in
accordance with the terms of Stock Purchase Plan that is part of the
Company's 1993 Long Term Omnibus Plan.
(5) Consists of (a) contributions in the form of stock to the Company's
profit sharing and 401(k) plan for 1996, 1995 and 1994, the non-
401(k) portion of which was based on the attainment of predetermined
levels of funds from operations per share, and stock bonuses in the
amount equal to what would have been contributed to the 401(k) plan
in the absence of applicable IRS limitations: Mr. Stein, $33,629,
$22,521 and $11,448; Mr. Johnson, $18,943, $13,332 and $11,448; Mr.
Gillander, $13,456, $12,365 and $11,448; Mr. Thompson, $17,119,
$12,120 and $11,448; and Mr. Cook, $16,228, $12,120 and $11,448; and
(b) excess term life insurance premiums for 1996, 1995 and 1994: Mr.
Stein, $810, $810 and $420; Mr. Johnson, $810, $810 and $571; Mr.
Gillander, $810, $810 and $288; Mr. Thompson, $810, $810 and $200 and
Mr. Cook, $810, $810 and $592.
(6) Mr. Cook resigned from the Company effective January 31, 1997.
Employment Agreements. The Company has entered into a three-year
employment agreement with Martin E. Stein, Jr., the Company's President
and Chief Executive Officer, providing for an annual base salary and
participation in the Company's executive compensation plans on the same
terms as other executive officers. The agreement, which was effective in
October 1993, will be renewed automatically for an additional year on each
anniversary date thereof so that the remaining term will be three years,
unless either party gives written notice of non-renewal. The agreement
provides for Mr. Stein to receive base salary and incentive compensation
for the remainder of the term of the agreement in the event that he is
terminated, his responsibilities are materially reduced or the Company's
headquarters are relocated from Jacksonville, Florida as a result of a
sale, merger or other change of control of the Company. The Company has
entered into agreements with its executive officers that provide for the
payment of salary and benefits for a specified period in the event of a
change of control only. A change of control is defined to include a
change in at least one-third of the directors (unless recommended by a
majority of the continuing directors), the acquisition by any person of at
least 30% of the combined voting power of the Company's outstanding
securities unless pursuant to transactions approved by a majority of the
continuing directors, certain mergers, and a sale of substantially all the
Company's assets.
Options. The following table sets forth information concerning the
value of unexercised options as of December 31, 1996 held by the
executives named in the Summary Compensation Table above. No options were
exercised during 1996.
OPTION YEAR-END VALUES TABLE
Number of Unexercised Value of Unexercised
Options at December 31, In-the-Money Options at
1996 December 31, 1996
Name Exercisable/Unexercisable Exercisable/Unexercisable
Martin E. Stein, Jr. 40,000 (E) / 0 (U) $280,000
Bruce M. Johnson 16,000 (E) / 0 (U) 112,000
Robert C. Gillander, 16,000 (E) / 0 (U) 112,000
Jr.
James D. Thompson 14,000 (E) / 0 (U) 98,000
Richard E. Cook 16,000 (E) / 0 (U) 112,000
_________________________
Stock Purchase Plan Loans. To further align the interest of
management with the Company's shareholders, the Company has implemented a
stock purchase plan ("SPP") as part of its Long-Term Omnibus Plan to
encourage stock ownership by management. Management purchased 226,000
shares under this program during 1993 and 1996 at fair market value at the
time of purchase. The stock purchases were funded by SPP loans from the
Company (averaging 92% of the purchase price) and cash provided directly
from management. The current SPP loans outstanding are fully secured by a
portion of the stock purchased, have full recourse to management, are
interest only (due quarterly) with fixed rates of interest of 7.34% to
7.79%, and mature in 10 years. As part of the program, a portion of the
loans may be forgiven annually based on Company FFO performance, and total
shareholder return.
The following table sets forth as of March 1, 1997, the amounts
outstanding under the SPP loan program from each of the Company's
executive officers.
SPP Loan Balance Largest Balance
Executive Officer March 1, 1997 Since January 1, 1996
Martin E. Stein, Jr. $651,662 $838,000
Bruce M. Johnson 314,767 398,850
Robert C. Gillander, Jr. 294,479 374,981
James D. Thompson 261,896 333,081
Richard E. Cook 163,645 335,200
Compensation of Directors. In 1996, the Company paid an annual fee
of $17,000 to each of its directors, other than the Chairman and the
President, plus $2,500 per year for service on a Board committee ($3,000
per year for chairing a committee). Directors' fees are currently paid in
shares of Common Stock, unless the director elects to receive all or any
portion of the fees in cash. Non-employee directors also receive
non-qualified options to purchase 1,000 shares of Common Stock at the end
of each year and may elect to participate in a stock purchase matching
program that provides for a total stock value match of up to $10,000 per
year. The options vest one year after grant and have a term of ten years
and an exercise price equal to the greater of the fair market value of the
Common Stock on the date of grant or the average trading price of the
Common Stock on the 20 business days preceding the date of grant.
Compensation Committee Interlocks
and Insider Participation
During the year ended December 31, 1996, Martin E. Stein, President
and Chief Executive Officer of the Company, served on the board of
directors of FRP Properties, Inc. Edward L. Baker, Chairman of the Board
of FRP Properties, Inc. is a member of the Company's Compensation
Committee.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table shows certain information relating to the
beneficial ownership as of March 1, 1997 of (i) each person known to the
Company to be the beneficial owner of more than 5% of the Company's Common
Stock, which is the only outstanding class of voting securities of the
Company, (ii) each director and nominee for director, (iii) each of the
named executive officers shown in the Summary Compensation Table elsewhere
herein, and (iv) all directors and executive officers as a group. Except
as otherwise indicated, the shareholders listed exercise sole voting and
dispositive power over the shares.
Percent
Amount and Nature of of Voting
Beneficial Owner(1) Beneficial Ownership Securities(2)
Security Capital U.S. ) 5,246,078 42.6%
Realty(3) )
Security Capital Holdings )
S.A. )
AXA Assurances I.A.R.D. )
Mutuelle(4) )
)
AXA Assurances Vie )
Mutuelle(4) )
)
Alpha Assurances ) 623,700(6) 5.1%
I.A.R.D. Mutuelle(5) )
)
Alpha Assurances )
Vie Mutuelle(5) )
)
Uni Europe Assurance )
Mutuelle(7) )
)
AXA(8) )
)
The Equitable Companies )
Incorporated(9) )
Joan W. Stein(10) )
)
Martin E. Stein, Jr.(10) )
)
Richard W. Stein(11) ) 733,440(12)(13) 5.9%
)
Robert L. Stein(14) )
)
John D. Baker II(15) )
Edward L. Baker 12,271(16) *
A.R. Carpenter 10,623(16) *
J. Dix Druce, Jr. 10,039(16) *
Albert Ernest, Jr. 9,617(16) *
Douglas S. Luke 12,123(16) *
Paul E. Szurek 4,078(16) *
J. Marshall Peck 4,728(16) *
J. Alexander Branch III 67,616(17)
Mary Lou Rogers(18) -- --
Robert S. Underhill(18) -- --
Bruce M. Johnson 58,717(13)(19) *
Robert C. Gillander, Jr. 55,180(19) *
James D. Thompson 47,952(19) *
Richard E. Cook(20) 54,857(19)
All directors, nominees for 1,026,384(21) 8.2%
director and executive
officers as a group (a total
of 17 persons)
________________________
* Less than one percent.
(1) Information presented in this table and related notes has been
obtained from the beneficial owner and from reports filed by the
beneficial owner with the Securities and Exchange Commission pursuant
to Section 13 of the Securities Act of 1934.
(2) The percentages shown on the above table do not take into account the
shares of Common Stock issuable upon conversion of the Company's
Class B Non-Voting Stock (the "Class B Stock"). The Company has
outstanding a total of 2,500,000 shares of Class B Stock held by a
single institutional investor which are convertible into Common Stock
at the holder's option beginning December 20, 1998, subject to
certain numerical limitations, including a requirement that
conversion not result in the holder being the beneficial owner of
more than 4.9% of the Company's outstanding Common Stock. The Class
B Stock will be immediately convertible into Common Stock in full
upon the occurrence of certain extraordinary events or defaults,
including certain changes in management. A total of 2,975,468 shares
of Common Stock are issuable upon conversion of the Class B Stock.
Based on the number of shares of Common Stock outstanding on the
record date for the annual meeting (and assuming no other changes),
the 2,975,468 shares of Common Stock issuable upon conversion of the
Class B Stock would constitute approximately 19.4% of the Common
Stock outstanding immediately following conversion.
(3) The business address of Security Capital U.S. Realty and Security
Capital Holdings S.A. (collectively, "Security Capital") is 69, route
d'Esch, L-1470 Luxembourg.
(4) The business address of AXA Assurances I.A.R.D. Mutuelle and AXA
Assurances Vie Mutuelle is La Grande Arche, Pardi Nord, 92044 Paris
La Defense France.
(5) The business address of Alpha Assurances I.A.R.D. Mutuelle and Alpha
Assurances Vie Mutuelle is 101-100 Terrasse Boieldieu, 92042 Paris La
Defense France.
(6) AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, Alpha
Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle, Uni
Europe Assurance Mutuelle and AXA, as a group, disclaim any
beneficial ownership of these shares which include 64,000 shares over
which the reporting parties exercise shared voting power.
(7) The business address of Uni Europe Assurance Mutuelle is 24 Rue
Drouot, 75009 Paris France.
(8) The business address of AXA is 23 Avenue Matignon, 75008 Paris
France.
(9) The business address of The Equitable Companies Incorporated is 787
Seventh Avenue, New York, New York 10019.
(10) The business address of Joan W. Stein and Martin E. Stein, Jr. is 121
West Forsyth Street, Suite 200, Jacksonville, Florida 32202.
(11) The business address of Richard W. Stein is 1650 Prudential Drive,
Suite 304, Jacksonville, Florida 32207.
(12) Includes 160,263 shares held through The Regency Group, Inc. The
named individual is deemed to have shared voting and investment power
over these shares by virtue of testamentary trusts and a voting trust
of which the Steins and John D. Baker, II are trustees, which trusts
own 100% of the voting stock of The Regency Group, Inc. Also
includes: 307,147 shares and 108,235 shares owned through two family
partnerships, The Regency Group II and Regency Square II,
respectively. The general partners of The Regency Group II and
Regency Square II are the Steins and a testamentary trust of which
the Steins and Mr. Baker are trustees. Also includes: 10,816 shares
owned by Joan W. Stein, individually; 92,571 shares owned by Martin
E. Stein, Jr., individually; 40,000 shares subject to presently
exercisable options held by Martin E. Stein, Jr.; 4,000 shares held
by a trust of which Martin E. Stein, Jr. is the beneficiary; 1,305
shares held for the benefit of Martin E. Stein, Jr.'s minor children
over which he has sole voting and dispositive power; 2,501 shares
owned by Richard W. Stein, individually; 3,407 shares owned by Robert
L. Stein, individually; 2,000 shares subject to presently exercisable
options held by Robert L. Stein; and 2,500 shares held for the
benefit of Robert L. Stein's minor children, over which he has sole
voting and dispositive power.
(13) Excludes 46,691 shares held by the Company's 401(k) plan, of which
Messrs. Martin E. Stein, Jr. and Johnson are trustees. The trustees
have shared voting power over these shares.
(14) Robert L. Stein's business address is 1610 Independent Square,
Jacksonville, Florida 32202.
(15) Mr. Baker's business address is 155 E. 21st Street, Jacksonville,
Florida 32206.
(16) Includes the following shares covered by presently exercisable
options: Mr. Baker, 5,000 shares; Mr. Carpenter, 5,000 shares; Mr.
Druce, 5,000 shares; Mr. Ernest, 5,000 shares; Mr. Luke, 5,000
shares; Mr. Szurek, 3,000 shares; and Mr. Peck, 3,000 shares.
(17) Excludes 80,309 shares issuable upon redemption of limited
partnership units held by Mr. Branch and 2,228 shares issuable upon
redemption of limited partnership units held by Mr. Branch's wife as
trustee for the benefit of their children.
(18) Nominee for director.
(19) Includes the following shares covered by presently exercisable
options: Mr. Johnson, 16,000 shares; Mr. Gillander, 16,000 shares;
Mr. Thompson, 14,000 shares; and Mr. Cook, 16,000 shares.
(20) Mr. Cook resigned as Senior Vice President, Development, effective
January 31, 1997.
(21) Includes 119,000 shares subject to presently exercisable options.
Security Capital has agreed to a five-year standstill (renewable for
additional one-year terms) in its Stockholders Agreement with the Company,
as amended, pursuant to which Security Capital may not, among other
things, (i) acquire more than 45% of the Company's outstanding Common
Stock on a fully diluted basis, (ii) transfer shares in a negotiated
transaction that would result in any transferee beneficially owning more
than 9.8% of the Company's capital stock unless the Company approves the
transfer, in its sole discretion, (iii) act in concert with any third
parties as part of a 13D group, or (iv) seek to change the composition or
size of the Board of Directors (except as provided in the Stockholders
Agreement with respect to Security Capital's representation on the Board).
During the standstill term, Security Capital is generally required to vote
its shares of Common Stock in accordance with the recommendation of the
Company's Board of Directors or proportionally in accordance with the vote
of the other holders of the Common Stock except with respect to the
election of Security Capital's nominees to the Company's Board (as to
which Security Capital can vote its shares in its sole discretion) and
with respect to an amendment to the Company's Articles of Incorporation or
Bylaws and certain extraordinary matters (as to which Security Capital may
vote Common Stock owned by it up to 40% of the outstanding shares).
The standstill will terminate automatically prior to the end of its
stated term upon the occurrence of certain events, including the
acquisition by another person or group of 9.8% or more of the voting power
of the Company's outstanding voting securities. Opportunity Capital
Partners II Limited Partnership, a Maryland limited partnership ("OCP"),
is expected to have beneficial ownership of more than 9.8% of the Common
Stock following the exercise by it of redemption rights with respect to
units of limited partnership interest that are redeemable for Common
Stock. Security Capital has agreed that the standstill will not be
terminated by OCP's exercise of redemption rights so long as the shares
acquired by OCP as a result of such exercise are held directly and
beneficially by OCP. The waiver of the termination of the standstill also
extends to (i) 225,930 shares beneficially owned for various managed
accounts by ABKB/LaSalle Securities Limited, an affiliate of OCP's general
partner ("ABKB/LaSalle") (including 32,200 shares held in a discretionary
account for the benefit of OCP's limited partner), but only to the extent
that such shares are continuously held in each such account, and (ii) up
to 4.9% of the outstanding Common Stock beneficially owned as a result of
the conversion of Class B Stock, which is beneficially owned by an
affiliate of ABKB/LaSalle for another client. However, the waiver will
terminate as to all the shares described above if OCP, ABKB/LaSalle, any
other affiliate of OCP, or any member of a group of which OCP is a member
acquires beneficial ownership of any additional voting securities of the
Company or takes any other actions that would otherwise result in the
termination of the standstill.
During the standstill period, OCP has agreed with the Company that
OCP will not, and OCP and ABKB/LaSalle have agreed that they will not
cause other managed accounts for OCP's limited partner (collectively with
OCP, the "OCP Accounts") to acquire additional shares (i) so long as OCP
continues to beneficially own more than 9.8% of the Common Stock, on a
fully diluted basis, or (ii) thereafter if, after giving effect to the
acquisitions, the OCP Accounts would own more than 9.8% of the Common
Stock, on a fully diluted basis. However, neither ABKB/LaSalle nor any of
its affiliates is so bound with respect to any of their other clients or
accounts. Accordingly, if ABKB/LaSalle becomes the beneficial owner of
any shares that are not exempted from the standstill waiver as described
above (or if any of the exempted shares are transferred between
ABKB/LaSalle affiliates even though their aggregate beneficial ownership
does not decrease), then all shares beneficially owned by OCP,
ABKB/LaSalle and their affiliates will be counted in determining whether
Security Capital's standstill has terminated. If after any such event
such persons then beneficially own more than 9.8% of the outstanding
Common Stock, the standstill will terminate, and Security Capital will not
be restricted in the voting of the shares that it owns or in any other
action that it might take as a shareholder of the Company.
Item 13. Certain Relationships and Transactions
The Audit Committee of the Board of Directors is responsible for
evaluating the appropriateness of all related-party transactions.
Company Option on TRG Properties. TRG and Joan W. Stein, Martin E.
Stein, Jr. and Robert L. Stein (who are directors of the Company, and
together with Richard W. Stein, the "Steins") have retained interests in
properties that were determined not to be appropriate for ownership by the
Company initially because their transfer is restricted or because they
lack cash flow or are of a type presently inconsistent with the Company's
investment objectives. Upon consummation of the Company's initial public
offering in 1993, TRG granted options to the Company for all of the
properties (the "Option Properties") that TRG has the right to option and
that are likely to become suitable for Company investment, e.g., land that
can be developed into shopping centers or suburban office buildings. One
of the Option Properties consists of a 19-story downtown office building
in Fort Lauderdale, Florida ("BBP"), as to which the Company has been
granted a right of first refusal. The remaining Option Properties consist
of land in Florida that does not produce any cash flow. The Company has
an option to purchase any of these properties, in whole or in part, for
development as a Company property at a price equal to the sum of (i) 85%
of the appraised value of the property multiplied by the percentage
interest of TRG in the partnership that owns the property, plus (ii) 100%
of the appraised value of the property multiplied by the percentage
interest of any existing third party partners who also own an interest in
the property.
Management Services for TRG and its Affiliates. The Company, through
its affiliate Regency Realty Group, Inc. (the "Management Company"),
provides management and leasing services for BBP, and also will receive
brokerage fees for arranging the sale of any of the Option Properties, in
the event the Company does not acquire them, and development fees for
providing development services for the Option Properties that consist of
land held for sale. These arrangements are intended to give the Company
the economic benefit from the management, leasing, brokerage and
development activities with respect to such properties. All of such
services are provided on terms and conditions no less favorable to the
Management Company than the terms and conditions on which the Management
Company provides similar services to third parties. The Audit Committee
of the Board of Directors is required to review annually the terms and
conditions on which such services are provided. During the year ended
December 31, 1996, TRG paid the Management Company an aggregate of
$413,199 for such services. The Management Company also will receive
incentive compensation for developing certain Option Properties for others
and for arranging the sale of certain Option Properties as to which the
Company elects not to exercise its options in the form of a share of TRG's
net proceeds from such activities in excess of specified levels.
Administrative Services for TRG and its Affiliates. From time to
time, certain personnel of the Company or its subsidiaries provide risk
management, accounting, office space and other services to TRG and certain
of its affiliates, including the Steins, pursuant to an administrative
services agreement entered into in November 1993. The cost of such
services are reimbursed by TRG based on percentage allocations of
management time and general overhead made in compliance with applicable
regulations of the Internal Revenue Service. The Audit Committee of the
Board of Directors is required to review annually the cost allocations
made pursuant to the administrative services agreement. During the year
ended December 31, 1996, $95,000 was reimbursed to the Company under this
agreement.
Cost Sharing Arrangement with Management Company. The Company
manages, leases and develops its own properties under employee and cost
sharing arrangements with the Management Company. TRG owns 95% of the
voting common stock of the Management Company, and the Company owns 100%
of the Management Company's non-voting preferred stock and 5% of its
voting common stock. The cost sharing arrangements are based on
allocations of management time and general overhead made on an
arm's-length basis and in compliance with applicable regulations of the
Internal Revenue Service. All such cost sharing arrangements must be
reviewed annually by the Audit Committee of the Board of Directors, and
any changes in such arrangements must be approved by a majority of the
Company's independent directors. Under generally accepted accounting
principles, all items of income and expense of the Management Company are
consolidated with the Company and included in the Company's financial
statements, net of inter-company transactions.
Limited Partnership Agreement with WLD Enterprises, Inc. The
Company, through its subsidiary RRC JV One, Inc., has entered into a
limited partnership with WLD Realty, Ltd. known as Regency Ocean East
Partnership, Ltd. in which the Company, as general partner, owns a
twenty-five percent (25%) interest and WLD Realty, Ltd., as limited
partner, owns a seventy-five percent (75%) interest. Douglas S. Luke, a
director of the Company, is President and Chief Executive Officer of WLD
Enterprises, Inc. ("WLD"), an affiliate of WLD Realty, Ltd., and also owns
a 3.85% interest in WLD Realty, Ltd. The purpose of the partnership is to
operate Ocean East, a Florida shopping center. Each partner contributed
their pro rata share of capital on the closing date, January 31, 1996.
Future distributions from the operations of the shopping center will be
made pro rata until each partner has achieved a cumulative internal rate
of return of 12%, then distributions will be 50% to each partner. In the
event of sale or refinancing, distributions to each partner after return
of capital will be pro rata and after an IRR of 18% will be 50% to each
partner. In the opinion of the Board of Directors, the terms of the
partnership agreement are at least as favorable as those that could be
obtained from entering into a partnership with an unrelated party.
Consulting Services from Security Capital Affiliate. Security
Capital Investment Research, Inc.("SCII"), an affiliate of Security
Capital, provides consulting services from time to time on an as-needed
basis to the various entities in which Security Capital has invested.
During the year ended December 31, 1996, the Company accrued consulting
fees and expenses to SCII of approximately $95,000, primarily for due
diligence assistance in connection with the Branch Transaction.
Other. Richard W. Stein, a nominee for director and the son and
brother, respectively, of Joan W. Stein, the Company's Chairman, and
Martin E. Stein, Jr., the Company's President and a director, is President
and Chief Executive Officer, and a director of Palmer & Cay/Carswell,
Inc., an independent insurance agency. During the year ended December 31,
1996, the Company obtained insurance through Palmer & Cay/Carswell for
which Palmer & Cay/Carswell received commissions in the aggregate amount
of approximately $127,000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly executed this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
REGENCY REALTY CORPORATION
Date: April 28, 1997 By: /s/ Martin E. Stein, Jr.
Martin E. Stein, Jr.
President and Chief Executive Officer
