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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF
THE SECURITIES EXCHANGE ACT OF 1934
REGENCY CENTERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 59-3429602
(State of 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 pursuant to Section 12(b) of the Act: None.
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Title of each class Name of each exchange on which
to be so registered: each class is to be registered:
NOT APPLICABLE NOT APPLICABLE
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Securities registered pursuant to Section 12(g) of the Act:
Class B Units of Partnership Interest
(Title of class)
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TABLE OF CONTENTS
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PAGE
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Item 1. Business....................................................................................... 1
Item 2. Financial Information.......................................................................... 7
Item 3. Properties..................................................................................... 15
Item 4. Security Ownership of Certain Beneficial Owners and Management................................. 23
Item 5. Directors and Executive Officers of the Registrant............................................. 24
Item 6. Executive Compensation......................................................................... 24
Item 7. Certain Relationships.......................................................................... 24
Item 8. Legal Proceedings.............................................................................. 25
Item 9. Market Price of and Dividends on the Registrant's Common Equity and
Related Shareholder Matters.................................................................... 25
Item 10. Recent Sales of Unregistered Securities........................................................ 26
Item 11. Description of Registrant's Securities To Be Registered........................................ 27
Item 12. Indemnification of Directors and Officers...................................................... 29
Item 13. Consolidated Financial Statements and Supplementary Data....................................... 29
Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........... 29
Item 15. Financial Statements and Exhibits.............................................................. 29
SIGNATURES................................................................................................... 32
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ITEM 1. BUSINESS
ORGANIZATION AND SHOPPING CENTER BUSINESS
Regency Centers, L.P. (the "Partnership") is a limited partnership which
acquires, owns, develops and manages neighborhood and community shopping centers
in targeted infill markets in the eastern half of the United States. As a result
of the formation of the Partnership in 1996 and the subsequent consolidation of
substantially all of its neighborhood and community shopping centers in early
1998, the Partnership is the primary entity through which Regency Realty
Corporation (the "Company," "Regency" or the "General Partner") owns its
properties and through which the Company intends to expand its ownership and
operation of properties. Regency is a real estate investment trust ("REIT"), the
common stock of which is traded on the New York Stock Exchange. The Company
believes that the tax deferral advantages offered by the Partnership increase
the attractiveness of the Partnership's units as consideration for property
acquisitions.
As of March 31, 1998, the Partnership owned, directly or through joint
ventures, 100 of the Company's 121 properties, containing approximately 10.7
million square feet of Partnership-owned GLA. As of March 31, 1998, the Company
had an investment in real estate of approximately $991.8 million, of which
$779.0 million was attributable to the Partnership.
The Company believes that the Company's and the Partnership's portfolio of
grocery-anchored neighborhood and community shopping centers is one of the
largest (measured by GLA) and highest quality in the industry. As of March 31,
1998, the Company owned 121 shopping centers with 60% of the Company's 13.4
million square feet of GLA located in Georgia and Florida and the Partnership
owned 100 shopping centers with 62% of the Partnership's 10.7 million square
feet of GLA located in Georgia and Florida. As of March 31, 1998, the Company's
shopping centers (excluding centers under development) were approximately 94.5%
leased and the Partnership's shopping centers (excluding centers under
development) were approximately 95.2% leased.
OPERATING AND INVESTMENT PHILOSOPHY
The Company's and the Partnership's key operating and investment objective
is to create long-term shareholder value by (i) continuing to grow their high
quality real estate portfolio of grocery-anchored neighborhood shopping centers
in attractive infill markets, (ii) maximizing the value of the portfolio through
implementation of their Retail Operating System, a system that incorporates
research-based investment strategies and value-added leasing and management
systems, and (iii) utilizing conservative financial management and their
substantial capital base to access the most cost effective capital to fund their
growth.
Management believes that the key to achieving its objective is its single
focus on, and growing critical mass of, quality grocery-anchored neighborhood
shopping centers. In the opinion of management, the Partnership's premier
platform of shopping centers in targeted markets, its proprietary research
capabilities, its value enhancing Retail Operating System, its cohesive and
experienced management team and its access to competitively priced capital
enable it to maintain a competitive advantage over other operators.
The Partnership believes that ownership of the approximately 30,000
shopping centers throughout the United States is highly fragmented, with less
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than 10% owned by REITs, and that many centers are held by unsophisticated and
undercapitalized owners. As a result, the Partnership believes that an
opportunity exists for it to be a consolidating force in the industry. In
addition, the Partnership believes that through proprietary demographic research
and targeting, its portfolio and tenant mix can be customized for and marketed
to national and regional retailers, thereby producing greater sales and a value-
added shopping environment for both retailer and shopper.
The Partnership's shopping center properties feature some of the most
attractive characteristics in the industry: an average age of seven years, an
average remaining grocery-anchor lease term of 15 years and an average grocery-
anchor size of 48,000 square feet (45% of the square footage of the grocery-
anchored centers on average).
GROCERY-ANCHORED INFILL STRATEGY
The Partnership's investment strategy is focused on grocery-anchored infill
shopping centers. Infill locations are situated in densely populated residential
communities where there are significant barriers to entry, such as zoning
restrictions, growth management laws or limited availability of sites for
development or expansions. The Partnership is focused on building a platform of
grocery-anchored neighborhood shopping centers because grocery stores provide
convenience shopping for daily necessities, generate foot traffic for adjacent
"side shop" tenants and should be better able to withstand adverse economic
conditions. By developing close relationships with the leading supermarket
chains, the Partnership believes it can attract the best "side shop" merchants
and enhance revenue potential. Based on Partnership research, at March 31, 1998,
66 of the Partnership's shopping centers were anchored by the grocery store with
the first or second leading market share, as measured by total market sales.
RESEARCH DRIVEN MARKET SELECTION
The Partnership has identified 35 markets in the eastern half of the United
States as its target markets. These markets were selected because, in general,
they offer greater growth in population, household income and employment than
the national averages. In addition, the Partnership believes that it can achieve
"critical mass" in these markets (defined as owning or managing four to five
shopping centers) and that it can generate sustainable competitive advantages,
through long-term leases to the predominant grocery-anchor and other barriers to
entry from competition. Within these markets, the Partnership's research staff
further defines and selects submarkets and trade areas based on additional
analysis of the above data. The Partnership then identifies target properties
and their owners (including development opportunities) within these submarkets
and trade areas based on three-mile radius demographic data and ranks potential
properties for purchase. The properties currently owned by the Partnership are
in submarkets with an average three-mile population of 69,000, average household
income of $62,000 and projected five-year population growth of 12%.
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RETAIL OPERATING SYSTEM
The Partnership's value-added operating strategy is driven by its Retail
Operating System which is characterized by: (i) proactive leasing and
management; (ii) value enhancing remerchandising initiatives; (iii) the
Partnership's "preferred customer initiative"; (iv) a customer driven
development and redevelopment program; and (v) proven management expertise.
PROACTIVE LEASING AND MANAGEMENT. Leasing and management efforts are
strengthened by the Partnership's integrated approach to property management.
Property managers are an integral component of the acquisition and integration
teams. Thorough, candid tenant interviews by property managers during
acquisition due diligence allow the Partnership to quickly assess both problem
areas as well as opportunities for revenue enhancement prior to closing.
Property managers are responsible not only for the general operations of their
centers, but also for coordinating leasing efforts, thereby aligning their
interests with the Partnership's. In addition, the Partnership's information
systems allow managers to spot future lease expirations and to proactively
market and remerchandise spaces several years in advance of such expirations.
VALUE ENHANCING REMERCHANDISING INITIATIVES. The Partnership believes that
certain shopping centers underserve their customers, reducing foot traffic and
negatively affecting the tenants located in the shopping center. In response,
the Partnership is initiating a remerchandising program which is directed at
obtaining the optimum mix of tenants offering goods, personal services and
entertainment and dining options in each of its shopping centers. By re-
tenanting shopping centers with tenants that more effectively service the
community, the Partnership expects to increase sales, and therefore the value,
of its shopping centers.
PREFERRED CUSTOMER INITIATIVE. The Partnership has established a preferred
customer initiative with dedicated personnel whose goal is to establish new and
strengthen existing strategic relationships with successful retailers at the
national, regional and local levels. The Partnership achieves this goal by
establishing corporate relationships, negotiating standard lease forms and
working with the preferred customers to match expansion plans with future
availability in the Partnership's shopping centers. Retail trends and the
operating performance of these preferred customers are monitored. The benefits
of the preferred customer initiative are expected to improve the merchandising
and performance of the shopping centers, establish brand recognition among
leading operators, reduce turnover of tenants and reduce vacancies. The
Partnership currently has identified and is developing relationships with 45
preferred customers, including Radio Shack, GNC, Hallmark Cards, Mailboxes, Etc.
and Starbucks Coffee, and continues to target additional tenants with which to
establish preferred customer relationships.
CUSTOMER-DRIVEN DEVELOPMENT AND REDEVELOPMENT PROGRAM. The Partnership's
development and redevelopment program is primarily conducted in close
cooperation with its major customers, including Kroger, Publix and Eckerd. The
Partnership uses its development capabilities to service these customer's growth
needs by building or re-developing modern properties with state of the art
supermarket formats that generate higher returns for the Partnership under new
long-term leases. During 1997, the Partnership began development on 20 retail
projects, including new developments, redevelopments and build-to-suits. Upon
completion, the Partnership will have invested $77.4 million in these projects.
In 1998, the Partnership has begun development on 19 retail projects, including
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new developments, redevelopments and build-to-suits. Upon completion, the
Partnership will have invested $154.0 million in these projects. The Partnership
manages its development risk by obtaining signed anchor leases prior to the
commencement of construction.
PROVEN MANAGEMENT EXPERTISE. The Partnership strives to maintain an
experienced and integrated management team to effectively run all aspects of its
business. The Company's and the Partnership's management team includes 22
officers who have been cycle-tested and average 11 years of experience with the
Partnership and/or with Branch Properties, L.P. ("Branch") or Midland
Development Group, Inc. ("Midland"), from which the Partnership made major
acquisitions in 1997 and 1998, respectively.
ACQUISITION TRACK RECORD
The Partnership has grown its asset base significantly through acquisitions
in recent years, acquiring properties totaling $101.7 million, $346.0 million
and $128.8 million in 1996 and 1997 and through March 31, 1998 respectively.
These acquisitions have allowed the Partnership to diversify geographically from
its predominantly Florida-based portfolio and have enabled it to establish a
presence in many of its target markets. Upon identifying an acquisition target,
the Partnership utilizes expertise from all of its functional areas, including
acquisitions, due diligence and property management, not only to determine the
appropriate purchase price, but also to develop a business plan for the center
and to design an integration plan for the management of the center. The
Partnership believes that its established acquisition and integration procedures
produce higher returns on its portfolio, reduce risk and position the
Partnership to capitalize on consolidation in the shopping center industry.
CAPITAL STRATEGY
The Partnership and the Company intend to maintain a conservative capital
structure designed to enhance access to capital on favorable terms, to allow
growth through development and acquisition and to promote future earnings
growth. The Partnership has adopted a policy of limiting total indebtedness to
50% of total assets at cost and maintaining a minimum debt service coverage
ratio of 2:1. Debt service coverage ratio is defined as EBITDA (as defined
below) divided by interest expense plus preferred distributions. As of March
31, 1998, the Partnership had indebtedness equal to 38.8% of total assets at
cost and a debt service coverage ratio of 4.8:1. On a pro forma basis, after
giving effect to the issuance by the Partnership of $80.0 million 8.125% Series
A Cumulative Redeemable Preferred Units in June 1998 (the "Series A Preferred
Units") and $100.0 million 7-1/8% Notes Due July 20, 2005 in July 1998 (the
"Notes" and collectively with the Series A Preferred Units, the "Financings")
and the application of the proceeds therefrom, as of March 31, 1998, the
Partnership would have had indebtedness equal to 36.2% of total assets at cost
and a debt service coverage ratio of 3.0:1. As used herein, "EBITDA" means
earnings before interest expense, taxes (excluding taxes pertaining to the
brokerage operations), depreciation, amortization and minority interests.
EBITDA is computed as income from operations before minority interest plus
interest expense, non-recurring gains and losses from the sale of operating real
estate, depreciation and amortization. The Partnership believes that in
addition to cash flows and net income, EBITDA is a useful financial performance
measurement for assessing its operating performance because, together with net
income and cash flows, EBITDA provides investors with an additional basis to
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evaluate the ability of the Partnership to incur and service debt and to fund
acquisitions and other capital expenditures.
Since the Company's initial public offering in 1993, the Partnership and
the Company have financed their growth in part through a series of public and
private offerings of Regency equity and Partnership units totaling, as of June
1, 1998, approximately $464.6 million, including the Partnership's utilization
of its units as consideration for acquisitions.
As described above, the Partnership issued $80.0 million of Preferred Units
in a private placement on June 25, 1998 and issued $100.0 million of Notes in a
private placement on July 20, 1998. The Partnership applied the net proceeds
therefrom to retire indebtedness under its $300.0 million unsecured revolving
line of credit (the "Line") with a group of commercial banks.
The Partnership had an outstanding balance under the Line of approximately
$90.2 million as of March 31, 1998. At that time, the Partnership also had
mortgage loans outstanding of $212.0 million that were secured by 38 properties.
On a pro forma basis, after giving effect to the Financings and the application
of the net proceeds therefrom, as of March 31, 1998, the Partnership would have
had $300.0 million available under the Line.
SC-USREALTY ALLIANCE
In June 1996, Regency entered into a strategic alliance with Security
Capital Holdings, S.A. (together with its parent company, Security Capital U.S.
Realty, "SC-USREALTY") as a result of which SC-USREALTY became Regency's
principal shareholder. In addition to SC-USREALTY's initial investment in 1996,
SC-USREALTY has participated in subsequent Regency equity issuances (including
in connection with the Branch acquisition and a common stock offering in 1997)
pursuant to participation rights. As a result, SC-USREALTY beneficially owned
39.4% (including convertible securities on a fully diluted basis) of Regency's
outstanding common stock as of June 30, 1998. In connection with its investment,
SC-USREALTY has placed two of its nominees on Regency's thirteen-member Board of
Directors.
SC-USREALTY endeavors to obtain strategic ownership positions in leading
value-added real estate operating companies in the United States. SC-USREALTY's
investments focus on real estate operating companies in which opportunities
exist to enhance asset cash flow by combining a strategically focused asset
portfolio with synergistic marketing and other strategies that meet the needs of
customers. The Company's relationship with SC-USREALTY combines SC-USREALTY's
commitment to in-depth market research, tested operating systems and access to
global capital with the Company's market presence, operating skills and grocery-
anchored real estate platform. This relationship provides the Company with
access to financial and strategic resources and differentiates the Company from
its competitors in the retail shopping center industry. See "Risk
Factors-Concentration of Ownership of Regency Common Stock."
MATTERS RELATING TO THE REAL ESTATE BUSINESS, THE PARTNERSHIP'S RAPID GROWTH AND
THE PARTNERSHIP STRUCTURE
The Partnership is subject to certain business risks arising in connection
with owning real estate which include, among others, (1) a change in the general
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economic climate and local conditions, such as an oversupply of space or a
reduction in demand for real estate in an area, (2) the bankruptcy or insolvency
of, or a downturn in the business of, any of its anchor tenants, (3) the
possibility that such tenants will not renew their leases as they expire, (4)
vacated anchor space affecting the entire shopping center because of the loss of
the departed anchor tenant's customer drawing power, (5) risks relating to
leverage, including uncertainty that the Partnership will be able to refinance
its indebtedness, floating rate debt and the risk of higher interest rates, (6)
the Partnership's inability to satisfy its cash requirements for operations and
the possibility that the Partnership may be required to borrow funds to enable
Regency to meet distribution requirements in order to maintain its qualification
as a REIT, (7) potential liability for unknown or future environmental matters
and costs of compliance with the Americans with Disabilities Act, (8) the risk
of uninsured losses (such as from hurricanes) and (9) the risk that the
Partnership's development activities will be unsuccessful. Unfavorable economic
conditions could also result in the inability of tenants in certain retail
sectors to meet their lease obligations and otherwise could adversely affect the
Partnership's ability to attract and retain desirable tenants. The Partnership
believes that the shopping centers are relatively well positioned to withstand
adverse economic conditions since they typically are anchored by grocery stores,
drug stores and discount department stores that offer day-to-day necessities
rather than luxury goods.
The Partnership is also subject to risks due to its extensive growth
through acquisitions. This expansion has placed significant demands on its
operational, administrative and financial resources. The continued growth of
the Partnership's real estate portfolio can be expected to continue to place a
significant strain on its resources. The Partnership's future performance will
depend in part on its ability to successfully attract and retain qualified
management personnel to manage the growth and operations of the Partnership's
business and to finance such acquisitions.
Regency's acquisition of properties through the Partnership in exchange for
interests in the Partnership may permit certain tax deferral advantages to
limited partners who contribute properties to the Partnership. Since properties
contributed to the Partnership may have unrealized gain attributable to the
difference between the fair market value and adjusted tax basis in such
properties prior to contribution, the sale of such properties could cause
adverse tax consequences to the limited partners who contributed such
properties. Although generally Regency, as the general partner of the
Partnership, has no obligation to consider the tax consequences of its actions
to any limited partner, there can be no assurance that the Partnership will not
acquire properties in the future subject to material restrictions designed to
minimize the adverse tax consequences to the limited partners who contribute
such properties. Such restrictions could result in significantly reduced
flexibility to manage Partnership assets.
COMPETITION
There are numerous shopping center developers, real estate companies and
other owners of real estate that compete with the Partnership in seeking retail
tenants to occupy vacant space, for the acquisition of shopping centers, and for
the development of new shopping centers. The Partnership believes that its
competition in the real estate industry is highly fragmented with less than 10%
owned by REITs, and that many centers are held by unsophisticated and
undercapitalized owners. As a result, the Company believes that an opportunity
exists for it to be a consolidating force in the industry.
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CHANGES IN POLICIES
Regency's Board of Directors determines Regency's and the Partnership's
policies with respect to certain activities, including debt capitalization,
growth, distributions, Regency's REIT status, and investment and operating
policies. The Board of Directors has no present intention to amend or revise
these policies. However, the Board of Directors may do so at any time without a
vote of Regency's stockholders or the Partnership's limited partners.
EMPLOYEES
The Partnership's headquarters are located in Jacksonville, Florida.
Regency presently maintains nine offices in which it conducts management and
leasing activities located in Florida, Georgia, North Carolina, Ohio, and
Missouri. As of March 31, 1998, the Partnership had approximately 255 employees
and believes that relations with its employees are good.
ITEM 2. FINANCIAL INFORMATION
SELECTED FINANCIAL DATA
The following table sets forth Selected Financial Data on a historical
basis for the three months ended March 31, 1997 and March 31, 1998 and for the
five years ended December 31, 1997, for the Partnership and the commercial real
estate business of The Regency Group, Inc. ("TRG" or "Regency Properties"), the
predecessor of the Company. This information should be read in conjunction with
the Consolidated Financial Statements of the Partnership (including the related
notes thereto) and "Management's Discussion and Analysis of the Financial
Condition and Results of Operations," each included elsewhere in this
Registration Statement. The historical Selected Financial Data for the
Partnership for the four year period ended December 31, 1997, and for the period
from July 9, 1993 to December 31, 1993, have been derived from audited financial
statements. The historical Selected Financial Data for the Regency Properties
as of November 5, 1993 has been derived from audited financial statements. The
data presented for the three-month periods ended March 31, 1997 and March 31,
1998 are derived from unaudited financial statements and include, in the opinion
of management, all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the data for such periods. The results for the
three-month period ended March 31, 1998 are not necessarily indicative of the
results to be expected for the full fiscal year.
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REGENCY
REGENCY CENTERS, LP. PROPERTIES
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THREE MONTHS ENDED PERIOD PERIOD
MARCH 31, YEAR ENDED DECEMBER 31, ENDED ENDED
------------------- --------------------------------------- Dec. 31, Nov. 5,
1998 1997 1997 1996 1995 1994 1993 1993(1)
------------------- --------------------------------------- -------- ----------
(Unaudited)
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(In thousands of dollars, except per unit data)
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OPERATING DATA:
Revenues:
Rental revenue.................... $ 21,294 $ 11,323 $ 67,221 $ 24,899 $ 14,362 $10,209 $ 954 $ 3,938
Management, leasing & brokerage
fees............................ 2,504 1,641 7,997 3,444 2,426 2,332 534 2,247
Equity in income of
investments in real
estate partnerships............. 1 27 33 70 4 17 3 18
-------- -------- -------- -------- -------- ------- ------- -------
Total revenues................. 23,799 12,991 75,251 28,413 16,792 12,558 1,491 6,203
-------- -------- -------- -------- -------- ------- ------- -------
Operating expenses:
Operating, maintenance & real
estate taxes.................... 5,139 3,068 17,139 7,211 4,130 3,279 406 2,275
General and administrative........ 3,433 2,221 9,964 6,049 4,895 4,531 736 2,835
Depreciation and amortization..... 4,145 1,921 11,905 4,345 2,573 1,895 167 963
-------- -------- -------- -------- -------- ------- ------- -------
Total operating expenses....... 12,717 7,210 39,008 17,605 11,598 9,705 1,309 6,073
-------- -------- -------- -------- -------- ------- ------- -------
Interest expense, net of
interest income................. 3,091 2,330 12,679 5,866 4,398 2,276 (74) 1,766
-------- -------- -------- -------- -------- ------- ------- -------
Income (loss) before minority
interest and gain on
sale of real estate
investments..................... 7,991 3,451 23,564 4,942 796 577 256 ( 1,636)
Minority interest...................... (97) (131) (505) -- -- -- -- 126
Gain on sale of real estate investments
and other income..................... 10,237 -- 451 -- -- -- -- 2,725
-------- -------- -------- -------- -------- ------- ------- -------
Net income........................ 18,131 3,320 23,510 4,942 796 577 256 1,215
Net income for unit holders....... $ 18,131 $ 3,320 $ 23,510 $ 4,942 $ 796 $ 577 $ 256 $ 1,215
======== ======= ======== ======== ======== ======= ======= =======
Earnings per unit:
Basic........................... $ 0.71 $ 0.20 $ 1.20 $ 0.19 $ 0.04 $ 0.09 $ 0.07 n/a
======== ======== ========= ======== ======== ======= ======= =======
Diluted......................... $ 0.70 $ 0.20 $ 1.12 $ 0.19 $ 0.04 $ 0.09 $ 0.07 n/a
======== ========= ========= ======== ======== ======= ======= =======
BALANCE SHEET DATA:
Real estate investments at cost........ $779,008 $ 519,472 $636,787 $257,066 $149,735 $92,649 $41,484 -
Total assets........................... 776,211 523,499 641,149 258,184 145,997 90,404 40,262 -
Total debt............................. 302,259 241,336 193,587 107,982 55,686 56,998 2,521 -
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__________
(1) Such Combined Financial Statements have been prepared to reflect the
historical combined operations of the Regency Properties associated with
the ownership of the properties and the management, leasing, acquisition,
development and brokerage business acquired by the Company from TRG on
November 5, 1993 in connection with the Company's initial public offering
completed November 5, 1993.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto of the Partnership appearing
elsewhere herein. This Registration Statement contains certain forward-looking
statements (as such term is defined in the Private Securities Litigation Reform
Act of 1995) and information relating to Regency and the Partnership that is
based on the beliefs of the management of Regency and the Partnership, as well
as assumptions made by and information currently available to the management of
Regency and the Partnership. When used in this Registration Statement, the
words "estimate," "project," "believe," "anticipate," "intend," "expect" and
similar expressions are intended to identify forward-looking statements. Such
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results, performance or achievements of the Company, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: general
economic and business conditions; changes in customer preferences; competition;
changes in technology; the integration of any acquisitions, including the Branch
and Midland Acquisitions (each as defined herein); changes in business strategy;
the indebtedness of the Partnership; quality of management, business abilities
and judgment of the Partnership's personnel; the availability, terms and
deployment of capital; and various other factors referenced in this Registration
Statement. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof.
SHOPPING CENTER BUSINESS
The Partnership's principal business is owning, operating and developing
grocery-anchored neighborhood infill shopping centers in the eastern half of the
United States. Infill locations are situated in densely populated residential
communities where there are significant barriers to entry, such as zoning
restrictions, growth management laws, or limited availability of sites for
development or expansions.
ACQUISITION AND DEVELOPMENT OF SHOPPING CENTERS
The Partnership acquired 12 shopping centers during 1996 (the "1996
Acquisitions") for $101.7 million. The Partnership acquired 36 shopping centers
during 1997 (the "1997 Acquisitions") for $346.0 million. The 1997 Acquisitions
include the acquisition of 26 shopping centers from Branch for $232.4 million in
March 1997 (the "Branch Acquisition"). The real estate acquired from Branch (the
"Branch Properties") included 100% fee simple interests in 20 shopping centers,
and also partnership interests (ranging from 50% to 93%) in four partnerships
with outside investors that owned six shopping centers. The Partnership also
acquired the third party property management contracts of Branch on
approximately three million square feet of shopping center GLA that generate
management fees and leasing commission revenues. During March 1998, the
principals of Branch received 721,997 additional earn-out units and shares of
common stock from the Partnership and the Company and may receive additional
units and shares after the second and third anniversaries of the Branch closing,
based on the performance of certain properties. The future earn-out is limited
to an aggregate of 298,064 units and shares.
In January, 1998, the Partnership entered into an agreement to acquire the
shopping centers from various entities comprising the Midland Group ("Midland")
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consisting of 21 shopping centers plus a development pipeline of 11 shopping
centers. Of the 32 centers to be acquired or developed (the "Midland
Acquisition" or "Midland Properties"), 31 are anchored by Kroger, or its
affiliate. Eight of the shopping centers included in the development pipeline
will be owned through a joint venture in which the Partnership will own less
than a 50% interest upon completion of construction (the "JV Properties"). The
Partnership acquired 13 of the Midland shopping centers during March, 1998 for
approximately $111 million. As of June 30, 1998, the Partnership has acquired
all but one of the shopping centers and all of the JV Properties. The
Partnership acquired the one remaining operating shopping center during July,
1998 and expects to acquire the remaining three development shopping centers
during the third quarter of 1998. As of June 30, 1998, the Partnership=s total
investment in the properties acquired from Midland was $180.3 million. During
1998, 1999 and 2000, including all payments made to date, the Partnership will
pay approximately $213 million for the 32 properties, and in addition may pay
contingent consideration of $23 million for the properties, through the issuance
of Partnership units, the payment of cash and the assumption of debt.
During the first quarter of 1998, the Partnership acquired a total of 14
shopping centers for approximately $128.8 million (the "1998 Acquisitions"),
which includes the 13 properties acquired from Midland.
RESULTS FROM OPERATIONS
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 TO
Three Months Ended March 31, 1997
Revenues increased $10.8 million, or 83%, from $13.0 million for the first
three months of 1997 to $23.8 million for the first three months of 1998. The
increase was primarily the result of the 1997 Acquisitions and the Midland
Acquisition. At March 31, 1998, the real estate portfolio contained
approximately 10.7 million square feet and was 93.5% leased. Minimum rent
increased $8.1 million, or 91%, and recoveries from tenants increased $1.5
million, or 68%, for the first three months of 1998 compared to the first three
months of 1997. Revenues from property management, leasing, brokerage and
development services provided on properties not owned by the Partnership were
$2.5 million for the first three months of 1998 compared to $1.6 million for the
first three months of 1997, the increase was due to fees earned from third
property management and leasing contracts acquired as part of the Branch
Acquisition and the Midland Acquisition. At March 31, 1998, the Partnership
managed shopping centers and office buildings owned entirely by third parties
containing approximately 6.1 million square feet.
During the first quarter of 1998, the Partnership sold three office
buildings and a parcel of land for $26.7 million, and recognized a gain on the
sale of $10.2 million. The Partnership sold its one remaining office building
during the second quarter of 1998, resulting in the Partnership's real estate
portfolio being comprised entirely of neighborhood shopping centers. The
proceeds from the sale were applied toward the purchase price of the 1998
Acquisitions.
Operating expenses increased $5.5 million, or 76%, to $12.7 million for the
first three months of 1998. Combined operating and maintenance expenses and real
estate taxes increased $2.1 million, or 68%, during the first three months of
1998 to $5.1 million. The increases are due to the 1997 Acquisitions and the
Midland Acquisition. General and administrative expense increased 55% during the
first three months of 1998 to $3.4 million due to the hiring of new employees
10
<PAGE>
and related office expenses necessary to manage the 15 shopping centers acquired
in the Midland Acquisition. Depreciation and amortization increased $2.2 million
during the first three months of 1998, or 116%, primarily due to the 1997
Acquisitions and the Midland Acquisition.
Interest expense increased to $3.4 million in the first three months of
1998 from $2.5 million in the first three months of 1997, or 37%, due primarily
to increased average outstanding loan balances related to the financing of the
1997 and 1996 Acquisitions on the Line and the assumption of debt, as discussed
under "-Acquisition and Development of Shopping Centers" above and "--Liquidity
and Capital Resources" below.
COMPARISON OF 1997 TO 1996
Revenues increased $46.8 million, or 165%, to $75.3 million in 1997. The
increase was due primarily to the 1997 Acquisitions and 1996 Acquisitions. At
December 31, 1997, the real estate portfolio contained approximately 7.1 million
square feet and was 93.6% leased. Minimum rent increased $32.8 million, or 160%,
and recoveries from tenants increased $8.7 million, or 204%. Revenues from
property management, leasing, brokerage and development services provided on
properties not owned by the Partnership were $8.0 million in 1997 compared to
$3.4 million in 1996, due to fees earned from third party property management
and leasing contracts acquired as part of the Branch Acquisition. At December
31, 1997, the Partnership managed shopping centers and office buildings owned
entirely by third parties containing approximately 4.4 million square feet as
compared with 1.2 million square feet at December 31, 1996.
Operating expenses increased $21.4 million, or 122%, to $39.0 million in
1997. Combined operating and maintenance expenses and real estate taxes
increased $9.9 million, or 138%, during 1997 to $17.1 million. The increases are
due to the 1997 and 1996 Acquisitions. General and administrative expense
increased 65% during 1997 to $10.0 million due to the hiring of new employees
and related office expenses necessary to manage the 52 shopping centers acquired
during 1996 and 1997, as well as the 44 shopping centers that the Partnership
began managing for third parties during 1997. Depreciation and amortization
increased $7.6 million during 1997, or 174%, primarily due to the 1997 and 1996
Acquisitions.
Interest expense increased to $13.6 million in 1997 from $6.5 million in
1996, or 110%, due primarily to increased average outstanding loan balances
related to the financing of the 1997 and 1996 Acquisitions on the Line and the
assumption of debt, as discussed under "--Acquisition and Development of
Shopping Centers" above and "--Liquidity and Capital Resources" below.
COMPARISON OF 1996 TO 1995
Revenues increased $11.6 million, or 69.2%, to $28.4 million in 1996. The
increase was due primarily to the 1996 Acquisitions discussed above and six
shopping centers purchased during 1995 for $53.3 million ("1995 Acquisitions").
At December 31, 1996, the real estate portfolio contained approximately 3.5
million square feet and was 95.3% leased. Minimum rent increased $8.5 million,
or 70%, and recoveries from tenants increased $2.0 million, or 87%. Revenues
from property management, leasing, brokerage and development services provided
on properties not owned by the partnership were $3.4 million in 1996 compared to
$2.4 million in 1995, due to fees earned on build-to-suit development activity.
11
<PAGE>
At December 31, 1996 and 1995, the Partnership managed shopping centers and
office buildings owned entirely by third parties containing approximately 1.2
million square feet.
Operating expenses increased $6.0 million, or 52%, to $17.6 million in
1996. Combined operating and maintenance expenses and real estate taxes
increased $3.1 million, or 75%, during 1996 to $7.2 million. General and
administrative expense increased 24% during 1996 to $6.0 million due to the
hiring of new employees and related office expenses necessary to manage the 20
shopping centers acquired during 1995 and 1996. Depreciation and amortization
increased $1.8 million during 1996, or 69%, primarily due to the 1996 and 1995
Acquisitions and three new anchor tenants who opened during 1996.
Interest expense increased to $6.5 million in 1996 from $4.8 million in
1995, or 35%, due primarily to increased average outstanding loan balances
related to the 1996 and 1995 Acquisitions. Outstanding debt at December 31, 1996
was $108.0 million as opposed to $55.7 million at year-end 1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided to the Partnership by operating activities was $13.0
million for the three months ended March 31, 1998, and was $30.1 million, $8.0
million and $4.4 million for the years ended December 31, 1997, 1996 and 1995,
respectively. Net cash provided to the Partnership by operating activities is
the primary source of funds to pay interest and scheduled principal reductions
on outstanding debt, maintain and operate the shopping centers and pay
distributions to partners. Changes in net cash provided to the Partnership by
operating activities is further discussed above under "--Results from
Operations". Net cash used in investing activities was $47.7 million for the
three months ended March 31, 1998 and $150.3 million, $107.3 million and $57.1
million during 1997, 1996 and 1995, respectively, as discussed above in
"--Acquisition and Development of Shopping Centers". Net cash provided to the
Partnership by financing activities was $25.7 million for the three months ended
March 31, 1998, and was $128.4 million, $104.5 million and $53.2 million during
1997, 1996 and 1995, respectively.
The Partnership's total indebtedness at March 31, 1998 and December 31,
1997 and 1996 was $302.3 million, $193.6 million and $108.0 million,
respectively, of which $173.5 million, $114.6 million and $30.5 million had
fixed interest rates averaging 7.6%, 7.9% and 8.3%, respectively. The weighted
average interest rate on total debt at March 31, 1998 and December 31, 1997 and
1996 was 7.3%, 7.7% and 7.8%, respectively. During 1997, the Partnership, as
part of its acquisition activities, assumed $117.7 million of debt, as compared
to no assumed debt in connection with acquisition activities during 1996. The
cash portion of the purchase price for the 1997 Acquisitions was financed from
Regency's Line. At December 31, 1997 and 1996, the balance of the Line was $48.1
million and $73.7 million, respectively.
During March 1998, the Partnership assumed Regency's obligations under the
Line and entered into an agreement to increase the unsecured commitment amount
of the Line from $150.0 million to $300.0 million, provide for a $150.0 million
competitive bid facility and reduce the interest rate on the Line based upon
achieving an investment grade rating of BBB- or higher from Standard & Poors
Ratings Services ("S&P") and a Baa3 rating or higher from Moody's Investors
Service, Inc. ("Moody's"). As of the date hereof, the Partnership has received
investment grade ratings from Moody's of Baa2, a rating of BBB- from S&P and a
12
<PAGE>
rating of BBB from Duff and Phelps. As of March 31, 1998, the Line had an
outstanding principal balance of $90.2 million. As of May 1, 1998, the interest
rate on the Line was equal to LIBOR plus .875%. Regency anticipates that future
debt will also be incurred primarily by the Partnership.
The Credit Agreement, dated as of March 27, 1998 (the "Credit Agreement"),
in connection with the Line contains certain financial covenants which, among
other things, require Regency (on a consolidated basis with its subsidiaries,
including the Partnership) to maintain a minimum net worth and certain financial
ratios and which also restrict distributions, investments and the incurrence of
additional indebtedness. Regency is currently in compliance with its financial
covenants under the Line, but there can be no assurance that it will continue to
be in compliance with these covenants in the future.
The Partnership's real estate portfolio grew substantially during 1997 as a
result of the acquisitions and developments discussed above. In 1998, the
Partnership intends to exceed its 1997 level of acquisitions and development.
The Partnership expects to meet the related capital requirements from borrowings
on the Line and from equity and debt offerings, including the issuance of $80.0
million of Preferred Units in a private placement in late June 1998. Because
such acquisition and development activities are discretionary in nature, they
are not expected to burden the Partnership's capital resources currently
available for liquidity requirements. The Partnership expects that cash provided
by operating activities, unused amounts available under the Line and cash
reserves are adequate to meet liquidity requirements.
ACCOUNTING STANDARDS AND ACCOUNTING CHANGES
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS
130"), which is effective for years beginning after December 15, 1997. FAS 130
establishes standards for reporting total comprehensive income in financial
statements, and requires that companies explain the differences between total
comprehensive income and net income. Management has adopted this statement in
1998. No differences between total comprehensive income and net income existed
in the interim financial statements reported at March 31, 1998 and 1997.
FASB issued Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("FAS
131"), which is effective for years beginning after December 15, 1997. FAS 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. Management does not believe that FAS 131 will affect
its current disclosures.
Effective March 19, 1998, the Emerging Issues Task Force ("EITF") ruled in
Issue 97-11, "Accounting for Internal Costs Relating to Real Estate Property
Acquisitions", that only internal costs of identifying and acquiring non-
operating properties that are directly identifiable with the acquired properties
should be capitalized, and that all internal costs associated with identifying
and acquiring operating properties should be expensed as incurred. The
Partnership had previously capitalized all costs associated with the acquisition
of operating properties as a cost of the real estate. The Partnership has
adopted EITF 97-11 effective March 19, 1998. During 1997, the Partnership
capitalized $1.5 million of internal costs related to acquiring operating
13
<PAGE>
properties. Through the effective date of EITF 97-11, the Partnership has
capitalized $474,000 of internal acquisition costs in 1998. For the remainder of
1998, the Partnership expects to incur $1.1 million internal costs related to
acquiring operating properties, which will be expensed.
On May 22, 1998, the EITF reached a consensus on issue 98-9 "Accounting for
Contingent Rent in Interim Financial Periods." The EITF has stated that lessors
should defer recognition of contingent rental income that is based on meeting
specified targets until those specified targets are met, rather than recognizing
it ratably throughout the year. The Partnership has previously recognized
contingent rental income (i.e., percentage rent) ratably over the year based on
the historical trends of its tenants. The Partnership has adopted Issue 98-9
prospectively and has ceased the recognition of contingent rents until such time
as its tenants have achieved their specified targets. The Partnership believes
this will affect the interim period in which percentage rent is recognized;
however, it will not have a material impact on the annual recognition of
percentage rent.
ENVIRONMENTAL MATTERS
The Partnership, like others in the commercial real estate industry, is
subject to numerous environmental laws and regulations affecting the ownership
and operation of real property. Dry cleaning facilities at the Partnership's
shopping centers are a significant environmental concern. Certain of the
Partnership's properties have been impacted by the dry cleaning operations of
tenants or by other sources, and the Partnership is currently investigating or
remediating contamination at these properties. The Partnership believes that the
tenant dry cleaners are presently operating in accordance with current laws and
regulations and has established procedures to monitor their operations. Based on
information presently available, no additional environmental accruals have been
made, and management believes that the ultimate disposition of currently known
matters will not have a material adverse effect on the financial position,
liquidity or results of operations of the Partnership. However, there can be no
assurance that current remediation estimates and liability accruals for these
matters will not change or that the future environmental compliance or remedial
obligations arising out of known or currently undiscovered matters will not have
a material adverse effect on the Partnership's business, financial condition or
results of operations.
INFLATION
Inflation has remained relatively low during 1998 and 1997 and has had a
minimal impact on the operating performance of the shopping centers. However,
substantially all of the Partnership's long-term leases contain provisions
designed to mitigate the adverse impact of inflation. Such provisions include
clauses enabling the Partnership to receive percentage rentals based on tenants'
gross sales, which generally increase as prices rise, and/or escalation clauses,
which generally increase rental rates during the terms of the leases. Such
escalation clauses are often related to increases in the consumer price index or
similar inflation indices. In addition, many of the Partnership's leases are for
terms of less than ten years, which permits the Partnership to seek increased
rents upon re-rental at market rates. Most of the Partnership's leases require
the tenants to pay their share of operating expenses, including common area
maintenance, real estate taxes, insurance and utilities, thereby reducing the
Partnership's exposure to increases in costs and operating expenses resulting
from inflation.
14
<PAGE>
YEAR 2000 SYSTEM COMPLIANCE
The Partnership has conducted a comprehensive review of its computer
systems to identify the systems that could be affected by the "Year 2000"
problem and is in the process of resolving the issue. During 1997, the
Partnership and the Company converted their operating system, and their general
accounting and lease administration software systems, to versions containing
modifications that corrected for the Year 2000 problem. The Partnership will
continue to assess its other internal systems and reprogram or upgrade as
necessary; however, the cost to convert remaining systems is not expected to
have a material adverse affect on the Partnership's financial position. The
Partnership is also reviewing the Year 2000 system conversions of other
companies with which it does business in order to determine their compliance.
ITEM 3. PROPERTIES
The Partnership's properties and the Company's properties are summarized by
state, including their GLA, as of March 31, 1998 as follows:
<TABLE>
<CAPTION>
Partnership COMPANY
------------------------------------- -------------------------------------
LOCATION # PROPERTIES GLA % Leased(1) # PROPERTIES GLA % LEASED(1)
-------- ------------ ---------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Florida 34 4,154,104 93.8% 44 5,310,720 91.9%
Georgia 25 2,540,304 92.9% 27 2,717,511 93.2%
North Carolina 12 1,239,667 96.8% 12 1,239,667 96.8%
Ohio 9 945,610 97.5% 11 1,575,530 93.9%
Alabama 0 C -- 5 516,080 99.9%
Texas 5 464,552 86.1% 5 464,552 86.1%
Tennessee 4 295,257 90.2% 4 295,257 90.2%
Mississippi 0 C -- 2 185,061 97.8%
Colorado 5 441,049 82.8% 5 441,049 82.8%
Virginia 2 197,324 98.1% 2 197,324 98.1%
Kentucky 1 205,060 93.1% 1 205,060 93.1%
South Carolina 1 79,743 88.7% 1 79,743 88.7%
Michigan 1 85,478 99.0% 1 85,478 99.0%
Missouri 1 82,498 99.8% 1 82,498 99.8%
--- ---------- ---- --- ---------- ----
TOTAL 100 10,730,646 93.5% 121 13,395,530 92.9%
=== ========== ==== === ========== ====
</TABLE>
__________________________
(1) Includes 14 properties under development If centers under development were
excluded, as of March 31, 1998, the Partnership's shopping centers would be
95.2% leased and the Company's shopping centers would be 94.5% leased.
The following table summarizes the largest tenants occupying the
Partnership's shopping centers and the Company's shopping centers based upon
percentage of total annual rent exceeding 1% at March 31, 1998:
15
<PAGE>
<TABLE>
<CAPTION>
PARTNERSHIP COMPANY
------------------------------------------------- ----------------------------------------------
% OF TOTAL % OF TOTAL
PARTNER- RENT(1) % OF Company- RENT(1) % OF
SHIP- (IN PARTNERSHIP OWNED (IN COMPANY
TENANT GLA OWNED GLA MILLIONS) RENT(1) GLA GLA MILLIONS) RENT(1)
------ --------- --------- ---------- ----------- --------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kroger(2) 1,413,570 13.2% $11.6 13.4% 1,482,570 11.1% $11.9 10.7%
Publix 1,068,110 10.0 7.0 8.1% 1,249,521 9.3% 7.8 7.1%
Winn Dixie 411,003 3.9 2.7 3.1% 687,513 5.1% 4.7 4.3%
Blockbuster 179,838 1.7 2.6 3.0% 186,338 1.4% 2.7 2.5%
K-Mart 427,743 4.0 2.2 2.6% 427,743 3.2% 2.2 2.0%
Harris Teeter 184,563 1.7 2.2 2.6% 184,563 1.4% 2.2 2.0%
Eckerd 148,211 1.4 1.3 1.5% 198,325 1.5% 1.6 1.4%
Walgreens 122,365 1.2 1.2 1.3% 177,365 1.3% 1.6 1.4%
Wal-Mart 224,169 2.1 1.0 1.2% 486,168 3.6% 2.0 1.8%
CVS Drugs 94,206 0.9 0.8 0.9% 103,206 0.8% 0.8 0.7%
</TABLE>
_____________________________
(1) Rent includes annual base rent, annual percentage rent and annualized
reimbursements for common area maintenance, real estate taxes and insurance
as of March 31, 1998.
(2) Excludes 11 Kroger-anchored shopping centers under development. If
included, percentage of Partnership-owned GLA would be 19.5% and percentage
of Partnership rent would be 20.5%. If included, percentage of Company-
owned GLA would be 16.2% and percentage of Company rent would be 16.5%.
The Partnership's leases have lease terms generally ranging from three to
five years for tenant space under 5,000 square feet. Leases greater than 10,000
square feet generally have lease terms in excess of five years, mostly comprised
of anchor tenants with leases generally ranging from five to 40 years. Many of
the anchor leases contain provisions allowing the tenant the option of extending
the term of the lease at expiration. The Partnership's leases provide for the
monthly payment in advance of fixed minimum rentals and for the payment of
additional rents calculated as a percentage of the tenant's sales (in some
cases), the tenant's pro rata share of real estate taxes, insurance and common
area maintenance expenses and reimbursement for utility costs if not directly
metered. The following table sets forth for all occupied leases in place as of
June 30, 1998, a schedule of the Partnership's lease expirations for the next
ten years, assuming that no tenants exercise renewal options:
<TABLE>
<CAPTION>
FUTURE
PERCENT OF BASE PERCENT OF
TOTAL GLA RENT UNDER TOTAL
EXPIRING CURRENTLY EXPIRING BASE
LEASE EXPIRATION YEAR GLA Occupied Leases Rent(2)
--------------------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
(1)....................... 89,144 0.9% $ 910,569 0.9%
1998...................... 411,827 4.1 5,247,617 5.3
1999...................... 806,004 8.0 9,255,584 9.4
2000...................... 712,092 7.0 8,333,714 8.4
2001...................... 845,221 8.4 10,050,718 10.2
2002...................... 1,028,305 10.2 10,888,764 11.0
2003...................... 552,124 5.5 6,042,302 6.1
2004...................... 291,777 2.9 2,779,954 2.8
2005...................... 164,717 1.6 1,697,464 1.7
2006...................... 484,189 4.8 3,926,680 4.0
2007...................... 367,624 3.6 3,541,174 3.6
--------- ---- ----------- ----
10 Yr Total........ 5,753,024 56.9% $62,674,540 63.3%
========= ==== =========== ====
</TABLE>
______________
16
<PAGE>
(1) Leased currently under month-to-month rent or in process of renewal.
(2) Total minimum rent includes current minimum rent and future contractual
rent steps for all properties, but excludes additional rent such as
percentage rent, common area maintenance, real estate taxes and insurance
reimbursements.
See the property table below and also see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for further
information about the Partnership's properties.
The following table describes the Partnership's properties and the
Company's properties not owned by the Partnership at March 31, 1998:
<TABLE>
<CAPTION>
YEAR GROSS
YEAR CON- LEASABLE PERCENTAGE GROCERY GROCERY DRUG OTHER
PROPERTY NAME ACQUIRED STRUCTED(1) AREA (GLA) LEASED (2) GLA ANCHOR STORE ANCHORS
- ------------- -------- ----------- ---------- ---------- ------- ------------ ---------- -----------
FLORIDA
JACKSONVILLE/NORTH FLORIDA
- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anastasia Shopping Plaza 1993 1988 102,342 98.3% 4 8,555 Publix -- --
Bolton Plaza 1994 1988 172,938 98.6% -- -- -- Wal-Mart
Carriage Gate 1994 1978 76,833 90.4% -- -- -- TJ Maxx
Courtyard (3) 1987 1987 67,794 44.6% 6 6,446 Albertson's (4) -- --
Ensley Square (5) 1997 1977 62,361 97.1% 4 7,786 Delchamps -- --
Millhopper (3) 1993 1974 84,444 85.9% 3 7,244 Publix Eckerd --
Newberry Square 1994 1986 181,006 99.0% 3 9,795 Publix Kmart
Old St. Augustine Plaza 1996 1990 170,220 98.2% 4 2,112 Publix Eckerd Waccamaw
Palm Harbor 1996 1991 168,448 98.8% 4 5,254 Publix Eckerd Bealls
Pine Tree Plaza (6) 1997 1998 60,488 82.4% 3 7,888 Publix -- --
Regency Court 1997 1992 218,665 97.6% -- -- -- CompUSA,
Office Depot,
Sports
Authority
South Monroe Commons (6) 1996 1998 80,214 86.5% 4 8,466 Winn-Dixie Eckerd --
Village Commons (7) 1988 1988 105,895 97.5% -- -- -- Wal-Mart (4),
Stein Mart
TAMPA/ORLANDO
- -------------------------------
Bloomingdale 1998 1987 267,935 98.1% 3 9,795 Publix Eckerd Wal-Mart,
Beall's
Mainstreet Square 1997 1988 107,159 89.9% 5 6,000 Winn-Dixie Walgreen's --
Mariner's Village 1997 1986 117,665 95.6% 4 5,500 Winn-Dixie Walgreen's --
Market Place-St. Petersburg 1995 1983 90,296 100.0% 3 6,464 Publix Eckerd --
Paragon Cable Building 1993 1993 40,298 100.0% -- -- -- --
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
YEAR GROSS
YEAR CON- LEASABLE PERCENTAGE GROCERY GROCERY DRUG OTHER
PROPERTY NAME ACQUIRED STRUCTED(1) AREA (GLA) LEASED (2) GLA ANCHOR STORE ANCHORS
- ------------- -------- ----------- ---------- ---------- ------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peachland Promenade 1995 1991 82,082 97.4% 48,890 Publix Ace Hardware
Regency Square at Brandon (3) 1986 1986 341,751 82.6% -- -- -- TJ Maxx, AMC,
Staples,
Marshalls,
Michaels
Seven Springs 1994 1986 162,580 93.1 35,000 Winn-Dixie -- Kmart
Terrace Walk (3) 1990 1990 50,926 56.8 -- -- -- --
Town Square 1997 1986 42,969 100.0 14,074 Kash 'N Karry Rite Aid
University Collections 1996 1984 106,627 93.8 40,143 Kash 'N Karry Eckerd
(4)
Village CenterCTampa 1995 1993 181,096 98.7 36,434 Publix Walgreen's Stein Mart
WEST PALM BEACH/
Treasure Coast
- ---------------------------
Boynton Lakes Plaza 1997 1993 130,724 91.0 44,000 Winn-Dixie Walgreen's --
Chasewood Plaza (3) 1992 1986 141,034 89.6 39,795 Publix Walgreen's --
Chasewood Storage (3) 1992 1986 42,810 99.9 -- -- --
East Port Plaza 1997 1991 231,656 99.4 42,112 Publix Walgreen's Kmart, Sears
Homelife
Martin Downs Village Center (3) 1992 1985 121,998 92.7 -- -- Walgreen's Coastal Care
Martin Downs Village
Shoppes (3)(6) 1992 1988 48,932 95.6 -- -- -- --
Ocean Breeze (3) 1992 1985 111,551 93.2 36,464 Publix Walgreen's Coastal Care
Ocean East (5) 1996 1997 112,894 63.4 38,100 Stuart's Fine -- Coastal Care
Foods
Tequesta Shoppes 1996 1986 109,766 92.8 39,795 Publix Walgreen's --
Town Center at Martin Downs 1996 1996 64,546 100.0 56,146 Publix -- --
Wellington Market Place 1995 1990 178,555 91.9 46,475 Winn-Dixie Walgreen's United Artists
Wellington Town Square 1996 1982 105,150 94.9 36,464 Publix Eckerd --
MIAMI/FT. LAUDERDALE
- ---------------------------
Aventura (3) 1994 1974 102,876 90.5 35,908 Publix Eckerd Humana
Berkshire Commons 1994 1992 106,434 99.9 65,537 Publix Walgreen's --
Garden Square 1997 1991 90,258 96.3 42,112 Publix Eckerd --
North Miami (3) 1993 1988 42,500 100.0 32,000 Publix Eckerd --
Palm Trails Plaza (6) 1997 1998 76,067 85.0 59,562 Winn-Dixie -- --
Tamiami Trail 1997 1987 110,867 93.8 42,112 Publix Eckerd --
University Market Place 1990 1990 129,121 61.1 63,139 Albertson's (4) -- Linens
Super-
market
Welleby 1996 1982 109,949 89.5 46,779 Publix Walgreen's --
--------- -----
Subtotal/Weighted Average 5,310,720 91.9%
(Florida) --------- -----
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
YEAR GROSS
YEAR CON- LEASABLE PERCENTAGE GROCERY GROCERY DRUG OTHER
PROPERTY NAME ACQUIRED STRUCTED(1) AREA (GLA) LEASED (2) GLA ANCHOR STORE ANCHORS
- ------------- -------- ----------- ---------- ---------- ------- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GEORGIA
- ---------------------------
ATLANTA
- ---------------------------
Ashford Place 1997 1993 53,345 100.0% -- -- -- Pier 1 Imports
Braelin Village (5) 1997 1991 226,522 98.8 63,986 Kroger -- Kmart
Briarcliff LaVista 1997 1962 39,201 100.0 -- -- Drug --
Emporium
Briarcliff Village 1997 1990 192,660 90.0 -- -- Eckerd TJ Maxx,
Office Depot
Buckhead Court 1997 1984 55,227 95.8 -- -- -- Outback
Steakhouse
Cambridge Square 1996 1979 68,725 79.6 32,000 Winn-Dixie -- --
Cromwell Square 1997 1990 81,826 83.6 -- -- CVS Drug Haverty's
Furniture
Cumming 400 1997 1994 126,899 100.0 56,146 Publix -- Big Lots
Delk Spectrum (3)(5) 1998 1991 100,880 100.0 45,044 A&P -- --
Dunwoody Hall 1997 1986 79,974 99.0 34,632 A&P Eckerd --
Dunwoody Village (5) 1997 1975 114,657 96.3 26,950 Bruno's -- --
Evans Crossing 1998 1993 76,580 100.0 62,580 Kroger -- --
Loehmann's Plaza 1997 1986 137,635 86.6 -- -- Eckerd Loehmann's
Lovejoy Station 1997 1995 77,336 100.0 47,955 Publix -- --
Memorial Bend 1997 1995 177,278 86.5 56,146 Publix -- TJ Maxx
Orchard Square 1995 1987 85,940 89.8 36,990 A&P CVS Drug --
Paces Ferry Plaza 1997 1987 61,693 100.0 -- -- -- --
Powers Ferry Square 1997 1987 97,809 100.0 7,216 Harry's Drugs for --
Less
Powers Ferry Village 1997 1994 78,995 100.0 47,955 Publix CVS Drug --
Rivermont Station 1997 1996 90,267 100.0 58,261 Harris Teeter CVS Drug --
Roswell Village (6) 1997 1997 144,071 86.8 37,888 Publix Eckerd Ace Hardware
Russell Ridge 1994 1995 98,556 100.0 63,296 Kroger -- --
Sandy Plains Village 1996 1992 168,513 76.9 60,009 Kroger -- Ace Hardware
Sandy Springs Village 1997 1997 48,245 100.0 41,354 Kroger -- --
Trowbridge Crossing (5) (6) 1997 1997 64,060 89.9 37,888 Publix -- --
OTHER MARKETS
- ---------------------------
LaGrange Marketplace (3) 1993 1989 76,327 93.6 46,733 Winn-Dixie Eckerd --
Parkway Station (5) 1996 1983 94,290 92.9 42,130 Kroger -- --
--------- -----
Subtotal/Weighted
2,717,511 -----
Average (Georgia) --------- 93.2%
-----
NORTH CAROLINA
- ---------------------------
CHARLOTTE
- ---------------------------
Carmel Commons 1997 1979 132,647 95.7% 14,300 Fresh Market Eckerd Piece Goods
City View 1996 1993 77,550 98.5 44,000 Winn-Dixie CVS Drug --
Union Square 1996 1989 97,191 100.0 33,000 Harris Teeter CVS Drug Consolidated
Theatres
RALEIGH/DURHAM
- ---------------------------
Bent Tree Plaza 1998 1994 79,503 100.0 54,153 Kroger -- --
Garner Square (6)(7) 1998 1998 221,650 94.7 57,590 Kroger United
-- Artists,
Office Max,
Petsmart
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
YEAR GROSS
YEAR CON- LEASABLE PERCENTAGE GROCERY GROCERY DRUG OTHER
PROPERTY NAME ACQUIRED STRUCTED(1) AREA (GLA) LEASED (2) GLA ANCHOR STORE ANCHORS
- ------------- -------- ----------- ---------- ---------- ------- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Glenwood Village 1997 1983 42,864 100.0 27,764 Harris Teeter -- --
Lake Pine Plaza 1998 1997 87,690 100.0 57,590 Kroger -- --
Maynard Crossing 1998 1997 122,814 100.0 55,973 Kroger -- --
Southpoint Crossing (6)(7) 1998 1998 101,088 80.4 59,160 Kroger -- --
Woodcroft 1996 1984 85,353 98.5 26,752 Food Lion Eckerd True Value
ASHEVILLE
- ------------------------------
Oakley Plaza 1997 1988 118,727 100.0 42,317 Bi-Lo CVS Drug Baby
Superstore
WINSTON-SALEM
- ------------------------------
Kernersville Marketplace 1998 1997 72,590 100.0 57,590 Kroger -- --
--------- -----
Subtotal/Weighted
Average (North --------- -----
Carolina)
1,239,667 96.8%
--------- -----
OHIO
- ------------------------------
CINCINNATI
- ------------------------------
Beckett Commons 1998 1995 80,434 100.0% 57,590 Kroger -- --
Cherry Grove 1998 1997 186,040 92.6 66,879 Kroger CVS Drug TJ Maxx,
Hancock
Fabrics
Hyde Park Plaza (3)(5) 1997 1995 374,743 96.3 138,592 Kroger, Walgreen's Barnes &
Thriftway Noble,
Old Navy,
Micheals
COLUMBUS
- ------------------------------
East Pointe 1998 1993 86,520 100.0 59,120 Kroger Stein Mart,
The
Limited, S&K
Menswear
North Gate Plaza 1998 1996 85,100 94.2 62,000 Kroger --
Kingsdale (3)(6) 1997 1998 255,177 77.3 55,000 Big Bear Stein Mart,
The
Limited, S&K
Menswear
Windmiller Plaza-Pickerington 1998 1997 119,192 97.1 75,240 Kroger Sears Hardware
HAMILTON
- ------------------------------
Hamilton Meadows 1998 1989 126,251 100.0 67,216 Kroger K-Mart
WESTCHESTER
- ------------------------------
Westchester Plaza 1998 1988 88,181 98.4 66,523 Kroger -- --
WORTHINGTON
- ------------------------------
Worthington 1998 1991 93,092 100.0 52,337 Kroger CVS Drug --
--------- -----
Subtotal/Weighted --------- -----
Average (Ohio) 1,575,530 93.9%
--------- -----
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
YEAR GROSS
YEAR CON- LEASABLE PERCENTAGE GROCERY GROCERY DRUG OTHER
PROPERTY NAME ACQUIRED STRUCTED(1) AREA (GLA) LEASED (2) GLA ANCHOR STORE ANCHORS
- ------------- -------- ----------- ---------- ---------- ------- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COLORADO
- -------------------------------
COLORADO SPRINGS
- -------------------------------
Cheyenne Meadows (5)(6) 1998 1998 89,130 88.5% 69,105 King Soopers -- --
Monument (6)(7) 1998 1998 85,313 81.9 69,913 King Soopers -- --
Woodman Plaza (6)(7) 1998 1998 97,913 71.4 69,913 King Soopers -- --
DENVER
- -------------------------------
Lloyd King Center (5)(6) 1998 1998 83,380 91.6 61,000 King Soopers -- --
Stroh Ranch (6)(7) 1998 1998 85,313 81.9 69,913 King Soopers -- --
--------- -----
Subtotal/Weighted
Average (Colorado) 441,049 82.8%
--------- -----
TENNESSEE
- --------------------------------
NASHVILLE
- --------------------------------
Harpeth Village (5)(6) 1997 1998 70,091 95.4% 54,510 Bruno's -- --
Marketplace (5) 1997 1997 23,500 100.0 -- -- -- Office Max
Murphreesburo (5) 1998 1998 86,871 70.5 61,224 Kroger -- --
Nashboro Village (6)(7) 1998 1998 86,871 70.5 61,224 Kroger -- --
Peartree Village 1997 1997 -- -- 654,538 Harris Teeter Eckerd Office Max
114,795 100.0
Subtotal/Weighted -- --
Average (Tennessee) 295,257 90.2%
SOUTH CAROLINA
- --------------------------------
Merchants Village (6) 1997 1997 79,743 88.7% 37,888 Publix -- --
- --------------------------------
KENTUCKY
- --------------------------------
Franklin Square 1998 1988 205,060 93.1% 50,499 Kroger Rite Aid JC Penney,
Goody's
MICHIGAN
- --------------------------------
Lakeshore 1998 1996 85,478 99.0% 49,465 Kroger Rite Aid --
MISSOURI
- --------------------------------
St. Ann Square 1998 1986 82,498 99.8% 43,483 National -- --
TEXAS
- --------------------------------
DALLAS
- --------------------------------
Bethany Lake (6)(7) 1998 1998 92,674 63.0% 58,374 Kroger -- --
Preston BrookCFrisco (6)(7) 1998 1998 86,132 70.7 60,932 Kroger -- --
Shiloh Springs (6)(7) 1998 1997 81,932 93.9 60,932 Kroger -- --
ARLINGTON
- --------------------------------
Creekside (5) 1998 1997 85,642 100.0 60,932 Kroger -- --
- --------------------------------
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
YEAR GROSS
YEAR CON- LEASABLE PERCENTAGE GROCERY GROCERY DRUG OTHER
PROPERTY NAME ACQUIRED STRUCTED(1) AREA (GLA) LEASED (2) GLA ANCHOR STORE ANCHORS
- ------------- -------- ----------- ---------- ---------- ------- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SOUTHLAKE
- --------------------------------
Village Center-Southlake (5) 1998 1997 118,172 100.0 60,932 Kroger -- --
--------- -----
Subtotal/Weighted
Average (Texas) --------- 86.1%
464,552 -----
---------
VIRGINIA
- --------------------------------
Brookville Plaza 1998 1991 63,664 100.0% 52,864 Kroger -- --
Statler Square 1998 1996 133,660 97.2 65,003 Kroger CVS Drug Staples
--------- -----
Subtotal/Weighted
Average (Virginia) 197, 324 98.1%
--------- ----
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
YEAR GROSS
YEAR CON- LEASABLE PERCENTAGE GROCERY GROCERY DRUG OTHER
PROPERTY NAME ACQUIRED STRUCTED(1) AREA (GLA) LEASED (2) GLA ANCHOR STORE ANCHORS
------------- -------- ----------- ---------- ---------- ------- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALABAMA
- --------------------------------
BIRMINGHAM
- --------------------------------
Villages of Trussville (3) 1993 1987 69,300 100.0% 38,380 Bruno's CVS Drug --
West County Marketplace (3) 1993 1987 129,155 100.0 42,848 Food World (4) Eckerd Wal-Mart
- --------------------------------
MONTGOMERY
- --------------------------------
Country Club (1) 1993 1991 67,622 99.6 35,922 Winn-Dixie Harco --
- --------------------------------
ROANOKE/ALEXANDER CITY
- --------------------------------
Bonner's Point (1) 1993 1985 87,280 100.0 34,700 Winn-Dixie -- Wal-Mart
Marketplace-Alexander City (3) 1993 1987 162,723 100.0 47,668 Winn-Dixie --
'97
Subtotal/Weighted Average 516,080 99.9%
(Alabama) ======= =====
MISSISSIPPI
- --------------------------------
Columbia Marketplace (3) 1993 1988 136,002 97.0% 41,895 Winn-Dixie -- Wal-Mart
Lucedale Marketplace (3) 1993 1989 49,059 100.0 35,059 Delchamps -- Wal-Mart (4)
Subtotal/Weighted Average 185,061 97.8%
(Mississippi)
Total/Weighted Average 13,395,530 92.9%
========== =====
</TABLE>
- -------------------------
(1) Or latest renovation.
(2) Includes development properties. If development properties are excluded,
the total percentage leased would be 95.2% for Partnership shopping centers
and 94.5% for Company shopping centers.
(3) Company-owned property not owned by the Partnership.
(4) Tenant owns its own building.
(5) Owned by a partnership with outside investors in which the Partnership (or
the Company in the case of a property referred to in note (3) above) or an
affiliate is the general partner.
(6) Property under development or redevelopment.
(7) Owned by a joint venture in which the Partnership owns less than a 100%
interest.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Partnership interests in the Partnership are represented by Units, of which
there are (i) Series A Preferred Units, (ii) Original Limited Partnership Units
(including Class A Units), all of which were issued in connection with the
Branch Acquisition, (iii) Class 2 Units, all of which were issued in connection
with the Midland Acquisition, and (iv) Class B Units, all of which are owned by
Regency. With the exception of certain Class B Units, all of the Units
represent limited partner interests. The General Partner, as the holder of
Class B Units, has broad powers to manage the affairs of the Partnership. The
Series A Preferred Units, the Original Limited Partnership Units and the Class 2
Units have limited voting rights and have no right to vote for or control the
management of the Partnership. Each class of limited partnership interest may
be entitled to vote only with respect to certain issuances of additional limited
partnership interests, certain amendments to the Partnership Agreement and, in
the case of the Series A Preferred Units, the merger or consolidation of the
Partnership or the sale of substantially all of the Partnership's assets under
certain circumstances.
23
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Information known to the Partnership with respect to beneficial ownership
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
of more than 5% of the outstanding Class B Units as of July 31, 1998 is as
follows:
NO. OF UNITS
CLASS BENEFICIAL OWNER BENEFICIALLY OWNED % OF CLASS
- --------------------------------------------------------------------------------
Class B Units Regency Realty Corporation 21,550,259 100%
121 W. Forsyth St., Suite 200
Jacksonville, Florida 32202
SECURITY OWNERSHIP OF MANAGEMENT
The Partnership has no directors or executive officers and is managed by
Regency as the general partner of the Partnership. Other than J. Alexander
Branch III (11,147 Original Limited Partnership Units) and Lee S. Wielansky
(68,810 Class 2 Units), no director or executive officer of Regency personally
owns any Units of the Partnership as of July 31, 1998.
Information concerning the beneficial ownership of shares of common stock
of Regency by its directors and executive officers, as well as by persons
believed to be the beneficial owner of more than 5% of Regency's outstanding
common stock, is hereby incorporated by reference to the information contained
in Regency's definitive proxy statement for its 1998 Annual Meeting of
Shareholders under the caption "Voting Securities."
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership is managed by Regency as the general partner of the
Partnership. The information required by this item is hereby incorporated by
reference to the material appearing under Item 10, "Directors and Executive
Officers of the Registrant," in Regency's Annual Report on Form 10-K for the
year ended December 31, 1997.
ITEM 6. EXECUTIVE COMPENSATION
The Partnership is managed by Regency as the general partner of the
Partnership. Consequently, the information required by this item is reflected
in and is hereby incorporated by reference to the information contained in
Regency's definitive proxy statement for its 1998 Annual Meeting of Shareholders
under the caption "Executive Compensation."
ITEM 7. CERTAIN RELATIONSHIPS
The Partnership is managed by Regency as the general partner of the
Partnership. The information required by this item is hereby incorporated by
24
<PAGE>
reference to the information contained in Regency's definitive proxy statement
for its 1998 Annual Meeting of Shareholders under the caption "Certain
Transactions."
ITEM 8. LEGAL PROCEEDINGS
The Partnership is not presently involved in any litigation nor, to its
knowledge, is any litigation threatened against the Partnership, except for
routine litigation arising in the ordinary course of business such as "slip and
fall" litigation which is expected to be covered by insurance. In the opinion
of management of Regency, such litigation is not expected to have a material
adverse effect on the business, financial condition or results of operations of
the Partnership.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS
There is no established public trading market for the Units, and Units may
be transferred only with the consent of the general partner as provided in the
Second Amended and Restated Agreement of Limited Partnership (the "Partnership
Agreement"). As of July 31, 1998, Regency was the only holder of Class B Units,
and there were approximately 72 holders of record of other Units, determined in
accordance with Rule 12g5-1 under the Securities Exchange Act of 1934, as
amended. To the Partnership's knowledge, there have been no bids for the Units
and, accordingly, there is no available information with respect to the high and
low quotation of the Units. Each outstanding Unit other than Class B Units and
Series A Preferred Units is redeemable, on a one share per Unit basis, for the
common stock of Regency.
At the present time, (i) there are no Units subject to outstanding options
or warrants to purchase, or securities convertible into, Units of the
Partnership, although additional units may be issued in payment of contingent
consideration for the Branch and Midland Acquisitions and (ii) there are no
Units that have been, or are proposed to be publicly offered by the Partnership.
The Partnership Agreement provides that the Partnership will make priority
distributions of Available Cash (as defined in the Partnership Agreement) first
to Series A Preferred Units on each March 31, June 30, September 30 and December
31 in a distribution amount equal to 8.125% of the original capital contribution
per Series A Preferred Unit. Subject to the prior right of the holders of
Series A Preferred Units to receive all distributions accumulated on such Units
in full, at the time of each distribution to holders of common stock of Regency
distributions of Available Cash will then be made to the holders of Original
Limited Partnership Units, first, and to the holders of Class 2 Units, second,
in an amount per Unit identical to the amount that is distributed with respect
to each share of common stock. The Partnership Agreement provides that all
remaining Available Cash will be distributed to the general partner. The
following table sets forth the quarterly distributions paid by the Partnership
to its limited partners (other than holders of Series A Preferred Units) with
respect to each full quarterly period for which Regency or its affiliate has
been the general partner of the Partnership.
25
<PAGE>
DISTRIBUTION
QUARTER ENDED PER LP UNIT
- ------------- -------------
March 31, 1998................................................. $0.44
December 31, 1997.............................................. 0.44
September 30, 1997............................................. 0.42
June 30, 1997.................................................. 0.42
Under the loan agreement governing the Line, distributions may not exceed
95% of funds from operations ("FFO") based on the immediately preceding four
quarters. The Partnership considers FFO, as defined by the National Association
of Real Estate Investment Trusts, as net income (computed in accordance with
generally accepted accounting principles) excluding gains (or losses) from debt
restructuring and sales of income producing property held for investment, plus
depreciation and amortization of real estate, and after adjustments for
unconsolidated investments in real estate partnerships and joint ventures, to be
the industry standard for reporting the operations of real estate investment
trusts ("REITs"). Adjustments for investments in real estate partnerships are
calculated to reflect FFO on the same basis. In the event of any monetary
default, the Partnership will not make distributions to partners.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
The Partnership has engaged in the following sales of unregistered
securities, each based upon Rule 506 of the Securities Act:
On March 7, 1997, the Partnership acquired substantially all of the assets
of Branch in exchange for the issuance of 3,888,699 Original Limited Partnership
and Class A Units, valued for purposes of such transaction at $22.125 per Unit,
the fair market value of the Regency common stock on the date the terms of the
Branch transaction were reached. Pursuant to the Branch Acquisition, the
principals of Branch could receive additional Units and shares of Regency common
stock after the first, second and third anniversaries of the Branch closing
based on the performance of certain properties, up to an aggregate of 1,020,061
Units. On March 23, 1998, in connection with the first anniversary of the
Branch closing, the Partnership issued 721,997 additional Units representing
property earn-outs pursuant to the Branch transaction, also valued at $22.125
per Unit.
On March 11, 1998, the Partnership acquired substantially all of the assets
of the Midland Group, in exchange for cash plus the issuance of 392,163 Class 2
Units, valued for purposes of such transaction at $26.5813. Certain equity
owners of the Midland Group may also be entitled to receive contingent
consideration in the form of Units on the first, second and third anniversaries
of the Midland closing, also valued at $26.5813 per Unit.
On June 25, 1998, the Partnership issued $80,000,000 8.125% Series A
Cumulative Redeemable Preferred Units to a single institutional investor.
On July 20, 1998, the Partnership sold an aggregate of $100,000,000 7-1/8%
Notes due July 20, 2005 to Goldman Sachs & Co., Morgan Stanley & Co.
Incorporated and PaineWebber Incorporated in a private placement pursuant to
26
<PAGE>
Section 4(2) of the Securities Act at a purchase price equal to 99.758% of the
face value of the Notes, less an underwriting discount of 0.625%. Such initial
purchasers agreed to resell the Notes only to qualified institutional buyers
pursuant to Rule 144A under the Securities Act, to institutional accredited
investors in a manner exempt from registration under the Securities Act or to
non-U.S. persons in compliance with Regulation S under the Securities Act.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The securities registered by this Registration Statement are the general
partnership interests in the Partnership represented by Class B Units, all of
which are held by the Company and are subordinate to the limited partnership
interests of the Partnership. All Units acquired by the Company (and any of its
affiliates that acquire interests in the Partnership) will be Class B Units;
provided, however, that Units acquired by the Company upon the exercise by
limited partners of redemption rights will be limited partnership interests
represented by Class B Units. The following is a summary of certain provisions
of the Partnership Agreement and is subject to, and qualified in its entirety
by, the Partnership Agreement, which has been filed as an exhibit to this
Registration Statement.
DISTRIBUTIONS
The holders of Series A Preferred Units are entitled to a preferred payment
of quarterly distributions at the rate of 8.125% of the original capital
contribution per Unit. Likewise, before the General Partner or any of its
affiliates will be entitled to any distributions of operating cash flow
("Available Cash"), each Original Limited Partner and holder of Class 2 Units
(the "Additional Limited Partners") must receive an amount equal to such
partner's Cumulative Unpaid Priority Distribution Account (as defined in the
Partnership Agreement), together with an amount thereon accruing at the prime
rate plus 2% per annum (the "Cumulative Unpaid Accrued Return Account").
However, once the holders of Series A Preferred Units, first, Original Limited
Partners, second, and the Additional Limited Partners, third, have received an
amount per Unit equal to the cash dividend paid on the common stock (together
with any amounts in such partners' Cumulative Unpaid Priority Distribution
Account and Cumulative Unpaid Accrued Return Account), the Limited Partners will
not be entitled to any further distributions of Available Cash from the
Partnership, and the remainder will be paid to the General Partner and any of
its affiliates that acquire Units.
The General Partner is required to restore any negative balance in its
capital account upon liquidation of the Partnership. As a general rule, the
General Partner will not be required to contribute funds to the Partnership in
order to avoid arrearages in distributions of Available Cash. Conversely, to
the extent that the Partnership's properties produce substantially more cash
flow per Unit than the cash dividend on the common stock during the same period,
the General Partner and its affiliates will be entitled to 100% of the excess.
27
<PAGE>
POWERS OF THE GENERAL PARTNER
The Partnership Agreement grants the General Partner broad powers to manage
the business of the Partnership. The General Partner has agreed in Section
7.1(h) of the Partnership Agreement to use its reasonable best efforts as a
fiduciary to manage the Partnership's business to prevent arrearages in
distributions of Available Cash. However, Section 7.8(b) of the Partnership
Agreement provides that, except as expressly otherwise provided, the General
Partner is under no obligation to consider the separate interests of the Limited
Partners in deciding whether to take any actions which the General Partner has
undertaken in good faith on behalf of the Partnership. There are also numerous
other provisions granting authority to the General Partner to take actions for
specified reasons regardless of the consequences to the Limited Partners. For
example, Section 7.9(d) of the Partnership Agreement authorizes actions by the
General Partner undertaken in the good faith belief that such actions are
necessary to protect Regency's continued qualification as a REIT or to avoid the
incurrence by Regency of taxes under the Code. While section 7.1(a)(iii) of the
Partnership Agreement requires the General Partner to use reasonable efforts to
effect dispositions of the Partnership's assets in non-taxable exchanges under
Section 1031 of the Code, section 7.1(f) of the Partnership Agreement permits
the General Partner to take actions permitted under the Partnership Agreement
even though such actions could result in income tax liability to the Limited
Partners.
Under Section 7.1(a)(iii) of the Partnership Agreement, the General Partner
is authorized to encumber assets of the Partnership for loans made to the
General Partner, the proceeds of which are not required to be contributed to or
loaned to the Partnership. However, Regency is required to make capital
contributions to the Partnership where necessary (up to the amount of debt
service and closing costs paid by the Partnership with respect to any such loan)
to enable the Partnership to make the maximum permitted quarterly distribution
of Available Cash.
Section 7.8(b) of the Partnership Agreement acknowledges Regency's
contractual commitment to SC-USREALTY that Regency take actions so as to avoid
classification of SC-USREALTY as a "passive foreign investment company" as
defined in Section 1296 of the Code. In general, this obligation will require,
among other things, that (i) the Partnership manage its assets directly through
employees of the Partnership and not through employees of Affiliates, (ii) that
SC-USREALTY own (within the meaning of Section 1296(c) of the Code) at least
27.5% by value of Regency's capital stock at the end of each quarter, and (iii)
that the General Partner maintain at least a 75% interest in the capital or
profits of the Partnership.
TRANSFER RESTRICTIONS
The Partnership Agreement provides that the General Partner may not
transfer its general partnership interest (other than to an affiliate of the
General Partner) or withdraw as general partner other than under certain
conditions in connection with a merger, consolidation or other business
combination or transaction with or into another person or sale of all or
substantially all of its assets, or any reclassification or recapitalization.
The General Partner may transfer all or any of its limited partnership interests
to any party without the consent of the Partnership or any other partner.
28
<PAGE>
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware Revised Uniform Limited Partnership Act provides that a
limited partnership has the power to indemnify and hold harmless any partner or
other person from and against any and all claims and demands whatsoever, subject
to such standards and restrictions, if any, as are set forth in its partnership
agreement.
The Partnership Agreement provides that the General Partner shall not be
liable for monetary damages to the Partnership or the Limited Partners for
losses sustained or liabilities incurred as a result of errors in judgment or of
any act or omission if the General Partner acted in good faith. The Partnership
Agreement also provides for the indemnification of the General Partner, a
Limited Partner, a director or officer of the Partnership and affiliates of the
General Partner or Partnership acting in good faith on behalf of the Partnership
as determined by the General Partner in its good faith judgment other than for
any action by such person involving fraud, willful misconduct or gross
negligence.
ITEM 13. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See "Index to Pro Forma Condensed Consolidated Financial Statements" on
page P-1 of this Form 10 and "Index to Financial Statements" on page F-1 of this
Form 10.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
See "Index to Pro Forma Condensed Consolidated Financial Statements"
on page P-1 of this Form 10 and "Index to Financial Statements" on
page F-1 of this Registration Statement on Form 10.
(B) EXHIBITS:
The following exhibits are included in this Registration Statement on
Form 10:
3.1 Second Amended and Restated Agreement of Limited Partnership of
Regency Centers, L.P., dated as of March 5, 1998, incorporated by
reference to Exhibit 10(a) to the Company's Current Report on Form 8-
K/A filed March 19, 1998
3.2 Amendment No. 1 to Second Amended and Restated Agreement of Limited
Partnership Relating to 8.125% Series A Cumulative Redeemable
Preferred Units
29
<PAGE>
4.1 Amended and Restated Redemption Agreement dated as of March 5, 1998 by
and among Regency Centers, L.P., Regency Realty Corporation and the
limited partners party thereto, incorporated by reference to Exhibit
10(c) to the Company's Current Report on Form 8-K/A filed March 19,
1998
10.1 Credit Agreement dated as of March 27, 1998 among Regency Centers,
L.P., as the Borrower, Regency Realty Corporation, as the Parent, the
financial institutions party thereto, as the Lenders, and Wells Fargo
Bank, N.A., as the Agent, incorporated by reference to Exhibit 10(c)
to the Company's Quarterly Report on Form 10-Q filed May 15, 1998.
10.2 Indenture dated as of July 20, 1998 among Regency Centers, L.P., the
Guarantors named therein and First Union National Bank, as trustee
30
<PAGE>
10.3 Exchange and Registration Rights Agreement dated as of July 15, 1998
among Regency Centers, L.P., the Guarantors named therein and the
Purchasers named therein
21.1 Subsidiaries of the Registrant
27.1 Financial Data Schedule
99.1 The following sections of Regency Realty Corporation's definitive
proxy statement for its 1998 Annual Meeting of Shareholders, which
sections are incorporated by reference to such Proxy Statement:
(a) The section captioned "Voting Securities" at pages 1 through 3.
(b) The section captioned "Executive Compensation at pages 18 through
21.
(c) The section captioned "Certain Transactions" at pages 21 through
23.
99.2 The following sections of Regency Realty Corporation's Annual Report
on Form 10-K for the year ended December 31, 1997, which sections are
incorporated by reference to such Annual Report:
(a) The response to item 10, "Directors and Executive Officers of the
Registrant."
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
REGENCY CENTERS, L.P.
By: REGENCY REALTY CORPORATION,
its general partner
Date: August 7, 1998 By: /s/ J. Christian Leavitt
------------------------
J. Christian Leavitt, Vice President,
Secretary, Treasurer and Principal
Accounting Officer
32
<PAGE>
REGENCY CENTERS, L.P.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated balance sheet is
based upon the historical consolidated balance sheet of the Partnership as of
March 31, 1998 as if the Partnership had completed the acquisition of all the
Midland Properties and the Financings as of that date. The following unaudited
pro forma consolidated statements of operations of the Partnership are based
upon the historical consolidated statements of operations for the three-month
period ended March 31, 1998 and the year ended December 31, 1997, and are
presented as if the Partnership had acquired the Branch Properties, the
Midland Properties, the additional 12 grocery-anchored shopping centers
acquired in 1997 and 1998 (the "Acquisition Properties") and had completed the
Financings as of January 1, 1997. These unaudited pro forma condensed
consolidated financial statements should be read in conjunction with the
Consolidated Financial Statements of the Partnership included elsewhere in
this Registration Statement.
The unaudited pro forma condensed consolidated financial statements are not
necessarily indicative of what the actual financial position or results of
operations of the Partnership would have been at March 31, 1998 or December
31, 1997 assuming the transactions had been completed as set forth above, nor
does it purport to represent the financial position or results of operations
of the Partnership in future periods.
P-2
<PAGE>
REGENCY CENTERS, L.P.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MIDLAND OTHER
HISTORICAL PROPERTIES (A) ADJUSTMENTS PRO FORMA
---------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Real estate investments,
at cost................. $737,251 $56,100 $ -- $793,351
Construction in progress. 40,765 -- -- 40,765
Less: accumulated depre-
ciation................ 20,812 -- -- 20,812
-------- ------- --------- --------
Real estate rental
property, net......... 757,204 56,100 -- 813,304
-------- ------- --------- --------
Investments in real es-
tate partnerships....... 992 -- -- 992
-------- ------- --------- --------
Net real estate invest-
ments.................. 758,196 56,100 -- 814,296
-------- ------- --------- --------
Cash and cash equiva-
lents................... 5,556 -- 36,777 (b) 42,333
Tenant receivables, net
of allowance for
uncollectible accounts.. 7,651 -- -- 7,651
Deferred costs, less ac-
cumulated amortization.. 2,570 -- -- 2,570
Other assets............. 2,238 -- 1,250 (b) 3,488
-------- ------- --------- --------
Total Assets........... $776,211 $56,100 $ 38,027 $870,338
======== ======= ========= ========
LIABILITIES AND PARTNERS'
CAPITAL
Mortgage loans payable... $212,028 $31,732 $ (25,774)(b) $217,986
Acquisition and develop-
ment line of credit..... 90,231 24,368 (114,599)(b)(c) --
Notes offered hereby..... -- -- 100,000 (b) 100,000
-------- ------- --------- --------
Total debt............. 302,259 56,100 (40,373) 317,986
Tenants' security and es-
crow deposits........... 2,049 -- -- 2,049
Accounts payable and
other liabilities....... 8,881 -- -- 8,881
-------- ------- --------- --------
Total liabilities...... 313,189 56,100 (40,373) 328,916
-------- ------- --------- --------
Limited partners' inter-
est in consolidated
partnerships............ 7,246 -- -- 7,246
-------- ------- --------- --------
Cumulative redeemable
preferred units......... -- -- 80,000 (c) 80,000
Operating partnership
units................... 455,776 -- (1,600)(c) 454,176
-------- ------- --------- --------
Total partners' capi-
tal................... 455,776 -- 78,400 534,176
-------- ------- --------- --------
Total liabilities and
partners' capital... $776,211 $56,100 $ 38,027 $870,338
======== ======= ========= ========
</TABLE>
See accompanying notes to pro forma condensed consolidated balance sheet.
P-3
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
(IN THOUSANDS)
(a) Acquisitions of Shopping Centers:
In January 1998, the Partnership entered into an agreement to acquire
shopping centers from various entities comprising the Midland Group
consisting of 21 shopping centers plus eleven shopping centers under
development. The Partnership acquired 13 of the Midland shopping centers
during March 1998 containing 1.3 million square feet for approximately
$111,000. Those shopping centers are included in the Partnership's March 31,
1998 balance sheet. Subsequent to March 31, 1998, the Partnership has
acquired or will acquire six additional shopping centers for $56,100 and
during August 1998, expects to acquire an additional three properties under
development for $41,300. In addition, during 1998, the Partnership expects
to pay $4,600 in additional costs related to joint venture investments and
other transaction costs related to acquiring the various shopping centers
from Midland, and during 1999 and 2000 may pay contingent consideration of
$23,000. The following table sets forth the aggregate purchase price for
East Point, Maxtown, Worthington, Franklin Square, Windmiller and St. Ann
Square, which were acquired or will be acquired subsequent to March 31,
1998.
<TABLE>
<CAPTION>
PURCHASE
PRICE
--------
<S> <C>
East Point.......................... $ 8,215
Maxtown............................. 7,712
Worthington......................... 10,691
Franklin Square..................... 11,375
Windmiller.......................... 11,464
St. Ann Square...................... 6,653
-------
$56,100
=======
</TABLE>
The following table represents the properties under development which the
Partnership expects to acquire from Midland upon completion of construction
during 1998. These properties are not included in these pro forma condensed
consolidated financial statements.
<TABLE>
<CAPTION>
EXPECTED
ACQUISITION PURCHASE
DATE PRICE
----------- --------
<S> <C> <C>
Garner Festival....................................... Aug-98 20,571
Nashboro.............................................. Aug-98 7,260
Crooked Creek......................................... Aug-98 13,471
-------
$41,302
=======
</TABLE>
(b) Represents the proceeds from the offering of the Notes less offering costs
of 1.25%. The Partnership used the net proceeds from the offering of the
Notes in the amount of $98,800, for (a) the repayment of the balance
outstanding on the Line ($36,200 on the pro forma basis presented herein
after giving effect to the repayment described below in connection with the
Offering of the Series A Preferred Units (the "Preferred Offering"), and (b)
the repayment of existing mortgage loans ($25,800) and, for purposes of
these pro forma financial statements, will retain the remainder ($36,800) as
cash and cash equivalents to be used to complete the Midland Acquisition.
The $1,200 of financing costs will be recorded as an "Other Asset" to be
amortized over the term of the Notes. The mortgage loans were repaid during
April 1998 without any premium or penalty, had average interest rates of
7.14% and were to mature from November 1998 to December 2001.
(c) Represents the proceeds from the offering of the Series A Preferred Units,
less offering costs of 2%. At closing, the Partnership used the net proceeds
from the Preferred Offering, in the amount of $78,400, for the repayment of
outstanding balances on the Line.
P-4
<PAGE>
REGENCY CENTERS, L.P.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
-----------------------------------------------------------------
MIDLAND ACQUISITION OTHER
HISTORICAL PROPERTIES (E) PROPERTIES (F) ADJUSTMENTS PRO FORMA
---------- -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Minimum rent........... $17,064 $3,332 $214 $ (697)(j) $19,913
Percentage rent........ 419 -- -- (8)(j) 411
Recoveries from
tenants............... 3,811 410 47 (67)(j) 4,201
Management, leasing and
brokerage fees........ 2,504 -- -- -- 2,504
Equity in income of
investments in real
estate partnerships... 1 -- -- -- 1
------- ------ ---- -------- -------
23,799 3,742 261 (772) 27,030
------- ------ ---- -------- -------
Operating expenses:
Depreciation and
amortization.......... 4,145 676(g) 49(g) (453)(j) 4,417
Operating and
maintenance........... 3,044 228 42 (122)(j) 3,192
General and
administrative........ 3,433 180 -- (25)(j) 3,588
Real estate taxes...... 2,094 385 24 (81)(j) 2,422
------- ------ ---- -------- -------
12,716 1,469 115 (681) 13,619
------- ------ ---- -------- -------
Interest expense (income):
Interest expense....... 3,410 2,058(h) 133(i) (895)(k) 4,706
Interest income........ (318) -- -- -- (l) (318)
------- ------ ---- -------- -------
3,092 2,058 133 (895) 4,388
------- ------ ---- -------- -------
Income before minority
interest and gain on
sale of real estate
investments........... 7,991 215 13 804 9,023
Gain on sale of real es-
tate investments....... 10,237 -- -- (9,336)(j) 901
Minority interest....... (97) -- -- -- (97)
------- ------ ---- -------- -------
Net income............. 18,131 215 13 (8,532) 9,827
Preferred distribu-
tions........... -- -- -- (1,625)(m) (1,625)
------- ------ ---- -------- -------
Net income for unit
holders............... $18,131 $ 215 $ 13 $(10,157) $ 8,202
======= ====== ==== ======== =======
Net income per unit
(note (n)):
Basic.................. $ 0.71 $ 0.29
======= =======
Diluted................ $ 0.70 $ 0.29
======= =======
</TABLE>
See accompanying notes to pro forma consolidated statements of operations.
P-5
<PAGE>
REGENCY CENTERS, L.P.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------------------
BRANCH MIDLAND ACQUISITION OTHER
HISTORICAL PROPERTIES(D) PROPERTIES (E) PROPERTIES (F) ADJUSTMENTS PRO FORMA
---------- ------------- -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Minimum rent........... $53,330 $3,596 $16,482 $6,834 $(4,136)(j) $76,106
Percentage rent........ 898 167 -- 17 -- 1,082
Recoveries from
tenants............... 12,993 751 2,240 1,701 (548)(j) 17,137
Management, leasing and
brokerage fees........ 7,997 1,060 -- -- -- 9,057
Equity in income of
investments in real
estate partnerships... 33 -- -- -- -- 33
------- ------ ------- ------ ------- -------
75,251 5,574 18,722 8,552 (4,684) 103,415
------- ------ ------- ------ ------- -------
Operating expenses:
Depreciation and
amortization.......... 11,905 972 2,994(g) 1,590(g) (855)(j) 16,606
Operating and
maintenance........... 10,688 595 1,194 1,604 (1,260)(j) 12,821
General and
administrative........ 9,964 683 1,042 -- (49)(j) 11,640
Real estate taxes...... 6,451 404 1,635 925 (447)(j) 8,968
------- ------ ------- ------ ------- -------
39,008 2,654 6,865 4,119 (2,611) 50,035
------- ------ ------- ------ ------- -------
Interest expense (income):
Interest expense....... 13,614 1,517 10,353(h) 4,385(i) (5,091)(k) 24,778
Interest income........ (935) (33) -- -- -- (l) (968)
------- ------ ------- ------ ------- -------
12,679 1,484 10,353 4,385 (5,091) 23,810
------- ------ ------- ------ ------- -------
Income before minority
interest and gain on
sale of real estate
investments........... 23,564 1,436 1,504 48 3,018 29,570
Gain on sale of real
estate investments..... 451 -- -- -- (451)(j) --
Minority interest....... (505) (313) -- -- -- (818)
------- ------ ------- ------ ------- -------
Net income............. 23,510 1,123 1,504 48 2,567 28,752
Preferred distribu-
tions................... -- -- -- -- (6,500)(m) (6,500)
------- ------ ------- ------ ------- -------
Net income for unit
holders............... $23,510 $1,123 $ 1,504 $ 48 $(3,933) $22,252
======= ====== ======= ====== ======= =======
Net income per unit
(note (n)):
Basic.................. $ 1.20 $ 1.12
======= =======
Diluted................ $ 1.12 $ 1.05
======= =======
</TABLE>
See accompanying notes to pro forma consolidated statements of operations.
P-6
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(d) Reflects pro forma results of operations for the Branch Properties for the
period from January 1, 1997 to March 7, 1997 (acquisition date).
(e) Reflects revenues and certain expenses for the Midland Properties for the
period from January 1, 1998 to the earlier of respective acquisition date
of the property or March 31, 1998 and for the year ended December 31,
1997.
<TABLE>
<CAPTION>
FOR THE PERIOD FROM JANUARY 1, 1998
TO THE ACQUISITION DATE
---------------------------------------
PROPERTY ACQUISITION MINIMUM RECOVERIES OPERATING AND REAL GENERAL AND
NAME DATE RENT FROM TENANTS MAINTENANCE ESTATE TAXES ADMINISTRATIVE
-------- ----------- ------- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Windmiller.............. 7/15/98 $ 289 $ 45 $ 17 $ 36 $ 16
Franklin Square......... 4/29/98 303 19 27 25 13
St. Ann Square.......... 4/17/98 184 3 17 -- 5
East Pointe............. 4/29/98 223 19 15 46 8
Maxtown Road............ 4/29/98 181 51 12 46 22
Worthington............. 4/29/98 227 74 17 61 7
Beckett Commons......... 3/1/98 113 7 6 14 4
Cherry Grove............ 3/1/98 239 11 13 22 21
Bent Tree Plaza......... 3/1/98 137 11 7 59 8
Westchester Plaza....... 3/1/98 130 12 13 42 7
Brookville Plaza........ 3/1/98 95 5 5 -- 4
Lakeshore............... 3/1/98 123 10 5 -- 6
Evans Crossing.......... 3/1/98 116 4 5 -- 6
Statler Square.......... 3/1/98 164 15 13 1 8
Kernersville Plaza...... 3/1/98 120 4 8 -- 8
Maynard Crossing........ 3/1/98 272 38 13 -- 15
Shoppes at Mason........ 3/1/98 116 27 15 33 6
Lake Pine Plaza......... 3/1/98 152 13 10 -- 9
Hamilton Meadows........ 3/1/98 148 42 10 -- 7
------ ---- ---- ---- ----
$3,332 $410 $228 $385 $180
====== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
---------------------------------------
PROPERTY ACQUISITION MINIMUM RECOVERIES OPERATING AND REAL GENERAL AND
NAME DATE RENT FROM TENANTS MAINTENANCE ESTATE TAXES ADMINISTRATIVE
-------- ----------- ------- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Windmiller.............. 7/15/98 $ 1,157 $ 181 $ 69 $ 143 $ 64
Franklin Square......... 4/29/98 1,270 171 158 94 98
St. Ann Square.......... 4/17/98 741 149 60 119 42
East Pointe............. 4/29/98 821 159 50 107 51
Maxtown Road............ 4/29/98 718 100 56 84 32
Worthington............. 4/29/98 862 208 67 124 59
Beckett Commons......... 3/1/98 687 140 38 83 47
Cherry Grove............ 3/1/98 1,445 175 85 131 105
Bent Tree Plaza......... 3/1/98 786 130 64 59 48
Westchester Plaza....... 3/1/98 807 70 72 84 45
Brookville Plaza........ 3/1/98 571 42 34 50 30
Lakeshore............... 3/1/98 759 156 55 96 32
Evans Crossing.......... 3/1/98 613 84 34 50 33
Statler Square.......... 3/1/98 913 76 43 54 60
Kernersville Plaza...... 3/1/98 605 58 29 51 33
Maynard Crossing........ 3/1/98 1,367 133 78 95 104
Shoppes at Mason........ 3/1/98 644 56 61 65 38
Lake Pine Plaza......... 3/1/98 827 93 54 51 46
Hamilton Meadows........ 3/1/98 889 59 87 95 75
------- ------ ------ ------ ------
$16,482 $2,240 $1,194 $1,635 $1,042
======= ====== ====== ====== ======
</TABLE>
P-7
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(f) Reflects revenues and certain expenses of the Acquisition Properties for
the periods from January 1, 1998 and 1997 to the respective acquisition
date of the property.
<TABLE>
<CAPTION>
FOR THE PERIOD FROM JANUARY 1, 1998 TO THE ACQUISITION DATE
------------------------------------------------------------------------------
PROPERTY ACQUISITION MINIMUM PERCENTAGE RECOVERIES OPERATING AND REAL
NAME DATE RENT RENT FROM TENANTS MAINTENANCE ESTATE TAXES
-------- ----------- ------------ ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bloomingdale
Square............... 2/11/98 $ 214 $ -- $ 47 $ 42 $ 24
------- ------------ ----------- ----------- ----------- -----------
$ 214 $ -- $ 47 $ 42 $ 24
============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD FROM JANUARY 1, 1997 TO THE ACQUISITION DATE
--------------------------------------------------------------------------
PROPERTY ACQUISITION MINIMUM PERCENTAGE RECOVERIES OPERATING AND REAL
NAME DATE RENT RENT FROM TENANTS MAINTENANCE ESTATE TAXES
-------- ----------- ------------ ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Oakley Plaza............ 3/14/97 $ 142 $ -- $ 14 $ 21 $ 13
Mariner's Village....... 3/25/97 185 6 37 52 33
Carmel Commons.......... 3/28/97 297 11 63 61 35
Mainstreet Square....... 4/15/97 193 -- 34 57 30
East Port Plaza......... 4/25/97 543 -- 107 129 65
Rivermont Station....... 6/30/97 642 -- 124 99 56
Lovejoy Station......... 6/30/97 306 -- 63 45 29
Tamiami Trails.......... 7/10/97 508 -- 163 154 66
Gardens Square.......... 9/19/97 671 -- 232 194 99
Boynton Lakes Plaza..... 12/1/97 1,159 -- 391 347 250
Pinetree Plaza.......... 12/23/97 279 -- 51 71 37
Bloomingdale Square..... 2/11/98 1,909 -- 422 376 212
------------ ---------- ------------ ------------ ----------
$ 6,834 $ 17 $ 1,701 $ 1,604 $ 925
============ ========== ============ ============ ==========
</TABLE>
(g) Depreciation expense is based on the estimated useful life of the
properties acquired. For properties under construction, depreciation
expense is calculated from the date the property is placed in service
through the end of the period. In addition, the calculation reflects
depreciation expense on the properties for the year ended December 31,
1997 and for the period from January 1, 1998 to the earlier of the
respective acquisition date or March 31, 1998.
<TABLE>
<CAPTION>
FOR THE PERIOD FROM JANUARY 1, 1998 TO THE ACQUISITION DATE
------------------------------------------------------
PROPERTY BUILDING AND YEAR PROPERTY DEPRECIATION
NAME IMPROVEMENTS BUILT/RENOVATED USEFUL LIFE ADJUSTMENT
-------- ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
Bloomingdale Square.. $ 13,189 1987 30 $ 49
====
Midland Properties... $180,435 Ranging from Ranging from
1986 to 1996 29 to 40 $676
====
</TABLE>
P-8
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
<TABLE>
<CAPTION>
FOR THE PERIOD FROM JANUARY 1, 1997 TO THE ACQUISITION DATE
-----------------------------------------------------------
PROPERTY BUILDING AND YEAR PROPERTY DEPRECIATION
NAME IMPROVEMENTS BUILT/RENOVATED USEFUL LIFE ADJUSTMENT
-------- ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
Oakley Plaza............ $ 6,428 1988 31 $41
Mariner's Village....... 5,979 1986 29 47
Carmel Commons.......... 9,335 1979 22 101
Mainstreet Square....... 4,581 1988 31 43
East Port Plaza......... 8,179 1991 34 76
Rivermont Station....... 9,548 1996 39 121
Lovejoy Station......... 5,560 1995 38 73
Tamiami Trails.......... 7,598 1987 30 133
Garden Square........... 7,151 1991 34 151
Boynton Lakes Plaza..... 9,618 1993 36 244
Pinetree Plaza.......... 3,057 1982 25 120
Bloomingdale Square..... 13,189 1987 30 440
Acquisition Properties --------
pro forma depreciation
adjustment............ $ 1,590
=======
Midland Properties...... $180,435 Ranging from Ranging from $ 2,994
1986 to 1996 29 to 40 =======
(h) To reflect interest expense on the Line required to complete the
acquisition of the Midland Properties at the average interest rate afforded
the Partnership (6.525%) and the assumption of $97,000 of debt. For
properties under construction, interest expense is calculated from the date
the property is placed in service through the end of the period.
Pro forma interest adjustment for the three-month period ended
March 31, 1998................................................... $ 2,058
=======
Pro forma interest adjustment for the year ended December 31,
1997............................................................. $10,353
=======
(i) To reflect interest expense on the Line required to complete the acquisition
of the Acquisition Properties at the average interest rate afforded the
Partnership (6.525%). The three-month period ended March 31, 1998 and year
ended December 31, 1997 calculation reflects interest expense on the
properties from January 1, 1997 to the respective acquisition date of the
property.
Pro forma interest adjustment for the three-month period ended
March 31, 1998................................................... $ 133
=======
Pro forma interest adjustment for the year ended December 31,
1997............................................................. $ 4,385
=======
</TABLE>
P-9
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(j) In December 1997, the Partnership sold one office building for $2,600 and
recognized a gain on the sale of $451. During the first quarter of 1998, the
Partnership sold three office buildings and a parcel of land for $26,700,
and recognized a gain on the sale of $9,300. The adjustments to the pro
forma consolidated statements of operations reflect the reversal of the
revenues and expenses from the office buildings generated during 1997 and
1998, including the gains on the sale of the office buildings as if the sale
had been completed on January 1, 1997.
(k) To reflect (i) interest expense and loan cost amortization on the Notes
offset by (ii) the reduction of interest expense on the Line and mortgage
loans from the proceeds of the offering of the Notes, the issuance of the
Series A Preferred Units and the proceeds from the sale of the office
buildings referred to in note (j).
<TABLE>
<S> <C>
Pro forma interest adjustment for the three-month period ended
March 31, 1998................................................... $ (895)
=======
Pro forma interest adjustment for the year ended December 31,
1997............................................................. $(5,091)
=======
</TABLE>
(l) Proforma interest income earned has not been reflected in these
Consolidated Pro Forma Statements of Operations for available proceeds in
excess of the amounts needed to pay down the Line and mortgage loans. Pro
forma interest income on the excess proceeds, assuming a 5% interest
rate, would have amounted to $1,600 and $400 for the year ended
December 31, 1997 and the three months ended March 31, 1998,
respectively.
(m) To reflect the distribution on the Series A Preferred Units at an annual
rate of 8.125% for the three-month period ended March 31, 1998 and year
ended December 31, 1997.
P-10
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(n) The following summarizes the calculation of basic and diluted earnings
per unit for the three-month period ended March 31, 1998 and the year
ended December 31, 1997:
<TABLE>
<CAPTION>
FOR THE THREE FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
Basic earnings per unit (EPU) calculation:
Weighted average common units outstanding. 23,496 15,327
======= =======
Net income for unit holders............... $ 8,202 $22,252
Class B common stock dividends............ (1,344) (5,140)
------- -------
Net income for Basic and Diluted EPU...... $ 6,858 $17,112
======= =======
Basic EPU.................................. $ 0.29 $ 1.12
======= =======
Diluted earnings per unit (EPU) calculation:
Weighted average common units outstanding
per basic EPU............................ 23,496 15,327
Incremental shares to be issued under
common stock options using the Treasury
method................................... 54 80
Contingent units or shares for the
acquisition of real estate............... 334 955
------- -------
Total diluted units...................... 23,884 16,362
======= =======
Diluted EPU................................ $ 0.29 $ 1.05
======= =======
</TABLE>
P-11
<PAGE>
REGENCY CENTERS, L.P.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Regency Centers, L.P.
<TABLE>
<S> <C>
Independent Auditors' Report........................................... F-2
Consolidated Balance Sheets as of March 31, 1998 (unaudited) and
December 31, 1997 and 1996 ........................................... F-3
Consolidated Statements of Operations for the three months ended March
31, 1998 and 1997 (unaudited) and the years ended December 31, 1997,
1996 and 1995 ........................................................ F-4
Consolidated Statements of Changes in Capital for the three months
ended March 31, 1998 (unaudited) and the years ended December 31,
1997, 1996 and 1995................................................... F-5
Consolidated Statements of Cash Flows for the three months ended March
31, 1998 and 1997 (unaudited) and the years ended December 31, 1997,
1996 and 1995......................................................... F-6
Notes to Consolidated Financial Statements............................. F-8
Financial Statement Schedule
Independent Auditors' Report on Financial Statement
Schedule.......................................................... S-1
Schedule III - Regency Centers, L.P. Combined Real Estate and
Accumulated Depreciation - December 31, 1997...................... S-2
All other schedules are omitted because they are not applicable or because
information required therein is shown in the financial statements or notes
thereto.
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Unit Holders of Regency Centers, L.P.
and the Board of Directors of Regency Realty Corporation:
We have audited the accompanying consolidated balance sheets of Regency
Centers, L.P. (the "Partnership") as of December 31, 1997 and 1996, and the
related consolidated statements of operations, changes in capital and cash
flows for each of the years in the three-year period ended December 31, 1997.
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Partnership as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1997 in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Jacksonville, Florida
June 9, 1998
F-2
<PAGE>
REGENCY CENTERS, L.P.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
------------ ------------ ------------
(UNAUDITED)
ASSETS
<S> <C> <C> <C>
Real estate investments, at cost (notes
2, 4, 5 and 9):
Land................................... $161,686,129 $134,457,274 $ 55,713,109
Buildings and improvements............. 575,565,348 467,730,009 196,957,090
Construction in progress--development
for investment........................ 18,988,365 13,427,370 1,665,144
Construction in progress--development
for sale.............................. 21,776,546 20,173,039 1,695,062
------------ ------------ ------------
778,016,388 635,787,692 256,030,405
Less: accumulated depreciation......... 20,812,516 22,041,114 11,669,690
------------ ------------ ------------
757,203,872 613,746,578 244,360,715
Investments in real estate partnerships
(note 3).............................. 992,122 999,730 1,035,107
------------ ------------ ------------
Net real estate investments........... 758,195,994 614,746,308 245,395,822
Cash and cash equivalents (note 4)...... 5,556,513 14,642,429 6,466,899
Tenant receivables, net of allowance for
uncollectible accounts of $1,357,948,
$1,162,570 and $832,091 at March 31,
1998 and December 31, 1997 and 1996,
respectively........................... 7,651,036 7,245,788 3,608,727
Deferred costs, less accumulated
amortization of $1,352,682, $1,456,933
and $788,108 at March 31, 1998 and
December 31, 1997 and 1996,
respectively........................... 2,569,952 2,215,099 1,538,874
Other assets............................ 2,237,699 2,299,521 1,173,286
------------ ------------ ------------
$776,211,194 $641,149,145 $258,183,608
============ ============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loans payable (note 4)........ $212,027,750 $145,455,989 $ 34,281,064
Acquisition and development line of
credit (note 5)....................... 90,231,185 48,131,185 73,701,185
Accounts payable and other liabilities. 8,881,063 9,972,065 5,489,236
Tenants' security and escrow deposits.. 2,049,465 1,854,700 987,902
------------ ------------ ------------
Total liabilities..................... 313,189,463 205,413,939 114,459,387
------------ ------------ ------------
Limited partners' interest in
consolidated partnerships (note 2)..... 7,245,598 7,305,945 --
------------ ------------ ------------
Partners' capital....................... 455,776,133 428,429,261 143,724,221
------------ ------------ ------------
Commitments and contingencies (notes 9,
11 and 12)
$776,211,194 $641,149,145 $258,183,608
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
REGENCY CENTERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
----------------------- -------------------------------------
1998 1997 1997 1996 1995
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenues:
Minimum rent (note 9).. $17,064,484 $ 8,936,405 $53,330,305 $20,537,939 $12,065,182
Percentage rent........ 419,114 121,886 897,686 91,233 18,494
Recoveries from
tenants............... 3,810,543 2,264,502 12,993,162 4,269,126 2,278,539
Management, leasing and
brokerage fees........ 2,504,106 1,641,191 7,996,714 3,444,287 2,425,733
Equity in income of
investments in real
estate partnerships
(note 3).............. 985 26,791 33,311 69,990 4,226
----------- ---------- ----------- ----------- -----------
Total revenues........ 23,799,232 12,990,775 75,251,178 28,412,575 16,792,174
----------- ---------- ----------- ----------- -----------
Operating expenses:
Depreciation and
amortization.......... 4,145,466 1,921,334 11,904,788 4,344,985 2,573,278
Operating and
maintenance........... 3,044,254 1,692,230 10,688,596 4,528,222 2,769,756
General and
administrative (note
10)................... 3,433,108 2,221,006 9,963,928 6,048,141 4,894,432
Real estate taxes...... 2,093,995 1,375,284 6,451,058 2,683,144 1,360,435
----------- ---------- ----------- ----------- -----------
Total operating
expenses............. 12,716,823 7,209,854 39,008,370 17,604,492 11,597,901
----------- ---------- ----------- ----------- -----------
Interest expense
(income):
Interest expense....... 3,409,517 2,488,443 13,613,704 6,475,909 4,799,577
Interest income........ (318,246) (158,690) (934,473) (609,892) (401,531)
----------- ---------- ----------- ----------- -----------
Net interest expense.. 3,091,271 2,329,753 12,679,231 5,866,017 4,398,046
----------- ---------- ----------- ----------- -----------
Income before minority
interest and gain on
sale of real estate
investments.......... 7,991,138 3,451,168 23,563,577 4,942,066 796,227
Gain on sale of real
estate investments..... 10,237,419 -- 450,902 -- --
Minority interest....... (97,149) (130,735) (504,957) -- --
----------- ---------- ----------- ----------- -----------
Net income............ $18,131,408 $3,320,433 $23,509,522 $ 4,942,066 $ 796,227
=========== ========== =========== =========== ===========
Net income per unit
(note 7):
Basic.................. $ 0.71 $ 0.20 $ 1.20 $ 0.19 $ 0.04
=========== ========== =========== =========== ===========
Diluted................ $ 0.70 $ 0.20 $ 1.12 $ 0.19 $ 0.04
=========== ========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
REGENCY CENTERS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
<TABLE>
<CAPTION>
PREDECESSOR GENERAL LIMITED TOTAL
EQUITY PARTNER PARTNERS CAPITAL
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance December 31,
1994................... $ 30,385,480 $ -- $ -- $ 30,385,480
Net income............. 796,227 -- -- 796,227
Cash contributions from
the issuance of
Regency stock......... 49,515,522 -- -- 49,515,522
Cash distributions for
dividends............. (10,760,237) -- -- (10,760,237)
Other contributions
(distributions), net.. 15,925,801 -- -- 15,925,801
------------- ------------ ------------ ------------
Balance December 31,
1995................... 85,862,793 -- -- 85,862,793
Net income............. 4,942,066 -- -- 4,942,066
Cash contributions from
the issuance of
Regency stock......... 63,617,263 -- -- 63,617,263
Cash distributions for
dividends............. (16,196,364) -- -- (16,196,364)
Other contributions
(distributions), net.. 5,498,463 -- -- 5,498,463
------------- ------------ ------------ ------------
Balance December 31,
1996................... 143,724,221 -- -- 143,724,221
Reclassification of
predecessor equity
upon formation of the
Partnership........... (143,724,221) 143,724,221 -- --
Net income............. -- 21,467,699 2,041,823 23,509,522
Units issued for
acquisitions of real
estate................ -- -- 98,635,846 98,635,846
Cash contributions from
the issuance of
Regency stock......... -- 227,501,120 -- 227,501,120
Cash distributions for
dividends............. -- (35,093,345) (1,900,288) (36,993,633)
Other contributions
(distributions), net.. -- (27,947,815) -- (27,947,815)
Units exchanged for
common stock of
Regency............... -- 85,460,247 (85,460,247) --
------------- ------------ ------------ ------------
Balance December 31,
1997................... -- 415,112,127 13,317,134 428,429,261
Net income............. -- 17,537,084 594,324 18,131,408
Cash contributions from
the issuance of
Regency stock......... -- 6,769 -- 6,769
Cash distributions for
dividends............. -- (12,219,915) (276,876) (12,496,791)
Other contributions
(distributions), net.. -- (4,560,723) -- (4,560,723)
Units issued for
acquisitions of real
estate................ -- -- 26,266,209 26,266,209
Units exchanged for
common stock of
Regency............... -- 14,155,883 (14,155,883) --
Reallocation of limited
partners interest..... -- 3,036,211 (3,036,211) --
------------- ------------ ------------ ------------
Balance March 31, 1998
(unaudited)............ $ -- $433,067,436 $ 22,708,697 $455,776,133
============= ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
REGENCY CENTERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
-------------------------- ---------------------------------------
1998 1997 1997 1996 1995
------------ ------------ ------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operat-
ing activities:
Net income.............. $ 18,131,408 $ 3,320,433 $ 23,509,522 $ 4,942,066 $ 796,227
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization.......... 4,145,466 1,921,334 11,904,788 4,344,985 2,573,278
Deferred financing
cost amortization..... 135,221 93,290 434,826 227,026 115,215
Debt premium
amortization.......... (76,341) -- -- -- --
Minority interest...... 97,149 130,735 504,957 -- --
Equity in income of
investments in real
estate partnerships... (985) (26,791) (33,311) (69,990) (4,226)
Gain on sale of real
estate investments.... (10,237,419) -- (450,902) -- --
Changes in assets and
liabilities:
(Increase) decrease
in tenant
receivables.......... 229,608 1,560,191 (3,637,071) (2,532,102) 231,969
Increase (decrease)
in deferred leasing
commissions.......... 341,020 (40,777) (849,786) (254,073) (261,351)
Increase (decrease)
in other assets...... 60,473 (400,398) (1,703,970) (644,864) (477,270)
(Decrease) increase
in tenants' security
deposits............. (41,953) 516,069 866,798 427,192 285,581
Increase (decrease)
in accounts payable
and other
liabilities.......... 205,177 1,727,267 (432,171) 1,601,729 1,142,629
------------ ------------ ------------ ------------ -----------
Net cash provided by
operating
activities......... 12,988,824 8,801,353 30,113,680 8,041,969 4,402,052
------------ ------------ ------------ ------------ -----------
Cash flows from
investing activities:
Acquisition,
development and
improvements of real
estate................ (74,475,438) (50,478,519) (153,030,917) (106,611,222) (57,093,867)
Investment in real
estate partnership.... -- -- -- (881,309) --
Distributions received
from real estate
partnership
investments........... 8,593 -- 68,688 231,581 12,146
Proceeds from sale of
real estate........... 26,734,955 -- 2,645,229 -- --
------------ ------------ ------------ ------------ -----------
Net cash used in
investing
activities.......... (47,731,890) (50,478,519) (150,317,000) (107,260,950) (57,081,721)
------------ ------------ ------------ ------------ -----------
Cash flows from
financing activities:
Cash contributions from
the issuance of
Regency stock......... 6,769 26,000,012 227,501,120 63,617,263 49,515,522
Cash distributions for
dividends............. (12,496,791) (5,787,475) (36,993,633) (16,196,364) (10,760,237)
Other contributions
(distributions), net.. (4,560,723) (544,094) (27,947,815) 5,498,463 15,925,801
Proceeds or (repayment)
from acquisition and
development line of
credit, net........... 42,100,000 31,150,000 (25,570,000) 51,361,382 (18,736,629)
Proceeds from mortgage
loans payable......... 1,774,207 -- 15,972,920 1,518,331 17,773,540
Repayments of mortgage
loans payable......... (574,690) (3,098,454) (24,015,293) (583,130) (349,263)
Deferred financing
costs................. (591,622) (351,416) (568,449) (762,771) (215,043)
------------ ------------ ------------ ------------ -----------
Net cash provided by
financing
activities......... 25,657,150 47,368,573 128,378,850 104,453,174 53,153,691
------------ ------------ ------------ ------------ -----------
Net (decrease)
increase in cash and
cash equivalents.... (9,085,916) 5,691,407 8,175,530 5,234,193 474,022
------------ ------------ ------------ ------------ -----------
Cash and cash
equivalents at
beginning of period.... 14,642,429 6,466,899 6,466,899 1,232,706 758,684
------------ ------------ ------------ ------------ -----------
Cash and cash
equivalents at end of
period................. $ 5,556,513 $ 12,158,306 $ 14,642,429 $ 6,466,899 $ 1,232,706
============ ============ ============ ============ ===========
</TABLE>
F-6
<PAGE>
REGENCY CENTERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------------ ----------------------------------
1998 1997 1997 1996 1995
----------- ------------ ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Supplemental disclosure
of cash flow
information--cash paid
for interest (net of
capitalized interest
of approximately
$1,064,000, $257,000,
$1,896,000, $381,000,
and $285,000 for the
three months ended
March 31, 1998 and
1997 and years ended
December 31, 1997,
1996 and 1995,
respectively)......... $ 3,158,926 $ 2,273,822 $ 13,247,209 $5,999,587 $4,776,868
=========== ============ ============ ========== ==========
Supplemental disclosure
of non cash
transactions:
Mortgage loans assumed
from sellers of real
estate............... $65,448,585 $105,302,169 $117,698,966 -- --
=========== ============ ============ ========== ==========
Redeemable operating
partnership units
issued to sellers of
real estate.......... $26,266,209 $ 94,769,706 $ 98,635,846 -- --
=========== ============ ============ ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Principles of Consolidation
Regency Centers, L.P. (the "Partnership") is the primary entity through
which Regency Realty Corporation ("Regency"), a self-administered and self-
managed real estate investment trust ("REIT"), conducts substantially all of
its business and owns substantially all of its assets. In 1993, Regency was
formed for the purpose of managing, leasing, brokering, acquiring, and
developing shopping centers. The Partnership also provides management,
leasing, brokerage and development services for real estate not owned by
Regency (i.e., owned by third parties).
The Partnership was formed in 1996 for the purpose of acquiring certain real
estate properties. The historical financial statements of the Partnership
reflect the accounts of the Partnership since its inception, together with the
accounts of certain predecessor entities (including Regency Centers, Inc., a
wholly-owned subsidiary of Regency through which Regency owned a substantial
majority of its properties), which were merged with and into the Partnership
as of February 26, 1998.
The Partnership has a total of 22,367,573 units outstanding at December 31,
1997. Units are issued for several purposes, including (i) the acquisition of
real estate from third parties, (ii) the contribution of real estate by
Regency, and (iii) the contribution of cash by Regency. Regency owns
approximately 97.5% of such units and is the General Partner in the
Partnership. Units not owned by Regency are exchangeable for Regency's common
stock on a one for one basis and units are paid the same amount of
distributions as such units would have received had they been exchanged for
common stock of Regency. The Limited Partners are holders of units that have
not yet exchanged for Regency common stock. Upon conversion, Regency's
ownership in the Partnership increases and the Limited Partners interest
decreases.
The accompanying consolidated financial statements include the accounts of
the Partnership, its wholly owned subsidiaries, and its majority owned
subsidiaries and partnerships. All significant intercompany balances and
transactions have been eliminated in the consolidated financial statements.
(b) Revenues
The Partnership leases space to tenants under agreements with varying terms.
Leases are accounted for as operating leases with minimum rent recognized on a
straight-line basis over the term of the lease regardless of when payments are
due. Accrued rents are included in tenant receivables. Minimum rent has been
adjusted to reflect the effects of recognizing rent on a straight line basis.
Certain of the lease agreements contain provisions which provide additional
rents based on tenants' sales volume. Substantially all of the lease
agreements provide for reimbursement of the tenants' share of real estate
taxes and certain common area maintenance ("CAM") costs. These additional
rents are reflected on the accrual basis. Management, leasing, brokerage and
development fees are recognized as revenue when earned.
(c) Real Estate Investments
Land, buildings and improvements are recorded at cost. All direct and
indirect costs clearly associated with the acquisition, development and
construction of real estate projects owned by the Partnership are capitalized
as buildings and improvements, while maintenance and repairs which do not
improve or extend the useful lives of the respective assets are reflected in
operating and
F-8
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
maintenance expense. The property cost includes the capitalization of interest
expense incurred during construction in accordance with generally accepted
accounting principles.
Depreciation is computed using the straight line method over estimated
useful lives up to forty years for buildings and improvements, term of lease
for tenant improvements, and five to seven years for furniture and equipment.
(d) Income Taxes
The Partnership is not liable for federal income taxes and each partner
reports its allocable share of income and deductions on its respective return;
accordingly no provision for income taxes is required in the consolidated
financial statements.
Regency Realty Group, Inc. and Regency Realty Group II, Inc., two of the
Partnership's subsidiaries, file separate tax returns and are subject to
Federal and State income taxes. The two companies had combined taxable income
of $277,227 and $150,674 for the years ended December 31, 1997 and 1996,
respectively and incurred a taxable loss for the year ended December 31, 1995.
Regency Realty Group, Inc. had a net operating loss carryforward of $1,057,644
at December 31, 1997, and accordingly paid no income tax in 1997 and 1996. No
income tax benefit has been recorded for the net operating loss carryforwards.
Regency Realty Group II, Inc. paid $330,441 in Federal and State income tax in
1997, and had no operations prior to 1997.
At December 31, 1997, the net book basis of real estate assets exceeded the
tax basis by approximately $25.4 million, primarily due to the difference
between the cost basis of the assets acquired and their carryover basis
recorded for tax purposes. At December 31, 1996, the tax basis exceeded the
book basis by approximately $7.5 million primarily due to higher depreciation
expense for book purposes.
(e) Deferred Costs
Deferred costs consist of internal and external commissions associated with
leasing the rental property and loan costs incurred in obtaining financing
which are limited to initial direct and incremental costs. The net leasing
commission balance was $1,089,557 and $546,995 at December 31, 1997 and 1996,
respectively. The net loan cost balance was $1,125,542 and $991,879 at
December 31, 1997 and 1996, respectively. Such costs are deferred and
amortized using the straight-line method over the terms of the respective
leases and loans.
(f) Fair Value of Financial Instruments
The fair value of the Partnership's mortgage loans payable and acquisition
and development line of credit are estimated based on the current rates
available to the Partnership for debt of the same remaining maturities.
Therefore, the Partnership considers their carrying value to be a reasonable
estimation of their fair value.
(g) Earnings Per Unit
The Partnership adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share," on December 31, 1997. This
statement governs the computation,
F-9
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
presentation, and disclosure requirements for earnings per share for entities
with publicly held common stock. The Partnership has applied the provisions of
SFAS No. 128 to its calculation of basic and diluted earnings per unit.
Earnings per unit are based on the weighted average number of units
outstanding during each year (see note 7).
(h) Cash and Cash Equivalents
Any instruments which have an original maturity of ninety days or less when
purchased are considered cash equivalents.
(i) Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Partnership's management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities, at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
(j) Impairment of Long-Lived Assets
The Partnership adopted the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
on January 1, 1996. This Statement requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets.
Adoption of this Statement did not have a material impact on the Partnership's
financial position, results of operations or liquidity.
(k) Stock Option Plan
Prior to January 1, 1996, Regency and the Partnership accounted for its
stock option plan in accordance with the provisions of Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and
related interpretations. As such, compensation expense would be recorded on
the date of grant only if the current market price of the underlying stock
exceeded the exercise price. On January 1, 1996, Regency and the Partnership
adopted SFAS No. 123, "Accounting for Stock-Based Compensation," which permits
entities to recognize as expense over the vesting period the fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123 also
allows entities to continue to apply the provisions of APB Opinion No. 25 and
provide pro forma net income and pro forma earnings per share disclosures for
employee stock option grants made in 1995 and future years as if the fair-
value-based method defined in SFAS No. 123 had been applied. Regency and the
Partnership have elected to continue to apply the provisions of APB Opinion
No. 25 and provide the pro forma disclosure provisions of SFAS No. 123.
(l) Allocation of Expenses
All general and administrative expenses incurred by Regency and the
Partnership have been paid by the Partnership. All other expenses have been
allocated between Regency and the Partnership
F-10
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
based upon the direct relationship to the real estate asset for which they
were incurred. The Partnership provides property management services for the
real estate properties within the Partnership as well as other entities, and
earns a fee for these services. Such fees are recorded as management fee
revenue for third parties or as a reduction of general and administrative
expenses for properties owned by Regency. These fees are charged based on a
percentage of total revenues, as defined.
(m) Interim Unaudited Financial Statements
The accompanying interim financial statements have been prepared by the
Partnership, without audit, and in the opinion of management reflect all
normal recurring adjustments necessary for a fair presentation of results for
the unaudited interim periods presented. Certain information in footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
(n) Recent Accounting Pronouncements
Effective March 19, 1998, the Emerging Issues Task Force ("EITF") ruled in
Issue 97-11, "Accounting for Internal Costs Relating to Real Estate Property
Acquisitions," that only internal costs of identifying and acquiring non-
operating properties that are directly identifiable with the acquired
properties should be capitalized, and that all internal costs associated with
identifying and acquiring properties should be expensed as incurred. The
Partnership had previously capitalized direct costs associated with the
acquisition of operating properties as a cost of the real estate. The
Partnership has adopted EITF 97-11 effective March 19, 1998. During 1997, the
Partnership capitalized approximately $1.5 million of internal costs related
to acquiring operating properties. Through the effective date of EITF 97-11,
the Partnership has capitalized $474,000 of internal acquisition costs. For
the remainder of 1998, the Partnership expects to incur $1.1 million of
internal costs related to acquiring properties, which will be expensed.
2. ACQUISITIONS OF SHOPPING CENTERS
On March 7, 1997, the Partnership acquired substantially all of the assets
of Branch Properties, L.P. ("Branch"), a privately held real estate firm based
in Atlanta, Georgia, for $232.4 million. The assets acquired from Branch
included 100% fee simple interests in 19 operating shopping centers and one
center under development, and also partnership interests (ranging from 50% to
93%) in four partnerships with outside investors that owned four operating
shopping centers and two centers under development. The Partnership also
assumed the third party property management contracts of Branch on
approximately three million square feet of shopping center GLA that generate
management fees and leasing commission revenues.
At closing and during 1997, the Partnership issued 3,728,224 units in
exchange for the assets acquired and the liabilities assumed from Branch. The
Units are redeemable on a one-for-one basis in exchange for shares of Regency
common stock. On June 13, 1997, 3,027,080 partnership units were converted to
Regency common stock. The purchase price of Branch, as recorded in the
Partnership's consolidated financial statements, includes approximately $100.1
million for Units issued (based upon $26.85, the fair market value of
Regency's common stock on the date the acquisition was publicly announced),
$27.3 million in cash, $7.8 million for transaction costs and to establish
reserves, and
F-11
<PAGE>
REGENCY CENTERS, L.P.
NOTES CONSOLIDATED TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
2. ACQUISITIONS OF SHOPPING CENTERS, CONTINUED
$97.2 million of assumed debt. Limited partners' interest in consolidated
partnerships of $7,910,253 was recorded for the four partnerships with outside
investors.
Additional units may be issued on the fifteenth day after the first, second
and third anniversaries of the closing (each an "Earn-Out Closing"), based on
the performance of the properties acquired (the "Property Earn-Out"). The
formula for the Property Earn-Out provides for calculating increases in value
on a property-by-property basis, based on increases in net income of the year
of calculation. The Property Earn-Out is limited to 721,997 units at the first
Earn-Out Closing and 1,020,061 units at all Earn-Out Closings (including the
first Earn-Out Closing). During March 1998, the Partnership issued 721,997
units valued at $18.2 million to the partners of Branch (based upon fair
market value of Regency's common stock at the time of issuance).
Including the acquisition of the properties from Branch, the Partnership
acquired or completed development of 36 shopping centers in 1997 and 12
shopping centers in 1996 (the "Acquisitions") accounted for as purchases, at
cost totaling approximately $346.0 million and $101.7 million, respectively,
through the issuance of units, assumed mortgage loans and cash. The operating
results are included in the Partnership's consolidated financial statements
from the date each property was acquired. The following unaudited pro forma
information presents the consolidated results of operations as if the
Acquisitions had occurred on January 1, 1996, after giving effect to certain
adjustments including depreciation expense, additional general and
administration costs, interest expense on new debt incurred, and an increase
in the weighted average operating partnership units issued to acquire the
shopping centers as if units had been issued on January 1, 1996. Pro forma
revenues would have been $107.3 million and $90.5 million in 1997 and 1996,
respectively. Pro forma net income for unit holders would have been $24.1
million and $7.4 million in 1997 and 1996, respectively. Diluted pro forma net
income per unit would have been $1.16 per unit and $0.21 per unit in 1997 and
1996, respectively. This data does not purport to be indicative of what would
have occurred had the Acquisitions been made on January 1, 1996, or of results
which may occur in the future.
In January 1998, the Partnership entered into an agreement to acquire the
shopping centers from various entities comprising the Midland Group
("Midland") consisting of 21 shopping centers plus 11 shopping centers under
development. Of the 32 centers to be acquired or developed, 31 are anchored by
Kroger or its affiliate. Eight of the shopping centers under development will
be owned through a joint venture in which the Partnership will own less than a
50% interest upon completion of construction. The Partnership acquired 13 of
the Midland shopping centers containing 1.3 million square feet for
approximately $111 million during March 1998 . During the second quarter of
1998, the Partnership will acquire the remaining shopping centers and the
shopping centers under development. During 1998, 1999 and 2000, the
Partnership will pay approximately $213 million, and in addition may pay
contingent consideration of $23 million, for the properties through the
issuance of units, the payment of cash and the assumption of debt. Through
March 31, 1998, the Partnership acquired a total of 14 shopping centers for
approximately $128.8 million (the "1998 Acquisitions"), which includes the 13
properties acquired from Midland.
3. INVESTMENTS IN REAL ESTATE PARTNERSHIPS
The Partnership accounts for all investments in which it owns less than 50%
using the equity method. The Partnership has a 10% investment in Village
Commons Shopping Center and during 1996 acquired a 25% investment in Ocean
East Mall. The Partnership's combined investment in these two partnerships was
$999,730 and $1,035,107 at December 31, 1997 and 1996, respectively. Net
income is allocated in accordance with each of the partnership agreements.
F-12
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4. MORTGAGE LOANS PAYABLE
At December 31, 1997 and 1996, the following mortgage loans payable have been
assigned by Regency to the Partnership since they are secured by real estate
rental property which is included within the Partnership:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
7.04% to 7.97% mortgage notes, payable in monthly
installments of $206,108, including principal and
interest, maturing from December 15, 2000 to
December 15, 2010................................ $29,064,254 $ --
7.60% to 8.01% mortgage notes, payable in monthly
principal installments of $39,646 plus interest
maturing from June 28, 2001 to August 17, 2002... 22,005,752 22,465,410
7.92% to 8.95% mortgage notes, payable in monthly
installments of $117,628, including principal and
interest, maturing from October 1, 2005 to August
1, 2009.......................................... 13,282,672 --
8.40% mortgage note, payable in monthly
installments of $102,646, including principal and
interest, maturing on June 1, 2017............... 12,916,746 --
7.84% mortgage note, payable in monthly
installments of $92,119, including principal and
interest, maturing on September 1, 2005.......... 12,490,525 --
9.80% mortgage note, payable in monthly
installments of $73,899, including principal and
interest, maturing on February 1, 1999........... 7,892,935 8,000,421
7.94% mortgage note, payable in monthly
installments of $52,214, including principal and
interest, maturing on December 21, 2002.......... 6,612,868 --
9.75% mortgage note, payable in monthly
installments of $55,630, including principal and
interest, maturing on January 1, 1998............ 5,864,972 --
8.625% mortgage note, payable in monthly
installments of $23,225, including principal and
interest, maturing on June 1, 2003............... 2,295,238 --
7.90% to 8.10% mortgage notes, payable in monthly
installments of $21,595, including principal and
interest, maturing from April 1, 2012 to June 1,
2017............................................. 2,189,049 --
6.987% to 7.863% (LIBOR + 1.25%) mortgage notes,
interest only, payable monthly maturing from
November 30, 1998 to June 12, 2000............... 24,122,500 --
</TABLE>
F-13
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
4. MORTGAGE LOANS PAYABLE, CONTINUED
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Construction notes payable, interest only payable
monthly at LIBOR + 1.5% and Prime + .25% maturing
December 2001.................................... 4,682,835 1,518,331
7.375% (LIBOR + 1.5%) mortgage note, payable in
monthly principal installments of $4,438,
maturing on August 1, 1998....................... 2,035,643 --
8.72% mortgage note, rate adjusts annually,
payable in monthly installments of $23,105,
including principal and interest, paid in full
during 1997...................................... -- 2,296,902
------------ -----------
Total mortgage loans payable...................... $145,455,989 $34,281,064
============ ===========
</TABLE>
Principal maturities on the mortgage loans are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------
<S> <C>
1998................................. $ 27,048,272
1999................................. 9,386,671
2000................................. 13,488,153
2001................................. 14,452,126
2002................................. 18,712,015
Thereafter........................... 62,368,752
------------
Total................................ $145,455,989
============
</TABLE>
As part of its borrowing arrangements, the Partnership is expected to
maintain escrow balances for the payment of real estate taxes on the mortgaged
properties. Escrow balances recorded as cash and cash equivalents were
$1,394,612 and $96,353 at December 31, 1997 and 1996, respectively.
In conjunction with the acquisition of the Midland properties during the
first quarter of 1998, the Partnership assumed mortgage loans of $66,191,790.
The mortgage loans have interest rates in a range of 7.2% to 9.6%, and mature
from June 10, 1999 to December 10, 2007. Principal and interest payments are
due monthly on the loans.
5. ACQUISITION AND DEVELOPMENT LINE OF CREDIT
At December 31, 1997, Regency had a $150 million unsecured revolving line of
credit which is used to finance real estate acquisitions and developments
which are included within the Partnership. Accordingly, Regency has assigned
this line of credit to the Partnership. The interest rate is based upon LIBOR
plus 1.5% with interest only for two years, and if then terminated, becomes a
two year term loan maturing in May 2000 with principal due in seven equal
quarterly installments. During March 1998, the line terms were modified by
increasing the commitment to $300 million, reducing the interest rate and
incorporating a competitive bid facility of up to $150 million of the
commitment amount. The borrower may request a one year extension of the
interest only revolving period annually in May of each year.
F-14
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
6. REGENCY STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
Allocation of profits and losses and distributions to unit holders are made
in accordance with the partnership agreement. Distributions to Limited
Partners are made in the same amount as the dividends declared and paid on
Regency common stock. Distributions to the General Partner are made at the
General Partner's discretion.
The following represent equity transactions initiated by Regency. The
proceeds from such transactions are the primary source of capital from which
the Partnership acquires and develops new real estate.
On June 11, 1996, Regency entered into a Stockholders Agreement (the
"Agreement") with Security Capital Holdings S.A. (together with its parent
company Security Capital U.S. Realty, "SC-USREALTY") granting it certain
rights such as purchasing Regency common stock, nominating representatives to
Regency's Board of Directors, and subjecting SC-USREALTY to certain
restrictions including voting and ownership restrictions. The Agreement
primarily granted SC-USREALTY (i) the right to acquire 7,499,400 shares for
approximately $132 million and also participation rights entitling it to
purchase additional equity in Regency, at the same price as that offered to
other purchasers, each time that Regency sells additional shares of capital
stock or options or other rights to acquire capital stock, in order to
preserve SC-USREALTY's pro rata ownership position; and (ii) the right to
nominate a proportionate number of directors on Regency's Board, rounded down
to the nearest whole number, based upon SC-USREALTY's percentage ownership of
outstanding common stock (but not to exceed 49% of the Board). As of December
31, 1997, SC-USREALTY has acquired all of the 7,499,400 shares related to the
Agreement. In connection with the units and shares of Regency common stock
issued in exchange for Branch's assets (see note 2, Acquisitions of Shopping
Centers), SC-USREALTY acquired 1,750,000 shares during August and December,
1997 at $22.125 per share in accordance with their rights as provided for in
the Agreement.
For a period of at least five years (subject to certain exceptions), SC-
USREALTY is precluded from, among other things, (i) acquiring more than 45% of
the outstanding Regency common stock on a diluted basis, (ii) transferring
shares without Regency's approval in a negotiated transaction that would
result in any transferee beneficially owning more than 9.8% of Regency's
capital stock, or (iii) acting in concert with any third parties as part of a
13D group. Subject to certain exceptions, SC-USREALTY is required to vote its
shares either as recommended by the Board of Directors or proportionately in
accordance with the vote of the other shareholders.
On July 11, 1997, Regency sold 2,415,000 shares to the public at $27.25 per
share. In connection with that offering, SC-USREALTY purchased an additional
1,785,000 shares at $27.25 directly from Regency. On August 11, 1997, the
Underwriters exercised the over-allotment option and Regency issued an
additional 129,800 shares to the public and 95,939 shares to SC-USREALTY at
$27.25 per share. Total proceeds from the sale of common stock to the public
and SC-USREALTY of approximately $117 million net of offering expenses was
used to reduce the balance of the Partnership's line of credit.
Regency completed a $50 million private placement by issuing 2,500,000
shares of non-voting Class B common stock to a single investor on December 20,
1995 (the "Private Placement"). The proceeds from the Private Placement were
used to acquire five shopping centers. Regency initially issued $18,250,000 of
Series B preferred stock on October 26, 1995 to fund the acquisition of a
shopping center. These shares were subsequently converted into Class B common
stock. The Class B common stock is convertible into 2,975,468 shares of common
stock beginning on the third
F-15
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
6. REGENCY STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL, CONTINUED
anniversary of the issuance date, subject to certain limitations defined in
the agreement. The dividend on each share of Class B common stock is payable
when and if declared by the Board of Directors pari passu with any dividend on
the common stock of Regency.
7. EARNINGS PER UNIT
The following summarizes the calculation of basic and diluted earnings per
unit for the years ended, December 31, 1997, 1996 and 1995 (in thousands
except per unit data):
<TABLE>
<CAPTION>
1997 1996 1995
------- ------ ------
<S> <C> <C> <C>
Basic earnings per unit ("EPU") calculation:
Weighted average common units outstanding............. 15,327 5,191 4,712
======= ====== ======
Net income............................................ $23,510 $4,942 $ 796
Less dividends paid on Class B common stock and
preferred stock...................................... 5,140 3,937 591
------- ------ ------
Net income for Basic and Diluted EPU.................. $18,370 $1,005 $ 205
======= ====== ======
Basic EPU.............................................. $ 1.20 $ 0.19 $ 0.04
======= ====== ======
Diluted EPU calculation:
Weighted average units outstanding per basic EPU...... 15,327 5,191 4,712
Incremental shares to be issued under common stock
options using the Treasury method.................... 80 3 --
Contingent units or shares for the acquisition of real
estate............................................... 955 -- --
------- ------ ------
Total diluted units................................... 16,362 5,194 4,712
======= ====== ======
Diluted EPU............................................ $ 1.12 $ 0.18 $ 0.04
======= ====== ======
</TABLE>
The Class B common stock dividends and the preferred stock dividends are
deducted from net income in computing earnings per unit since the proceeds of
these offerings were transferred to and reinvested by the Partnership.
Accordingly, payment of such dividends is dependent upon the operations of the
Partnership.
8. LONG-TERM STOCK INCENTIVE PLANS
Regency is committed to contribute to the Partnership all proceeds from the
exercise of options or other stock-based awards granted under Regency's Stock
Option and Incentive Plan. Regency's ownership in the Partnership will be
increased based on the amount of proceeds contributed to the Partnership.
In 1993, Regency adopted a Long Term Omnibus Plan (the "Plan") pursuant to
which the Board of Directors may grant stock and stock options to officers,
directors and other key employees. The Plan provides for the issuance of up to
12% of Regency's common shares outstanding not to exceed 3 million shares of
authorized but unissued common stock. Stock options are granted with an
exercise price equal to the stock's fair market value at the date of grant.
All stock options granted have ten year terms, and with respect to officers
and other key employees, become fully exercisable after five years from the
date of grant, and with respect to directors, become fully exercisable after
one year.
F-16
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
8. LONG-TERM STOCK INCENTIVE PLANS, CONTINUED
At December 31, 1997, there were approximately 1.3 million shares available
for grant under the Plan. The per share weighted-average fair value of stock
options granted during 1997 and 1996 was $3.26 and $3.04 on the date of grant
using the Black Scholes option-pricing model with the following weighted-average
assumptions: 1997--expected dividend yield 6.3%, risk-free interest rate of
6.3%, expected volatility 21%, and an expected life of 5.7 years; 1996--expected
dividend yield 6.6%, risk-free interest rate of 5.9%, expected volatility 21%,
and an expected life of five years. The Partnership applies APB Opinion No. 25
in accounting for this Plan and, accordingly, no compensation cost has been
recognized for its stock options in the consolidated financial statements.
Had the Partnership determined compensation cost based on the fair value at
the grant date for its stock options under SFAS No. 123, the Partnership's net
income would have been reduced to the pro forma amounts indicated below (in
thousands except per unit data):
<TABLE>
<CAPTION>
1997 1996 1995
------- ------ ----
<S> <C> <C> <C>
Net income as reported................................... $23,510 $4,942 $796
Net income per unit:
Basic.................................................. 1.20 0.19 0.04
Diluted................................................ 1.12 0.19 0.04
Pro forma net income..................................... 21,884 4,932 796*
Net income per unit:
Basic.................................................. 1.09 0.19 0.04
Diluted................................................ 1.02 0.19 0.04
</TABLE>
* The options granted during 1995 were issued on December 31, 1995 and
accordingly had no effect to income.
Pro forma net income for unitholders reflects only options granted in 1997,
1996 and 1995. Therefore, the full impact of calculating compensation cost for
stock options under SFAS No. 123 is not reflected in the pro forma net income
for unitholders amounts presented above because compensation cost is reflected
over the options' vesting period and compensation cost for options granted
prior to January 1, 1995 is not considered.
Stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED-AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding, December 31, 1994................... 191,000 $19.16
Granted......................................... 6,000 17.25
Forfeited....................................... (11,000) 19.25
--------- ------
Outstanding, December 31, 1995................... 186,000 19.09
Granted......................................... 12,000 24.67
--------- ------
Outstanding, December 31, 1996................... 198,000 19.43
Granted......................................... 1,252,276 25.39
Forfeited....................................... (7,000) 23.54
Exercised....................................... (124,769) 19.25
--------- ------
Outstanding, December 31, 1997................... 1,318,507 $25.08
========= ======
</TABLE>
F-17
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
8. LONG-TERM STOCK INCENTIVE PLANS, CONTINUED
The following table presents information regarding all options outstanding
at December 31, 1997.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
NUMBER OF REMAINING RANGE OF WEIGHTED AVERAGE
OPTIONS OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICES EXERCISE PRICE
------------------- ---------------- --------------- ----------------
<S> <C> <C> <C>
61,231 6.1 years $16.75--19.25 $18.77
1,155,800 9.0 years 25.25 25.25
101,476 6.8 years 26.25--27.75 26.99
--------- --------- ------------- ------
1,318,507 8.7 years $16.75--27.75 25.08
========= ========= ============= ======
</TABLE>
The following table presents information regarding options currently
exercisable at December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF RANGE OF WEIGHTED AVERAGE
OPTIONS EXERCISABLE EXERCISE PRICES EXERCISE PRICE
------------------- --------------- ----------------
<S> <C> <C>
61,231 $16.75--19.25 $18.77
240,500 25.25--26.25 25.27
76,476 26.88 26.88
------- ------------- ------
378,207 $16.75--26.88 $24.54
======= ============= ======
</TABLE>
Also as part of the Plan, in 1993 and 1996, certain officers purchased
common stock at fair market value directly from Regency, of which 90% and 95%,
respectively, was financed by a stock purchase loan provided by the Plan.
These recourse loans are fully secured by stock, bear interest at fixed rates
of 7.34% to 7.79% and mature after ten years. The Board of Directors may
authorize the forgiveness of all or a portion of the principal balance based
on Regency's achievement of specified financial objectives, and total
stockholder return performance targets. During 1997, 1996 and 1995, $601,516,
$646,598 and $379,418 was forgiven, respectively, and is included as a charge
to income on the Partnership's consolidated statements of operations. Regency
also has a performance based restricted stock plan for officers whereby a
portion of the shares authorized under the Plan may be granted upon the
achievement of certain total stockholder return performance targets. Shares
granted under the plan become fully vested by January 1, 2000. During 1997 and
1996, related to the restricted stock plan, Regency allocated $259,600 and
$809,400, respectively, to the Partnership, which has been offset against
income on the Partnership's consolidated statement of operations.
9. OPERATING LEASES
The Partnership's properties are leased to tenants under operating leases
with expiration dates extending to the year 2041. Future minimum rent under
noncancelable operating leases as of December 31, 1997, excluding tenant
reimbursements of operating expenses and excluding additional contingent
rentals based on tenants' sales volume are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ ------------
<S> <C>
1998......................... $ 63,513,327
1999......................... 57,715,603
2000......................... 51,604,223
2001......................... 41,306,315
2002......................... 35,169,738
Thereafter................... 253,648,003
------------
Total........................ $502,957,209
============
</TABLE>
F-18
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
At December 31, 1997, the real estate portfolio as a whole was approximately
93.6% leased.
9. OPERATING LEASES, CONTINUED
The shopping centers' tenant base includes primarily national and regional
supermarkets, drug stores, discount department stores and other retailers and,
consequently, the credit risk is concentrated in the retail industry. During
1997, there was one tenant which individually represented 10.51% of the
combined minimum rent, no other tenants individually exceeded 10%. The
combined annualized rent from the Partnership's four largest retail tenants
represented approximately 21% of annualized minimum rent at December 31, 1997.
10. RELATED PARTY TRANSACTIONS
The Partnership provides management, leasing, and brokerage services for
certain commercial real estate properties of The Regency Group, Inc. ("TRG"),
a corporation wholly-owned by certain officers and stockholders of Regency,
and its affiliates. Fees for such services are charged to TRG based on current
market rates. From time to time, certain personnel of the Partnership may
provide administrative services to TRG, pursuant to an agreement. 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.
11. CONTINGENCIES
The Partnership like others in the commercial real estate industry, is
subject to numerous environmental laws and regulations and the operation of
dry cleaning plants at the Partnership's shopping centers is the principal
environmental concern. The Partnership believes that the dry cleaners are
operating in accordance with current laws and regulations and has established
procedures to monitor their operations. While the Partnership has registered
the plants located in Florida under a state funded program designed to
substantially fund the clean up, if necessary, of any environmental issues,
the owner or operator is not relieved from the ultimate responsibility for
clean up. The Partnership also has established due diligence procedures to
identify and evaluate potential environmental issues on properties under
consideration for acquisition. In connection with acquisitions during 1997 and
1996, the Partnership established environmental reserves of $1,944,633 and
$600,000, respectively. While it is not possible to predict with certainty,
management believes that the reserves are adequate to cover future clean-up
costs related to these sites. The Partnership's policy is to accrue
environmental clean-up costs when it is probable that a liability has been
incurred and that amount is reasonably estimable. Based on information
presently available, no additional environmental accruals were made and
management believes that the ultimate disposition of currently known matters
will not have a material effect on the financial position, liquidity or
operations of the Partnership.
F-19
<PAGE>
REGENCY CENTERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997 AND 1996
AND FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
12. SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)
Presented below is a summary of the consolidated quarterly financial data for
the years ended December 31, 1997 and 1996.
<TABLE>
<CAPTION>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------
(AMOUNTS IN THOUSANDS, EXCEPT PER UNIT DATA)
<S> <C> <C> <C> <C>
1997:
Revenues................ $12,991 19,468 21,027 22,216
Net income.............. 3,320 4,028 7,624 8,538
Basic net income per
unit................... 0.20 0.20 0.35 0.37
Diluted net income per
unit................... 0.20 0.19 0.33 0.35
1996:
Revenues................ $ 5,965 6,213 7,478 8,757
Net income.............. 1,315 1,276 1,837 514
Basic net income per
unit................... 0.06 0.06 0.16 (0.08)
Diluted net income per
unit................... 0.06 0.06 0.16 (0.08)
</TABLE>
F-20
<PAGE>
Independent Auditors' Report
On Financial Statement Schedule
-------------------------------
The Unit Holders of Regency Centers, L.P.
and the Board of Directors of Regency Realty Corporation:
Under date of June 9, 1998 we reported on the consolidated balance sheets of
Regency Centers, L.P. as of December 31, 1997 and 1996, and the related
consolidated statements of operations, changes in capital, and cash flows for
each of the years in the three-year period ended December 31, 1997, as contained
in the report on Form 10. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related financial
statement schedule as listed in the accompanying index on page F-1 of the report
on Form 10. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statement schedule based on our audits.
In our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Jacksonville, Florida
June 9, 1998
S-1
<PAGE>
REGENCY CENTERS, L.P.
Combined Real Estate and Accumulated Depreciation
December 31 ,1997
<TABLE>
<CAPTION>
Schedule III
Initial Cost Total Cost
------------------------------- Cost Capitalized ------------------------------
Building & Subsequent to Building &
Land Improvements Acquisition Land Improvements
---- ------------ ----------- ---- ------------
<S> <C> <C> <C> <C> <C>
Anastasia Shopping Plaza 1,072,451 3,617,493 112,404 1,072,451 3,729,897
Ashford Place 2,803,998 9,943,994 79,313 2,803,998 10,023,307
Berkshire Commons 2,294,960 8,151,236 36,131 2,294,960 8,187,367
Bolton Plaza 2,660,227 6,209,110 1,168,755 2,634,663 7,403,429
Boynton Lakes 2,783,000 10,043,027 - 2,783,000 10,043,027
Braelin Village 4,191,214 12,389,585 29,000 4,191,214 12,418,585
Briarcliff LaVista 694,120 2,462,819 - 694,120 2,462,819
Briarcliff Village 4,597,018 16,303,813 - 4,597,018 16,303,813
Buckhead Court 1,737,569 6,162,941 101,703 1,737,569 6,264,644
Cambridge Square 792,000 2,916,034 9,503 792,000 2,925,537
Carmel Commons 2,466,200 8,903,187 394,450 2,466,200 9,297,637
Carriage Gate 740,960 2,494,750 973,938 740,960 3,468,688
City View 1,207,204 4,341,304 23,534 1,207,204 4,364,838
Cromwell Square 1,771,892 6,285,288 - 1,771,892 6,285,288
Cumming 400 2,374,562 8,420,776 1,506 2,374,562 8,422,282
Dunwoody Hall 1,819,209 6,450,922 13,824 1,819,209 6,464,746
Dunwoody Village 2,326,063 7,216,045 107,404 2,326,063 7,323,449
East Port Plaza 3,257,023 11,611,363 98,247 3,257,023 11,709,610
Ensley Square 915,493 3,120,928 - 915,493 3,120,928
Garden Square 2,073,500 7,614,748 5,250 2,073,500 7,619,998
Glenwood Village 1,194,198 4,235,476 48,930 1,194,198 4,284,406
Harpeth Village 2,283,874 5,559,498 - 2,283,874 5,559,498
Loehmann's Plaza 3,981,525 14,117,891 - 3,981,525 14,117,891
Lovejoy Station 1,540,000 5,581,468 1,654 1,540,000 5,583,122
Mainstreet Square 1,274,027 4,491,897 9,666 1,274,027 4,501,563
Mariner's Village 1,628,000 5,907,835 106,970 1,628,000 6,014,805
Marketplace 546,831 2,189,267 - 546,831 2,189,267
Marketplace - Murphreesburo 2,432,942 1,755,643 1,813,070 2,432,942 3,568,713
Market Place - St. Petersburg 1,287,000 4,662,740 145,115 1,287,000 4,807,855
Memorial Bend 3,256,181 11,546,660 - 3,256,181 11,546,660
Merchants Village 1,054,306 3,162,919 - 1,054,306 3,162,919
</TABLE>
<TABLE>
<CAPTION>
Total Cost,
Net of
Accumulated Accumulated
Total Depreciation Depreciation Mortgages
----- ------------ ------------ ---------
<S> <C> <C> <C> <C>
Anastasia Shopping Plaza 4,802,348 454,375 4,347,973 -
Ashford Place 12,827,305 270,924 12,556,381 4,737,136
Berkshire Commons 10,482,327 833,858 9,648,469 7,892,935
Bolton Plaza 10,038,092 703,549 9,334,543 -
Boynton Lakes 12,826,027 - 12,826,027 -
Braelin Village 16,609,799 303,120 16,306,679 12,490,525
Briarcliff LaVista 3,156,939 59,584 3,097,355 1,667,855
Briarcliff Village 20,900,831 438,272 20,462,559 13,439,036
Buckhead Court 8,002,213 150,456 7,851,757 -
Cambridge Square 3,717,537 72,374 3,645,163 -
Carmel Commons 11,763,837 173,087 11,590,750 -
Carriage Gate 4,209,648 544,405 3,665,243 2,377,489
City View 5,572,042 162,095 5,409,947 -
Cromwell Square 8,057,180 168,957 7,888,223 4,518,368
Cumming 400 10,796,844 226,366 10,570,478 6,489,309
Dunwoody Hall 8,283,955 173,531 8,110,424 -
Dunwoody Village 9,649,512 138,770 9,510,742 5,864,972
East Port Plaza 14,966,633 221,661 14,744,972 -
Ensley Square 4,036,421 60,018 3,976,403 -
Garden Square 9,693,498 47,723 9,645,775 6,612,868
Glenwood Village 5,478,604 102,842 5,375,762 2,295,238
Harpeth Village 7,843,372 - 7,843,372 4,682,835
Loehmann's Plaza 18,099,416 379,505 17,719,911 10,000,000
Lovejoy Station 7,123,122 69,796 7,053,326 -
Mainstreet Square 5,775,590 89,814 5,685,776 -
Mariner's Village 7,642,805 111,949 7,530,856 -
Marketplace 2,736,098 154,947 2,581,151 2,286,946
Marketplace - Murphreesburo 6,001,655 76,255 5,925,400 2,035,643
Market Place - St. Petersburg 6,094,855 245,981 5,848,874 -
Memorial Bend 14,802,841 279,358 14,523,483 8,545,536
Merchants Village 4,217,225 67,584 4,149,641 -
</TABLE>
(*) The year acquired or year constructed is in Item 3.
Properties in the Company's Form 10.
<PAGE>
REGENCY CENTERS, L.P.
Combined Real Estate and Accumulated Depreciation
December 31, 1997
<TABLE>
<CAPTION>
Schedule III
-continued-
Initial Cost Total Cost
-------------------------------- Cost Capitalized --------------------------------
Building & Subsequent to Building &
Land Improvements Acquisition Land Improvements
---- ------------ ----------- ---- ------------
<S> <C> <C> <C> <C> <C>
Newberry Square 2,341,460 8,466,651 671,840 2,341,460 9,138,491
Oakley Plaza 1,772,540 6,406,975 20,481 1,772,540 6,427,456
Old St. Augustine Plaza 2,047,151 7,355,162 36,833 2,047,151 7,391,995
Orchard Square 1,155,000 4,135,353 248,460 1,155,000 4,383,813
Paces Ferry Plaza 2,811,522 9,967,557 222,957 2,811,522 10,190,514
Palm Harbour 2,899,928 10,998,230 315,287 2,899,928 11,313,517
Paragon Cable Building 570,000 2,472,537 - 570,000 2,472,537
Peachland Promenade 1,284,562 5,143,564 58,119 1,284,562 5,201,683
Peartree Village 5,196,653 8,732,711 4,408,150 5,196,653 13,140,861
Pine Tree Plaza 539,000 1,995,927 - 539,000 1,995,927
Powers Ferry Square 3,607,647 12,790,749 6,762 3,607,647 12,797,511
Powers Ferry Village 1,190,822 4,223,606 - 1,190,822 4,223,606
Quadrant 2,342,823 15,541,967 1,315,295 2,343,699 16,856,386
Regency Court 3,571,337 12,664,014 3,480 3,571,337 12,667,494
Rivermont Station 2,887,213 10,445,109 - 2,887,213 10,445,109
Roswell Village 2,304,345 6,777,200 - 2,304,345 6,777,200
Russell Ridge 2,153,214 0 6,546,957 2,215,341 6,484,830
Sandy Plains Village 2,906,640 10,412,440 1,635 2,906,640 10,414,075
Sandy Springs Village 733,126 2,565,411 65,000 733,126 2,630,411
Seven Springs 1,737,994 6,290,048 1,424,083 1,757,441 7,694,684
Tamiami Trails 2,046,286 7,462,646 - 2,046,286 7,462,646
Tequesta Shoppes 1,782,000 6,426,042 120,447 1,782,000 6,546,489
Town Center at Martin Downs 1,364,000 4,985,410 7,903 1,364,000 4,993,313
Town Square 438,302 1,555,481 - 438,302 1,555,481
Trowbridge Crossing 910,263 1,914,551 - 910,263 1,914,551
Union Square 1,578,654 5,933,889 108,926 1,578,654 6,042,815
University Collection 2,530,000 8,971,597 90,249 2,530,000 9,061,846
University Marketplace 3,250,562 7,044,579 2,209,804 3,532,046 8,972,899
Village Center 3,010,586 10,799,316 295,220 3,010,585 11,094,537
Welleby Plaza 1,496,000 5,371,636 253,171 1,496,000 5,624,807
Wellington Market Place 5,070,384 13,308,972 222,784 5,070,384 13,531,756
Wellington Town Square 1,914,000 7,197,934 574,179 1,914,000 7,772,113
Westland One 198,344 1,747,391 60,445 198,344 1,807,836
Woodcroft Shopping Center 1,419,000 5,211,981 312,251 1,419,000 5,524,232
----------- ----------- ---------- ----------- -----------
134,118,905 443,187,293 24,881,085 134,457,274 467,730,009
=========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Total Cost,
Net of
Accumulated Accumulated
Total Depreciation Depreciation Mortgages
----- ------------ ------------ ---------
<S> <C> <C> <C> <C>
Newberry Square 11,479,951 1,072,541 10,407,410 6,656,968
Oakley Plaza 8,199,996 126,236 8,073,760 -
Old St. Augustine Plaza 9,439,146 209,150 9,229,996 -
Orchard Square 5,538,813 219,788 5,319,025 -
Paces Ferry Plaza 13,002,036 269,031 12,733,005 5,065,000
Palm Harbour 14,213,445 393,904 13,819,541 -
Paragon Cable Building 3,042,537 242,120 2,800,417 -
Peachland Promenade 6,486,245 420,484 6,065,761 4,280,979
Peartree Village 18,337,514 196,402 18,141,112 12,916,746
Pine Tree Plaza 2,534,927 0 2,534,927 -
Powers Ferry Square 16,405,158 309,526 16,095,632 -
Powers Ferry Village 5,414,428 102,184 5,312,244 2,949,686
Quadrant 19,200,085 4,356,804 14,843,281 -
Regency Court 16,238,831 306,445 15,932,386 5,732,000
Rivermont Station 13,332,322 130,374 13,201,948 -
Roswell Village 9,081,545 125,446 8,956,099 -
Russell Ridge 8,700,171 445,001 8,255,170 6,403,370
Sandy Plains Village 13,320,715 368,719 12,951,996 -
Sandy Springs Village 3,363,537 56,976 3,306,561 -
Seven Springs 9,452,125 868,180 8,583,945 -
Tamiami Trails 9,508,932 77,983 9,430,949 -
Tequesta Shoppes 8,328,489 216,001 8,112,488 -
Town Center at Martin Down 6,357,313 135,242 6,222,071 -
Town Square 1,993,783 37,632 1,956,151 1,525,500
Trowbridge Crossing 2,824,814 36,818 2,787,996 1,800,000
Union Square 7,621,469 211,085 7,410,384 -
University Collection 11,591,846 270,068 11,321,778 -
University Marketplace 12,504,945 1,553,812 10,951,133 -
Village Center 14,105,122 577,869 13,527,253 -
Welleby Plaza 7,120,807 336,416 6,784,391 -
Wellington Market Place 18,602,140 767,986 17,834,154 -
Wellington Town Square 9,686,113 292,551 9,393,562 -
Westland One 2,006,180 391,646 1,614,534 -
Woodcroft Shopping Center 6,943,232 135,538 6,807,694 -
----------- ---------- ----------- -----------
602,187,283 22,041,114 580,146,169 143,266,940
=========== ========== =========== ===========
</TABLE>
(*) The year acquired or year constructed is in Item 3.
Properties in the Company's Form 10.
<PAGE>
REGENCY CENTERS, L.P.
Combined Real Estate and Accumulated Depreciation
December 31, 1997
Schedule III
-continued-
Depreciation and amortization of the Company's investment in buildings and
improvements reflected in the statement of operations is calculated over the
estimated useful lives of the assets as follows:
Buildings and improvements up to 40 years
The aggregate cost for Federal income tax purposes was approximately
$568,586,056 at December 31, 1997.
The changes in total real estate assets for the period ended December 31, 1997
and 1996:
1997 1996
------------ -----------
Balance, beginning of period 252,670,199 149,419,123
Developed or acquired properties 348,747,973 101,924,556
Sale of property (2,907,503) -
Improvements 3,676,614 1,326,520
------------ -----------
Balance, end of period $ 602,187,283 252,670,199
============ ===========
The changes in accumulated depreciation for the period ended December 31, 1997
and 1996:
1997 1996
----------- ----------
Balance, beginning of period 11,669,690 7,647,935
Sale of property (713,176) -
Depreciation for period 11,084,600 4,021,755
----------- ----------
Balance, end of period $22,041,114 11,669,690
=========== ==========
<PAGE>
EXHIBIT 3.2
REGENCY CENTERS, L.P.
AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP (THE "PARTNERSHIP AGREEMENT")
RELATING TO 8.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS
SECTION 1. DEFINITIONS. Capitalized terms used and not otherwise
-----------
defined herein shall have the meaning assigned thereto in the Partnership
Agreement. For purposes of this Amendment, the term "PARITY PREFERRED UNITS"
----------------------
shall be used to refer to any class or series of Partnership Interests of the
Partnership now or hereafter authorized, issued or outstanding expressly
designated by the Partnership to rank on a parity with Series A Preferred Units
(as hereafter defined) with respect to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership, or both,
as the context may require, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per unit or conversion rights or
exchange rights shall be different from those of the Series A Preferred Units.
The term "PRIORITY RETURN" shall mean, an amount equal to 8.125% per annum,
---------------
determined on the basis of a 360 day year of twelve 30 day months (or actual
days for any month which is shorter than a full monthly period), cumulative to
the extent not distributed for any given distribution period, of the stated
value of $50 per Series A Preferred Unit, commencing on the date of issuance of
such Series A Preferred Unit. The term "SUBSIDIARY" shall mean with respect to
----------
any person, any corporation, partnership, limited liability company, joint
venture or other entity of which a majority of (i) voting power of the voting
equity securities or (ii) the outstanding equity interests, is owned, directly
or indirectly, by such person. The term "PTP" shall mean a "publicly traded
---
partnership" within the meaning of Section 7704 of the Code (as hereinafter
defined). The following Paragraph shall be added to the end of the definition of
"Net Income" and "Net Loss" in the Partnership Agreement (new language is
---------- --------
underscored):
"SOLELY FOR PURPOSES OF ALLOCATING NET INCOME OR NET LOSS IN
ANY FISCAL YEAR TO THE HOLDERS OF THE SERIES A PREFERRED UNITS,
ITEMS OF NET INCOME AND NET LOSS, AS THE CASE MAY BE, SHALL NOT
INCLUDE DEPRECIATION WITH RESPECT TO PROPERTIES (OR GROUPINGS OF
PROPERTIES SELECTED BY THE GENERAL PARTNER USING ANY METHOD
DETERMINED BY IT TO BE REASONABLE) THAT ARE "CEILING LIMITED" IN
RESPECT OF THE HOLDERS OF THE SERIES A PREFERRED UNITS. FOR
PURPOSES OF THE PRECEDING SENTENCE, PARTNERSHIP PROPERTY SHALL BE
CONSIDERED CEILING LIMITED IN RESPECT OF A HOLDER OF SERIES A
PREFERRED UNITS IF DEPRECIATION ATTRIBUTABLE TO SUCH PARTNERSHIP
PROPERTY WHICH WOULD OTHERWISE BE ALLOCABLE TO SUCH PARTNER,
WITHOUT REGARD TO THIS PARAGRAPH, EXCEEDED DEPRECIATION
DETERMINED FOR FEDERAL INCOME TAX PURPOSES ATTRIBUTABLE TO SUCH
PARTNERSHIP PROPERTY WHICH WOULD OTHERWISE BE ALLOCATED TO SUCH
PARTNER BY MORE THAN 5%."
SECTION 2. DESIGNATION AND NUMBER. A series of Partnership Units in
----------------------
the Partnership designated as the "8.125% Series A Cumulative Redeemable
Preferred Units" (the "SERIES A PREFERRED UNITS") is hereby established. The
------------------------
number of Series A Preferred Units shall be 1,600,000.
<PAGE>
SECTION 3. RANK.
----
(a) The Series A Preferred Units will, with respect to distributions
or rights upon voluntary or involuntary liquidation, winding-up or dissolution
of the Partnership, or both, rank senior to all classes or series of Partnership
Interests now or hereafter authorized, issued or outstanding, other than any
class or series of equity securities of the Partnership issued after the
issuance of the Series A Preferred Units and expressly designated in accordance
with the Partnership Agreement as ranking on a parity with or senior to the
Series A Preferred Units as to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership, or both.
(b) The last sentence of Section 4.1(a) of the Partnership Agreement
shall be amended to read in full as follows (new language is underscored):
Any Partnership Interests held by the General Partner or any
Affiliate other than a Property Affiliate (including
Partnership Interests acquired under Sections 4.2, 8.6 and
8.7) shall be Class B. Units, OTHER THAN THE SERIES A
PREFERRED UNITS, THE ISSUANCE OF WHICH HAS BEEN APPROVED BY
THE LIMITED PARTNERS PURSUANT TO SECTION 4.2.
SECTION 4. DISTRIBUTIONS.
-------------
(a) Payment of Distributions. Subject to the rights of holders of
------------------------
Parity Preferred Units and any holders of Partnership Interests issued after the
date hereof in accordance herewith ranking senior to the Series A Preferred
Units as to the payment of distributions, holders of Series A Preferred Units
shall be entitled to receive, when, as and if declared by the Partnership acting
through the General Partner, out of Available Cash and Capital Transaction
Proceeds, cumulative preferential cash distributions at the rate per annum of
8.125% of the original Capital Contribution per Series A Preferred Unit. Such
distributions shall be cumulative, shall accrue from the original date of
issuance and will be payable (A) quarterly in arrears, on or before March 31,
June 30, September 30 and December 31 of each year commencing on June 30, 1998
and, (B), in the event of (i) an exchange of Series A Preferred Units into
Series A Preferred Stock, or (ii) a redemption of Series A Preferred Units, on
the exchange date or redemption date, as applicable (each a "Preferred Unit
--------------
Distribution Payment Date"). The amount of the distribution payable for any
- -------------------------
period will be computed on the basis of a 360-day year of twelve 30-day months
and for any period shorter than a full quarterly period for which distributions
are computed, the amount of the distribution payable will be computed on the
basis of the actual number of days elapsed in such a 30-day month. If any date
on which distributions are to be made on the Series A Preferred Units is not a
Business Day (as defined herein), then payment of the distribution to be made on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date. Distributions on June 30, 1998 and
thereafter on the Series A Preferred Units will be made to the holders of record
of the Series A Preferred Units on the relevant record dates to be fixed by the
Partnership acting through the General Partner, which record dates shall be not
less than ten (10) days and not more than thirty (30) Business Days prior to the
relevant Preferred Unit Distribution Payment Date (the "PREFERRED UNIT
--------------
PARTNERSHIP RECORD DATE").
- -----------------------
2
<PAGE>
The term "BUSINESS DAY" shall mean each day, other than a Saturday or
------------
a Sunday, which is not a day on which banking institutions in New York, New York
are authorized or required by law, regulation or executive order to close.
(b) Limitation on Distributions. No distribution on the Series A
---------------------------
Preferred Units shall be declared or paid or set apart for payment by the
Partnership at such time as the terms and provisions of any agreement of the
Partnership relating to its indebtedness (other than any agreement with the
holder of Partnership Interests or an Affiliate thereof), prohibits such
declaration, payment or setting apart for payment or provide, that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration, payment or setting
apart for payment shall be restricted or prohibited by law. Nothing in this
Section 4(b) shall be deemed to modify or in any manner limit the provisions of
Sections 4(c) or 4(d).
(c) Distributions Cumulative. Distributions on the Series A Preferred
------------------------
Units will accrue whether or not the terms and provisions of any agreement of
the Partnership, including any agreement relating to its indebtedness at any
time prohibit the current payment of distributions, whether or not the
Partnership has earnings, whether or not there are funds legally available for
the payment of such of such distributions and whether or not such distributions
are authorized. Accrued but unpaid distributions on the Series A Preferred
Units will accumulate as of the Preferred Unit Distribution Payment Date on
which they first become payable. Distributions on account of arrears for any
past distribution periods may be declared and paid at any time, without
reference to a regular Preferred Unit Distribution Payment Date to holders of
record of the Series A Preferred Units on the record date fixed by the
Partnership acting through the General Partner which date shall be not less than
ten (10) days and not more than thirty (30) Business Days prior to the payment
date. Accumulated and unpaid distributions will not bear interest.
(d) Priority as to Distributions.
----------------------------
(i) So long as any Series A Preferred Units are outstanding, no
distribution of cash or other property shall be authorized, declared, paid or
set apart for payment on or with respect to any class or series of Partnership
Interests of the Partnership ranking junior as to the payment of distributions
to the Series A Preferred Units (collectively, "JUNIOR UNITS"), nor shall any
------------
cash or other property be set aside for or applied to the purchase, redemption
or other acquisition for consideration of any Series A Preferred Units, any
Parity Preferred Units with respect to distributions or any Junior Units,
unless, in each case, all distributions accumulated on all Series A Preferred
Units and all classes and series of outstanding Parity Preferred Units as to
payment of distributions have been paid in full. The foregoing sentence will
not prohibit (a) distributions payable solely in Junior Units, (b) the
conversion of Junior Units or Parity Preferred Units into Partnership Interests
of the Partnership ranking junior to the Series A Preferred Units as to
distributions, or (c) the redemption of Partnership Interests corresponding to
any Series A Preferred Stock, Parity Preferred Stock with respect to
distributions or Junior Stock to be purchased by the General Partner pursuant to
Article 5 of the Articles of Incorporation of the General Partner (the
"CHARTER") to preserve the General Partner's status as a real estate investment
-------
trust, provided that such redemption shall be upon the same terms as the
corresponding purchase pursuant to Article 5 of the Charter.
(ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not irrevocably deposited in trust for
payment) upon the Series A Preferred Units, all distributions authorized and
declared on the Series A Preferred Units and all classes or series of
3
<PAGE>
outstanding Parity Preferred Units with respect to distributions shall be
authorized and declared so that the amount of distributions authorized and
declared per Series A Preferred Unit and such other classes or series of Parity
Preferred Units shall in all cases bear to each other the same ratio that
accrued distributions per Series A Preferred Unit and such other classes or
series of Parity Preferred Units (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such class or
series of Parity Preferred Units do not have cumulative distribution rights)
bear to each other.
(e) No Further Rights. Holders of Series A Preferred Units shall not
-----------------
be entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
(f) Section 5.1 of the Partnership Agreement is hereby deleted and
the following inserted as a new Section 5.1 in lieu thereof (new language is
underscored):
Section 5.1 Requirement and Characterization of Distributions.
-------------------------------------------------
(a) The General Partner shall distribute quarterly an amount equal to
100% of Available Cash generated by the Partnership during such quarter to
the Partners who are Partners on the Partnership Record Date with respect
to such quarter as follows (and for this purpose, the holders of Class A
Units shall be treated as if they were Original Limited Partners):
(i) First, one hundred percent (100%) to the Original Limited
Partners, pro rata based on the number of Original Limited Partnership
Units held by each such Partner on the applicable Partnership Record
Date, until each has received an amount equal to the Priority
Distribution Amount for the quarter for each such Unit;
(ii) Next, if any Original Limited Partners have a positive
Cumulative Unpaid Accrued Return Account, one hundred percent (100%)
to such Original Limited Partners, pro rata based on the relative
amounts of their Cumulative Unpaid Accrued Return Accounts, until each
such Cumulative Unpaid Accrued Return Account reaches zero;
(iii) Next, if any Original Limited Partners have a positive
Cumulative Unpaid Priority Distribution Account, one hundred percent
(100%) to such Original Limited Partners, pro rata based on the
relative amounts of their Cumulative Unpaid Priority Distribution
Accounts, until each such Cumulative Unpaid Priority Distribution
Account reaches zero;
(iv) Next, one hundred percent (100%) to the Additional Limited
Partners, pro rata based on the relative amounts of their Priority
Distribution Amounts, until each has received an amount equal to the
Priority Distribution Amount for the quarter for each Unit held by
such Additional Limited Partner on the applicable Partnership Record
Date;
(v) Next, if any Additional Limited Partners have a positive
Cumulative Unpaid Accrued Return Account, one hundred percent (100%)
to such Limited Partners, pro rata based on the relative amounts of
their Cumulative Unpaid Accrued Return Accounts, until each such
Cumulative Unpaid Accrued Return Account reaches zero;
4
<PAGE>
(vi) Next, if any Additional Limited Partners have a positive
Cumulative Unpaid Priority Distribution Account, one hundred percent
(100%) to such Additional Limited Partners, pro rata based on the
relative amounts of their Cumulative Unpaid Priority Distribution
Accounts, until each such Cumulative Unpaid Priority Distribution
Account reaches zero; and
(vii) Thereafter, to the General Partner and any other holders
of Class B Units, pro rata in accordance with the relative number of
Class B Units held by each.
(b) The General Partner shall distribute Capital Transaction Proceeds
received by the Partnership within 30 days after the date of such Capital
Transaction, provided that the General Partner has given the Limited
--------
Partners 20 days' prior written notice of the date for any such
distribution (the "Capital Transaction Record Date"), as follows (and for
-------------------------------
this purpose, the holders of Class A Units shall be treated as if they were
Original Limited Partners):
(i) First, if any Original Limited Partners have a positive
Cumulative Unpaid Accrued Return Account, one hundred percent (100%)
to such Original Limited Partners, pro rata based on the relative
amounts of their Cumulative Unpaid Accrued Return Accounts, until each
such Cumulative Unpaid Accrued Return Account reaches zero;
(ii) Next, if any Original Limited Partners have a positive
Cumulative Unpaid Priority Distribution Account, one hundred percent
(100%) to such Original Limited Partners, pro rata based on the
relative amounts of their Cumulative Unpaid Priority Distribution
Accounts, until each such Cumulative Unpaid Priority Distribution
Account reaches zero;
(iii) Next, if any Additional Limited Partners have a positive
Cumulative Unpaid Accrued Return Account, one hundred percent (100%)
to such Additional Limited Partners, pro rata based on the relative
amounts of their Cumulative Unpaid Accrued Return Accounts, until each
such Cumulative Unpaid Accrued Return Account reaches zero;
(iv) Next, if any Additional Limited Partners have a positive
Cumulative Unpaid Priority Distribution Account, one hundred percent
(100%) to such Additional Limited Partners, pro rata based on the
relative amounts of their Cumulative Unpaid Priority Distribution
Accounts, until each such Cumulative Unpaid Priority Distribution
Account reaches zero; and
(v) Thereafter, to the General Partner and any other holders of
Class B Units, pro rata in accordance with the relative number of
Class B Units held by each.
(C) ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, NO AVAILABLE
CASH OR CAPITAL TRANSACTION PROCEEDS SHALL BE DISTRIBUTED PURSUANT TO
SECTION 5.1(A) OR SECTION 5.1(B) UNLESS ALL DISTRIBUTIONS ACCUMULATED ON
ALL SERIES A PREFERRED UNITS HAVE BEEN PAID IN FULL.
5
<PAGE>
SECTION 5. ALLOCATIONS.
-----------
(a) Sections 6.1(a) and 6.1(b) of the Agreement are hereby deleted
and the following inserted as new Sections 6.1(a) and 6.1(b) in lieu
thereof (new language is underscored):
Section 6.1 Allocations of Net Income and Net Loss. For purposes of
--------------------------------------
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership's Net Income and Net Loss shall be allocated
among the Partners for each taxable year (or portion thereof) as provided herein
below.
(a) Net Income. After giving effect to the special allocations set
----------
forth in Section 6.2 below, Net Income shall be allocated as follows (and
for this purpose, the holders of Class A Units shall be treated as if they
were Original Limited Partners):
(i) First, one hundred percent (100%) to the General Partner in
an amount equal to the excess, if any, of (A) the cumulative Net
Losses allocated to the General Partner pursuant to Section 6.1(B)(IX)
and the last sentence of Section 6.1(b) for all prior fiscal years,
over (B) the cumulative Net Income allocated pursuant to this Section
6.1(a)(i) for all prior fiscal years;
(II) SECOND, ONE HUNDRED PERCENT (100%) TO THE HOLDERS OF SERIES
A PREFERRED UNITS IN AN AMOUNT EQUAL TO THE EXCESS, IF ANY, OF (A) THE
CUMULATIVE NET LOSSES ALLOCATED TO THE HOLDERS OF SERIES A PREFERRED
UNITS PURSUANT TO SECTION 6.1(B)(VIII) FOR ALL PRIOR FISCAL YEARS,
OVER (B) THE CUMULATIVE NET INCOME ALLOCATED PURSUANT TO THIS SECTION
6.1(A)(II) AND SECTION 6.2(G) FOR ALL PRIOR FISCAL YEARS;
(III) THIRD, one hundred percent (100%) to the Original Limited
Partners in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to such Partners pursuant to Section
6.1(b)(iv) for all prior fiscal years, over (B) the cumulative Net
Income allocated pursuant to this Section 6.1(a)(iii) for all prior
fiscal years, which amount shall be allocated among the Partners in
the same proportions and in the reverse order as the Net Losses were
allocated pursuant to Section 6.1(b)(iv);
(IV) FOURTH, one hundred percent (100%) to the Original Limited
Partners in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to such Partners pursuant to Section
6.1(b)(iii) for all prior fiscal years, over (B) the cumulative Net
Income allocated pursuant to this Section 6.1(a)(iv) for all prior
fiscal years, which amount shall be allocated among such Partners in
the same proportions and in the reverse order as the Net Losses were
allocated pursuant to Section 6.1(b)(iii);
(V) FIFTH, ONE HUNDRED PERCENT (100%) TO THE HOLDERS OF SERIES
A PREFERRED UNITS UNTIL THE HOLDERS OF SERIES A PREFERRED UNITS HAVE
BEEN ALLOCATED AN AMOUNT EQUAL TO THE REMAINDER, IF ANY, OF THE
CUMULATIVE PRIORITY RETURN TO THE LAST DAY OF THE CURRENT FISCAL YEAR,
MINUS THE CUMULATIVE NET INCOME ALLOCATED TO THE HOLDERS OF SERIES A
PREFERRED UNITS PURSUANT TO THIS SECTION 6.1(A)(V) AND SECTION 6.2(G)
FOR ALL PRIOR PERIODS;
6
<PAGE>
(VI) SIXTH, one hundred percent (100%) to the Original
Limited Partners until the cumulative allocations of Net Income to
each Original Limited Partner under this Section 6.1(a)(vi) for the
current and all prior fiscal years equal the cumulative distributions
paid to the Original Limited Partner pursuant to Section 5.1(a)(i) and
Section 13.2(a)(iii);
(VII) SEVENTH, one hundred percent (100%) to the Original
Limited Partners until the cumulative allocations of Net Income to
each Original Limited Partner under this Section 6.1(a)(vii) for the
current and all prior fiscal years equal the sum of the cumulative
amounts credited to such Partner's Cumulative Unpaid Priority
Distribution Account and Cumulative Unpaid Accrued Return Account for
the current and all prior fiscal years;
(VIII) EIGHTH, one hundred percent (100%) to the Additional
Limited Partners in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to the Additional Limited Partners
pursuant to Section 6.1(b)(vii) for all prior fiscal years, over (B)
the cumulative Net Income allocated pursuant to this Section
6.1(a)(viii) for all prior fiscal years, which amount shall be
allocated among the Additional Limited Partners in the same
proportions and in the reverse order as the Net Losses were allocated
pursuant to Section 6.1(b)(vii);
(IX) NINTH, one hundred percent (100%) to the Additional
Limited Partners in an amount equal to the excess, if any, of (A) the
cumulative Net Losses allocated to the Additional Limited Partners
pursuant to Section 6.1(b)(vi) for all prior fiscal years, over (B)
the cumulative Net Income allocated pursuant to this Section
6.1(a)(ix) for all prior fiscal years, which amount shall be allocated
among such Partners in the same proportions and in the reverse order
as the Net Losses were allocated pursuant to Section 6.1(b)(vi);
(X) TENTH, one hundred percent (100%) to the
Additional Limited Partners until the cumulative allocations of Net
Income to each Additional Limited Partner under this Section 6.1(A)(X)
for the current and all prior fiscal years equal the cumulative
distributions paid to the Additional Limited Partners pursuant to
Section 5.1(a)(iv) and Section 13.2(a)(iv);
(XI) ELEVENTH, one hundred percent (100%) to the Additional
Limited Partners until the cumulative allocations of Net Income to
each Additional Limited Partner under this Section 6.1(A)(XI) for the
current and all prior fiscal years equal the sum of the cumulative
amounts credited to such Partner's Cumulative Unpaid Priority
Distribution Account and Cumulative Unpaid Accrued Return Account for
the current and all prior fiscal years; and
(XII) Thereafter, to the General Partner and any other holders
of Class B Units, pro rata in accordance with the relative number of
Class B Units held by each.
(b) Net Losses. After giving effect to the special allocations set
----------
forth in Section 6.2 below, Net Losses shall be allocated as follows (and
for this purpose, the holders of Class A Units shall be treated as if they
were Original Limited Partners):
7
<PAGE>
(i) First, one hundred percent (100%) to the General Partner
and the Class B Unit holders in an amount equal to the excess, if any,
of (A) the cumulative Net Income allocated pursuant to Section
6.1(A)(XII) hereof for all prior fiscal years, over (B) the cumulative
Net Losses allocated pursuant to this Section 6.1(b)(i) for all prior
fiscal years;
(ii) Second, to the Original Limited Partners until the
cumulative allocations of Net Losses under this Section 6.1(b)(ii)
equal the excess, if any, of the cumulative allocations of Net Income
under Section 6.1(A)(VII) to such Partners for all prior fiscal years
over the cumulative distributions to such Partners under Section
5.1(a)(ii) and (iii) and Section 5.1(b)(i) and (ii) for the current
and all prior fiscal years (such allocation being made in proportion
to such Partners' respective excess amounts);
(iii) Third, to the Original Limited Partners with positive
Adjusted Capital Account balances (determined, solely for purposes of
this Section 6.1(b)(iii), without regard to any obligation of a
Partner to restore a negative Capital Account under Section 13.4), in
proportion to such balances, until such balances are reduced to zero;
(iv) Fourth, to the Original Limited Partners in proportion to
their relative Percentage Interests; provided, however, that to the
-------- -------
extent that an allocation under this Section 6.1(b)(iv) would cause or
increase an Adjusted Capital Account Deficit for such Partner, such
Net Loss shall be allocated to those Original Limited Partners (in
proportion to their relative Percentage Interests) for whom such
allocation would not cause or increase an Adjusted Capital Account
Deficit; and
(v) Fifth, to the Additional Limited Partners until the
cumulative allocations of Net Losses under this Section 6.1(b)(v)
equal the excess, if any, of the cumulative allocations of Net Income
under Section 6.1(A)(XI) to such Partners for all prior fiscal years
over the cumulative distributions to such Partners under Section
5.1(a)(v) and (vi) and Section 5.1(b)(iii) and (iv) for the current
and all prior fiscal years (such allocation being made in proportion
to such Partners' respective excess amounts);
(vi) Sixth, to the Additional Limited Partners with positive
Adjusted Capital Accounts balances (determined, solely for purposes of
this Section 6.1(b)(vi), without regard to any obligation of a Partner
to restore a negative Capital Account under Section 13.4), in
proportion to such balances, until such balances are reduced to zero;
(vii) Seventh, to the Additional Limited Partners in proportion
to their relative Percentage Interests; provided, however, that to the
-------- -------
extent that an allocation under this Section 6.1(b)(vii) would cause
or increase an Adjusted Capital Account Deficit for such Partner, such
Net Loss shall be allocated to those Additional Limited Partners (in
proportion to their relative Percentage Interests) for whom such
allocation would not cause or increase an Adjusted Capital Account
Deficit;
(VIII) EIGHTH, TO THE HOLDERS OF SERIES A PREFERRED UNITS UNTIL
THEIR ADJUSTED CAPITAL ACCOUNT BALANCE (DETERMINED, SOLELY FOR
PURPOSES OF THIS SECTION 6.1(B)(VIII),
8
<PAGE>
WITHOUT REGARD TO ANY OBLIGATION OF A PARTNER TO RESTORE A NEGATIVE
CAPITAL ACCOUNT UNDER SECTION 13.4), HAS BEEN REDUCED TO ZERO; AND
(IX) Any remaining Net Loss shall be allocated solely to
the General Partner.
Notwithstanding the foregoing, Net Losses shall not be allocated to any Limited
Partner pursuant to this Section 6.1(b)(ix) to the extent that such allocation
would cause such Limited Partner to have an Adjusted Capital Account Deficit at
the end of such taxable year (or increase any existing Adjusted Capital Account
Deficit). All Net Losses in excess of the limitations set forth in the
preceding sentence of this Section 6.1(b) shall be allocated to the General
Partner.
(b) Section 6.2(g) of the Agreement is hereby deleted and the
following inserted as new Section 6.2(g) in lieu thereof (new language is
underscored):
(g) Capital Account Adjustments. Notwithstanding anything herein to the
---------------------------
contrary, any gain or loss arising from an adjustment to the Gross Asset Value
of any Partnership asset pursuant to clause (b) or (c) of the definition thereof
shall be allocated (I) FIRST, TO THE HOLDERS OF THE SERIES A PREFERRED UNITS,
BUT ONLY TO THE EXTENT THAT THEY WOULD HAVE BEEN ALLOCATED SUCH GAIN PURSUANT TO
SECTION 6.1(A)(II) OR SECTION 6.1(A)(V) OF THIS AGREEMENT OR SUCH LOSS PURSUANT
TO SECTION 6.1(B)(VIII) OF THIS AGREEMENT, AS APPLICABLE, IF SUCH GAIN OR LOSS
HAD BEEN ACTUALLY REALIZED; AND (II) SECOND, one hundred percent (100%) OF THE
REMAINDER OF SUCH GAIN OR LOSS to the General Partner and the Additional Limited
Partners (OTHER THAN HOLDERS OF SERIES A PREFERRED UNITS) pro-rata in accordance
with the relative number of Units held by each; provided, however, that for this
-------- -------
purpose, the General Partner shall be treated as owning all of the outstanding
Class A Units and all of the outstanding Original Limited Partnership Units in
addition to the actual number of Units which the General Partner holds. An
Additional Limited Partner (EXCEPT FOR HOLDERS OF SERIES A PREFERRED UNITS), at
the time of admission to the Partnership, may elect with the consent of the
General Partner to not receive special allocations of any gain or loss resulting
from such adjustments.
SECTION 6. LIQUIDATION PREFERENCE.
----------------------
(a) Payment of Liquidating Distributions. Subject to the rights of
------------------------------------
holders of Parity Preferred Units with respect to rights upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership and
subject to Partnership Interests ranking senior to the Series A Preferred Units
with respect to rights upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, the holders of Series A Preferred
Units shall be entitled to receive out of the assets of the Partnership legally
available for distribution or the proceeds thereof, after payment or provision
for debts and other liabilities of the Partnership, but before any payment or
distributions of the assets shall be made to holders of any class or series of
Partnership Interest that ranks junior to the Series A Preferred Units as to
rights upon liquidation, dissolution or winding-up of the Partnership, an amount
equal to the sum of (i) a liquidation preference equal to their positive Capital
Account balances, determined after taking into account all Capital Account
adjustments for the Partnership taxable year during which the liquidation occurs
(other than those made as a result of the liquidating distribution set forth in
this Section 6(a)), and (ii) an amount equal to any accumulated and unpaid
distributions thereon, whether or not declared, to the date of payment. In the
event that, upon such voluntary or involuntary liquidation, dissolution or
winding-up, there are insufficient assets to permit full payment of liquidating
distributions to the holders of Series A Preferred Stock and any Parity
Preferred Units as to rights upon
9
<PAGE>
liquidation, dissolution or winding-up of the Partnership, all payments of
liquidating distributions on the Series A Preferred Units and such Parity
Preferred Units shall be made so that the payments on the Series A Preferred
Units and such Parity Preferred Units shall in all cases bear to each other the
same ratio that the respective rights of the Series A Preferred Unit and such
other Parity Preferred Units (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such Parity
Preferred Units do not have cumulative distribution rights) upon liquidation,
dissolution or winding-up of the Partnership bear to each other.
(b) Notice. Written notice of any such voluntary or involuntary
------
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than 30 and not more that 60 days prior
to the payment date stated therein, to each record holder of the Series A
Preferred Units at the respective addresses of such holders as the same shall
appear on the transfer records of the Partnership.
(c) No Further Rights. After payment of the full amount of the
-----------------
liquidating distributions to which they are entitled, the holders of Series A
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
(d) Consolidation, Merger or Certain Other Transactions. The
---------------------------------------------------
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the General Partner to, or the consolidation or merger or
other business combination of the Partnership with or into, any corporation,
trust or other entity (or of any corporation, trust or other entity with or into
the Partnership) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Partnership.
SECTION 7. OPTIONAL REDEMPTION.
--------------------
(a) Right of Optional Redemption. The Series A Preferred Units may
----------------------------
not be redeemed prior to the fifth anniversary of the issuance date. On or after
such date, the Partnership shall have the right to redeem the Series A Preferred
Units, in whole or in part, at any time or from time to time, upon not less than
30 nor more than 60 days' written notice, at a redemption price, payable in
cash, equal to the Capital Account balance of the holder of Series A Preferred
Units (the "REDEMPTION PRICE"); provided, however, that no redemption pursuant
----------------
to this SECTION 7 will be permitted if the Redemption Price does not equal or
exceed the original Capital Contribution of such holder plus the cumulative
Priority Return, whether or not declared, to the redemption date to the extent
not previously distributed or distributed on the redemption date pursuant to
Section 4(a). If fewer than all of the outstanding Series A Preferred Units are
to be redeemed, the Series A Preferred Units to be redeemed shall be selected
pro rata (as nearly as practicable without creating fractional units).
(b) Limitation on Redemption.
------------------------
(i) The Redemption Price of the Series A Preferred Units (other
than the portion thereof consisting of accumulated but unpaid distributions)
will be payable solely out of the sale proceeds of capital stock of the General
Partner, which will be contributed by the General Partner to the Partnership as
additional capital contribution, or out of the sale of limited partner interests
in the Partnership and from no other source. For purposes of the preceding
sentence, "capital stock" means any equity securities (including Common Stock
and Preferred Stock (as such terms are defined in the
10
<PAGE>
Charter)), shares, participation or other ownership interests (however
designated) and any rights (other than debt securities convertible into or
exchangeable for equity securities) or options to purchase any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the
outstanding Series A Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series A Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.
(c) Procedures for Redemption.
-------------------------
(i) Notice of redemption will be (i) faxed, and (ii) mailed by
the Partnership, by certified mail, postage prepaid, not less than 30 nor more
than 60 days prior to the redemption date, addressed to the respective holders
of record of the Series A Preferred Units at their respective addresses as they
appear on the records of the Partnership. No failure to give or defect in such
notice shall affect the validity of the proceedings for the redemption of any
Series A Preferred Units except as to the holder to whom such notice was
defective or not given. In addition to any information required by law, each
such notice shall state: (i) the redemption date, (ii) the Redemption Price,
(iii) the aggregate number of Series A Preferred Units to be redeemed and if
fewer than all of the outstanding Series A Preferred Units are to be redeemed,
the number of Series A Preferred Units to be redeemed held by such holder, which
number shall equal such holder's pro rata share (based on the percentage of the
aggregate number of outstanding Series A Preferred Units the total number of
Series A Preferred Units held by such holder represents) of the aggregate number
of Series A Preferred Units to be redeemed, (iv) the place or places where such
Series A Preferred Units are to be surrendered for payment of the Redemption
Price, (v) that distributions on the Series A Preferred Units to be redeemed
will cease to accumulate on such redemption date and (vi) that payment of the
Redemption Price will be made upon presentation and surrender of such Series A
Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect
of Series A Preferred Units (which notice will be irrevocable) then, by 12:00
noon, New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series A Preferred Units being
redeemed funds sufficient to pay the applicable Redemption Price and will give
irrevocable instructions and authority to pay such Redemption Price to the
holders of the Series A Preferred Units upon surrender of the Series A Preferred
Units by such holders at the place designated in the notice of redemption. If
the Series A Preferred Units are evidenced by a certificate and if fewer than
all Series A Preferred Units evidenced by any certificate are being redeemed, a
new certificate shall be issued upon surrender of the certificate evidencing all
Series A Preferred Units, evidencing the unredeemed Series A Preferred Units
without cost to the holder thereof. On and after the date of redemption,
distributions will cease to accumulate on the Series A Preferred Units or
portions thereof called for redemption, unless the Partnership defaults in the
payment thereof. If any date fixed for redemption of Series A Preferred Units is
not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If payment of the Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series A Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
11
<PAGE>
SECTION 8. VOTING RIGHTS.
-------------
(a) General. Holders of the Series A Preferred Units will not have
-------
any voting rights or right to consent to any matter requiring the consent or
approval of the Limited Partners, except as otherwise expressly set forth in the
Partnership Agreement and except as set forth below.
(b) Certain Voting Rights. So long as any Series A Preferred Units
---------------------
remain outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series A Preferred Units outstanding
at the time (i) authorize or create, or increase the authorized or issued amount
of, any class or series of Partnership Interests ranking prior to the Series A
Preferred Units with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any Partnership Interests
of the Partnership into any such Partnership Interest, or create, authorize or
issue any obligations or security convertible into or evidencing the right to
purchase any such Partnership Interests, (ii) authorize or create, or increase
the authorized or issued amount of any Parity Preferred Units or reclassify any
Partnership Interest of the Partnership into any such Partnership Interest or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such Partnership Interests but only to the
extent such Parity Preferred Units are issued to an affiliate of the
Partnership, other than (A) Security Capital U.S. Realty, Security Capital
Holdings, S.A. or their affiliates or (B) the General Partner to the extent the
issuance of such interests was to allow the General Partner to issue
corresponding preferred stock to persons who are not affiliates of the
Partnership or (iii) either (A) consolidate, merge into or with, or convey,
transfer or lease its assets substantially as an entirety to, any corporation or
other entity or (B) amend, alter or repeal the provisions of the Partnership
Agreement, whether by merger, consolidation or otherwise, that would materially
and adversely affect the powers, special rights, preferences, privileges or
voting power of the Series A Preferred Units or the holders thereof; provided,
however, that with respect to the occurrence of a merger, consolidation or a
sale or lease of all of the Partnership's assets as an entirety, so long as (a)
the Partnership is the surviving entity and the Series A Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability company or other pass-
through entity organized under the laws of any state and substitutes the Series
A Preferred Units for other interests in such entity having substantially the
same terms and rights as the Series A Preferred Units, including with respect to
distributions, voting rights and rights upon liquidation, dissolution or
winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series A Preferred Units and no vote of the Series A Preferred
Units shall be required in such case; and provided further that any increase in
the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests, in each case ranking (a) junior to the
Series A Preferred Units with respect to payment of distributions and the
distribution of assets upon liquidation, dissolution or winding-up, or (b) on a
parity to the Series A Preferred Units with respect to payment of distributions
and the distribution of assets upon liquidation, dissolution or winding-up to
the extent such Partnership Interest are not issued to an affiliate of the
Partnership, other than the General Partner to the extent the issuance of such
interests was to allow the General Partner to issue corresponding preferred
stock to persons who are not affiliates of the Partnership, shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers and no vote of the Series A Preferred Units shall be required in
such case.
SECTION 9. TRANSFER RESTRICTIONS.
---------------------
(a) The Series A Preferred Units shall be subject to the provisions of
Article 11 of the Partnership Agreement.
12
<PAGE>
(b) No transfer of the Series A Preferred Units may be made without
the consent of the General Partner, which consent may be given or withheld in
its sole and absolute discretion, if such transfer would result in more than
four partners holding all outstanding Series A Preferred Units within the
meaning of Treasury Regulation Section 1.7704-1(h)(3).
SECTION 10. EXCHANGE RIGHTS.
---------------
(a) Right to Exchange.
-----------------
(i) Series A Preferred Units will be exchangeable in whole or in
part at anytime on or after the tenth anniversary of the date of issuance, at
the option of the holders thereof, for authorized but previously unissued shares
of 8.125% Series A Cumulative Redeemable Preferred Stock of the General Partner
(the "SERIES A PREFERRED STOCK") at an exchange rate of one share of Series A
------------------------
Preferred Stock for one Series A Preferred Unit, subject to adjustment as
described below (the "EXCHANGE PRICE"), provided that the Series A Preferred
--------------
Units will become exchangeable at any time, in whole or in part, at the option
of the holders of Series A Preferred Units for Series A Preferred Stock if (y)
at any time full distributions shall not have been timely made on any Series A
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive, provided, however, that a distribution in respect of
Series A Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Preferred Unit Distribution Payment Date if
at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series A Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
occurrence of a defined event in the immediate future will be, a PTP and (B) an
opinion rendered by an outside nationally recognized independent counsel
familiar with such matters addressed to a holder or holders of Series A
Preferred Units, that the Partnership is or likely is, or upon the occurrence of
a defined event in the immediate future will be or likely will be, a PTP. In
addition, the Series A Preferred Units may be exchanged for Series A Preferred
Stock, in whole or in part, at the option of any holder prior to the tenth
anniversary of the issuance date and after the third anniversary thereof if such
holder of a Series A Preferred Units shall deliver to the General Partner either
(i) a private ruling letter addressed to such holder of Series A Preferred Units
or (ii) an opinion of independent counsel reasonably acceptable to the General
Partner based on the enactment of temporary or final Treasury Regulations or the
publication of a Revenue Ruling, in either case to the effect that an exchange
of the Series A Preferred Units at such earlier time would not cause the Series
A Preferred Units to be considered "stock and securities" within the meaning of
section 351(e) of the Internal Revenue Code of 1986, as amended (the "CODE") for
----
purposes of determining whether the holder of such Series A Preferred Units is
an "investment company" under section 721(b) of the Code if an exchange is
permitted at such earlier date. Furthermore, the Series A Preferred Units may be
exchanged in whole or in part for Series A Preferred Shares at any time after
the date hereof, if both (1) the holder thereof concludes based on results or
projected results that there exists (in the reasonable judgement of the holder)
an imminent and substantial risk that the holder's interest in the Partnership
does or will represent more than 19.5% of the total profits or capital interests
in the Partnership (determined in accordance with Treasury Regulations Section
1.731-2(e)(4)) for a taxable year, and (2) the holder delivers to the General
Partner an opinion of nationally recognized independent counsel to the effect
that there is an imminent and substantial risk that the holder's interest in the
Partnership does or will represent more than 19.5% of the total profits or
capital interests in the Partnership (determined in accordance with Treasury
Regulations Section 1.731-2(e)(4)) for a taxable year.
13
<PAGE>
(ii) Notwithstanding anything to the contrary set forth in
SECTION 10(A)(I), if an Exchange Notice (as defined herein) has been delivered
to the General Partner, then the General Partner may, at its option, elect to
redeem or cause the Partnership to redeem all or a portion of the outstanding
Series A Preferred Units for cash in an amount equal to the original Capital
Contribution per Series A Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. The General Partner may
exercise its option to redeem the Series A Preferred Units for cash pursuant to
this SECTION 10(A)(II) by giving each holder of record of Series A Preferred
Units notice of its election to redeem for cash, within five (5) Business Days
after receipt of the Exchange Notice, by (i) fax, and (ii) registered mail,
postage paid, at the address of each holder as it may appear on the records of
the Partnership stating (i) the redemption date, which shall be no later than
sixty (60) days following the receipt of the Exchange Notice, (ii) the
redemption price, (iii) the place or places where the Series A Preferred Units
are to be surrendered for payment of the redemption price, (iv) that
distributions on the Series A Preferred Units will cease to accrue on such
redemption date; (v) that payment of the redemption price will be made upon
presentation and surrender of the Series A Preferred Units and (vi) the
aggregate number of Series A Preferred Units to be redeemed, and if fewer than
all of the outstanding Series A Preferred Units are to be redeemed, the number
of Series A Preferred Units to be redeemed held by such holder, which number
shall equal such holder's pro-rata share (based on the percentage of the
aggregate number of outstanding Series A Preferred Units the total number of
Series A Preferred Units held by such holder represents) of the aggregate number
of Series A Preferred Units being redeemed.
(iii) Upon the occurrence of an event giving rise to exchange
rights pursuant to Section 10(a)(i), in the event an exchange of all or a
portion of Series A Preferred Units pursuant to SECTION 10(A)(I) would violate
the provisions on ownership limitation of the General Partner set forth in
Article 5 of the Charter, the General Partner shall give written notice thereof
to each holder of record of Series A Preferred Units, within five (5) Business
Days following receipt of the Exchange Notice, by (i) fax, and (ii) registered
mail, postage prepaid, at the address of each such holder set forth in the
records of the Partnership. In such event, each holder of Series A Preferred
Units shall be entitled to exchange, pursuant to the provision of SECTION 10(B)
a number of Series A Preferred Units which would comply with the provisions on
the ownership limitation of the General Partner set forth in such Article 5 of
the Charter and any Series A Preferred Units not so exchanged (the "EXCESS
------
UNITS") shall be redeemed by the Partnership for cash in an amount equal to the
original Capital Contribution per Excess Unit, plus any accrued and unpaid
distributions thereon, whether or not declared, to the date of redemption. The
written notice of the General Partner shall state (i) the number of Excess Units
held by such holder, (ii) the redemption price of the Excess Units, (iii) the
date on which such Excess Units shall be redeemed, which date shall be no later
than sixty (60) days following the receipt of the Exchange Notice, (iv) the
place or places where such Excess Units are to be surrendered for payment of the
Redemption Price, (iv) that distributions on the Excess Units will cease to
accrue on such redemption date, and (v) that payment of the redemption price
will be made upon presentation and surrender of such Excess Units. In the event
an exchange would result in Excess Units, as a condition to such exchange, each
holder of such units agrees to provide representations and covenants reasonably
requested by the General Partner relating to (i) the widely held nature of the
interests in such holder, sufficient to assure the General Partner that the
holder's ownership of stock of the General Partner (without regard to the limits
described above) will not cause any individual to own in excess of 9.8% of the
stock of the General Partner; and (ii) to the extent such holder can so
represent and covenant without obtaining information from its owners, the
holder's ownership of tenants of the Partnership and its affiliates.
(iv) The redemption of Series A Preferred Units described in
SECTION 10(A)(II) and (III) shall be subject to the provisions of SECTION
7(B)(I) and SECTION 7(C)(II); provided, however, that
14
<PAGE>
for purposes hereof the term "Redemption Price" in Sections 7(b)(i) and 7(c)(ii)
shall be read to mean the original Capital Contribution per Series A Preferred
Unit being redeemed plus all accrued and unpaid distributions to the redemption
date.
(b) Procedure for Exchange.
----------------------
(i) Any exchange shall be exercised pursuant to a notice of
exchange (the "EXCHANGE NOTICE") delivered to the General Partner by the holder
---------------
who is exercising such exchange right, by (i) fax and (ii) by certified mail
postage prepaid. Upon request of the General Partner, such holder delivering the
Exchange Notice shall provide to the General Partner in writing such information
as the General Partner may reasonably request to determine whether any portion
of the exchange by the delivering holder will result in the violation of the
restrictions of Article 5 of the Charter, including the Ownership Limit and the
Related Tenant Limit. The exchange of Series A Preferred Units, or a specified
portion thereof, may be effected after the fifth (5/th/) Business Days following
receipt by the General Partner of the Exchange Notice and such requested
information by delivering certificates, if any, representing such Series A
Preferred Units to be exchanged together with, if applicable, written notice of
exchange and a proper assignment of such Series A Preferred Units to the office
of the General Partner maintained for such purpose. Currently, such office is
121 West Forsyth Street, Suite 200, Jacksonville, Florida 32202. Each exchange
will be deemed to have been effected immediately prior to the close of business
on the date on which such Series A Preferred Units to be exchanged (together
with all required documentation) shall have been surrendered and notice shall
have been received by the General Partner as aforesaid and the Exchange Price
shall have been paid. Any Series A Preferred Shares issued pursuant to this
SECTION 10 shall be delivered as shares which are duly authorized, validly
issued, fully paid and nonassessable, free of pledge, lien, encumbrance or
restriction other than those provided in the Charter, the Bylaws of the General
Partner, the Securities Act and relevant state securities or blue sky laws.
(ii) In the event of an exchange of Series A Preferred Units
for shares of Series A Preferred Stock, an amount equal to the accrued and
unpaid distributions which are not paid pursuant to Section 4(a) hereof, whether
or not declared, to the date of exchange on any Series A Preferred Units
tendered for exchange shall (i) accrue and be payable by the General Partner
from and after the date of exchange on the shares of the Series A Preferred
Stock into which such Series A Preferred Units are exchanged, and (ii) continue
to accrue on such Series A Preferred Units, which shall remain outstanding
following such exchange, with the General Partner as the holder of such Series A
Preferred Units. Notwithstanding anything to the contrary set forth herein, in
no event shall a holder of a Series A Preferred Unit that was validly exchanged
into Series A Preferred Stock pursuant to this section (other than the General
Partner now holding such Series A Preferred Unit), receive a distribution out of
Available Cash or Capital Transaction Proceeds of the Partnership with respect
to any Series A Preferred Units so exchanged.
(iii) Fractional shares of Series A Preferred Stock are not to
be issued upon exchange but, in lieu thereof, the General Partner will pay a
cash adjustment based upon the fair market value of the Series A Preferred Stock
on the day prior to the exchange date as determined in good faith by the Board
of Directors of the General Partner.
(c) Adjustment of Exchange Price.
----------------------------
(i) The Exchange Price is subject to adjustment upon certain
events, including, (i) subdivisions, combinations and reclassification of the
Series A Preferred Stock, and (ii)
15
<PAGE>
distributions to all holders of Series A Preferred Stock of evidences of
indebtedness of the General Partner or assets (including securities, but
excluding dividends and distributions paid in cash out of equity applicable to
Series A Preferred Stock).
(ii) In case the General Partner shall be a party to any
transaction (including, without limitation, a merger, consolidation, statutory
share exchange, tender offer for all or substantially all of the General
Partner's capital stock or sale of all or substantially all of the General
Partner's assets), in each case as a result of which the Series A Preferred
Stock will be converted into the right to receive shares of capital stock, other
securities or other property (including cash or any combination thereof), each
Series A Preferred Unit will thereafter be exchangeable into the kind and amount
of shares of capital stock and other securities and property receivable
(including cash or any combination thereof) upon the consummation of such
transaction by a holder of that number of shares of Series A Preferred Stock or
fraction thereof into which one Series A Preferred Unit was exchangeable
immediately prior to such transaction. The General Partner may not become a
party to any such transaction unless the terms thereof are consistent with the
foregoing.
SECTION 11. NO CONVERSION RIGHTS. The holders of the Series A
--------------------
Preferred Units shall not have any rights to convert such shares into shares of
any other class or series of stock or into any other securities of, or interest
in, the Partnership.
SECTION 12. NO SINKING FUND. No sinking fund shall be established
---------------
for the retirement or redemption of Series A Preferred Units.
SECTION 13. PTP OBLIGATIONS. Notwithstanding anything contained in
---------------
the Partnership Agreement to the contrary, prior to January 1, 1999, no transfer
(or purported transfer) by a Limited Partner of his Partnership Units (or any
economic or other interest, right or attribute therein) may be made to any
Person, and any such transfer (or purported transfer) shall be void ab initio,
-- ------
and no Person shall otherwise become a Partner if (a) legal counsel to the
Partnership renders an opinion letter that such transfer creates a substantial
risk that the Partnership would be treated as a PTP within the meaning of
Section 7704 of the Code or (b) such transfer would cause the Partnership to
have more than 100 Partners within the meaning of Treasury Regulation Section
1.7704-1(h)(3) immediately after such transfer.
SECTION 14. MISCELLANEOUS.
-------------
(a) The last sentence of Page 1 of the Partnership Agreement is
inapplicable to the Series A Preferred Units.
(b) The terms "Original Limited Partnership Units," "Class A Units,"
"Class B Units" and "Class 2 Units" in the Partnership Agreement shall not be
deemed to include the Series A Preferred Units. The terms "Limited Partnership
Interest", "Partnership Interest" and "Percentage Interest" shall be deemed to
include the Series A Preferred Units.
(c) Exhibit A to the Partnership Agreement is hereby amended to (i)
include the Series A Preferred Units as Limited Partnership Interests and (ii)
adjust the Percentage Interests specified in Exhibit A proportionately to
reflect the issuance of the Series A Preferred Units.
16
<PAGE>
(d) Section 7.1(h) of the Partnership Agreement is hereby amended to
include the Priority Return amount.
(e) Nothing contained in Section 8.4 or the last sentence of Section
13.6 of the Partnership Agreement shall be deemed to limit the issuance of, and
provisions applicable to, the Series A Preferred Units.
(f) Notwithstanding anything to the contrary contained in Section 8.6
of the Partnership Agreement, in no event shall the rights of the holders of the
Series A Preferred Units set forth in Section 10 of this Amendment be
subordinate to the Redemption Rights set forth in Section 8.6 of the Partnership
Agreement.
17
<PAGE>
GENERAL PARTNER
Regency Realty Corporation
By: /s/ Bruce M. Johnson
---------------------------------------
Bruce M. Johnson
Its: Managing Director and Executive Vice
President
Signature Page Partnership Agreement Amendment
18
<PAGE>
BELAIR CAPITAL FUND LLC
By: Eaton Vance Management, as it Manager
By: Thomas Otis
--------------------------
Name: Thomas Otis
Title: Vice President
Signature Page to Partnership Agreement Amendment
19
<PAGE>
REGENCY CENTERS, L.P.
AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP
RELATING TO 8.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS
REGENCY REALTY CORPORATION, SECURITY CAPITAL U.S. REALTY
GENERAL PARTNER
By: /s/ Bruce M. Johnson By: /s/ Gerald R. Morgan, Jr.
------------------------------- -------------------------------
Bruce M. Johnson Gerald R. Morgan, Jr
Managing Director and Chief Senior Vice President
Financial Officer
SECURITY CAPITAL HOLDINGS S.A.
By: /s/ Gerald R. Morgan, Jr.
-------------------------------
Gerald R. Morgan, Jr.
Senior Vice President
20
<PAGE>
EXHIBIT 10.2
[Execution Copy]
____________________________________________________________
REGENCY CENTERS, L.P.
AND
THE GUARANTORS NAMED
ON THE SIGNATURE
PAGES HEREOF
TO
FIRST UNION NATIONAL BANK
Trustee
________________
Indenture
Dated as of July 20, 1998
________________
$100,000,000
7 1/8% Notes due July 15, 2005
____________________________________________________________
<PAGE>
REGENCY CENTERS, L.P.
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939
Trust Indenture Indenture
Act Section Section
- ----------- --------------
(S) 310(a)(1) ......................... 609
(a)(2) ......................... 609
(a)(3) ......................... Not
Applicable
(a)(4) ......................... Not
Applicable
(b) ......................... 608
......................... 610
(S) 311(a) ......................... 613
(b) ......................... 613
(b)(2) ......................... 703(a)(2)
......................... 703(b)
(S) 312(a) ......................... 701
702(a)
(b) ......................... 702(b)
(c) ......................... 702(c)
(S) 313(a) ......................... 703(a)
(b) ......................... 703(b)
(c) ......................... 703(a)
703(b)
(d) .......................... 703(c)
(S) 314(a) .......................... 704
(b) .......................... Not
Applicable
(c)(1) .......................... 102
(c)(2) .......................... 102
(c)(3) Not
Applicable
(d) .......................... Not
Applicable
(e) .......................... 102
(S) 315(a) .......................... 601
(b) .......................... 602
703(a)(6)
(c) .......................... 601
(d) .......................... 601
(e) .......................... 514
-i-
<PAGE>
Trust Indenture Indenture
Act Section Section
- ----------------- --------------
(S) 316(a) ............................... 101
(a)(1)(A) ............................... 502
512
(a)(1)(B) ............................... 513
(a)(2) ............................... Not
Applicable
(b) ............................... 508
(c) ............................... 104(c)
(S) 317(a)(1) ............................... 503
(a)(2) ............................... 504
(b) ............................... 1003
(S) 318(a) ............................... 107
______________
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
-ii-
<PAGE>
TABLE OF CONTENTS
Page
----
Parties .............................................. 1
Recitals of the Issuer................................ 1
ARTICLE ONE
Definitions and Other Provisions of
General Application
SECTION 101. Definitions:
Acquired Indebtedness..................... 3
Act....................................... 3
Additional Interest....................... 3
Additional Original Securities............ 3
Affiliate................................. 3
Annual Service Charge..................... 3
Applicable Procedures..................... 3
Board of Directors........................ 4
Board Resolution.......................... 4
Business Day.............................. 4
Capital Stock............................. 4
Commission................................ 4
Common Stock.............................. 4
Consolidated Income Available for
Debt Service............................ 4
Consolidated Net Worth.................... 5
Corporate Trust Office.................... 5
corporation............................... 5
Depositary................................ 5
Disqualified Stock........................ 5
Distribution Compliance Period............ 6
DTC....................................... 6
Earnings from Operations.................. 6
Encumbrance............................... 6
Euroclear................................. 6
Event of Default.......................... 6
- -----------
Note: This table of contents shall not, for any purpose, be
deemed to be a part of the Indenture.
-iii-
<PAGE>
Page
----
Exchange Act.............................. 6
Exchange Offer............................ 6
Exchange Securities....................... 7
Global Security........................... 7
Guaranteed Obligations.................... 7
Guaranty.................................. 7
Guarantors................................ 7
Holder.................................... 7
Indebtedness.............................. 7
Incur..................................... 8
Indenture................................. 8
Initial Issue Date........................ 8
Interest Payment Date..................... 8
Issuer.................................... 8
Issuer Request; Issuer Order.............. 8
Make-Whole Amount......................... 9
Maturity.................................. 9
Non-Recourse Indebtedness................. 9
Officers' Certificate..................... 9
Opinion of Counsel........................ 10
Original Securities....................... 10
Outstanding............................... 10
pari passu................................ 11
------------
Paying Agent.............................. 11
Person.................................... 11
Predecessor Security...................... 11
Real Property Assets...................... 11
Recourse Indebtedness..................... 12
Redemption Date........................... 12
Redemption Price.......................... 12
Regency................................... 12
Regular Record Date....................... 12
Regulation S.............................. 12
Regulation S Certificate.................. 12
Regulation S Global Security.............. 12
Regulation S Legend....................... 12
Regulation S Securities................... 12
Reinvestment Rate......................... 12
Responsible Officer....................... 13
Rule 144.................................. 13
Rule 144A................................. 13
Rule 144A Securities...................... 13
Securities................................ 13
Securities Act............................ 14
Securities Act Legend..................... 14
-iv-
<PAGE>
Page
----
Security Register;
Security Registrar........................ 14
Special Record Date........................ 14
Stated Maturity............................ 14
Statistical Release........................ 14
Step-Down Date............................. 14
Step-Up.................................... 14
Subsidiary................................. 14
Total Assets............................... 15
Total Unencumbered Assets.................. 15
Trust Indenture Act........................ 15
Trustee.................................... 15
Undepreciated Real Estate Assets........... 15
Unsecured Indebtedness..................... 16
Vice President............................. 16
Yield to Maturity.......................... 16
SECTION 102. Compliance Certificates and Opinions....... 17
SECTION 103. Form of Documents Delivered
to Trustee............................. 18
SECTION 104. Acts of Holders; Record Date............... 18
SECTION 105. Notices, Etc., to Trustee and
the Issuer............................. 22
SECTION 106. Notice to Holders; Waiver.................. 22
SECTION 107. The Application of Trust Indenture
Act.................................... 23
SECTION 108. Effect of Headings and
Table of Contents...................... 23
SECTION 109. Successors and Assigns..................... 23
SECTION 110. Separability Clause........................ 24
SECTION 111. Benefits of Indenture...................... 24
SECTION 112. Governing Law.............................. 24
SECTION 113. Legal Holidays............................. 24
-v-
<PAGE>
Page
----
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally; Initial Forms of
Rule 144A and Regulation S
Securities............................. 25
SECTION 202. Form of Face of Security............... 26
SECTION 203. Form of Reverse of Security............ 33
SECTION 204. Form of Trustee's
Certificate of Authentication.......... 34
SECTION 205. Form of Guarantee...................... 35
ARTICLE THREE
The Securities
SECTION 301. Title and Terms........................ 39
SECTION 302. Denominations.......................... 40
SECTION 303. Execution, Authentication,
Delivery and Dating................... 40
SECTION 304. Temporary Securities................... 42
SECTION 305. Global Securities...................... 43
SECTION 306. Registration, Registration of
Transfer and Exchange Generally;
Restrictions on Transfer and Exchange;
Securities Act Legends................ 45
SECTION 307. Mutilated, Destroyed,
Lost and Stolen Securities............. 50
SECTION 308. Payment of Interest;
Interest Rights Preserved.............. 51
SECTION 309. Persons Deemed Owners.................. 53
-vi-
<PAGE>
Page
----
SECTION 310. Cancellation.......................... 53
SECTION 311. Computation of Interest............... 54
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and
Discharge of Indenture............... 54
SECTION 402. Application of Trust Money............. 56
ARTICLE FIVE
Remedies
SECTION 501. Events of Default...................... 56
SECTION 502. Acceleration of Maturity;
Rescission and Annulment............. 59
SECTION 503. Collection of Indebtedness and
Suits for Enforcement by
Trustee.............................. 60
SECTION 504. Trustee May File Proofs of Claim....... 61
SECTION 505. Trustee May Enforce Claims
Without Possession of
Securities........................... 62
SECTION 506. Application of Money Collected......... 62
SECTION 507. Limitation on Suits.................... 63
SECTION 508. Unconditional Right of Holders to
Receive Principal, Premium
and Interest......................... 64
SECTION 509. Restoration of Rights and Remedies..... 64
SECTION 510. Rights and Remedies Cumulative......... 64
-vii-
<PAGE>
Page
----
SECTION 511. Delay or Omission Not Waiver........... 65
SECTION 512. Control by Holders..................... 65
SECTION 513. Waiver of Past Defaults................ 65
SECTION 514. Undertaking for Costs.................. 66
SECTION 515. Waiver of Stay or Extension Laws....... 66
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and
Responsibilities....................... 67
SECTION 602. Notice of Defaults..................... 67
SECTION 603. Certain Rights of Trustee.............. 67
SECTION 604. Not Responsible for Recitals
or Issuance of Securities............ 69
SECTION 605. May Hold Securities.................... 69
SECTION 606. Money Held in Trust.................... 70
SECTION 607. Compensation and Reimbursement......... 70
SECTION 608. Disqualification; Conflicting
Interests............................ 71
SECTION 609. Corporate Trustee Required;
Eligibility.......................... 71
SECTION 610. Resignation and Removal;
Appointment of Successor............. 71
SECTION 611. Acceptance of Appointment by
Successor............................ 73
SECTION 612. Merger, Conversion, Consolidation
-viii-
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
or Succession to Business................................. 73
SECTION 613. Preferential Collection of Claims
Against Issuer or the Guarantors........................ 74
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Issuer
SECTION 701. Issuer to Furnish Trustee Names
and Addresses of Holders................................ 74
SECTION 702. Preservation of Information;
Communications to Holders............................... 75
SECTION 703. Reports by Trustee........................................ 75
SECTION 704. Reports by the Issuer..................................... 76
SECTION 705. Officers' Certificate with Respect to
Change in Interest Rates................................ 76
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Issuer May Consolidate, Etc.,
and Purchases of Assets Only on
Certain Terms.......................................... 76
SECTION 802. Successor Substituted..................................... 78
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without
Consent of Holders...................................... 78
SECTION 902. Supplemental Indentures with
Consent of Holders...................................... 79
</TABLE>
-ix-
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 903. Execution of Supplemental
Indentures.............................................. 80
SECTION 904. Effect of Supplemental Indentures......................... 81
SECTION 905. Conformity with Trust Indenture Act....................... 81
SECTION 906. Reference in Securities to
Supplemental Indentures................................. 81
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium
and Interest............................................ 81
SECTION 1002. Maintenance of Office or Agency........................... 82
SECTION 1003. Money for Security Payments to
be Held in Trust........................................ 82
SECTION 1004. Existence................................................. 84
SECTION 1005. Maintenance of Properties................................. 85
SECTION 1006. Payment of Taxes and Other Claims......................... 85
SECTION 1007. Maintenance of Insurance.................................. 85
SECTION 1008. Limitations on Incurrence of
Indebtedness............................................ 86
SECTION 1009. [Intentionally Omitted]................................... 88
SECTION 1010. Provision of Financial Information........................ 88
SECTION 1011. Statement by Officers as to
Default; Compliance Certificates........................ 89
SECTION 1012. Waiver of Certain Covenants............................... 88
</TABLE>
-x-
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
ARTICLE ELEVEN
Redemption of Securities
<S> <C>
SECTION 1101. Right of Redemption....................................... 90
SECTION 1102. Applicability of Article.................................. 90
SECTION 1103. Election to Redeem; Notice
to Trustee.............................................. 90
SECTION 1104. Selection by Trustee of
Securities to Be Redeemed............................... 90
SECTION 1105. Notice of Redemption...................................... 91
SECTION 1106. Deposit of Redemption Price............................... 92
SECTION 1107. Securities Payable on
Redemption Date......................................... 92
SECTION 1108. Securities Redeemed in Part............................... 93
ARTICLE TWELVE
Guarantees
SECTION 1201. Guarantees................................................ 93
SECTION 1202. Guarantees Absolute....................................... 94
SECTION 1203. Waivers................................................... 96
SECTION 1204. Waiver of Subrogation and
Contribution............................................ 97
SECTION 1205. Certain Agreements........................................ 98
SECTION 1206. Execution and Delivery of Guarantees...................... 99
SECTION 1207. No Waiver; Cumulative Remedies............................ 100
SECTION 1208. Continuing Guarantees..................................... 100
</TABLE>
-xi-
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1209. Severability............................................... 101
SECTION 1210. Limitation on Guarantor Liability.......................... 101
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
SECTION 1301. Issuer's Option to Effect
Defeasance or Covenant
Defeasance............................................... 101
SECTION 1302. Defeasance and Discharge................................... 102
SECTION 1303. Covenant Defeasance........................................ 102
SECTION 1304. Conditions to Defeasance or
Covenant Defeasance...................................... 103
SECTION 1305. Deposited Money and U.S. Government
Obligations to be Held in Trust;
Other Miscellaneous Provisions........................... 106
SECTION 1306. Reinstatement.............................................. 107
TESTIMONIUM............................................................... 108
SIGNATURES AND SEALS...................................................... 108
</TABLE>
ANNEX A -- Form of Regulation S Certificate............................... A-1
ANNEX B -- Form of Restricted Securities Certificate...................... B-1
ANNEX C -- Form of Unrestricted Securities Certificate.................... C-1
ANNEX D -- Form of Certification to be Given by Holders
of Beneficial Interest in a Regulation S
Temporary Global Security...................................... D-1
ANNEX E -- Form of Certification to be Given by the
Euroclear Operator or Cedel S.A................................ E-1
-xii-
<PAGE>
INDENTURE, dated as of July 20, 1998, between REGENCY CENTERS, L.P., a
limited partnership duly organized and existing under the laws of the State of
Delaware (herein called the "Issuer"), having its principal office at 121 West
Forsyth Street, Suite 200, Jacksonville, FL 32202, the Guarantors named on the
signature pages hereof and First Union National Bank, a national banking
association duly organized and existing under the laws of the United States of
America, as Trustee (herein called the "Trustee").
RECITALS OF THE ISSUER
The Issuer has duly authorized the creation of an issue of up to
$100,000,000 aggregate principal amount of (A) its 7 1/8% Notes due July 15,
2005 (the "Original Securities") and (B) its 7 1/8% Notes due July 15, 2005 to
be issued in exchange for the Original Securities (the "Exchange Securities" and
collectively with the Original Securities, the "Securities"), in each case
guaranteed by the Guarantors, of substantially the tenor and amount hereinafter
set forth, and to provide therefor the Issuer and the Guarantors have duly
authorized the execution and delivery of this Indenture. The Original Securities
and the Exchange Securities shall rank pari passu.
---- -----
All things necessary to make the Securities and the Guarantees, when
executed by the Issuer and the Guarantors, respectively, and authenticated and
delivered hereunder and duly issued by the Issuer and the Guarantors, the valid
obligations of the Issuer and the Guarantors, respectively, and to make this
Indenture a valid agreement of the Issuer and the Guarantors, in accordance with
their and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
<PAGE>
of General Application
SECTION 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles (whether or not such is indicated herein), and, except as
otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as are generally
accepted as consistently applied by the Issuer at the date of such
computation;
(4) unless otherwise specifically set forth herein, all calculations
or determinations of a Person shall be performed or made on a consolidated
basis in accordance with generally accepted accounting principles; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
-2-
<PAGE>
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at
the time the Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from the Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, the Person becoming a
Subsidiary or that acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Subsidiary.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Additional Interest" has the meaning set forth in the form of
Security contained in Section 202. Unless the context otherwise requires,
references herein to "interest" on the Securities shall include Additional
Interest.
"Additional Original Securities" means Securities issued from time to
time, after the Initial Issue Date.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Annual Service Charge" for any period means the aggregate interest
expense for the period in respect of, and the amortization during the period of
any original issue discount of, Indebtedness of the Issuer and its Subsidiaries
and the amount of dividends which are payable during the period in respect of
any Disqualified Stock.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of DTC or any successor depositary that apply to such transfer and
exchange.
"Board of Directors" means either the board of directors or similar
body of the Issuer or the Guarantors,
-3-
<PAGE>
as the case may be, or any duly authorized committee of that board or similar
body.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Issuer to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any Person, any capital stock
(including preferred stock), shares, interests, participations or other
ownership interests (however designated) of the Person and any rights (other
than debt securities convertible into or exchangeable for corporate stock),
warrants or options to purchase any thereof.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of the Issuer and its Subsidiaries plus amounts which
have been deducted, and minus amounts which have been added, for the following
(without duplication): (i) interest expense on Indebtedness of the Issuer and
its Subsidiaries; (ii) provision for taxes of the Issuer and its Subsidiaries
based on income; (iii) amortization of debt discount; (iv) provisions for gains
and losses on properties and property depreciation and
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amortization; (v) the effect of any noncash charge resulting from a change in
accounting principles in determining Earnings from Operations for the period;
and (vi) amortization of deferred charges.
"Consolidated Net Worth" of any Person means the consolidated equity
of such Person, determined on a consolidated basis in accordance with generally
accepted accounting principles, less amounts attributable to Disqualified Stock
of such Person; provided that, with respect to the Issuer, adjustments following
the date of the Indenture to the accounting books and records of the Issuer in
accordance with Accounting Principles Board Opinions Nos. 16 and 17 (or
successor opinions thereto) or otherwise resulting from the acquisition of
control of the Issuer by another Person shall not be given effect to.
"Corporate Trust Office" means the principal office of the Trustee in
the City of Jacksonville, Florida at which at any particular time its corporate
trust business shall be administered.
"corporation" means a corporation, association, company, joint-stock
company, limited liability company, partnership or business trust.
"Depositary" means, with respect to the Securities issuable or issued
in whole or in part in the form of one or more Global Securities, The Depository
Trust Company for so long as it shall be a clearing agency registered under the
Exchange Act, or such successor as the Issuer shall designate from time to time
in an Officers' Certificate delivered to the Trustee.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of the Person which by the terms of that Capital Stock (or by the terms of
any security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock), (ii) is convertible into or exchangeable or exercisable for Indebtedness
or Disqualified Stock or (iii) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
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solely in exchange for Capital Stock which is not Disqualified Stock or the
redemption price of which may, at the option of that Person, be paid in Capital
Stock which is not Disqualified Stock), in each case on or prior to the Stated
Maturity of the Securities; provided, however, that equity interests whose
holders have (or will have after the expiration of an initial holding period)
the right to have such equity interests redeemed for cash in an amount
determined by the value of the common stock of Regency do not constitute
Disqualified Stock.
"Distribution Compliance Period" means the period through and
including the 40/th/ day after the latest of the commencement of the offering
and sale of the Original Securities and the original issue date of the Original
Securities.
"DTC" means The Depository Trust Company, a New York corporation.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items, and property
valuation losses, net, as reflected in the financial statements of the Issuer
and its Subsidiaries for the period determined on a consolidated basis in
accordance with generally accepted accounting principles.
"Encumbrance" means any mortgage, lien, charge, pledge or security
interest of any kind, except any mortgage, lien, charge, pledge or security
interest of any kind which secures debt of any Guarantor owed to the Issuer.
"Euroclear" means the Euroclear Clearance System (or any successor
securities clearing agency).
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" refers to the Securities Exchange Act of 1934 as it may
be amended and any successor act thereto.
"Exchange Offer" has the meaning set forth in the form of the Security
contained in Section 202.
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<PAGE>
"Exchange Securities" means the securities issued pursuant to the
Exchange Offer.
"Global Security" means the security or securities that evidence all
or part of the Securities and bear the legend set forth in Section 202.
"Guaranteed Obligations" has the meaning specified in Article 12.
"Guaranty" means a guaranty of the Securities contained in Article 12
given by the Guarantors.
"Guarantors" means the Persons executing a Guarantee on the date of
this Indenture until a successor Guarantor for such Person shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Guarantors" shall include such successor Guarantor.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" of the Issuer or any Subsidiary means any indebtedness
of the Issuer or any Subsidiary, whether or not contingent, in respect of (i)
borrowed money or indebtedness evidenced by bonds, notes, debentures or similar
instruments, (ii) borrowed money or indebtedness evidenced by bonds, notes,
debentures or similar instruments secured by any Encumbrance existing on
property owned by the Issuer or any Subsidiary, (iii) reimbursement obligations
in connection with any letters of credit actually issued or amounts representing
the balance deferred and unpaid of the purchase price of any property or
services, except any such balance that constitutes an accrued expense or trade
payable, or all conditional sale obligations under any title retention
agreement, (iv) the amount of all obligations of the Issuer or any Subsidiary
with respect to redemption, repayment or other repurchase of any Disqualified
Stock, and (v) any lease of property by the Issuer or any Subsidiary as lessee
which is reflected on the Issuer's consolidated balance sheet as a capitalized
lease in accordance with generally accepted accounting principles, to the
extent, in the case of items of indebtedness under (i) through (iv) above, that
any such items (other than letters of credit) would appear as a liability on the
Issuer's consolidated balance sheet in accordance with generally accepted
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accounting principles, and also includes, to the extent not otherwise included,
any obligation of the Issuer or any Subsidiary to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), Indebtedness of another Person (other than the
Issuer or any Subsidiary) (it being understood that Indebtedness shall be deemed
to be incurred by the Issuer or any Subsidiary whenever the Issuer or the
Subsidiary shall create, assume, guarantee or otherwise become liable in respect
thereof).
"Incur" means, with respect to any indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such indebtedness or
other obligation or the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such indebtedness or other obligation
on the balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable"
and "Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in generally accepted accounting principles that results
in an obligation of such Person that exists at such time becoming indebtedness
shall not be deemed an Incurrence of such indebtedness.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Initial Issue Date" means the date of this Indenture.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Issuer" means the Person named as the "Issuer" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture and thereafter "Issuer" shall mean
such successor Person.
"Issuer Request" or "Issuer Order" means a written request or order
signed in the name of the Issuer by its Chairman of the Board, its President or
a Vice President,
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and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Make-Whole Amount" means, in connection with any optional redemption
or accelerated payment of any Security, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semi-annual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of Redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the
Securities being redeemed or paid.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Non-Recourse Indebtedness" means Indebtedness for which the right of
recovery of the obligee thereof is limited to recourse against the Real Property
Assets securing such Indebtedness (subject to such limited exceptions to the
non-recourse nature of such Indebtedness such as fraud, misappropriation,
misapplication and environmental indemnities, as are usual and customary in like
transactions at the time of the incurrence of such Indebtedness).
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Issuer, and delivered
to the Trustee and containing the statement provided for in Section 102. One of
the officers signing an Officer's Certificate given pursuant to Section 1011
shall be the principal executive, financial or accounting officer of the Issuer.
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<PAGE>
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Issuer, and who shall be acceptable to the Trustee, and
containing the statements provided for in Section 102.
"Original Securities" means all Securities including Additional
Original Securities, other than Exchange Securities.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
------
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Issuer) in trust or set aside and segregated
in trust by the Issuer (if the Issuer shall act as its own Paying Agent)
for the Holders of such Securities; provided that, if such Securities are
--------
to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been
made; and
(iii) Securities which have been paid pursuant to Section 307 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Issuer;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities
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owned by the Issuer or any other obligor upon the Securities or any Affiliate of
the Issuer or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Issuer or any other obligor upon the Securities or any
Affiliate of the Issuer or of the Guarantors or of such other obligor.
"pari passu", when used with respect to the ranking of any
---- -----
indebtedness of any Person in relation to other indebtedness of such Person,
means that each such indebtedness (a) either (i) is not subordinated in right of
payment to any other indebtedness of such Person or (ii) is subordinate in right
of payment to the same indebtedness of such Person as is the other and is so
subordinate to the same extent and (b) is not subordinate in right of payment to
the other or to any indebtedness of such Person as to which the other is not so
subordinate.
"Paying Agent" means any Person authorized by the Issuer to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Issuer or of the Guarantors.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 307 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
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"Real Property Assets" means as of any time, the real property assets
(including interests in participating mortgages in which the interest of the
Issuer or any Subsidiary therein is characterized as equity according to
generally accepted accounting principles) owned directly or indirectly by the
Issuer or any Subsidiary at such time.
"Recourse Indebtedness" shall mean Indebtedness of the Issuer or any
Subsidiary that is not Non-Recourse Indebtedness.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, has the meaning set forth in Section 1101.
"Regency" means Regency Realty Corporation, a Florida corporation and
the parent company of the Issuer.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the January 1 or July 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificate" means a certificate substantially in the
form set forth in Annex A.
"Regulation S Global Security" has the meaning specified in Section
201.
"Regulation S Legend" means a legend substantially in the form of the
legend required in the form of Security set forth in Section 202 to be placed
upon Regulation S Securities.
"Regulation S Securities" means all Securities required pursuant to
Section 306(c) to bear a Regulation S Legend.
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<PAGE>
"Reinvestment Rate" means 0.25% (twenty-five one hundredths of one
percent) plus the arithmetic mean of the yields under the respective heading
"Week Ending" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity of the Securities, as of the
payment date of the principal being redeemed or paid. If no maturity exactly
corresponds to such maturity, yields for the two published maturities most
closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Securities Legend" means a legend substantially in the
form of the legend required in the form of Security set forth in Section 202 to
be placed upon Global Securities and Original Securities.
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
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<PAGE>
"Rule 144A Securities" means the Securities purchased by the
Purchasers from the Issuer pursuant to the purchase agreement, other than the
Regulation S Securities.
"Securities" means the securities designated as such in the first
paragraph of the RECITALS OF THE ISSUER and includes the Exchange Securities.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Securities Act Legend" means a legend substantially in the form of
the legend required in the form of Security set forth in Section 202 to be
placed upon Original Securities.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 306.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 308.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination under this
Indenture, then such other reasonably comparable index which shall be designated
by the Issuer.
"Step-Down Date" has the meaning set forth in the form of the Security
contained in Section 202.
"Step-Up" has the meaning set forth in the form of the Security
contained in Section 202.
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<PAGE>
"Subsidiary" means a corporation, partnership or other entity a
majority of (i) the voting power of the voting equity securities or (ii) the
outstanding equity interests of which are owned, directly or indirectly, by the
Issuer or by one or more other Subsidiaries of the Issuer. For the purposes of
this definition, "voting equity securities" means equity securities having
voting power for the election of directors, whether at all times or only so long
as no senior class of security has such voting power by reason of any
contingency.
"Total Assets" as of any date means the sum of (i) those Undepreciated
Real Estate Assets and (ii) all other assets of the Issuer and its Subsidiaries
determined in accordance with generally accepted accounting principles (but
excluding intangibles).
"Total Unencumbered Assets" means the sum of (i) those Undepreciated
Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all
other assets of the Issuer and its Subsidiaries not subject to an Encumbrance
for borrowed money determined in accordance with generally accepted accounting
principles (but excluding intangibles).
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as provided
in Section 905; provided, however, that in the event the Trust Indenture Act of
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1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"U.S. Person" means (i) any individual resident in the United States,
(ii) any partnership or corporation organized or incorporated under the laws of
the United States, (iii) any estate of which an executor or administrator is a
U.S. Person (other than an estate governed by foreign law and of which at least
one executor or administrator is a non-U.S. Person who has sole or shared
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investment discretion with respect to its assets), (iv) any trust of which any
trustee is a U.S. Person (other than a trust of which at least one trustee is a
non-U.S. Person who has sole or shared investment discretion with respect to its
assets and no beneficiary of the trust (and no settlor if the Trust is
revocable) is a U.S. Person), (v) any agency or branch of a foreign entity
located in the United States, (vi) any non-discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. Person, (vii) any discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States (other than
such an account held for the benefit or account of a non-U.S. Person), (viii)
any partnership or corporation organized or incorporated under the laws of a
foreign jurisdiction and formed by a U.S. Person principally for the purpose of
investing in securities not registered under the Securities Act (unless it is
organized or incorporated, and owned, by accredited investors within the meaning
of Rule 501(a) under the Securities Act who are not natural persons, estates or
trusts); provided, however, that the term "U.S. Person" does not include (A) a
branch or agency of a U.S. Person that is located and operating outside the
United States for valid business purposes as a locally regulated branch or
agency engaged in the banking or insurance business, (B) any employee benefit
plan established and administered in accordance with the law, customary
practices and documentation of a foreign country and (C) the international
organizations set forth in Section 902(o)(7) of Regulation S under the
Securities Act and any other similar international organizations, and their
agencies, affiliates and pension plans.
"Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Issuer
and its Subsidiaries on that date, before depreciation and amortization,
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Unsecured Indebtedness" means Indebtedness which is (i) not
subordinated to any other indebtedness and (ii) not secured by any Encumbrance
upon any of the properties of the Issuer or any Subsidiary.
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"Vice President", when used with respect to the Issuer or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Yield to Maturity" means the yield to maturity, computed at the time
of issuance of a Note (or, if applicable, at the most recent redetermination of
interest on such Note) and as set forth in such Note in accordance with
generally accepted United States bond yield computation principles.
SECTION 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Issuer or the Guarantors to the
Trustee to take any action under any provision of this Indenture, the Issuer or
the Guarantors shall furnish to the Trustee such certificates and opinions as
may be required under the Trust Indenture Act. Each such certificate or opinion
shall be given in the form of an Officers' Certificate, if to be given by an
officer of the Issuer or the Guarantors, or an Opinion of Counsel, if to be
given by counsel, and shall comply with the requirements of the Trust Indenture
Act and any other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion
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as to whether or not such covenant or condition has been complied with;
and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Issuer or the
Guarantors may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or opinion
of counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Issuer or of the Guarantors stating that the information with respect to such
factual matters is in the possession of the Issuer or of the Guarantors, unless
such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
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SECTION 104. Acts of Holders; Record Date.
----------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Issuer and the Guarantors. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Issuer, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
The Issuer or the Guarantors may, in the circumstances permitted by
the Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted to be given or taken by Holders. If not set
by the Issuer or the Guarantors prior to the first solicitation of a Holder made
by any Person in respect of any such action, or, in the case of any such vote,
prior to such vote, the record date
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for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 701)
prior to such first solicitation or vote, as the case may be. With regard to any
record date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee, the Issuer, or the
Guarantors in reliance thereon, whether or not notation of such action is made
upon such Security.
The Issuer or the Guarantors may set any day as a record date for the
purpose of determining the Holders of Outstanding Securities entitled to give,
make or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given, made
or taken by Holders of Securities, provided that the Issuer may not set a record
date for, and the provisions of this paragraph shall not apply with respect to,
the giving or making of any notice, declaration, request or direction referred
to in the next paragraph. If not set by the Issuer prior to the first
solicitation of a Holder made by any Person in respect of any such matter
referred to in the foregoing sentence, the record date for any such matter shall
be the 30th day (or, if later, the date of the most recent list of Holders
required to be provided pursuant to Section 701) prior to such first
solicitation. If any record date is set pursuant to this paragraph, the Holders
of Outstanding Securities on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Securities on such record date.
Nothing in this paragraph shall be construed to prevent the Issuer from setting
a new record date for any
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action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Issuer, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Trustee in writing and to each Holder of Securities in the manner
set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings referred
to in Section 507(2) or (iv) any direction referred to in Section 512. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the Trustee
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be canceled
and of no effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Trustee, at the Issuer's
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Issuer in writing and to
each Holder of Securities in the manner set forth in Section 106.
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<PAGE>
With respect to any record date set pursuant to this Section, the
party hereto which sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section
106, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
SECTION 105. Notices, Etc., to Trustee and Issuer.
------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Issuer or the Guarantors
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Department, or
(2) the Issuer or the Guarantors by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid,
to the Issuer or the Guarantors addressed to it at the address of its
principal office specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the Trustee by the
Issuer or by the Guarantors, as the case may be.
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<PAGE>
SECTION 106. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. The Application of Trust Indenture Act.
--------------------------------------
The Trust Indenture Act shall apply as a matter of contract to this
Indenture for purposes of interpretation, construction and defining the rights
and obligations hereunder. If any provision hereof limits, qualifies or
conflicts with a provision of the Trust Indenture Act that is required under
such Act to be a part of and govern this Indenture, the latter provision shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
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<PAGE>
SECTION 108. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Issuer or the
Guarantors shall bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders of Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
-------------
THIS INDENTURE, THE SECURITIES AND THE GUARANTEES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 113. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) need not be made on such
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<PAGE>
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption Date or at the
Stated Maturity, provided that no interest shall accrue for the period from and
--------
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally; Initial Forms of Rule 144A and
Regulation S Securities.
-----------------------------------------------
The Original Securities, the Exchange Securities and the Trustee's
certificates of authentication thereof shall be in substantially the forms set
forth in this Article, with such appropriate legends, insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods on steel engraved borders or may
be produced in any other manner all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
Upon their original issuance, Rule 144A Securities shall be issued in
the form of one or more Global Securities without interest coupons registered in
the name of DTC, as Depositary, or its nominee and deposited with the Trustee,
as custodian for DTC, in New York, New York, for credit by DTC to the respective
accounts of beneficial owners of the Securities represented thereby (or such
other accounts as they may direct). Such Global Securities, together with their
Successor Securities which are Global Securities other than the Regulation S
Global Security are collectively herein called the "Restricted Global Security".
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<PAGE>
Upon their original issuance, Regulation S Securities (herein called
the "Regulation S Temporary Global Security") shall be issued in the form of a
single temporary Global Security without coupons registered in the name of DTC,
as Depositary, or its nominee and deposited with the Trustee at its Corporate
Trust Office, as custodian for DTC, for credit to Morgan Guaranty Trust Company
of New York, Brussels Office, as operator of Euroclear, and Cedel Bank S.A.
("CEDEL") to the respective accounts of beneficial owners of the Securities
represented thereby (or such other accounts as they may direct) in accordance
with the rules thereof. Such Global Securities, together with their Successor
Securities which are Global Securities are collectively herein called the
"Regulation S Global Security".
Beneficial interests in the Regulation S Temporary Global Security may
only be held through Euroclear and Cedel until such interests are exchanged for
corresponding interests in an unrestricted Global Security as provided in the
next sentence. A holder of a beneficial interest in the Regulation S Temporary
Global Security must provide written certification to Euroclear or Cedel, as the
case may be, that the beneficial owner of the interest in such Global Security
is not a U.S. Person (an "Owner Securities Certification"), and Euroclear or
Cedel, as the case may be, must provide to the Trustee a similar certificate in
the form set forth in Annex C (a "Depositary Securities Certification"), prior
to (i) the payment of interest with respect to such holder's beneficial interest
in the Regulation S Temporary Global Security and (ii) any exchange of such
beneficial interest for a beneficial interest in the Regulation S Global
Security.
SECTION 202. Form of Face of Security.
------------------------
[If a Global Security, then insert -- THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGEABLE IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO
TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN
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<PAGE>
SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.]
[If a Global Security to be held by The Depository Trust Company, then
insert -- UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[If the Original Securities, then insert -- THE SECURITIES EVIDENCED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR (1) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), AND (B) BY SUBSEQUENT INVESTORS, AS SET FORTH IN (A)
ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE
MEANING OF RULE 5O1(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES.]
[If the Security is a Regulation S Security, then insert -- THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OF BENEFIT OF, ANY U.S. PERSON, UNLESS THIS
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<PAGE>
SECURITY IS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS THEREOF IS AVAILABLE.]
[If the Security is a Regulation S Temporary Global Security, then
insert -- THIS SECURITY IS A REGULATION S TEMPORARY GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE REFERRED TO HEREINAFTER. INTERESTS IN THIS REGULATION
S TEMPORARY GLOBAL SECURITY MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON PRIOR TO
THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN THE
INDENTURE) EXCEPT IN CERTAIN LIMITED CIRCUMSTANCES IN ACCORDANCE WITH THE TERMS
OF THE INDENTURE.]
7 1/8% Notes due July 15, 2005
No. __________ $________
CUSIP No. ___________
Regency Centers, L.P., a limited partnership duly organized and
existing under the laws of Delaware (herein called the "Issuer", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to _________________, or registered
assigns, the principal sum of _______________ Dollars (such amount the
"principal amount" of this Security) [if the Security is a Global Security, then
insert -- , or such other principal amount (which, when taken together with the
principal amounts of all other Outstanding Securities, shall not exceed
$100,000,000 in the aggregate at any one time) as may be set forth in the
records of the trustee hereinafter referred to in accordance with the
Indenture,] on July 15, 2005, and to pay interest thereon from July 20, 1998 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semi-annually on January 15 and July 15 in each year,
commencing January 15, 1999, at the rate of 7 1/8% per annum, until the
principal hereof is paid or made available for payment, and (to the extent that
the payment of such interest shall be legally enforceable) at the rate of 2% per
annum on any overdue principal and premium and on any overdue installment of
interest until paid. [If Original Securities, then insert -- provided, however,
-------- -------
that if (i) the Issuer has not filed a registration statement under the
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<PAGE>
Securities Act of 1933, as amended (the "Securities Act"), registering a
security substantially identical to this Security pursuant to an exchange offer
(the "Exchange Offer") (the "Exchange Registration Statement") by September 18,
1998, or, if applicable, a registration statement registering this security for
resale (the "Resale Registration Statement") has not been filed on or prior to
the date (the "Resale Registration Filing Deadline") upon which it is required
to be filed under the Exchange and Registration Rights Agreement, dated as of
July 15, 1998 (the "Registration Rights Agreement") or (ii) the Exchange
Registration Statement relating to the Exchange Offer has not become or been
declared effective by January 16, 1999 or, if applicable, the Resale
Registration Statement has not been declared effective within 90 days of Resale
Registration Filing Deadline or (iii) the Exchange Offer has not been completed
within 30 business days after the date on which the Exchange Registration
Statement has become or been declared effective initially or (iv) either the
Exchange Registration Statement or, if applicable, the Resale Registration
Statement is filed and declared effective but shall thereafter cease to be
effective (except as specifically permitted therein) without being succeeded
immediately by an additional registration statement filed and declared effective
or (v) the Partnership and the Guarantors have not consummated the Exchange
Offer (or, if applicable, the Resale Registration Statement has not become
effective) within 240 days following the Closing, in each case (i) through (v)
upon the terms and conditions set forth in the Registration Rights Agreement, by
and between the Issuer and the Holders from time to time of the Securities (each
such event referred to in clauses (i) through (v), a "Registration Default"),
then the per annum interest rate borne by the Securities shall increase (the
"Step-Up") by 0.5% per annum until such time (the "Step-Down Date") as no
Registration Default is in effect (after which such interest rate will be
restored to its initial rate). Interest accruing as a result of the Step-Up is
referred to herein as "Additional Interest." Accrued Additional Interest shall
be paid semi-annually on the Interest Payment Dates; and the amount of accrued
Additional Interest shall be determined on the basis of the number of days
actually elapsed. Any accrued and unpaid interest (including Additional
Interest) on this Security upon the issuance of an Exchange Security in exchange
for this Security shall cease to be payable to the Holder hereof but such
accrued and unpaid interest
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<PAGE>
(including Additional Interest) shall be payable on the next Interest Payment
Date for such Exchange Security to the Holder thereof on the related Regular
Record Date.] The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the January 1 or July 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Issuer maintained for that
purpose in Jacksonville, Florida or in the Borough of Manhattan, The City of New
York, in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided,
--------
however, that at the option of the Issuer payment of interest may be made by
- -------
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be
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<PAGE>
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
-31-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
Dated:
REGENCY CENTERS, L.P.
By: Regency Realty Corporation,
its general partner
By_____________________________
Name:
Title:
Attest:
__________________
Name:
Title:
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<PAGE>
SECTION 203. Form of Reverse of Security.
---------------------------
This Security is one of a duly authorized issue of Securities of the
Issuer designated as its 7 1/8% Notes due July 15, 2005 (herein called the
"Securities"), limited in aggregate principal amount to $100,000,000, issued and
to be issued under an Indenture, dated as of July 20, 1998 (herein called the
"Indenture"), between the Issuer, the Guarantors named on the signature pages
thereof and First Union National Bank, as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Issuer, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.
Securities of this series may be redeemed at any time at the option of
the Issuer, in whole or in part, upon notice of not more than 60 nor less than
30 days prior to the Redemption Date, at a redemption price equal to the sum of
(i) the principal amount of the Securities being redeemed plus accrued interest
thereon to the Redemption Date and (ii) the Make-Whole Amount, if any, with
respect to such Securities.
The Securities do not have the benefit of any sinking fund
obligations.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (i)
the entire indebtedness of this Security or (ii) certain restrictive covenants
and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
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<PAGE>
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the Guarantors and the rights of the Holders of the Securities under
the Indenture at any time by the Issuer, the Guarantors, and the Trustee with
the consent of the Holders of a majority in aggregate principal amount of the
Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Issuer or by the Guarantors with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Issuer in Jacksonville, Florida or in the Borough of
Manhattan, The City of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Issuer and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any
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<PAGE>
integral multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities are exchangeable for a like aggregate
principal amount of Securities of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Issuer, the Guarantors, the Trustee and any agent of the Issuer,
the Guarantors, or the Trustee may treat the Person in whose name this Security
is registered as the owner hereof for all purposes, whether or not this Security
be overdue, and neither the Issuer, the Guarantors, the Trustee nor any such
agent shall be affected by notice to the contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months, provided, however, that Additional Interest shall
-------- -------
be computed on the basis of a 365- or 366-day year, as the case may be, and the
number of days actually elapsed.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 204. Form of Trustee's Certificate of
--------------------------------
Authentication.
--------------
This is one of the Securities referred to in the within-mentioned
Indenture.
FIRST UNION NATIONAL BANK,
Dated: as Trustee
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<PAGE>
By ____________________
Authorized Officer
SECTION 205. Form of Guarantee.
-----------------
GUARANTEE
For value received, Regency Realty Corporation, Regency Office
Partnership, L.P., Hyde Park Partners, L.P., Regency Retail Centers of Ohio,
Inc., RRC Operating Partnership of Georgia, L.P., RRC FL Five, Inc., RRC FL
Seven, Inc., RRC Acquisitions, Inc. and RRC Acquisitions Two, Inc., as
Guarantors (the "Guarantors") hereby unconditionally guarantee to the Holder of
the Security upon which these Guarantees are endorsed, and to the Trustee on
behalf of such Holder, the due and punctual payment of the principal of (and
premium, if any) and interest on such Security when and as the same shall become
due and payable, whether at the Stated Maturity, by acceleration, call for
redemption, purchase or otherwise, according to the terms thereof and of the
Indenture referred to therein. In case of the failure of the Issuer punctually
to make any such payment, the Guarantors hereby agree to cause such payment to
be made punctually when and as the same shall become due and payable, whether at
the Stated Maturity or by acceleration, call for redemption, purchase or
otherwise, and as if such payment were made by the Issuer.
The Guarantors hereby agree that their respective obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of such Security or the Indenture, the absence of any action to
enforce the same or any release or amendment or waiver of any term of any other
Guarantee of, or any consent to departure from any requirement of any other
Guarantee of all or of any of the Securities, the election by the Trustee or any
of the Holders in any proceeding under Chapter 11 of the Bankruptcy Code of the
application of Section 1111(b)(2) of the Bankruptcy Code, any borrowing or grant
of a security interest by the Issuer, as debtor-in-possession, under Section 364
of the Bankruptcy Code, the disallowance, under Section 502 of the Bankruptcy
Code, of all or any portion of the claims of the Trustee or any of the Holders
for payment of any of the Securities, any waiver or consent by the Holder of
such Security or by the Trustee or either of them with respect to any provisions
thereof or of the Indenture,
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<PAGE>
the obtaining of any judgment against the Issuer or any action to enforce the
same or any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. The Guarantors hereby waive the
benefits of diligence, presentment, demand of payment, any requirement that the
Trustee or any of the Holders exhaust any right or take any action against the
Issuer or any other Person, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuer, any right to require a proceeding first
against the Issuer, protest or notice with respect to such Security or the
Indebtedness evidenced thereby and all demands whatsoever, and covenant that
these Guarantees will not be discharged except by complete performance of the
obligations contained in such Security and in these Guarantees. The Guarantors
hereby agree that, in the event of a default in payment of principal (or
premium, if any) or interest on such Security, whether at their Stated Maturity,
by acceleration, call for redemption, purchase or otherwise, legal proceedings
may be instituted by the Trustee on behalf of, or by, the Holder of such
Security, subject to the terms and conditions set forth in the Indenture,
directly against the Guarantors to enforce these Guarantees without first
proceeding against the Issuer. The Guarantors agree that if, after the
occurrence and during the continuance of an Event of Default, the Trustee or any
of the Holders are prevented by applicable law from exercising their respective
rights to accelerate the maturity of the Securities, to collect interest on the
Securities, or to enforce or exercise any other right or remedy with respect to
the Securities, the Guarantors agree to pay to the Trustee for the account of
the Holders, upon demand therefor, the amount that would otherwise have been due
and payable had such rights and remedies been permitted to be exercised by the
Trustee or any of the Holders.
No reference herein to the Indenture and no provision of these
Guarantees or of the Indenture shall alter or impair the Guarantees of the
Guarantors, which are absolute and unconditional, of the due and punctual
payment of the principal (and premium, if any) and interest on the Security upon
which these Guarantees are endorsed.
The Guarantors shall be subrogated to all rights of the Holder of this
Security against the Issuer in respect of any amounts paid by the Guarantors on
account of this Security pursuant to the provisions of their respective
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Guarantees or the Indenture; provided, however, that the Guarantors shall not be
-------- -------
entitled to enforce or to receive any payments arising out of, or based upon,
such right of subrogation until the principal of (and premium, if any) and
interest on this Security and all other Securities issued under the Indenture
shall have been paid in full.
These Guarantees shall remain in full force and effect and continue to
be effective should any petition be filed by or against the Issuer for
liquidation or reorganization, should the Issuer become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Issuer's assets, and shall, to
the fullest extent permitted by law, continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Securities is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee on the Securities whether as a "voidable
preference," "fraudulent transfer," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Securities shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
All terms used in these Guarantees which are defined in the Indenture
referred to in the Security upon which these Guarantees are endorsed shall have
the meanings assigned to them in such Indenture.
These Guarantees shall not be valid or obligatory for any purpose
until the certificate of authentication on the Security upon which these
Guarantees are endorsed shall have been executed by the Trustee under the
Indenture by manual signature.
Reference is made to Article Twelve of the Indenture for further
provisions with respect to this Guarantee.
These Guarantees shall be governed by and construed in accordance with
the laws of the State of New York.
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IN WITNESS WHEREOF, each of Regency Realty Corporation, Regency Office
Partnership, L.P., Hyde Park Partners, L.P., Regency Retail Centers of Ohio,
Inc., RRC Operating Partnership of Georgia, L.P., RRC FL Five, Inc., RRC FL
Seven, Inc., RRC Acquisitions, Inc. and RRC Acquisitions Two, Inc., as
Guarantors, has caused this Guarantee to be duly executed.
REGENCY REALTY CORPORATION,
REGENCY OFFICE PARTNERSHIP , L.P.,
REGENCY RETAIL CENTERS OF OHIO, INC.,
RRC OPERATING PARTNERSHIP OF GEORGIA,
RRC FL FIVE, INC.,
RRC FL SEVEN, INC.,
RRC ACQUISITIONS, INC.,
RRC ACQUISITIONS TWO, INC.
By_____________________________
Authorized Signatory
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ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
---------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $100,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 304,
305, 306, 906 or 1108. After the Initial Issue Date and prior to the expiration
of the Exchange Offer, the Issuer may issue Additional Original Securities from
time to time, pursuant to a Board Resolution, subject to Section 303, included
in an Officers' Certificate delivered to the Trustee, in authorized
denominations; provided the aggregate principal amount of the Securities
Outstanding after such issuance does not exceed $100,000,000. The Issuer may
issue Exchange Securities from time to time pursuant to an Exchange Offer or
otherwise, in each case pursuant to a Board Resolution, subject to Section 303,
included in an Officers' Certificate delivered to the Trustee, in authorized
denominations in exchange for a like principal amount of the Original
Securities. Upon any such exchange the Securities shall be canceled in
accordance with Section 310 and shall no longer be deemed Outstanding for any
purpose. In no event shall the aggregate principal amount of the Original
Securities and Exchange Securities Outstanding exceed $100,000,000.
The Securities shall be known and designated as the "7 1/8% Notes due
July 15, 2005" of the Issuer. Their Stated Maturity shall be July 15, 2005 and
they shall accrue interest at the rate of 7 1/8% per annum (subject, in the case
of the Original Securities, to increase at the rate of 0.50% per annum, as
provided in such Original Security), from July 20, 1998 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, as
the case may be, payable semi-annually on January 15 and July 15, commencing
January 15, 1999 until the principal thereof is paid or made available for
payment.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Issuer in Jacksonville, Florida
or in the
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Borough of Manhattan, The City of New York maintained for such purpose and at
any other office or agency maintained by the Issuer for such purpose; provided,
--------
however, that at the option of the Issuer payment of interest may be made by
- -------
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
The Securities shall be redeemable as provided in Article Eleven. The
Securities shall be Guaranteed by the Guarantors as provided in Article 12.
Unless the context otherwise requires, the Original Securities and the
Exchange Securities shall constitute one series for all purposes under the
Indenture, including without limitation, amendments, waivers or redemptions.
The Securities shall be subject to defeasance at the option of the
Issuer as provided in Article Thirteen.
SECTION 302. Denominations.
-------------
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery
-----------------------------------
and Dating.
----------
The Securities shall be executed on behalf of the Issuer by the
Chairman of the Board, the President or one of the Vice Presidents of its
general partner, under the corporate seal of such general partner reproduced
thereon attested by its Secretary or one of its Assistant Secretaries and the
Guarantee to be endorsed on the Securities shall be executed on behalf of the
Guarantors by their Chairmen of the Board, their Presidents or one of their
Vice-Presidents. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Issuer or the Guarantors shall
bind the Issuer or the Guarantors, notwithstanding that such individuals or any
of them have ceased to hold such offices prior
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<PAGE>
to the authentication and delivery of such Securities or did not hold such
offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Securities executed by the Issuer having
a Guarantee endorsed thereon executed by the Guarantors to the Trustee for
authentication, together with a Issuer Order for the authentication and delivery
of such Securities with the Guarantees of the Guarantors endorsed thereon; and
the Trustee in accordance with such Issuer Order shall authenticate and deliver
such Securities with the Guarantees of the Guarantors endorsed thereon as in
this Indenture provided and not otherwise.
At any time and from time to time after the execution and delivery of
this Indenture, and (i) prior to the expiration of the Exchange Offer, in the
case of Additional Original Securities or (ii) after the effectiveness of a
Registration Statement under the Securities Act with respect thereto, in the
case of Exchange Securities, the Issuer may deliver Additional Original
Securities or Exchange Securities, as the case may be, executed by the Issuer to
the Trustee for authentication, together with a Issuer Order for the
authentication and delivery of such Additional Original Securities or Exchange
Securities, as applicable, and a like principal amount of Original Securities
for cancellation in accordance with Section 310 of this Indenture, in the case
of Exchange Securities, and the Trustee in accordance with the Issuer Order
shall authenticate and deliver such Securities. In authenticating such
Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 601) shall be fully protected in relying upon, an Opinion of
Counsel stating,
(a) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 301, that such form has been
established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been
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<PAGE>
established in conformity with the provisions of this Indenture;
(c) that such Securities have been duly and validly issued in
accordance with the terms of the Indenture, and are entitled to all the
rights and benefits set forth herein;
(d) that all conditions precedent to the authentication and delivery
of such Securities have been complied with and that such Securities, when
authenticated and delivered by the Trustee and issued by the Issuer in the
manner and subject to any conditions specified in such Opinion of Counsel,
will constitute valid and legally binding obligations of the Issuer,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting the enforcement of creditors' rights and to general equity
principles; and
(e) that the issuance of the Exchange Securities in exchange for the
Original Securities has been effected in compliance with the Securities Act
of 1933, as amended.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 304. Temporary Securities.
--------------------
Pending the preparation of definitive Securities, the Issuer may
execute and the Guarantors may execute, and upon Issuer Order the Trustee shall
authenticate and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise
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<PAGE>
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities.
If temporary Securities are issued, the Issuer will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Issuer designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Issuer shall execute and the Guarantors shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of authorized denominations. Until so exchanged
the temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 305. Global Securities.
-----------------
(a) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Issuer for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (i) such Depositary (A) has notified the Issuer that it is
unwilling or unable to continue as Depositary for such Global Security or (B)
has ceased to be a clearing agency registered as such under the Exchange Act,
and in either case the Issuer fails to appoint a successor Depositary within 90
days, (ii) the Company executes and delivers to the Trustee an Issuer Order
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stating that it elects to cause the issuance of the Securities in certificated
form and that all Global Securities shall be exchanged in whole for Securities
that are not Global Securities (in which case such exchange shall be effected by
the Trustee) or (iii) there shall have occurred and be continuing an Event of
Default or any Event which after notice or lapse of time or both would be an
Event of Default with respect to the Securities.
(c) If any Global Security is to be exchanged for other Securities or
canceled in whole, it shall be surrendered by or on behalf of the Depositary or
its nominee to the Trustee, as Security Registrar, for exchange or cancellation
as provided in this Article Three. If any Global Security is to be exchanged for
other Securities or canceled in part, or if another Security is to be exchanged
in whole or in part for a beneficial interest in any Global Security, then
either (i) such Global Security shall be so surrendered for exchange or
cancellation as provided in this Article Three or (ii) the principal amount
thereof shall be reduced or increased by an amount equal to the portion thereof
to be so exchanged or canceled, or equal to the principal amount of such other
Security to be so exchanged for a beneficial interest therein, as the case may
be, by means of an appropriate adjustment made on the records of the Trustee, as
Security Registrar, whereupon the Trustee, in accordance with the Applicable
Procedures, shall instruct the Depositary or its authorized representative to
make a corresponding adjustment to its records. Upon any such surrender or
adjustment of a Global Security, the Trustee shall, subject to Section 306(c)
and as otherwise provided in this Article Three, authenticate and deliver any
Securities issuable in exchange for such Global Security (or any portion
thereof) to or upon the order of the Issuer, and registered in such names as may
be directed by, the Depositary or its authorized representative. Upon the
request of the Trustee in connection with the occurrence of any of the events
specified in the preceding paragraph, the Issuer shall promptly make available
to the Trustee a reasonable supply of Securities that are not in the form of
Global Securities. The Trustee shall be entitled to rely upon any order,
direction or request of the Depositary or its authorized representative which is
given or made pursuant to this Article Three if such order, direction or request
is given or made in accordance with the Applicable Procedures.
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<PAGE>
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article Three or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global Security,
unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof.
(e) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under the
Indenture and the Securities, and owners of beneficial interests in a Global
Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members.
SECTION 306. Registration, Registration of Transfer and
Exchange Generally; Restrictions on Transfer
and Exchange; Securities Act Legends.
--------------------------------------------
(a) Registration, Registration of Transfer and Exchange Generally.
-------------------------------------------------------------
The Issuer shall cause to be kept at the Corporate Trust Office of the Trustee a
register (the register maintained in such office and in any other office or
agency of the Issuer designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Issuer shall provide for the
registration of Securities and of transfers and exchanges of Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers and exchanges of Securities as herein provided. Such
Security Register shall distinguish between Original Securities and Exchange
Securities.
Upon surrender for registration of transfer of any Security at an
office or agency of the Issuer designated pursuant to Section 1002 for such
purpose, and provided that the other requirements of this Section 306 have been
satisfied, the Issuer shall execute and the Guarantors shall
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<PAGE>
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denominations, of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture.
At the option of the Holder, and subject to the other provisions of
this Section 306, Securities may be exchanged for other Securities of any
authorized denominations, of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any Securities are
so surrendered for exchange, the Issuer shall execute and the Guarantors shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuer and the Guarantors,
evidencing the same debt, and (except for the differences between Original
Securities and Exchange Securities provided for herein) entitled to the same
benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Issuer or the Security Registrar)
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to the Holder for any registration of
transfer or exchange of Securities, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906 or 1108.
The Issuer shall not be required (i) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of business
15 days before
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<PAGE>
the day of the mailing of a notice of redemption of Securities selected for
redemption under Section 1104 and ending at the close of business on the day of
such mailing, or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
(b) Certain Transfers and Exchanges. Notwithstanding any other
-------------------------------
provision of this Indenture or the Securities, transfers and exchanges of
Securities and beneficial interests in a Global Security of the kinds specified
in this Section 306(b) shall be made only in accordance with this Section
306(b).
(i) Restricted Global Security to Regulation S Temporary Global
-----------------------------------------------------------
Security or Regulation S Global Security. If the owner of a beneficial
----------------------------------------
interest in the Restricted Global Security wishes at any time to transfer
such interest to a Person who wishes to acquire the same in the form of a
beneficial interest in the Regulation S Temporary Global Security (if
before the expiration of the Distribution Compliance Period) or in the
Regulation S Global Security (if thereafter), such transfer may be effected
only in accordance with the provisions of this Clause (b)(i) subject to the
Applicable Procedures. Upon receipt by the Trustee, as Security Registrar,
of (A) an order given by the Depositary or its authorized representative
directing that a beneficial interest in the Regulation S Temporary Global
Security or Regulation S Global Security (as applicable) in a specified
principal amount be credited to a specified agent member's account and that
a beneficial interest in the Restricted Global Security in an equal
principal amount be debited from another specified agent member's account
and (B) a Regulation S Certificate, substantially in the form attached
hereto as Annex A duly executed by the owner of such beneficial interest in
the Restricted Global Security or his attorney duly authorized in writing,
then the Trustee, as Security Registrar but subject to Clause (b)(iv)
below, shall reduce the principal amount of the Restricted Global Security
and increase the principal amount of the Regulation S Temporary Global
Security or Regulation S Global Security (as applicable) by such specified
principal amount as provided in Section 306(b).
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<PAGE>
(ii) Regulation S Temporary Global Security to Restricted Global
-----------------------------------------------------------
Security. If the owner of a beneficial interest in the Regulation S
--------
Temporary Global Security wishes at any time to transfer such interest to a
Person who wishes to acquire the same in the form of a beneficial interest
in the Restricted Global Security, such transfer may be effected only in
accordance with this Clause (b)(ii) and subject to the Applicable
Procedures. Upon receipt by the Trustee, as Security Registrar, of (A) an
order given by the Depositary or its authorized representative directing
that a beneficial interest in the Restricted Global Security in a specified
principal amount be credited to a specified Agent Member's account and that
a beneficial interest in the Regulation S Temporary Global Security in an
equal principal amount be debited from another specified Agent Member's
account and (B) a Restricted Securities Certificate, substantially in the
form attached hereto as Annex B duly executed by the owner of such
beneficial interest in the Regulation S Temporary Global Security or his
attorney duly authorized in writing, then the Trustee, as Security
Registrar, shall reduce the principal amount of the Regulation S Temporary
Global Security and increase the principal amount of the Restricted Global
Security by such specified principal amount as provided in Section 306(b).
(iii) Exchanges between Global Security and Non-Global Security. A
---------------------------------------------------------
beneficial interest in a Global Security may be exchanged for a Security
that is not a Global Security as provided in Section 306, provided that, if
such interest is a beneficial interest in the Restricted Global Security,
or if such interest is a beneficial interest in the Regulation S Temporary
Global Security, then such interest shall be exchanged for a Restricted
Security (subject in each case to Section 305(b)).
(iv) Regulation S Temporary Global Security to be Held Through
---------------------------------------------------------
Euroclear or Cedel during Distribution Compliance Period. The Issuer shall
--------------------------------------------------------
use its best efforts to cause the Depositary to ensure that beneficial
interests in the Regulation S Temporary Global Security may be held only in
or through accounts
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maintained at the Depositary by Euroclear or Cedel (or by Agent Members
acting for the account thereof), and no person shall be entitled to effect
any transfer or exchange that would result in any such interest being held
otherwise than in or through such an account; provided that this Clause
(b)(iv) shall not prohibit any transfer or exchange of such an interest in
accordance with Clause (b)(ii) above.
(c) Securities Act Legends. Rule 144A Securities and their respective
----------------------
Successor Securities shall bear a Restricted Securities Legend, and Regulation S
Securities and their Successor Securities shall bear a Regulation S Legend,
subject to the following:
(i) subject to the following Clauses of this Section 306(c), a
Security or any portion thereof which is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Securities Act Legend borne by such Global Security while represented
thereby;
(ii) subject to the following Clauses of this Section 306(c), a new
Security which is not a Global Security and is issued in exchange for
another Security (including a Global Security) or any portion thereof, upon
transfer or otherwise, shall bear the Securities Act Legend borne by such
other Security, provided that, if such new Security is required pursuant to
Section 306(b)(iii) to be issued in the form of a Restricted Security, it
shall bear a Restricted Securities Legend and, if such new Security is so
required to be issued in the form of a Regulation S Security, it shall bear
a Regulation S Legend;
(iii) Exchange Securities shall not bear a Securities Act Legend;
(iv) at any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject to
transfer restrictions pursuant to the Securities Act, a new Security which
does not bear a Securities Act Legend may be issued in exchange for or in
lieu of a Security (other than a Global Security) or any portion thereof
which bears such a legend if the Trustee has received
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an Unrestricted Securities Certificate, substantially in the form attached
hereto as Annex C duly executed by the Holder of such legended Security or
his attorney duly authorized in writing, and after such date and receipt of
such certificate, the Trustee shall authenticate and deliver such a new
Security in exchange for or in lieu of such other Security as provided in
this Article Three;
(v) a new Security which does not bear a Securities Act Legend may
be issued in exchange for or in lieu of a Security (other than a Global
Security) or any portion thereof which bears such a legend if, in the
Issuer's judgment, placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the direction of the Issuer, shall
authenticate and deliver such a new Security as provided in this Article
Three; and
(vi) notwithstanding the foregoing provisions of this Section
306(c), a Successor Security of a Security that does not bear a particular
form of Securities Act Legend shall not bear such form of legend unless the
Issuer has reasonable cause to believe that such Successor Security is a
"restricted security" within the meaning of Rule 144, in which case the
Trustee, at the direction of the Issuer, shall authenticate and deliver a
new Security bearing a Restricted Securities Legend in exchange for such
Successor Security as provided in this Article Three.
SECTION 307. Mutilated, Destroyed, Lost and
------------------------------
Stolen Securities.
-----------------
If any mutilated Security is surrendered to the Trustee, the Issuer
shall execute and the Guarantors shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Issuer, the Guarantors and the
Trustee (i) evidence to their satisfaction of the destruction, loss or theft of
any Security and
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(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Issuer or the Trustee that such Security has been acquired by a bona fide
purchaser, the Issuer shall execute and the Guarantors shall execute and upon
its request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Issuer or the Guarantors in
its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 308. Payment of Interest; Interest
-----------------------------
Rights Preserved.
----------------
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
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Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Issuer, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Issuer may elect to make pay ment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Issuer shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Issuer shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Issuer of such Special Record Date and, in the name and at the expense
of the Issuer, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears in the
Security Register, not less than 10 days
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prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Securities (or their respective Predecessor Securities) are registered
at the close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
(2) The Issuer may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Issuer to the Trustee of the proposed payment pursuant to this Clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 309. Persons Deemed Owners.
---------------------
Prior to due presentment of a Security for registration of transfer,
the Issuer, the Guarantors, the Trustee and any agent of the Issuer, the
Guarantors, or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment
of principal of (and premium, if any) and (subject to Section 308) interest on
such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Issuer, the Guarantors, the Trustee nor any
agent of the Issuer, the Guarantors, or the Trustee shall be affected by notice
to the contrary.
SECTION 310. Cancellation.
------------
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All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Issuer
or the Guarantors may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Issuer or
the Guarantors may have acquired in any manner whatsoever, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of as directed by a Issuer
Order.
SECTION 311. Computation of Interest.
-----------------------
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months; provided, however, that Additional Interest on the
-------- -------
Securities shall be computed on the basis of a 365- or 366-day year, as the case
may be, and the number of days actually elapsed.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have
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been replaced or paid as provided in Section 307 and (ii) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in Section
1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Issuer,
and the Issuer or the Guarantors, in the case of (i), (ii) or (iii)
above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Issuer or the Guarantors has paid or caused to be paid all
other sums
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payable hereunder by the Issuer or the Guarantors; and
(3) the Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture pursuant to
this Article Four, the obligations of the Issuer or the Guarantors to the
Trustee under Section 607 and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations
of the Trustee under Section 402 and the last paragraph of Section 1003 shall
survive.
SECTION 402. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer or the Guarantors acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money has been deposited
with the Trustee.
ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
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(1) default in the payment of the principal of (or premium, if any,
on) any Security at its Maturity; or
(2) default in the payment of any interest upon any Security when it
becomes due and payable, and continuance of such default for a period of 30
days; or
(3) default in the performance, or breach, of Section 801; or
(4) default in the performance, or breach, of any covenant or
warranty of the Issuer in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to the Issuer by the Trustee or to the Issuer and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(5) a default or defaults under any bond(s), debenture(s), note(s) or
other evidence(s) of Indebtedness by the Issuer or any Guarantor or under
any mortgage(s), indenture(s) or instrument(s) under which there may be
issued or by which there may be secured or evidenced any Indebtedness of
such type by the Issuer or any such Guarantor with a principal amount then
outstanding, individually or in the aggregate, in excess of $5 million,
whether such Indebtedness now exists or shall hereafter be created, which
default or defaults shall constitute a failure to pay any portion of the
principal of such Indebtedness when due and payable after the expiration of
any applicable grace
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period with respect thereto or shall have resulted in such Indebtedness
becoming or being declared due and payable prior to the date on which it
would otherwise have become due and payable; or
(6) a final judgment or final judgments for the payment of money are
entered against the Issuer or any Guarantor in an aggregate amount in
excess of $5 million by a court or courts of competent jurisdiction, which
judgments remain undischarged or unbonded for a period (during which
execution shall not be effectively stayed) of 60 days after the right to
appeal all such judgments has expired; or
(7) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Issuer or any Guarantor in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a decree
or order adjudging the Issuer or any such Guarantor a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Issuer or any such Guarantor under any applicable Federal or State law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Issuer or any such Guarantor
or of any substantial part of the property of the Issuer or any such
Guarantor, or ordering the winding up or liquidation of the affairs of the
Issuer or any such Guarantor, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect
for a period of 60 consecutive days; or
(8) the commencement by the Issuer or any Guarantor of a voluntary
case or proceeding under any applicable Federal or
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State bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by the Issuer or any such Guarantor to the entry of a decree or
order for relief in respect of the Issuer or any Guarantor in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against the
Issuer or any Guarantor, or the filing by the Issuer or any such Guarantor
of a petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by the Issuer or any
such Guarantor to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Issuer or any Guarantor or of any
substantial part of the property of the Issuer or any Guarantor, or the
making by the Issuer or any Guarantor of an assignment for the benefit of
creditors, or the admission by the Issuer or any such Guarantor in writing
of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Issuer or any such Subsidiary in
furtherance of any such action.
SECTION 502. Acceleration of Maturity; Rescission
------------------------------------
and Annulment.
-------------
If an Event of Default (other than an Event of Default specified in
Section 501(7) or (8)) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable immediately, by a notice in writing to the Issuer (and to the
Trustee if given by Holders), and upon any such declaration such principal and
any accrued interest shall become immediately due and payable. If an Event of
Default specified in Section 501(7)
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or (8) occurs, the principal of and any accrued interest on the Securities then
Outstanding shall ipso facto become immediately due and payable without any
---- -----
declaration or other Act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Issuer and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Issuer or the Guarantors has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, on) any Securities
which have become due otherwise than by such declaration of
acceleration and, to the extent that payment of such interest is
lawful, interest thereon at the rate provided by the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate provided by the Securities,
and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
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No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits
------------------------------------
for Enforcement by Trustee.
--------------------------
The Issuer covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Issuer and the Guarantors will, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal (and premium, if any) and interest,
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate provided by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Issuer or the Guarantors fails to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of the sums so due
and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Issuer, the Guarantors or any other obligor upon
the Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Issuer, the Guarantors or any
other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such
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appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
--------------------------------
In case of any judicial proceeding relative to the Issuer or the
Guarantors (or any other obligor upon the Securities), its property or its
creditors, the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the Trust
Indenture Act in order to have claims of the Holders and the Trustee allowed in
any such proceeding. In particular, the Trustee shall be authorized to collect
and receive any moneys or other property payable or deliverable on any such
claims and to distribute the same; and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims
--------------------------
Without Possession of Securities.
--------------------------------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
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and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal (and premium, if
any) and interest, respectively.
SECTION 507. Limitation on Suits.
-------------------
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
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(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to
---------------------------------
Receive Principal, Premium and Interest.
---------------------------------------
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 308) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
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SECTION 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Issuer, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 307, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
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SECTION 512. Control by Holders.
------------------
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
--------
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as
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Trustee, a court may require any party litigant (other than the Trustee) in such
suit to file an undertaking to pay the costs of such suit, and may assess costs
against any such party litigant, in the manner and to the extent provided in the
Trust Indenture Act; provided, that neither this Section nor the Trust Indenture
--------
Act shall be deemed to authorize any court to require such an undertaking or to
make such an assessment in any suit instituted by the Issuer or in any suit for
the enforcement of the right to convert any Security in accordance with Article
Thirteen.
SECTION 515. Waiver of Stay or Extension Laws.
--------------------------------
The Issuer and the Guarantors covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Issuer and
the Guarantors (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
-----------------------------------
The duties and responsibilities of the Trustee shall be as provided in
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so pro vided, every provision of this Indenture relating to the
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conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
------------------
The Trustee shall give the Holders notice of any default hereunder as
and to the extent provided by the Trust Indenture Act; provided, however, that
-------- -------
in the case of any default of the character specified in Section 501(4), no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default.
SECTION 603. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties ;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by a Issuer Request or Issuer Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically pre-
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scribed) may, in the absence of bad faith on its part, rely upon an
Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Issuer
or the Guarantors, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
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SECTION 604. Not Responsible for Recitals
----------------------------
or Issuance of Securities.
-------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Issuer or the Guarantors, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Issuer of Securities or the
proceeds thereof.
SECTION 605. May Hold Securities.
-------------------
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Issuer or the Guarantors, in its individual or any other capacity,
may become the owner or pledgee of Securities and, subject to Sections 608 and
613, may otherwise deal with the Issuer with the same rights it would have if it
were not the Trustee, any Paying Agent, any Security Registrar or such other
agent.
SECTION 606. Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Issuer or the Guarantors.
SECTION 607. Compensation and Reimbursement.
------------------------------
The Issuer agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law
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in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any pro vision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or reasonable expense incurred without negligence or
bad faith on its part, arising out of or in connection with the acceptance
or administration of this trust, including the reasonable costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
SECTION 608. Disqualification; Conflicting Interests.
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section,
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the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal;
------------------------
Appointment of Successor.
------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Issuer. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Issuer.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Issuer or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Issuer or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public
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officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Issuer or the Guarantors by a Board Resolution
may remove the Trustee, or (ii) subject to Section 514, any Holder who has been
a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Issuer, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Issuer and the Guarantors and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Issuer. If no successor Trustee shall have been so appointed by
the Issuer or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Issuer shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 106. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuer and the Guarantors and to the retiring Trustee an
instrument
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accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Issuer, the Guarantors or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder. Upon request of any
such successor Trustee, the Issuer, or the Guarantors shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation
---------------------------------
or Succession to Business.
-------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the bond administrative
portion of the corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be otherwise qualified
and eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. In case any Securities
shall have been authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 613. Preferential Collection of Claims
---------------------------------
Against Issuer or the Guarantors.
--------------------------------
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If and when the Trustee shall be or become a creditor of the Issuer or
the Guarantors (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the collection of
claims against the Issuer or the Guarantors (or any such other obligor).
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Issuer
SECTION 701. Issuer to Furnish Trustee
-------------------------
Names and Addresses of Holders.
------------------------------
The Issuer and the Guarantors will furnish or cause to be furnished to
the Trustee
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and ad dresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Issuer or the Guarantors of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
- ---------
capacity as Security Registrar.
SECTION 702. Preservation of Information;
----------------------------
Communications to Holders.
-------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity
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as Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities and the
corresponding rights and duties of the Trustee, shall be provided by the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Issuer, the Guarantors and the Trustee that neither the Issuer,
the Guarantors nor the Trustee nor any agent of either of them shall be held
accountable by reason of any disclosure of information as to the names and
addresses of Holders made pursuant to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
------------------
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Issuer. The
Issuer will notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 704. Reports by Issuer.
-----------------
The Issuer and the Guarantors shall file with the Trustee and the
Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to such Act;
provided that any such information, documents or reports required to be filed
with Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 shall be filed with the Trustee within 15 days after the same is so
required to be filed with the Commission.
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SECTION 705. Officers' Certificate with Respect to Change in Interest Rates.
--------------------------------------------------------------
Within five days after any Step-Up or Step-Down Date, the Issuer shall
deliver an Officers' Certificate to the Trustee stating the new interest rate
and the date on which it became effective.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Issuer May Consolidate, Etc. and Purchases of Assets Only on
------------------------------------------------------------
Certain Terms.
-------------
The Issuer (a) shall not consolidate with or merge into any other
Person; (b) shall not permit any other Person to consolidate with or merge into
the Issuer; (c) shall not, directly or indirectly, transfer, convey, sell, lease
or otherwise dispose of all or substantially all of its properties and assets as
an entirety; and (d) shall not, and shall not permit any Subsidiary of the
Issuer to, (i) acquire Capital Stock or other ownership interests of any other
Person such that such Person becomes a Subsidiary of the Issuer or (ii) directly
or indirectly, purchase, lease or otherwise acquire all or substantially all of
the property and assets of any Person as an entirety or any existing business
(whether existing as a separate entity, subsidiary, division, unit or otherwise)
of any Person, unless in any such transaction:
(1) immediately before and after giving effect to such
transaction and treating any Indebtedness Incurred by the Issuer
or a Subsidiary of the Issuer as a result of such transaction as
having been Incurred by the Issuer or such Subsidiary at the time
of such transaction, no Event of Default, and no event which,
after notice or lapse of time, or both, would become an Event of
Default, shall have happened and be continuing;
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(2) in the case the Issuer shall consolidate with or merge
into another Person or shall directly or indirectly transfer,
convey, sell, lease or otherwise dispose of all or substantially
all of its properties and assets as an entirety, the Person
formed by such consolidation or into which the Issuer is merged
or the Person which acquires by transfer, conveyance, sale, lease
or other disposition all or substantially all of the properties
and assets of the Issuer as an entirety (for purposes of this
Article Eight, a "Successor Issuer") shall be a corporation,
partnership or trust, shall be organized and validly existing
under the laws of the United States of America, any State thereof
or the District of Columbia and shall expressly assume by an
indenture supplemental hereto executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of (and premium, if any) and
interest on all the Securities and the performance of every
covenant of this Indenture on the part of the Issuer to be
performed or observed;
(3) immediately after giving effect to such transaction, the
Consolidated Net Worth of the Issuer or, if applicable, the
Successor Issuer shall be equal to or greater than the
Consolidated Net Worth of the Issuer immediately prior to such
transaction; (provided that this clause (3) shall not apply to a
transaction involving the consolidation or merger of a direct or
indirect subsidiary of Regency with or into the Issuer and
provided further that for purposes of this clause (3), a series
of related transactions shall be treated as a single
transaction);
(4) other than in connection with an acquisition of an
individual property that would not constitute the acquisition of
a "significant subsidiary", if the tests set forth in Rule 1-
01(w) of Regulation S-X were
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applied with respect to such acquisition, the Issuer has
delivered to the Trustee an Officer's Certificate and an Opinion
of Counsel, each stating that such consolidation, merger,
conveyance, transfer, lease or acquisition and, if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture, complies with this Article and that all
conditions precedent herein provided for relating to such
transaction have been complied with, and, with respect to such
Officer's Certificate, setting forth the manner of determination
of the Consolidated Net Worth of the Issuer or, if applicable, of
the Successor Issuer as required pursuant to the foregoing.
SECTION 802. Successor Substituted.
---------------------
Upon any consolidation of the Issuer with, or merger of the Issuer
into, any other Person or any transfer, conveyance, sale, lease or other
disposition of all or substantially all of the properties and assets of the
Issuer as an entirety in accordance with Section 801, the Successor Issuer shall
succeed to, and be substituted for, and may exercise every right and power of,
the Issuer under this Indenture with the same effect as if such successor Person
had been named as the Issuer herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Issuer and the Guarantors,
when authorized by a Board Resolution, the Guarantors and the Trustee, at any
time and from time to time, may enter into one or more indentures supplemental
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hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Issuer and the Guarantors and the assumption by any such
successor of the covenants of the Issuer or the Guarantors
herein and in the Securities; or
(2) to add to the covenants of the Issuer for the benefit of
the Holders, or to surrender any right or power herein conferred
upon the Issuer; or
(3) to secure the Securities otherwise; or
(4) to comply with any requirements of the Commission in
order to effect and maintain the qualification of this Indenture
under the Trust Indenture Act; or
(5) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture which shall not
be inconsistent with the provisions of this Indenture, provided
such action pursuant to this Clause (5) shall not adversely
affect the interests of the Holders in any material respect and
Trustee may rely on an Opinion of Counsel that such action will
not adversely affect the interests of the Holders in any material
respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Issuer, the Guarantors and the Trustee, the Issuer, when
authorized by a Board Resolution, the Guarantors and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose
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of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture; provided, however, that no such supplemental
-------- -------
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any
instalment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium
payable thereon, or change the place of payment where, or the
coin or currency in which, any Security or any premium or the
interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date), or
(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section
513 or Section 1012, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
------------------------------------
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In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer and the Guarantors
shall so determine, new Securities so modified as to conform, in the opinion of
the Trustee and the Issuer, to any such supplemental indenture may be prepared
and executed by the Issuer and the Guarantors and authenticated and delivered by
the Trustee in exchange for Outstanding Securities.
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ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest.
------------------------------------------
The Issuer will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
-------------------------------
The Issuer and the Guarantors will maintain in Jacksonville, Florida
or in the Borough of Manhattan, The City of New York, an office or agency where
Securities may be presented or surrendered for payment, where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer in respect of the Securities and this Indenture
may be served. The Issuer and the Guarantors will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Issuer or the Guarantors shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Issuer and the
Guarantors hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Issuer may also from time to time designate one or more other
offices or agencies (in or outside Jacksonville, Florida or the Borough of
Manhattan, The City of New York) where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Issuer of its obligation to maintain an office or agency
in Jacksonville, Florida or in the Borough of Manhattan, The City of New York,
for such purposes. The Issuer will give prompt written notice to the Trustee of
any
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such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 1003. Money for Security Payments to be Held in Trust.
-----------------------------------------------
If the Issuer or the Guarantors shall at any time act as its own
Paying Agent, it will, on or before each due date of the principal of (and
premium, if any) or interest on any of the Securities, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Issuer shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Issuer will promptly
notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities in
trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as
herein provided;
(2) give the Trustee notice of any default by the Issuer or
the Guarantors (or any other obligor upon the Securities) in the
making of any payment of principal (and premium, if any) or
interest; and
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(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Issuer Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Issuer or the Guarantors or such Paying Agent, such sums to be held
by the Trustee upon the same trusts as those upon which such sums were held by
the Issuer or the Guarantors or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuer or the Guarantors, in trust for the payment of the principal of
(and premium, if any) or interest on any Security and remaining unclaimed for
two years after such principal (and premium, if any) or interest has become due
and payable shall be paid to the Issuer on Issuer Request, or (if then held by
the Issuer or the Guarantors) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Issuer and the Guarantors for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Issuer and the Guarantors as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuer and the
Guarantors cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer or the
Guarantors, as the case may be.
SECTION 1004. Existence.
---------
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Subject to Article Eight, the Issuer will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Issuer shall not be required to preserve any such right or franchise if the
Board of Directors in good faith shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Issuer and that the
loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. Maintenance of Properties.
-------------------------
The Issuer will cause all properties used or useful in the conduct of
its business or the business of any Subsidiary of the Issuer to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Issuer may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Issuer from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, as determined by the Board of Directors in good faith,
desirable in the conduct of its business or the business of any Subsidiary and
not disadvantageous in any material respect to the Holders.
SECTION 1006. Payment of Taxes and Other Claims.
---------------------------------
The Issuer and the Guarantors will pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (1) all taxes,
assessments and governmental charges levied or imposed upon the Issuer, any
Guarantor or any of their respective Subsidiaries, and (2) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a lien upon
the property of the Issuer, any Guarantor or any of their respective
Subsidiaries; provided, however, that the Issuer and any Guarantor shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment,
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charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings.
SECTION 1007. Maintenance of Insurance.
------------------------
The Issuer and the Guarantors shall, and shall cause each of their
Subsidiaries to, keep at all times all of their properties which are of an
insurable nature insured against loss or damage with insurers believed by the
Issuer to be responsible to the extent that property of similar character is
usually so insured by corporations similarly situated and owning like properties
in commercially reasonable amounts and types. The Issuer shall, and shall cause
its Subsidiaries to, use the proceeds from any such insurance policy to repair,
replace or otherwise restore the property to which such proceeds relate.
SECTION 1008. Limitations on Incurrence of Indebtedness.
-----------------------------------------
Neither the Issuer nor any Subsidiary will incur any Indebtedness if,
immediately after giving effect to the incurrence of such additional
Indebtedness and the application of the proceeds thereof, the aggregate
principal amount of all outstanding Indebtedness of the Issuer and its
Subsidiaries on a consolidated basis determined in accordance with generally
accepted accounting principles is greater than 60% of the sum of (without
duplication) (i) the Total Assets of the Issuer and its Subsidiaries as of the
end of the calendar quarter covered in the Issuer's Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, as the case may be, most recently filed with
the Trustee (or such reports of Regency if filed by the Issuer with the Trustee
in lieu of filing its own reports) prior to the incurrence of the additional
Indebtedness and (ii) the purchase price of any real estate assets or mortgages
receivable acquired and the amount of any securities offering proceeds received
(to the extent that the proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Indebtedness) by the Issuer or any
Subsidiary since the end of the calendar quarter, including those proceeds
obtained in connection with the incurrence of the additional Indebtedness.
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<PAGE>
In addition to the foregoing limitation on the incurrence of
Indebtedness, neither the Issuer nor any Subsidiary will incur any Indebtedness
secured by any Encumbrance upon any of the property of the Issuer or any
Subsidiary if, immediately after giving effect to the incurrence of the
additional Indebtedness and the application of the proceeds thereof, the
aggregate principal amount of all outstanding Indebtedness of the Issuer and its
Subsidiaries on a consolidated basis which is secured by any Encumbrance on
property of the Issuer or any Subsidiary is greater than 40% of the sum of
(without duplication) (i) the Total Assets of the Issuer and its Subsidiaries as
of the end of the calendar quarter covered in the Issuer's Annual Report on Form
10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed
with the Trustee (or such reports of Regency if filed by the Issuer with the
Trustee in lieu of filing its own reports) prior to the incurrence of the
additional Indebtedness and (ii) the purchase price of any real estate assets or
mortgages receivable acquired and the amount of any securities offering proceeds
received (to the extent that the proceeds were not used to acquire real estate
assets or mortgages receivable or used to reduce Indebtedness) by the Issuer or
any Subsidiary since the end of the calendar quarter, including those proceeds
obtained in connection with the incurrence of the additional Indebtedness.
The Issuer and its Subsidiaries may not at any time own Total
Unencumbered Assets equal to less than 150% of the aggregate outstanding
principal amount of the Unsecured Indebtedness of the Issuer and its
Subsidiaries on a consolidated basis.
In addition to the foregoing limitations on the incurrence of
Indebtedness, neither the Issuer nor any Subsidiary will incur any Indebtedness
if the ratio of Consolidated Income Available for Debt Service to the Annual
Service Charge for the four consecutive fiscal quarters most recently ended
prior to the date on which such additional Indebtedness is to be incurred shall
have been less than 1.5 to 1, on a pro forma basis, after giving effect thereto
and to the application of the proceeds therefrom and calculated on the
assumption that (i) such indebtedness and any other Indebtedness incurred by the
Issuer or its Subsidiaries since the first day of such four-quarter period and
the application of the proceeds therefrom, including
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Indebtedness to refinance other Indebtedness, had occurred at the beginning of
the period, (ii) the repayment or retirement of any other Indebtedness by the
Issuer and its Subsidiaries since the first day of such four-quarter period had
been incurred, repaid or retired at the beginning of that period (except that,
in making such computation, the amount of Indebtedness under any revolving
credit facility shall be computed based upon the average daily balance of the
Indebtedness during such period), (iii) in the case of Acquired Indebtedness or
Indebtedness incurred in connection with any acquisition since the first day of
the four-quarter period, the related acquisition had occurred as of the first
day of the period with the appropriate adjustments with respect to the
acquisition being included in the pro forma calculation, and (iv) in the case of
any acquisition or disposition by the Issuer or any Subsidiary of any asset or
group of assets since the first day of such four-quarter period, including,
without limitation, by merger, stock purchase or sale, or asset purchase or
sale, such acquisition or disposition or any related repayment of Indebtedness
had occurred as of the first day of such period with appropriate adjustments
with respect to the acquisition or disposition being included in such pro forma
calculation.
SECTION 1009. [Intentionally Omitted]
SECTION 1010. Provision of Financial Information.
----------------------------------
Whether or not the Issuer is required to be subject to Section 13(a)
or 15(d) of the Exchange Act or any successor provision thereto, the Issuer
shall file with the Commission the annual reports, quarterly reports and other
documents which the Issuer would have been required to file with the Commission
pursuant to such Section 13(a) or 15(d) or any successor provision thereto if
the Issuer were so required, such documents to be filed with the Commission on
or prior to the respective dates (the "Required Filing Dates") by which the
Issuer would have been required so to file such documents if the Issuer were so
required. The Issuer and the Guarantors will, for so long as any of the
Original Securities are outstanding, furnish to Holders of the Original
Securities and to security analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4) of
the Securities Act.
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The Issuer shall also in any event (a) within 15 days of each Required
Filing Date file with the Trustee copies of the annual reports, quarterly
reports and other documents which the Issuer files or would have been required
to file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange
Act or any successor provisions thereto if the Issuer were required to be
subject to such Sections and (b) if filing such documents by the Issuer with the
Commission is not permitted under the Exchange Act, promptly upon written
request supply copies of such documents to any Holder or prospective Holder.
SECTION 1011. Statement by Officers as to Default; Compliance Certificates.
------------------------------------------------------------
(a) The Issuer will deliver to the Trustee, within 90 days after the
end of each fiscal year, and within 60 days after the end of each fiscal quarter
(other than the fourth fiscal quarter), of the Issuer ending after the date
hereof an Officers' Certificate, stating whether or not to the best knowledge of
the signers thereof the Issuer is in default in the performance and observance
of any of the terms, provisions and conditions of Section 801 or Sections 1004
to 1010, inclusive, and if the Issuer shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
(b) The Issuer shall deliver to the Trustee, as soon as possible and
in any event within 10 days after the Issuer becomes aware or should reasonably
become aware of the occurrence of an Event of Default or an event which, with
notice or the lapse of time or both, would constitute an Event of Default, an
Officers' Certificate setting forth the details of such Event of Default or
default, and the action which the Issuer proposes to take with respect thereto.
SECTION 1012. Waiver of Certain Covenants.
---------------------------
The Issuer may omit in any particular instance to comply with any
covenant or condition set forth in Section 801 and Sections 1004 to 1010, if
before the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities shall, by Act
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of such Holders, either waive such compliance in such instance or generally
waive compliance with such covenant or condition, but no such waiver shall
extend to or affect such covenant or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of the
Issuer and the duties of the Trustee in respect of any such covenant or
condition shall remain in full force and effect.
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption.
-------------------
The Securities may be redeemed at the election of the Issuer, as a
whole or from time to time in part, at any time at a redemption price equal to
the sum of (i) the principal amount of the Securities being redeemed plus
accrued interest thereon to the Redemption Date and (ii) the Make-Whole Amount,
if any, with respect to such Securities (the "Redemption Price").
SECTION 1102. Applicability of Article.
------------------------
Redemption of Securities at the election of the Issuer, as permitted
by any provision of this Indenture, shall be made in accordance with such
provision and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Issuer to redeem any Securities pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Issuer of less than all the Securities, the
Issuer shall, at least 60 days prior to the Redemption Date fixed by the Issuer
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities to be
redeemed.
SECTION 1104. Selection by Trustee of Securities to Be Redeemed.
-------------------------------------------------
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If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or any integral multiple thereof) of the principal amount of
Securities of a denomination larger than $1,000.
The Trustee shall promptly notify the Issuer and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1105. Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities are
to be redeemed, the identification (and, in the case of
partial redemption, the principal amounts) of the particular
Securities to be redeemed,
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(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date, and
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Issuer shall be given by the Issuer or, at the Issuer's request, by the
Trustee in the name and at the expense of the Issuer.
SECTION 1106. Deposit of Redemption Price.
---------------------------
Prior to any Redemption Date, the Issuer shall deposit with the
Trustee or with a Paying Agent (or, if the Issuer is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 1107. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Issuer shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Issuer at the Redemption Price, together with accrued interest to
the Redemption Date; provided, however, that instalments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Record Dates according to their
terms and the provisions of Section 308.
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If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Security.
SECTION 1108. Securities Redeemed in Part.
---------------------------
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Issuer designated for that purpose pursuant to
Section 1002 (with, if the Issuer or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Issuer and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Issuer and the Guarantors shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Security so surrendered.
ARTICLE TWELVE
Guarantees
SECTION 1201. Guarantees.
----------
The Guarantors, jointly and severally, as primary obligors and not
merely as sureties, hereby irrevocably and unconditionally guarantee to each
Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment when due, whether at Stated Maturity, by acceleration or
otherwise, of all obligations of the Issuer now or hereafter existing under this
Indenture whether for principal of or interest on the Securities (and premium,
if any) and all other monetary obligations of the Issuer under this Indenture
and the Securities in respect of the Securities and (b) the full and punctual
performance within the applicable grace periods of all other obligations of the
Issuer under this Indenture and the Securities (all such obligations guaranteed
hereby by the Guarantors being the "Guaranteed Obligations"). The guarantees of
the Guarantors
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under this Article 12 is herein referred to as this "Guarantees".
The Guarantors agree to pay any and all fees and expenses (including
reasonable attorney's fees and expenses) incurred by the Trustee or the Holders
in enforcing any rights under this Article 12 with respect to the Guarantors.
Without limiting the generality of the foregoing, these Guarantees
guarantee, to the extent provided herein, the payment of all amounts which
constitute part of the Guaranteed Obligations and would be owed by the Issuer
under this Indenture or the Securities but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Issuer.
SECTION 1202. Guarantees Absolute.
-------------------
Each Guaranty is irrevocable, absolute and unconditional. The
Guarantors, jointly and severally, guarantee that the Guaranteed Obligations
will be performed strictly in accordance with the terms of this Indenture,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Trustee or the
Holders with respect thereto. The obligations of the Guarantors under these
Guarantees are independent of the Guaranteed Obligations, and a separate action
or actions may be brought and prosecuted against such Guarantor to enforce these
Guarantees, irrespective of whether any action is brought against the Issuer or
any other guarantor or whether the Issuer or any other guarantor is joined in
any such action or actions. The liability of the Guarantors under these
Guarantees shall be absolute and unconditional irrespective of:
(a) any lack of validity, regularity or enforceability of this
Indenture or the Securities with respect to the Issuer or any agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of any of the Guaranteed Obligations, or any other
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amendment or waiver of or any consent to departure from this Indenture;
(c) the failure to give notice to the Guarantors of the occurrence of
a default under the provisions of this Indenture or the Securities;
(d) any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(e) any failure, omission, delay by or inability on the part of the
Trustee or the Holders to assert or exercise any right, power or remedy
conferred on the Trustee or the Holders in this Indenture or the
Securities;
(f) any change in the corporate or other structure, or termination,
dissolution, consolidation or merger of the Issuer or any Guarantor with or
into any other entity, the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all the
assets of the Issuer or any Guarantor, the marshaling of the assets and
liabilities of the Issuer or any Guarantor, the receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors, or readjustments of, or other or
other similar proceedings affecting the Issuer or any Guarantor, or any of
the assets of any of them;
(g) the election by the Trustee or any of the Holders in any
proceeding under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code") of the application of Section 1111(b)(2) of the
Bankruptcy Code, any borrowing or grant of a security interest by the
Issuer, as debtor-in-possession, under Section 364 of the Bankruptcy Code,
the disallowance, under Section 502 of the Bankruptcy Code, of all or any
portion of the claims of the Trustee or any of the Holders for payment of
any of the Securities, any waiver or consent by the Holder of such Security
or by the Trustee with respect to any provisions thereof or of this
Indenture;
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(h) the assignment of any right, title or interest of the Trustee or
any Holder in this Indenture or the Securities to any other Person; or
(i) any other event or circumstance (including any statute of
limitations), whether foreseen or unforeseen and whether similar or
dissimilar to any of the foregoing, that might otherwise constitute a
defense available to, or a discharge of, the Issuer or any Guarantor, other
than performance in full of the Guaranteed Obligations for the payment of
money; it being the intent of any Guarantor that its obligations hereunder
shall not be discharged except by payment of all amounts owing pursuant to
this Indenture or the Securities.
These Guarantees shall continue to be effective or be reinstated, as
the case may be, if at any time any payment or performance with respect to any
of the Guaranteed Obligations is rescinded or must otherwise be returned by the
Trustee, any Holder or any other Person upon the insolvency, bankruptcy or
reorganization of the Issuer or otherwise, all as though such payment or
performance had not been made or occurred. The obligations of the Guarantors
under these Guarantees shall not be subject to reduction, termination or other
impairment by any set-off, recoupment, counterclaim or defense or for any other
reason.
SECTION 1203. Waivers.
-------
Each Guarantor hereby irrevocably waives, to the extent permitted by
applicable law:
(a) promptness, demand for payment, diligence, presentment, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and its Guaranty;
(b) any requirement that the Trustee, any Holder or any other Person
protect, secure, perfect or insure any Encumbrance or any property subject
thereto or exhaust any right or take any action against the Issuer or any
other Person, or obtain any relief pursuant to this Indenture or pursue any
other available remedy;
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(c) all right to trial by jury in any action, proceeding or
counterclaim arising out of or relating to this Indenture or the
Securities;
(d) filing of claims with a court in the event of insolvency or
bankruptcy of the Issuer, any right to require a proceeding first against
the Issuer, protest or notice with respect to such Security or the
Indebtedness evidenced thereby and all demands whatsoever;
(e) any defense arising by reason of any claim or defense based upon
an election of remedies by the Trustee or any Holder which in any manner
impairs, reduces, releases or otherwise adversely affects its subrogation,
contribution or reimbursement rights or other rights to proceed against the
Issuer or any other Person; and
(f) any duty on the part of the Trustee or any Holder to disclose to
such Guarantor any matter, fact or thing relating to the business,
operation or condition of the Issuer and its assets now known or hereafter
known by the Trustee or such Holder.
SECTION 1204. Waiver of Subrogation and Contribution.
--------------------------------------
Until this Indenture has been discharged, each Guarantor hereby
irrevocably waives any claim or other right which it may now or hereafter
acquire against the Issuer or any guarantor that arise from the existence,
payment, performance or enforcement of such Guarantor's obligations under its
Guaranty, including any right of subrogation, reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or remedy
of the Trustee or any Holder against the Issuer or any guarantor which the
Trustee or any Holder now has or hereafter acquires, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including the right to take or receive from the Issuer, directly or indirectly,
in cash or other property or by setoff or in any other manner, payment or
security on account of such claim or other rights. If any amount shall be paid
to a Guarantor in violation of the preceding sentence and the Guaranteed
Obligations shall not have been paid in full, such amount shall be deemed to
have been paid
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to such Guarantor for the benefit of, and held in trust for the benefit of, the
Trustee, and the Holders, and shall forthwith be paid to the Trustee for the
benefit of the Holders to be credited and applied to the Guaranteed Obligations,
whether matured or unmatured, in accordance with the terms of this Indenture.
Each Guarantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated by this Indenture and that the
waivers set forth in this Section 1204 are knowingly made in contemplation of
such benefits.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between itself, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 5 hereof for the
purposes of its Guaranty, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 5 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by such Guarantor
for the purpose of its Guaranty.
SECTION 1205. Certain Agreements.
------------------
Each Guarantor covenants and agrees that, as a condition to the
acceptability of its Guaranty to the Trustee and the Holders, it will:
(a) comply in all material respects with all applicable laws, rules,
regulations and orders, such compliance to include paying when due all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent contested in good faith; and
(b) preserve and maintain its existence, rights (contractual and
statutory) and franchises; provided, however, that such Guarantor shall not
be required to
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preserve any right or franchise if the board of directors or general
partner of such Guarantor shall determine that the preservation thereof is
no longer desirable in the conduct of the business of such Guarantor and
the loss thereof is not disadvantageous in any material respect to the
Guarantor or such Holders.
(c) not consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person) another Person whether or not affiliated
with such Guarantor unless:
(i) the Person formed by or surviving any such consolidation or
merger is organized under the laws of the United States of America or
any state thereof or the District of Columbia and, unless such
successor entity is the Issuer or a Guarantor, unconditionally assumes
all the obligations of such Guarantor pursuant to a supplemental
indenture in form and substance satisfactory to the Trustee, under the
Securities, the Indenture and its Guaranty on the terms set forth
herein or therein; and
(ii) immediately after giving effect to such transaction, no
default or Event of Default exists.
Any such consolidation, merger, sale, lease or conveyance is subject
to the condition that the Trustee receive an Officers' Certificate of such
Guarantor and an Opinion of Counsel to the effect that the merger, sale, lease
or conveyance, and the assumption by any successor entity, complies with the
provisions of this Article and that all conditions precedent herein provided for
relating to such transactions have been complied with.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Guaranty endorsed upon the Securities and the due and punctual performance of
all of the covenants and conditions of this Indenture to be performed by such
Guarantor, such successor Person shall succeed to and be substituted for
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such Guarantor with the same effect as if it had been named herein as a
Guarantor. Such Guarantor's Guaranty shall in all respects have the same legal
rank and benefit under this Indenture theretofore and thereafter issued in
accordance with the terms of this Indenture as though such Guaranty had been
issued at the date of the execution hereof.
SECTION 1206. Execution and Delivery of Guarantees.
------------------------------------
The Guarantees to be endorsed on the Securities shall include the
terms of the Guarantees set forth in this Article 12 and any other terms that
may be set forth in the form established pursuant to Section 205. The
Guarantors hereby agree to execute their respective Guarantee, in a form
established pursuant to Section 205, to be endorsed on each Security
authenticated and delivered by the Trustee.
The Guarantees shall be executed on behalf of each Guarantor by its
Chairman of the Board, its President or one of its Vice Presidents. The
signature of any or all of these persons on a Guarantee may be manual or
facsimile.
A Guarantee bearing the manual or facsimile signature of individuals
who were at any time the proper officers of a Guarantor shall bind such
Guarantor, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of the Security on
which such Guarantee is endorsed or did not hold such offices at the date of
such Guarantee.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee endorsed
thereon on behalf of the respective Guarantor. The Guarantors hereby agree that
their respective Guarantee set forth in Section 1201 shall remain in full force
and effect notwithstanding any failure to endorse a Guarantee on any Security.
SECTION 1207. No Waiver; Cumulative Remedies.
------------------------------
No failure on the part of the Trustee or any Holder to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude
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any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law. The Trustee and the Holders shall have all of the rights and
remedies granted in this Indenture and available at law or in equity, and these
same rights and remedies may be pursued separately, successively or concurrently
against the Issuer or the Guarantors.
SECTION 1208. Continuing Guarantees.
---------------------
Each Guaranty is a continuing guaranty and, except as otherwise
provided herein, shall (a) remain in full force and effect until the
satisfaction of the Guaranteed Obligations, (b) be binding upon the respective
Guarantor and (c) enure to the benefit of and be enforceable by the Trustee, the
Holders and their successors, transferees and assigns.
SECTION 1209. Severability.
------------
Any provisions of this Article 12 which is prohibited, unenforceable
or not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or non-
authorization, without invalidating the remaining provisions hereof or affecting
the validity, enforceability or legality of such provision in any other
jurisdiction.
SECTION 1210. Limitation on Guarantor Liability.
---------------------------------
Each Guarantor, and by its acceptance hereof, each Holder, hereby
confirms that it is the intention of all such parties that the Guaranty by such
Guarantor pursuant to its Guaranty not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law.
To effectuate the foregoing intention, the Holders and the Guarantors hereby
irrevocably agree that the obligations of such Guarantor under this Article 12
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws and after giving effect to any collections from or
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payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 12, if any, result in the
obligations of the Guarantor under such Guaranty not constituting a fraudulent
transfer or conveyance.
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
SECTION 1301. Issuer's Option to Effect Defeasance or Covenant Defeasance.
-----------------------------------------------------------
The Issuer may at its option by Board Resolution, at any time, elect
to have either Section 1302 or Section 1303 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this Article
Thirteen.
SECTION 1302. Defeasance and Discharge.
------------------------
Upon the Issuer's exercise of the option provided in Section 1301
applicable to this Section, the Issuer shall be deemed to have been discharged
from its obligations with respect to the Outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Issuer shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities and
to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Issuer, shall execute proper instruments acknowledging the same),
except for the following which shall survive until otherwise terminated or
discharged hereunder: (A) the rights of Holders of such Securities to receive,
solely from the trust fund described in Section 1304 and as more fully set forth
in such Section, payments in respect of the principal of (and premium, if any)
and interest on such Securities when such payments are due, (B) the Issuer's
obligations with respect to such Securities under Sections 304, 305, 306, 307,
1002 and 1003, (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (D) this Article Thirteen. Subject to compliance with this
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Article Thirteen, the Issuer may exercise its option under this Section
1302 notwithstanding the prior exercise of its option under Section 1303.
SECTION 1303. Covenant Defeasance.
-------------------
Upon the Issuer's exercise of the option provided in Section 1301
applicable to this Section, (i) the Issuer shall be released from its
obligations under Sections 1005 through 1010, inclusive, and Section 801, and
(ii) the occurrence of an event specified in Sections 501(3) (with respect to
Clauses (1), (3), (4) or (5) of Section 801), 501(4) (with respect to any of
Sections 1005 through 1010, inclusive), 501(5) and 501(6) shall not be deemed to
be an Event of Default on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant
defeasance means that the Issuer may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section or Clause, whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or Clause, or by reason of any reference in
any such Section or Clause to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.
SECTION 1304. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of either Section
1302 or Section 1303 to the then Outstanding Securities:
(1) The Issuer shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 609 who shall agree to comply with the provisions of this
Article Thirteen applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (A)
money in an amount, or (B) U.S. Government Obligations
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which through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount, or (C) a
combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall be
applied by the Trustee (or other qualifying trustee) to pay and discharge,
the principal of (, premium, if any,) and each instalment of interest on
the Securities on the Stated Maturity of such principal or instalment of
interest in accordance with the terms of this Indenture and of such
Securities. For this purpose, "U.S. Government Obligations" means
securities that are (x) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged or (y)
obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended) as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for
the account of the holder of such depository receipt, provided that (except
as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest
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on the U.S. Government Obligation evidenced by such depository receipt.
(2) In the case of an election under Section 1302, the Issuer shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the
Issuer has received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the date of this Indenture there has
been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the
Holders of the Outstanding Securities will not recognize gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred.
(3) In the case of an election under Section 1303, the Issuer shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities will not recognize gain or loss for
Federal income tax purposes as a result of such deposit and covenant
defeasance and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit and covenant defeasance had not occurred.
(4) The Issuer shall have delivered to the Trustee an Officer's
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit.
(5) Such defeasance or covenant defeasance shall not cause the Trustee
to have a conflicting interest as defined in Section 608 and for purposes
of the Trust Indenture
-107-
<PAGE>
Act with respect to any securities of the Issuer.
(6) No Event of Default or event which with notice or lapse
of time or both would become an Event of Default shall have
occurred and be continuing on the date of such deposit or,
insofar as subsections 501(7) and (8) are concerned, at any time
during the period ending on the 121st day after the date of such
deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(7) Such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, any
other agreement or instrument to which the Issuer is a party or
by which it is bound.
(8) The Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent provided for relating to either the
defeasance under Section 1302 or the covenant defeasance under
Section 1303 (as the case may be) have been complied with.
(9) Such defeasance or covenant defeasance shall not result
in the trust arising from such deposit constituting an investment
company as defined in the Investment Company Act of 1940, as
amended, or such trust shall be qualified under such act or
exempt from regulation thereunder.
SECTION 1305. Deposited Money and U.S. Government Obligations to be Held in
-------------------------------------------------------------
Trust; Other Miscellaneous Provisions.
-------------------------------------
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee--collectively, for
purposes of
-108-
<PAGE>
this Section 1305, the "Trustee") pursuant to Section 1304 in respect of the
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Issuer acting as its own
Paying Agent) as the Trustee may determine, to the Holders of such Securities,
of all sums due and to become due thereon in respect of principal (and premium,
if any) and interest, but such money need not be segregated from other funds
except to the extent required by law.
The Issuer shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
Anything in this Article Thirteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon Issuer Request
any money or U.S. Government Obligations held by it as provided in Section
1304 which, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent defeasance or covenant defeasance.
SECTION 1306. Reinstatement.
-------------
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 1302 or 1303 by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Issuer's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Thirteen until such time as the Trustee or Paying Agent
is permitted to apply all such money in accordance with Section 1302 or 1303;
provided, however, that if the Issuer makes any payment of principal of (and
premium, if any) or interest on any Security following the reinstatement of its
-109-
<PAGE>
obligations, the Issuer shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money held by the Trustee or the
Paying Agent.
____________________
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
-110-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
REGENCY CENTERS, L.P.
By: Regency Realty Corporation,
its general partner
By /s/ Bruce M. Johnson
--------------------------------
Name: Bruce M. Johnson
Title: Executive Vice President
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
REGENCY REALTY CORPORATION
By /s/ Bruce M. Johnson
--------------------------------
Name: Bruce M. Johnson
Title: Executive Vice President
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
-111-
<PAGE>
REGENCY OFFICE PARTNERSHIP, L.P.
By: Regency Centers, L.P.,
its general partner
By: Regency Realty Corporation,
its general partner
By /s/ Bruce M. Johnson
--------------------------------
Name: Bruce M. Johnson
Title: Executive Vice President
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
HYDE PARK PARTNERS, L.P.
By: Regency Retail Centers of Ohio,
Inc.,
its general partner
By /s/ Bruce M. Johnson
--------------------------------
Name: Bruce M. Johnson
Title: Executive Vice President
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
REGENCY RETAIL CENTERS
OF OHIO, INC.
By /s/ Bruce M. Johnson
--------------------------------
Name: Bruce M. Johnson
Title: Executive Vice President
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
-112-
<PAGE>
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
Title:
RRC OPERATING PARTNERSHIP OF
GEORGIA, L.P.,
By: Regency Centers, L.P.,
its general partner
By: Regency Realty Corporation,
its general partner
By /s/ Bruce M. Johnson
--------------------------------
Name: Bruce M. Johnson
Title: Executive Vice President
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
RRC FL FIVE, INC.
By /s/ Bruce M. Johnson
--------------------------------
Name: Bruce M. Johnson
Title: Executive Vice President
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
RRC FL SEVEN, INC.
By /s/ Bruce M. Johnson
--------------------------------
Name: Bruce M. Johnson
Title: Executive Vice President
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
-113-
<PAGE>
RRC ACQUISITIONS, INC.
By /s/ Bruce M. Johnson
--------------------------------
Name: Bruce M. Johnson
Title: Executive Vice President
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
RRC ACQUISITIONS TWO, INC.
By /s/ Bruce M. Johnson
--------------------------------
Name: Bruce M. Johnson
Title: Executive Vice President
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
FIRST UNION NATIONAL BANK
By /s/ R. Caraway
---------------------------
Name: Rhonda Caraway
Title: Trust Officer
Attest:
/s/ J. Christian Leavitt
- -----------------------------
Name: J. Christian Leavitt
Title: Secretary
-114-
<PAGE>
(For transfers pursuant to (S) 306(b)(i) of the Indenture)
First Union National Bank
225 Water Street, Third Floor
Jacksonville, Florida 32202
Re: 7 1/8% Notes due July 15, 2005
of Regency Centers, L.P.
(the "Securities")
-------------------------
Reference is made to the Indenture, dated as of July 20, 1998 (the
"Indenture"), from Regency Centers, L.P. (the "Issuer") and the Guarantors named
on the signature pages thereof to First Union National Bank, as Trustee. Terms
used herein and defined in the Indenture or in Regulation S or Rule 144 under
the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so
defined.
This certificate relates to U.S. $_______________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No. _____________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
The Specified Securities are represented by a Global Security and are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Regulation S Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 904 or Rule 144
A-1
<PAGE>
under the Securities Act and with all applicable securities laws of the states
of the United States and other jurisdictions. Accordingly, the Owner hereby
further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
-------------------
accordance with Rule 904:
(A) the Owner is not a distributor of the Securities, an
affiliate of the Issuer or any such distributor or a person acting on
behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to a
person in the United States;
(C) either:
(i) at the time the buy order was originated, the
Transferee was outside the United States or the Owner and
any person acting on its behalf reasonably believed that the
Transferee was outside the United States, or
(ii) the transaction is being executed in, on or
through the facilities of the Eurobond market, as regulated by
the Association of International Bond Dealers, or another
designated offshore securities market and neither the Owner nor
any person acting on its behalf knows that the transaction has
been prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United
States by or on behalf of the Owner or any affiliate thereof;
(E) if the Owner is a dealer in securities or has received a
selling concession, fee or other renumeration in respect of the
Specified Securities, and the transfer is to occur during the
Distribution Compliance Period, then the requirements of Rule
904(c)(1) have been satisfied; and
(F) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected
------------------
pursuant to Rule 144:
A-2
<PAGE>
(A) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule 144)
has elapsed since the Specified Securities were last acquired from the
Issuer or from an affiliate of the Issuer, whichever is later, and is
being effected in accordance with the applicable amount, manner of
sale and notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at
least two years has elapsed since the Specified Securities were last
acquired from the Issuer or from an affiliate of the Issuer, whichever
is later, and the Owner is not, and during the preceding three months
has not been, an affiliate of the Issuer.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchasers.
Dated: __________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:_______________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
ANNEX B -- Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to (S) 306(b)(ii) of the Indenture)
First Union National Bank
A-3
<PAGE>
225 Water Street, Third Floor
Jacksonville, Florida 32202
Re: 7 1/8% Notes due July 15, 2005
of Regency Centers, L.P.
(the "Securities")
-------------------------
Reference is made to the Indenture, dated as of July 20, 1998 (the
"Indenture"), from Regency Centers, L.P. (the "Issuer") and the Guarantors named
on the signature pages thereof to First Union National Bank, as Trustee. Terms
used herein and defined in the Indenture or in Rule 144A or Rule 144 under the
U.S. Securities Act of 1933 (the "Securities Act") are used herein as so
defined.
This certificate relates to U.S.$_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No. ____________
ISIN No. _____________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
The Specified Securities are represented by a Global Security and are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred
to a person (the "Transferee") who will take delivery in the form of a
Restricted Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an
effective registration statement under the Securities Act, it is being effected
in accordance with Rule 144A or Rule 144 under the Securities Act and all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as:
1. Rule 144A Transfers. If the transfer is being effected in
-------------------
accordance with Rule 144A:
(A) the Specified Securities are being transferred to a person
that the Owner and any
B-2
<PAGE>
person acting on its behalf reasonably believe is a "qualified
institutional buyer" within the meaning of Rule 144A, acquiring for
its own account or for the account of a qualified institutional
buyer; and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the Owner
may be relying on Rule 144A in connection with the transfer; and
2. Rule 144 Transfers. If the transfer is being effected
------------------
pursuant to Rule 144:
(A) the transfer is occurring after a holding period of at least
one year (computed in accordance with paragraph (d) of Rule 144) has
elapsed since the Specified Securities were last acquired from the
Issuer or from an affiliate of the Issuer, whichever is later, and is
being effected in accordance with the applicable amount, manner of
sale and notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at least
two years has elapsed since the Specified Securities were last
acquired from the Issuer or from an affiliate of the Issuer, whichever
is later, and the Owner is not, and during the preceding three months
has not been, an affiliate of the Issuer.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchasers.
Dated: _________________________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:__________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
B-3
<PAGE>
ANNEX C -- Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to (S) 306(c))
First Union National Bank
225 Water Street, Third Floor
Jacksonville, Florida 32202
Re: 7 1/8% Notes due July 15, 2005
of Regency Centers, L.P.
(the "Securities")
-------------------------
Reference is made to the Indenture, dated as of July 20, 1998 (the
"Indenture"), from Regency Centers, L.P. (the "Issuer") and the Guarantors named
on the signature pages thereof to First Union National Bank, as Trustee. Terms
used herein and defined in the Indenture or in Rule 144A or Rule 144 under the
U.S. Securities Act of 1933 (the "Securities Act") are used herein as so
defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Securities Act Legend pursuant to Section 306(c) of the
Indenture. In connection with such exchange, the Owner hereby certifies
C-1
<PAGE>
that the exchange is occurring after a holding period of at least two years
(computed in accordance with paragraph (d) of Rule 144) has elapsed since the
Specified Securities were last acquired from the Issuer or from an affiliate of
the Issuer, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Issuer. The Owner also
acknowledges that any future transfers of the Specified Securities must comply
with all applicable securities laws of the states of the United States and other
jurisdictions.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer and the Initial Purchasers.
Dated: __________________________________________________
(Print the name
of the Undersigned, as such term is defined in the
second paragraph of this certificate.)
By:_______________________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf
of the Undersigned must be stated.)
C-2
<PAGE>
ANNEX D -- Form of Certification to be Given by
Holders of Beneficial Interest in a Regulation S
Temporary Global Security
OWNER SECURITIES CERTIFICATION
REGENCY CENTERS, L.P.
7 1/8% Notes due July 15, 2005
This is to certify that, as of the date hereof, $________ of the
above-captioned Securities are beneficially owned by non-U.S. person(s). As used
in this paragraph, the term "U.S. person" has the meaning given to it by
Regulation S under the Securities Act of 1933, as amended.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the Securities
held by you for our account in accordance with your operating procedures if any
applicable statement herein is not correct on such date, and in the absence of
any such notification it may be assumed that this certification applies as of
such date.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceedings.
Dated:______________, ____
By:____________________________________________
As, or as agent for, the beneficial owner(s)
of the Securities to which this certificate
relates.
D-1
<PAGE>
ANNEX E -- Form of Certification to be Given by
the Euroclear Operator or Cedel S.A.
DEPOSITARY SECURITIES CERTIFICATION
REGENCY CENTERS, L.P.
7 1/8% Notes due July 15, 2005
This is to certify that, with respect to U.S.$___________ principal
amount of the above-captioned Securities, except as set forth below, we have
received in writing, by tested telex or by electronic transmission, from member
organizations appearing in our records as persons being entitled to a portion of
the principal amount of Securities set forth above (our "Member Organizations"),
certifications with respect to such portion, substantially to the effect set
forth in the Indenture.
We further certify (i) that we are not making available herewith for
exchange (or, if relevant, exercise of any rights or collection of any interest)
any portion of the Regulation S Temporary Global Security (as defined in the
Indenture) excepted in such certifications and (ii) that as of the date hereof
we have not received any notification from any of our Member Organizations to
the effect that the statements made by such Member Organizations with respect to
any portion of the part submitted herewith for exchange (or, if relevant,
exercise of any rights or collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with
E-1
<PAGE>
which this certification is or would be relevant, we irrevocably authorize you
to produce this certification to any interested party in such proceedings.
Dated: _____________, _______
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Brussels office,
as operator of the Euroclear System]
or
[CEDEL S.A.]
By____________________________
E-2
<PAGE>
EXHIBIT 10.3
[Execution Copy]
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, dated as of July 15, 1998 by
and between Regency Centers, L.P., a Delaware limited partnership (the
"Partnership"), Regency Realty Corporation, a Florida corporation ("Regency"),
the other Guarantors listed on the signature pages hereof (collectively with
Regency, the "Guarantors"), and Goldman, Sachs & Co., Morgan Stanley & Co.
Incorporated and PaineWebber Incorporated (collectively, the "Purchasers"),
relating to the 7 1/8% Notes due July 15, 2005 of the Partnership guaranteed by
the Guarantors.
1. Certain Definitions.
For purposes of this Exchange and Registration Rights Agreement (this
"Agreement"), the following terms shall have the following respective meanings:
(a) "Additional Interest" shall have the meaning assigned thereto in
Section 2(c) hereof.
(b) "Closing Date" shall mean the date on which the Securities are
initially issued.
(c) "Commission" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.
(d) "Effective Time", in the case of (i) an Exchange Offer, shall
mean the date on which the Commission declares the Exchange Offer registration
statement effective or on which such registration statement otherwise becomes
effective and (ii) a Resale Registration, shall mean the date on which the
Commission declares the Resale Registration effective or on which the Resale
Registration otherwise becomes effective.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, or
any successor thereto, as the same shall be amended from time to time.
(f) "Exchange Offer" shall have the meaning assigned thereto in
Section 2(a).
(g) "Exchange Securities" shall have the meaning assigned thereto in
Section 2(a).
<PAGE>
[EXECUTION COPY]
(h) "Final Memorandum" shall mean the final offering circular
prepared by the Partnership and the Guarantors in connection with the sale of
the Securities, dated July 15, 1998, including any and all exhibits thereto.
(i) The term "holder" shall mean each of the Purchasers for so long
as it owns any Registrable Securities, and such of its respective successors and
assigns who acquire Registrable Securities, directly or indirectly, from such
person or from any successor or assign of such person, in each case for so long
as such person owns any Registrable Securities.
(j) "Indenture" shall mean the Indenture, dated as of July 20, 1998,
among the Partnership, the Guarantors and First Union National Bank, as Trustee.
(k) The term "person" shall mean a corporation, limited liability
company, association, partnership, organization, business, individual,
government or political subdivision thereof or governmental agency.
(l) "Purchase Agreement" shall mean the Purchase Agreement, dated as
of July 15, 1998, among the Partnership, Regency and the Purchasers.
(m) "Registrable Securities" shall mean the Securities; provided,
however, that such Securities shall cease to be Registrable Securities when (i)
except if on or prior to the consummation of the Exchange Offer existing
Commission interpretations are changed such that the Exchange Securities
received by holders in the Exchange Offer for Registrable Securities are not or
would not be, upon receipt, transferable by each such holder (other than a
Restricted Holder) without restriction under the Securities Act in the
circumstances contemplated by Section 2(a), the Exchange Offer is conducted as
contemplated in Section 2(a); provided, however, that any such Securities that,
pursuant to the last two sentences of Section 2(a), are included in a prospectus
for use in connection with resales by broker-dealers shall be deemed to be
Registrable Securities with respect to Sections 3, 4 and 6 until resale of such
Exchange Securities has been effected within the 180-day period referred to in
Section 2(a); (ii) in the circumstances contemplated by Section 2(b), a
registration statement registering such Securities under the Securities Act has
been declared or becomes effective and such Securities have been sold or
otherwise transferred by the holder thereof pursuant to such effective
registration statement; (iii) such Securities are sold pursuant to Rule 144 (or
any successor provision) promulgated under the Securities Act under
circumstances in which any legend borne by such Securities relating to
restrictions on transferability thereof, under the Securities Act or otherwise,
is removed by the Partnership or pursuant to the Indenture or such Securities
are eligible to be sold pursuant to paragraph (k) of Rule 144; or (iv) such
Securities shall cease to be outstanding.
(n) "Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
<PAGE>
(o) "Registration Expenses" shall have the meaning assigned thereto
in Section 4 hereof.
(p) "Resale Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.
(q) "Restricted Holder" shall mean (i) a holder that is an affiliate
of the Partnership or the Guarantors within the meaning of Rule 405 under the
Securities Act, (ii) a holder who acquires Exchange Securities outside the
ordinary course of such holder's business or (iii) a holder who has arrangements
or understandings with any person to participate in the Exchange Offer for the
purpose of distributing Exchange Securities.
(r) "Securities" shall mean, collectively, the 7 1/8% Notes due July
15, 2005, of the Partnership to be issued and sold to the Purchasers accompanied
by the guarantees thereof issued by the Guarantors, and securities issued in
exchange therefor or in lieu thereof pursuant to the Indenture.
(s) "Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
(t) "Trust Indenture Act" shall mean the Trust Indenture Act of 1939,
or any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Agreement, and the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision. Unless the context otherwise requires, any
reference to a statute, rule or regulation refers to the same (including any
successor statute, rule or regulation thereto) as it may be amended from time to
time.
2. Registration Under the Securities Act.
-3-
<PAGE>
(a) Except as set forth in Section 2(b) below, the Partnership and
the Guarantors agree to use their reasonable best efforts to file under the
Securities Act no later than 60 days after the Closing Date, a registration
statement relating to an offer to exchange (the "Exchange Offer") the Securities
for a like aggregate principal amount of debt securities of the Partnership and
the Guarantors which are substantially identical to the Securities (and which
are entitled to the benefits of a trust indenture which is substantially
identical to the Indenture or is the Indenture and which has been qualified
under the Trust Indenture Act) except that they have been registered pursuant to
an effective registration statement under the Securities Act (such new debt
securities hereinafter called "Exchange Securities") for any or all of the
Registrable Securities. The Partnership and the Guarantors agree to use their
reasonable best efforts to cause such registration statement to become effective
under the Securities Act as soon as practicable after the filing thereof. The
Exchange Offer will be registered under the Securities Act on the appropriate
form and will comply with all applicable tender offer rules and regulations
under the Exchange Act. The Partnership and the Guarantors further agree to
commence and complete the Exchange Offer promptly after such registration
statement has become effective, hold the Exchange Offer open for at least 30
days and exchange Exchange Securities for all Registrable Securities that have
been tendered and not withdrawn on or prior to the expiration of the Exchange
Offer. The Exchange Offer will be deemed to have been completed only if the
Exchange Securities received by holders other than Restricted Holders in the
Exchange Offer for Registrable Securities are, upon receipt, transferable by
each such holder without restriction under the Securities Act and the Exchange
Act and without material restrictions under the blue sky or securities laws of a
substantial majority of the States of the United States of America. The Exchange
Offer shall be deemed to have been completed upon the earlier to occur of (i)
the Partnership and the Guarantors having exchanged the Exchange Securities for
all outstanding Registrable Securities pursuant to the Exchange Offer and (ii)
the Partnership and the Guarantors having exchanged, pursuant to the Exchange
Offer, Exchange Securities for all Registrable Securities that have been
tendered and not withdrawn before the expiration of the Exchange Offer, which
shall be on a date that is at least 30 days following the commencement of the
Exchange Offer. The Partnership and the Guarantors agree (i) to include in the
registration statement a prospectus for use in connection with any resales by
any holder of Exchange Securities that is a broker-dealer and (ii) to keep such
registration statement effective for a period ending on the earlier of the 180th
day after the Exchange Offer has been completed or such time as such broker-
dealers no longer own any Registrable Securities. With respect to such
registration statement the Partnership, Regency and any such holder shall have
the benefit of, and shall each provide to the other, the rights of
indemnification and contribution set forth in Section 6 hereof.
(b) If (i) prior to the consummation of the Exchange Offer existing
Commission interpretations are changed such that the Exchange Securities
received by holders other than Restricted Holders in the Exchange Offer for
Registrable Securities are not or would not be, upon receipt, transferable by
each such holder without restriction under
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the Securities Act, (ii) the Exchange Offer has not been consummated within 180
days following the Closing Date, or (iii) a holder of Registrable Securities so
requests within 60 days after the consummation of the Exchange Offer with
respect to Exchange Notes held by it following consummation of the Exchange
Offer that may not be sold without restriction under federal or state securities
laws, in lieu of conducting the Exchange Offer contemplated by Section 2(a), the
Partnership and the Guarantors shall file under the Securities Act a "shelf"
registration statement providing for the registration of, and the sale on a
continuous or delayed basis by the holders of, all of the Registrable
Securities, pursuant to Rule 415 under the Securities Act and/or any similar
rule that may be adopted by the Commission (the "Resale Registration"). The
Partnership and the Guarantors agree to use their reasonable best efforts to
cause the Resale Registration to be filed on or prior to the earliest to occur
of (x) the later of (A) the 30th day after the date on which the Partnership or
the Guarantors determine that existing Commission interpretations are changed as
described in clause (i) above or (B) the 60th day following the Closing Date,
(y) the 30th day after the date on which the Partnership or the Guarantors
receive the request from a holder of Registrable Securities referred to in
clause (iii) above, or (z) the 180th day following the Closing Date if the
Exchange Offer is not consummated by such date (such earliest date being
referred to herein as the "Resale Registration Filing Date") and to cause the
Resale Registration to become or be declared effective no later than the later
of (I) 180 days after the Closing Date or (II) 60 days after the Resale
Registration Filing Date and to keep such Resale Registration continuously
effective for a period ending on the earlier of the second anniversary of the
Closing Date or such time as there are no longer any Registrable Securities
outstanding. The Partnership and the Guarantors further agree to supplement or
make amendments to the Resale Registration, as and when required by the rules,
regulations or instructions applicable to the registration form used by the
Partnership and the Guarantors for such Resale Registration or by the Securities
Act or rules and regulations thereunder for shelf registration, and the
Partnership and the Guarantors agree to furnish to the holders of the
Registrable Securities copies of any such supplement or amendment prior to its
being used and/or filed with the Commission.
(c) In the event that (i) the Partnership and the Guarantors have not
filed the registration statement relating to the Exchange Offer within 60 days
following the Closing Date or, if applicable, the Resale Registration by the
Resale Registration Filing Deadline, or (ii) such registration statement has not
become effective or been declared effective by the Commission within 180 days
following the Closing Date or, if applicable, the Resale Registration has not
been declared effective within 90 days of the Resale Registration Filing
Deadline, or (iii) the Exchange Offer has not been consummated within 30
business days after the initial effective date of the registration statement (if
the Exchange Offer is then required to be made) or (iv) any registration
statement required by Section 2(a) or 2(b) is filed and declared effective but
shall thereafter cease to be effective (except as specifically permitted herein)
without being succeeded immediately by an additional registration statement
filed and declared effective or (v) the Partnership and the Guarantors have not
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consummated the Exchange Offer (or, if applicable, the Resale Registration has
not become effective) within 240 days following the Closing Date (any such event
referred to in clauses (i) through (v), the "Registration Default"), then
interest will accrue (in addition to any stated interest on the Securities) at
the rate of 0.5% per annum on the principal amount of the Securities, determined
daily (calculated on the same basis as interest on the Securities shall be
calculated) for the period from the occurrence of the Registration Default until
such time as no Registration Default is in effect (at which time no such special
interest will accrue). Such additional interest (the "Additional Interest") will
be payable in cash semi-annually in arrears on each January 15 and July 15 in
accordance with the Indenture.
3. Registration Procedures.
If the Partnership and the Guarantors file a registration statement
pursuant to Section 2(a) or Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or the
Resale Registration, as the case may be, the Partnership shall qualify the
Indenture under the Trust Indenture Act.
(b) In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Partnership shall appoint
a new trustee thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Partnership's and the Guarantors'
obligations with respect to the Resale Registration, if applicable, the
Partnership and the Guarantors shall use their reasonable best efforts to effect
or cause the Resale Registration to permit the sale of the Registrable
Securities by the holders thereof in accordance with the intended method or
methods of distribution thereof described in the Resale Registration. In
connection therewith, the Partnership and the Guarantors shall:
(i) prepare and file with the Commission a registration statement
with respect to the Resale Registration on any form which may be utilized
by the Partnership and which shall permit the disposition of the
Registrable Securities in accordance with the intended method or methods
thereof, as specified in writing to the Partnership by the holders of the
Registrable Securities;
(ii) as soon as reasonably possible, prepare and file with the
Commission such amendments and supplements to such registration statement
and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such registration statement for the period
specified in Section 2(b) hereof and as may be required by the applicable
rules and regulations of the Commission and the instructions applicable to
the form of such registration statement;
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<PAGE>
(iii) as soon as reasonably possible, comply with the provisions of
the Securities Act applicable to the Partnership and the Guarantors in
connection with the disposition of all of the Registrable Securities
covered by such registration statement in accordance with the intended
methods of disposition by the holders thereof, set forth in such
registration statement;
(iv) provide (A) the holders of the Registrable Securities to be
included in such registration statement and not more than one counsel for
all the holders of such Registrable Securities, (B) the underwriters (which
term, for purposes of this Agreement, shall include a person deemed to be
an underwriter within the meaning of Section 2(11) of the Securities Act),
if any, thereof, (C) the sales or placement agent, if any, therefor, and
(D) one counsel for such underwriters or agents, if any, reasonable
opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission,
and each amendment or supplement thereto;
(v) for a reasonable period prior to the filing of such registration
statement, and throughout the period specified in Section 2(b), make
available at reasonable times at the Partnership's principal place of
business or such other reasonable place for inspection by the persons
referred to in Section 3(c)(iv) who shall certify to the Partnership that
they have a current intention to sell the Registrable Securities pursuant
to the Resale Registration such financial and other information and books
and records of the Partnership and the Guarantors, and cause the officers,
employees, counsel and independent certified public accountants of the
Partnership and the Guarantors to respond to such inquiries, as shall be
reasonably necessary, in the judgment of the respective counsel referred to
in such Section, to conduct a reasonable investigation within the meaning
of Section 11 of the Securities Act; provided, however, that each such
party shall be required to maintain in confidence and not to disclose to
any other person any information or records reasonably designated by the
Partnership as being confidential, until such time as (A) such information
becomes a matter of public record (whether by virtue of its inclusion in
such registration statement or otherwise, except by disclosure by such
party in breach of this Agreement), or (B) such person shall be required so
to disclose such information pursuant to the subpoena or order of any court
or other governmental agency or body having jurisdiction over the matter
(subject to, and only to the extent required by, the requirements of such
order, and only after such person shall have given the Partnership prompt
prior written notice of such requirement), or (C) such information is
required to be set forth in such registration statement or the prospectus
included therein or in an amendment to such registration statement or an
amendment or supplement to such prospectus in order that such registration
statement, prospectus, amendment or supplement, as the case may be, does
not contain an untrue statement of a material fact or omit to state therein
a material fact required to be stated therein
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<PAGE>
or necessary to make the statements therein not misleading in light of the
circumstances then existing;
(vi) promptly notify the selling holders of Registrable Securities,
the sales or placement agent, if any, therefor and the managing underwriter
or underwriters, if any, thereof and confirm such advice in writing, (A)
when such registration statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been
filed, and, with respect to such registration statement or any post-
effective amendment, when the same has become effective, (B) of any
comments by the Commission and by the blue sky or securities commissioner
or regulator of any state with respect thereto or any request by the
Commission for amendments or supplements to such registration statement or
prospectus or for additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings
for that purpose, (D) if at any time the representations and warranties of
the Partnership or the Guarantors contemplated by Section 3(c)(xv) or
Section 5 cease to be true and correct in all material respects, (E) of the
receipt by the Partnership or the Guarantors of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose, or (F) at any time when a prospectus is
required to be delivered under the Securities Act, that such registration
statement, prospectus, prospectus amendment or supplement or post-effective
amendment, or any document incorporated by reference in any of the
foregoing, contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing;
(vii) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
(viii) if requested in writing by any managing underwriter or
underwriters, any placement or sales agent or counsel for the holders of
Registrable Securities, promptly incorporate in a prospectus supplement or
post-effective amendment such information as is required by the applicable
rules and regulations of the Commission and as such managing underwriter or
underwriters, such agent or such holder specifies should be included
therein relating to the terms of the sale of such Registrable Securities,
including, without limitation, information with respect to the principal
amount of Registrable Securities being sold by any holder or agent or to
any underwriters, the name and description of such holder, agent or
underwriter, the offering price of such Registrable Securities and any
discount, commission or other compensation payable in respect thereof, the
purchase price being paid therefor by
-8-
<PAGE>
such underwriters and with respect to any other terms of the offering of
the Registrable Securities, to be sold by such holder or agent or to such
underwriters; and make all required filings of such prospectus supplement
or post-effective amendment promptly after notification of the matters to
be incorporated in such prospectus supplement or post-effective amendment;
(ix) furnish to each holder of Registrable Securities, each placement
or sales agent, if any, therefor, each underwriter, if any, thereof and the
respective counsel referred to in Section 3(c)(iv) an executed copy of such
registration statement, each such amendment and supplement thereto (in each
case including all exhibits thereto and documents incorporated by reference
therein) and such number of copies of such registration statement
(excluding exhibits thereto and documents incorporated by reference therein
unless specifically so requested by such holder, agent or underwriter, as
the case may be) and of the prospectus included in such registration
statement (including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the Securities Act, and
such other documents, as such holder, agent, if any, and underwriter, if
any, may reasonably request in order to facilitate the offering and
disposition of the Registrable Securities owned by such holder, offered or
sold by such agent or underwritten by such underwriter and to permit such
holder, agent and underwriter to satisfy the prospectus delivery
requirements of the Securities Act; and the Partnership and the Guarantors
hereby consent to the use of such prospectus (including such preliminary
and summary prospectus) and any amendment or supplement thereto by each
such holder and by any such agent and underwriter, in each case in the form
most recently provided to such party by the Partnership, in connection with
the offering and sale of the Registrable Securities covered by the
prospectus (including such preliminary and summary prospectus) or any
supplement or amendment thereto;
(x) use its reasonable best efforts to (A) register or qualify the
Registrable Securities to be included in such registration statement under
such securities laws or blue sky laws of such jurisdictions as any holder
of such Registrable Securities and each placement or sales agent, if any,
therefor and underwriter, if any, thereof shall reasonably request, (B)
keep such registrations or qualifications in effect and comply with such
laws so as to permit the continuance of offers, sales and dealings therein
in such jurisdictions during the period the Resale Registration is required
to remain effective under Section 2(b) above and for such shorter period as
may be necessary to enable any such holder, agent or underwriter to
complete its distribution of Securities pursuant to such registration
statement and (C) take any and all other actions as may be reasonably
necessary or advisable to enable each such holder, agent, if any, and
underwriter, if any, to consummate the disposition in such jurisdictions of
Registrable Securities; provided, however, that the Partnership and the
Guarantors shall not be required for any such purpose to (1) qualify as a
foreign
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<PAGE>
corporation in any jurisdiction wherein they would not otherwise be
required to qualify but for the requirements of this Section 3(c)(x), (2)
consent to general service of process in any such jurisdiction, or (3)
subject themselves to taxation in any jurisdiction where the Partnership
and the Guarantors are not already subject to taxation;
(xi) use their reasonable best efforts to obtain the consent or
approval of each governmental agency or authority, whether federal, state
or local, which may be required to effect the Resale Registration or the
offering or sale in connection therewith or to enable the selling holder or
holders to offer, or to consummate the disposition of, their Registrable
Securities;
(xii) cooperate with the holders of the Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall be printed, lithographed or engraved, or produced
by any combination of such methods, and which shall not bear any
restrictive legends; and, in the case of an underwritten offering, enable
such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters may request at least two business
days prior to any sale of the Registrable Securities;
(xiii) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the Resale Registration;
(xiv) enter into one or more underwriting agreements, engagement
letters, agency agreements or similar agreements, as appropriate, including
(without limitation) provisions relating to indemnification and
contribution substantially the same as those set forth in Section 6 hereof,
and take such other actions in connection therewith as any holders of
Registrable Securities aggregating at least 25% in aggregate principal
amount of the Registrable Securities included in such Resale Registration
shall request in order to expedite or facilitate the disposition of such
Registrable Securities; provided, that the Partnership and the Guarantors
shall not be required to enter into any such agreement more than once with
respect to all of the Registrable Securities and may delay entering into
such agreement until the consummation of any underwritten public offering
which the Partnership or Regency shall have then undertaken;
(xv) whether or not an agreement of the type referred to in Section
(3)(c)(xiv) hereof is entered into and whether or not any portion of the
offering contemplated by such registration statement is an underwritten
offering or is made through a placement or sales agent or any other entity,
(A) make such representations
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and warranties to the holders of such Registrable Securities and the
placement or sales agent, if any, therefor and the underwriters, if any,
thereof substantially the same as those set forth in Section 1 of the
Purchase Agreement and such other representations and warranties as are
customarily made with respect to the offering of debt securities pursuant
to a Resale Registration statement on the applicable form under the Act;
(B) obtain an opinion or opinions of counsel to the Partnership
substantially the same as the opinions provided for in Section 7 of the
Purchase Agreement, addressed to such holder or holders and the placement
or sales agent, if any, therefor and the underwriters, if any, thereof and
dated the effective date of such registration statement (and if such
registration statement contemplates an underwritten offering of a part or
all of the Registrable Securities, dated the date of the closing under the
underwriting agreement relating thereto) (it being agreed that the matters
to be covered by such opinion shall also include, without limitation, the
due incorporation or formation, as the case may be, of Regency and its
subsidiaries (including the Partnership); the qualification of Regency and
its subsidiaries to transact business as foreign corporations, limited
liability companies or limited partnerships, as the case may be; the due
authorization, execution and delivery of the relevant agreement of the type
referred to in Section (3)(c)(xiv) hereof, the due authorization,
execution, authentication and issuance, and the validity and
enforceability, of the Securities; the absence of material legal or
governmental proceedings involving Regency and its subsidiaries (including
the Partnership); the absence of a breach by Regency or any of its
subsidiaries (including the Partnership) of, or a default under, material
agreements binding upon Regency or any subsidiary of Regency (including the
Partnership); the absence of governmental approvals required to be obtained
in connection with the Resale Registration, the offering and sale of the
Registrable Securities, this Agreement or any agreement of the type
referred to in Section (3)(c)(xiv) hereof, except such approvals as may be
required under state securities or blue sky laws; and the compliance as to
form of such registration statement and any documents incorporated by
reference therein and of the Indenture with the requirements of the
Securities Act and the Trust Indenture Act, respectively; and such opinion
shall also state that such counsel has no reason to believe that, as of the
date of the opinion and of the registration statement or most recent post-
effective amendment thereto, as the case may be, such registration
statement and the prospectus included therein, as then amended or
supplemented, and the documents incorporated by reference therein (in each
case other than the financial statements and other financial information
contained therein) contains or contained an untrue statement of a material
fact or omits or omitted to state therein a material fact necessary to make
the statements therein not misleading (in the case of such documents, in
the light of the circumstances existing at the time that such documents
were filed with the Commission under the Exchange Act)); (C) obtain a "cold
comfort" letter or letters from the independent certified public
accountants of the Partnership and Regency addressed to the selling holders
of Registrable Securities,
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the placement or sales agent, if any, therefor and the underwriters, if
any, thereof, dated (i) the effective date of such registration statement
and (ii) the effective date of any prospectus supplement to the prospectus
included in such registration statement or post-effective amendment to such
registration statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of the latest
such statements included in such prospectus (and, if such registration
statement contemplates an underwritten offering pursuant to any prospectus
supplement to the prospectus included in such registration statement or
post-effective amendment to such registration statement which includes
unaudited or audited financial statements as of a date or for a period
subsequent to that of the latest such state ments included in such
prospectus, dated the date of the closing under the underwriting agreement
relating thereto), such letter or letters to be in customary form and
covering such matters of the type customarily covered by letters of such
type; (D) deliver such other documents and certificates, including
officers' certificates, as may be reasonably requested by any holders of at
least 25% in aggregate principal amount of the Registrable Securities
included in such Resale Registration or the placement or sales agent, if
any, therefor and the managing underwriters, if any, thereof to evidence
the accuracy of the representations and warranties made pursuant to clause
(A) above or those contained in Section 5(a) hereof and the compliance with
or satisfaction of any agreements or conditions contained in the
underwriting agreement or other agreement entered into by the Partnership
and the Guarantors; and (E) undertake such obligations relating to expense
reimbursement, indemnification and contribution as are provided in Section
6 hereof;
(xvi) notify in writing each holder of Registrable Securities of any
proposal by the Partnership or the Guarantors to amend or waive any
provision of this Agreement pursuant to Section 9(h) hereof and of any
amendment or waiver effected pursuant thereto, each of which notices shall
contain the text of the amendment or waiver proposed or effected, as the
case may be; and
(xvii) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as
a member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the By-
Laws of the National Association of Securities Dealers, Inc. ("NASD") or
any successor thereto, as amended from time to time) thereof, whether as a
holder of such Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or otherwise, assist
such broker-dealer in complying with the requirements of such Rules and By-
Laws, including, without limitation, by (A) if such Rules or By-Laws,
including Schedule E thereto (or any successor thereto), shall so require,
engaging a "qualified independent underwriter" (as defined in such Schedule
(or any successor
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thereto)) to participate in the preparation of the registration statement
relating to such Registrable Securities, to exercise usual standards of due
diligence in respect thereto and, if any portion of the offering
contemplated by such registration statement is an underwritten offering or
is made through a placement or sales agent, to recommend the yield of such
Registrable Securities, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided
in Section 6 hereof, and (C) providing such information to such broker-
dealer as may be required in order for such broker-dealer to comply with
the requirements of the Rules of Fair Practice of the NASD.
(d) In the event that the Partnership or the Guarantors would be
required, pursuant to Section 3(c)(vi)(F) above, to notify the selling holders
of Registrable Securities, the placement or sales agent, if any, therefor and
the managing underwriters, if any, thereof, the Partnership and the Guarantors
shall without delay prepare and furnish to each such holder, to each placement
or sales agent, if any, and to each underwriter, if any, a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter delivered
to purchasers of Registrable Securities, such prospectus shall not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. Each holder of Registrable Securities
agrees that upon receipt of any notice from the Partnership and the Guarantors
pursuant to Section 3(c)(vi)(F) hereof, such holder shall forthwith discontinue
the disposition of Registrable Securities, pursuant to the registration
statement applicable to such Registrable Securities until such holder shall have
received copies of such amended or supplemented prospectus, and if so directed
by the Partnership and the Guarantors, such holder shall deliver to the
Partnership (at the Partnership's expense) all copies, other than permanent file
copies, then in such holder's possession of the prospectus covering such
Registrable Securities at the time of receipt of such notice.
(e) The Partnership may require each holder of Registrable Securities
as to which any registration is being effected to furnish in writing to the
Partnership such information regarding such holder and such holder's intended
method of distribution of such Registrable Securities as the Partnership may
from time to time reasonably request in writing, but only to the extent that
such information is required in order to comply with the Securities Act, and may
exclude from any such registration the Registrable Securities of any such holder
who fails to furnish such reasonably requested information within 15 days after
such request. Each such holder agrees to notify the Partnership as promptly as
practicable of any inaccuracy or change in information previously furnished by
such holder to the Partnership or of the occurrence of any event in either case
as a result of which any prospectus relating to such registration contains or
would contain an untrue statement of a material fact regarding such holder or
such holder's intended method of distribution of such Registrable Securities or
omits to state any material fact regarding such holder or such holder's intended
method of distribution of such Registrable Securities required to be stated
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therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, and promptly to furnish to the Partnership any
additional information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to such holder or the distribution of such Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. Each such holder shall comply with the
provisions of the Securities Act applicable to such holder with respect to the
disposition by such holder of Registrable Securities covered by such
registration statement in accordance with the intended methods of disposition by
such holder set forth in such registration statement.
(f) Until such time as the Exchange Offer is completed and all
Securities duly tendered for exchange have been exchanged for Exchange
Securities, during two years after the Closing Date, the Partnership and the
Guarantors will not, and will not permit any of their respective "affiliates"
(as defined in Rule 144 under the Act) to, resell any of the Securities which
constitute "restricted securities" under Rule 144 that have been reacquired by
any of them except pursuant to an effective registration statement under the Act
or any exemption therefrom.
(g) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each holder of Registrable Securities
shall furnish, upon the request of the Partnership, prior to the consummation
thereof, a written representation to the Partnership (which shall be contained
in the letter of transmittal contemplated by the Exchange Offer registration
statement) to the effect that (A) it is not an affiliate of Regency or the
Partnership, (B) it is not engaged in, and does not intend to engage in, and has
no arrangement or understanding with any person to participate in, a
distribution of the Exchange Securities in its ordinary course of business.
Each Holder hereby acknowledges and agrees that any Restricted Holder must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction and that such a
secondary resale transaction should be covered by an effective registration
statement containing the selling security holder information required by Item
507 and 508, as applicable, of Regulation S-K if the resales are of Exchange
Securities obtained by such Restricted Holder in exchange for Securities
acquired by such Restricted Holder directly from the Partnership.
4. Registration Expenses.
If the Partnership and the Guarantors file a registration statement
pursuant to Section 2(a) or Section 2(b), the following provisions shall apply:
The Partnership agrees to bear and to pay or cause to be paid all expenses
incident to the Partnership's and the Guarantors' performance of or compliance
with this Agreement,
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including, without limitation, (a) all Commission and any NASD registration and
filing fees and expenses, (b) all fees and expenses in connection with the
qualification of Registrable Securities for offering and sale under the State
securities and blue sky laws referred to in Sec tion 3(c)(x) hereof, including
reasonable fees and disbursements of counsel for the placement or sales agent,
if any, or underwriters, if any, in connection with such qualifications, (c) all
expenses relating to the preparation, printing, distribution and reproduction of
each registration statement required to be filed hereunder, each prospectus
included therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, and the certificates representing the Securities,
(d) messenger and delivery expenses, (e) fees and expenses of the Trustee under
the Indenture and of any escrow agent or custodian, (f) internal expenses
(including, without limitation, all salaries and expenses of the Partnership's
and the Guarantors' officers and employees performing legal or accounting
duties), (g) fees, disbursements and expenses of counsel and independent
certified public accountants of the Partnership and the Guarantor (including the
expenses of any opinions or "cold comfort" letters required by or incident to
such performance and compliance), (h) fees, disbursements and expenses of any
"qualified independent underwriter" engaged pursuant to Section 3(c)(xvii)
hereof, (i) the reasonable fees, disbursements and expenses of one counsel for
the holders of Registrable Securities retained in connection with a Resale
Registration, as selected by the holders of at least a majority in aggregate
principal amount of the Registrable Securities being registered, and fees,
expenses and disbursements of any other persons, including special experts,
retained by the Partnership or the Guarantors in connection with such
registration (collectively, the "Registration Expenses"). To the extent that any
Registration Expenses are incurred, assumed or paid by any holder of Registrable
Securities or any placement or sales agent therefor or underwriter thereof, the
Partnership shall reimburse such person for the full amount of the Registration
Expenses so incurred, assumed or paid promptly after receipt of a written
request therefor. Notwithstanding the foregoing, the holders of the Registrable
Securities being registered shall pay all agency or brokerage fees and
commissions and underwriting discounts and commissions attributable to the sale
of such Registered Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly), other
than the counsel and experts specifically referred to above, transfer taxes on
resale of any of the Securities by such holders and any advertising expenses
incurred by or on behalf of such holders in connection with any offers they may
make.
5. Representations and Warranties.
The Partnership and each Guarantor represent and warrant to, and agrees
with, each Purchaser and each of the holders from time to time of Registrable
Securities that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section 3(c)(ix) hereof and any further
amendments or supplements to any such
-15-
<PAGE>
registration statement or prospectus, when it becomes effective or is filed with
the Commission, as the case may be, and, in the case of an underwritten offering
of Registrable Securities, at the time of the closing under the underwriting
agreement relating thereto, will conform in all material respects to the
requirements of the Securities Act and the Trust Indenture Act and any such
registration statement and any amendment thereto will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
any such prospectus or any amendment or supplement thereto will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing; and at all times subsequent to the
Effective Time of any such registration statement when a prospectus would be
required to be delivered under the Securities Act, other than from (i) such time
as a notice has been given to holders of Registrable Securities pursuant to
Section 3(c)(vi)(F) hereof until (ii) such time as the Company furnishes an
amended or supplemented prospectus pursuant to Section 3(d) hereof, each such
registration statement, and each prospectus (including any summary prospectus)
contained therein or furnished pursuant to Section 3(c)(ix) hereof, as then
amended or supplemented, will conform in all material respects to the
requirements of the Securities Act and the Trust Indenture Act and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Partnership by a holder of Registrable Securities or any
placement or sales agent therefor or underwriter thereof expressly for use
therein.
(b) Any documents incorporated by reference in any prospectus referred
to in Section 5(a) hereof, when they become or became effective or are or were
filed with the Commission, as the case may be, will conform or conformed in all
material respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and none of such documents will contain or contained an untrue
statement of a material fact or will omit or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Partnership by a holder of
Registrable Securities or any placement or sales agent therefor expressly for
use therein.
(c) The compliance by the Partnership and the Guarantors with all of
the provisions of this Agreement and the consummation of the transactions
herein contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which Regency
or any subsidiary of Regency is a party or by which Regency or any subsidiary of
Regency is bound or to which any of the property or assets of
-16-
<PAGE>
Regency or any subsidiary of Regency is subject, nor will such action result in
any violation of the provisions of the certificate of incorporation, as amended,
or the by-laws of Regency or the partnership agreement of the Partnership or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over Regency or any subsidiary of Regency or any of
their properties; and no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or body is
required for the consummation by the Partnership and the Guarantors of the
transactions contemplated by this Agreement, except the registration under the
Securities Act of the Registrable Securities, qualification of the Indenture
under the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under State securities or
blue sky laws in connection with the offering and distribution of the
Registrable Securities.
(d) This Agreement has been duly authorized, executed and delivered
by the Partnership and the Guarantors.
6. Indemnification.
(a) Indemnification by the Partnership and the Guarantors. Upon the
registration of the Registrable Securities pursuant to Section 2 hereof, and in
consideration of the agreements of the Purchasers contained herein, and as an
inducement to the Purchasers to purchase the Securities, the Partnership and the
Guarantors, jointly and severally, shall, and each of them hereby agrees to, (i)
indemnify and hold harmless each of the holders of Registrable Securities to be
included in such registration, and each person who participates as a placement
or sales agent or as an underwriter in any offering or sale of such Registrable
Securities and each holder of Exchange Securities that is a broker-dealer that
uses the prospectus in the Exchange Offer registration statement for resales of
Exchange Securities against any and all losses, liabilities (joint or several)
claims, damages and expenses, whatsoever to which such holder, agent or
underwriter may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act, or any
preliminary, final or summary prospectus contained therein or furnished by the
Partnership or any Guarantor to any such holder, agent or underwriter, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii)
reimburse such holder, such agent and such underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Partnership and the Guarantors shall not be liable to any such
person in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
-17-
<PAGE>
untrue statement or omission or alleged omission made in any such registration
statement, or preliminary, final or summary prospectus, or amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Partnership by any holders of Registrable Securities or any
placement or sales agent thereof or underwriter thereof expressly for use
therein;
(b) Indemnification by the Holders and any Agents and Underwriters.
The Partnership and the Guarantors may require, as a condition to including any
Registrable Securities in any registration statement filed pursuant to Section 2
hereof and to entering into any placement or underwriting agreement with respect
thereto, that the Partnership and the Guarantors shall have received an
undertaking reasonably satisfactory to them from the holder of such Registrable
Securities and from each placement agent or underwriter named in any such
placement agreement or underwriting agreement and each holder of Exchange
Securities that is a broker-dealer that uses the prospectus in the Exchange
Offer registration statement for resales of Exchange Securities, severally and
not jointly, to (i) indemnify and hold harmless the Partnership and the
Guarantors, and all other holders of Registrable Securities, against any losses,
claims, damages or liabilities to which the Partnership and the Guarantors or
such other holders of Registrable Securities may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, or any preliminary, final or summary prospectus
contained therein or furnished by the Partnership to any such holder, agent or
underwriter, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Partnership by such holder, agent or underwriter expressly for use therein, and
(ii) reimburse the Partnership and the Guarantors for any legal or other
expenses reasonably incurred by the Partnership and the Guarantors in connection
with investigating or defending any such action or claim as such expenses are
incurred; provided, however, that no such holder shall be required to undertake
liability to any person under this Section 6(b) for any amounts in excess of the
dollar amount of the proceeds to be received by such holder from the sale of
such holder's Registrable Securities pursuant to such registration.
(c) Notices of Claims, Etc. Each indemnified party shall give
written notice as promptly as reasonably practicable to each indemnifying party
of any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party (i) will not relieve
it from liability under paragraph (a) or (b) above unless and to the extent it
did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii)
will not, in any event, relieve the indemnifying party from any obligations to
any indemnified party
-18-
<PAGE>
ther than the indemnification obligation provided in paragraph (a) or (b) above.
The indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be satisfactory to
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Contribution. If the indemnification provided for in this
Section 6 is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the holders of Registrable Securities on the one hand and
any agents or underwriters on the other hand from the offering or sale of the
Registrable Securities, pursuant to this Agreement (provided that in no case
shall any agents or underwriters (except as may be provided in any agreement
among underwriters relating to the offering or sale of the Registrable
Securities) be responsible for any amount in excess of the underwriting discount
or commission applicable
-19-
<PAGE>
to the Notes purchased by such Purchaser placed or underwritten by it and
distributed to the public) or (ii) if the allocation provided by clause (i) is
unavailable for any reason, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the holders of Registrable Securities on the one hand and of any agents
or underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by holders of Registrable Securities on the one hand and any agents or
underwriters on the other hand in connection with the offering or sale of the
Registrable Securities shall be deemed to be in the same respective proportions
as the total net proceeds from the offering or sale thereof (before deducting
expenses) received by such holders bear to the total underwriting discounts and
commissions received by any agents or underwriters with respect to such offer or
sale. The relative fault of the holders of Registrable Securities on the one
hand and any agents or underwriters on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the holders of Registrable Securities or
by any agents or underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The holders of Registrable Securities and any agents or underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 6(d) were determined by pro rata allocation (even if the holders or any
agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 6(d). Notwithstanding
the provi sions of this Section 6(d), no holder shall be required to contribute
any amount in excess of the amount by which the dollar amount of the proceeds
received by such holder from the sale of any Registrable Securities (after
deducting any fees, discounts and commissions applicable thereto) exceeds the
amount of any damages which such holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, and no underwriter or agent shall be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities placed or underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such underwriter
or agent has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The holders' and
any underwriters' or agent's obligations in this Section 6(d) to contribute
shall be several in proportion to the principal amount of Registrable Securities
registered, underwritten or placed, as the case may be, by them and not joint.
-20-
<PAGE>
(e) The obligations of the Partnership and the Guarantors under this
Section 6 shall be in addition to any liability which the Partnership and the
Guarantors may otherwise have and shall extend, upon the same terms and
conditions, to each officer, director and partner of each holder, agent and
underwriter and each person, if any, who controls any holder, agent or
underwriter within the meaning of Section 15 or Section 20 of the Exchange Act;
and the obligations of the holders and any agents or underwriters contemplated
by this Section 6 shall be in addition to any liability which the respective
holder, agent or underwriter may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Partnership or the
Guarantors (including any person who, with his consent, is named in any
registration statement as about to become a director of Regency) and to each
person, if any, who controls the Partnership or the Guarantors within the
meaning of Section 15 or Section 20 of the Exchange Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities
covered by the Resale Registration are to be sold pursuant to an underwritten
offering, the managing underwriter or underwriters thereof shall be designated
by the holders of at least a majority in aggregate principal amount of the
Registrable Securities to be included in such offering; provided that such
designated managing underwriter or underwriters is or are reasonably acceptable
to the Partnership.
(b) Participation by Holders. Each holder of Registrable Securities
hereby agrees with each other such holder that no such holder may participate in
any underwritten offering hereunder unless such holder (i) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
(c) Consolidated Earnings Statements. In the event of an
underwritten offering, the Partnership and Regency agree to make generally
available to its securityholders as soon as practicable, but in any event not
later than eighteen months after the effective date of the applicable
registration statement (as defined in Rule 158(c) under the Act), consolidated
earnings statements of each of the Partnership and Regency complying with
Section 11(a) of the Act and the rules and regulations of the Commission
thereunder (including, at the option of the Company, Rule 158 under the Act).
8. Rule 144.
The Partnership and Regency, jointly and severally, covenant to the holders
of Registrable Securities that to the extent they shall be required to do so
under the Exchange
-21-
<PAGE>
Act, the Partnership and Regency shall use reasonable best efforts to timely
file the reports required to be filed under the Exchange Act or the Securities
Act (including, but not limited to, the reports under Section 13 and 15(d) of
the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder, and shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to make Rule 144 available to such holder for the sale of
Registrable Securities without registration under the Securities Act within the
limitations of the exemption provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities in connection with that holder's sale pursuant to Rule
144, the Partnership and Regency shall deliver to such holder a written
statement as to whether they have complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to
require the Partnership and Regency to register any of their respective
securities under the Exchange Act.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Partnership and each Guarantor
represent, warrant, covenant and agree that they have not granted, and shall not
grant, registration rights with respect to Registrable Securities or any other
securities which would be inconsistent with the terms contained in this
Agreement.
(b) Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and that each party may be irreparably harmed by any such
failure, and accordingly agree that each party, in addition to any other remedy
to which it may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of any other party under this Agreement
in accordance with the terms and conditions of this Agreement, in any court of
the United States or any State thereof having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, if delivered personally or by courier,
or three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows: If to the Partnership or
any Guarantor, to it at the address of the Partnership set forth in the Final
Memorandum, Attention: Secretary and if to a holder, to the address of such
holder set forth in the security register or other records of the Partnership,
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
-22-
<PAGE>
(d) Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective successors and assigns of the parties hereto. In
the event that any transferee of any holder of Registrable Securities shall
become a holder of Registrable Securities, in any manner, whether by gift,
bequest, purchase, operation of law or otherwise, such transferee shall, without
any further writing or action of any kind, be deemed a party hereto for all
purposes and such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Securities
such transferee shall be entitled to receive the benefits of and be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement. If the Partnership shall so request, any such
successor, assign or transferee shall agree in writing to acquire and hold the
Registrable Securities subject to all of the terms hereof.
(e) Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this
Agreement or made pursuant hereto shall remain in full force and effect
regardless of any investigation (or statement as to the results thereof) made by
or on behalf of any holder of Registrable Securities, any director, officer or
partner of such holder, any agent or underwriter or any director, officer or
partner thereof, or any controlling person of any of the foregoing, and shall
survive delivery of and payment for the Registrable Securities pursuant to the
Purchase Agreement and the transfer and registration of Registrable Securities
by such holder and the consummation of an Exchange Offer.
(F) LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAWS PROVISIONS THEREOF.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
(h) Entire Agreement; Amendments. This Agreement and the other
writings referred to herein (including the Indenture and the form of Securities)
or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter. This Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a written instrument
duly executed by the Partnership, Regency and the holders of at least 66-2/3
percent in aggregate principal amount of the Registrable Securities at the time
outstanding. Each holder
-23-
<PAGE>
of any Registrable Securities at the time or thereafter outstanding shall be
bound by any amendment or waiver effected pursuant to this Section 9(h), whether
or not any notice, writing or marking indicating such amendment or waiver
appears on such Registrable Securities or is delivered to such holder.
(i) Inspection. For so long as this Agreement shall be in effect,
this Agreement and a complete list of the names and addresses of all the holders
of Registrable Securities shall be made available for inspection and copying on
any business day by any holder of Registrable Securities at the offices of the
Partnership at the address thereof set forth in Section 9(c) above or at the
office of the Trustee under the Indenture.
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
-24-
<PAGE>
Agreed to and accepted as of the date referred to above.
REGENCY CENTERS, L.P.
By: Regency Realty Corporation,
its general partner
By: /s/ Bruce M. Johnson
-------------------------------
Name: Bruce M. Johnson
Title: Managing Director and
Executive Vice President
REGENCY REALTY CORPORATION
By:/s/ Bruce M. Johnson
-------------------------------
Name: Bruce M. Johnson
Title: Managing Director and
Executive Vice President
REGENCY OFFICE PARTNERSHIP, L.P.
By: Regency Centers, L.P.,
its general partner
By: Regency Realty Corporation,
its general partner
By:/s/ Bruce M. Johnson
-------------------------------
Name: Bruce M. Johnson
Title: Managing Director and
Executive Vice President
HYDE PARK PARTNERS, L.P.
By: Regency Retail Centers of Ohio, Inc.,
its general partner
By:/s/ Bruce M. Johnson
-------------------------------
Name: Bruce M. Johnson
Title: Managing Director and
Executive Vice President
<PAGE>
REGENCY RETAIL CENTERS OF OHIO, INC.
By: /s/ Bruce M. Johnson
-------------------------------
Name: Bruce M. Johnson
Title: Managing Director and
Executive Vice President
RRC OPERATING PARTNERSHIP
OF GEORGIA, L.P.
By: Regency Centers, L.P.,
its general partner
By: Regency Realty Corporation,
its general partner
By: /s/ Bruce M. Johnson
-------------------------------
Name: Bruce M. Johnson
Title: Managing Director and
Executive Vice President
RRC FL FIVE, INC.
By: /s/ Bruce M. Johnson
-------------------------------
Name: Bruce M. Johnson
Title: Managing Director and
Executive Vice President
RRC FL SEVEN, INC.
By: /s/ Bruce M. Johnson
-------------------------------
Name: Bruce M. Johnson
Title: Managing Director and
Executive Vice President
RRC ACQUISITIONS, INC.
By: /s/ Bruce M. Johnson
-------------------------------
Name: Bruce M. Johnson
Title: Managing Director and
Executive Vice President
RRC ACQUISITIONS TWO, INC.
By: /s/ Bruce M. Johnson
-------------------------------
Name: Bruce M. Johnson
Title: Managing Director and
Executive Vice President
<PAGE>
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO. INCORPORATED
PAINEWEBBER INCORPORATED
BY: GOLDMAN, SACHS & CO.
as representatives
/s/ Goldman Sachs & Co.
-------------------------------
(Goldman, Sachs & Co.)
<PAGE>
EXHIBIT 21
REGENCY CENTERS, L.P.
SUBSIDIARIES
Regency Office Partnership, L.P., a Delaware limited partnership
RRC Operating Partnership of Georgia, L.P., a Georgia limited partnership
Regency Ocean East, Ltd., a Florida limited partnership
Branch/HOP Associates, L.P., a Georgia limited partnership
Old Fort Associates, L.P., a Georgia limited partnership
Equiport Associates, L.P., a Georgia limited partnership
Fieldstone Associates, L.P., a Georgia limited partnership
T&M Durham Development Company LLC, a North Carolina limited liability company
T&M Nashboro Development Company LLC, a Tennessee limited liability company
T&M Garner Development Company LLC, a North Carolina limited liability company
Regency Realty Group, Inc., a Florida corporation
RRC Lender, Inc., a Florida corporation
Village Commons, a Florida general partnership
R&M Western Partnership, L.P., a Delaware limited partnership
OTR/Regency Colorado Realty Holdings, L.P., an Ohio limited
partnership
OTR/Regency Texas Realty Holdings, L.P., an Ohio limited partnership
T&M Allen Development Company, a Texas general partnership
T&M Arlington Development Company, a Texas general partnership
M&KS Arvada Development LLC, a Colorado limited liability company
M&KS Parker Development LLC, a Colorado limited liability company
M&KS Cheyenne Meadows LLC, a Colorado limited liability company
M&KS Woodmen Development LLC, a Colorado limited liability company
R&KS Dell Range LLC, a Wyoming limited liability company
T&M Frisco Development Company, a Texas general partnership
T&M Shiloh Development Company, a Texas general partnership
Panama Cove, Inc., a Florida corporation
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 14,642,429
<SECURITIES> 0
<RECEIVABLES> 8,408,358
<ALLOWANCES> 1,162,570
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 636,787,422
<DEPRECIATION> 22,041,114
<TOTAL-ASSETS> 641,149,145
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 428,429,261
<TOTAL-LIABILITY-AND-EQUITY> 641,149,145
<SALES> 0
<TOTAL-REVENUES> 75,251,178
<CGS> 0
<TOTAL-COSTS> 17,139,654
<OTHER-EXPENSES> 11,904,788
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,613,704
<INCOME-PRETAX> 23,509,522
<INCOME-TAX> 0
<INCOME-CONTINUING> 23,509,522
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,509,522
<EPS-PRIMARY> 1.20
<EPS-DILUTED> 1.12
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,556,513
<SECURITIES> 0
<RECEIVABLES> 9,008,984
<ALLOWANCES> 1,357,948
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 779,008,510
<DEPRECIATION> 20,812,516
<TOTAL-ASSETS> 776,211,194
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 455,776,133
<TOTAL-LIABILITY-AND-EQUITY> 776,211,194
<SALES> 0
<TOTAL-REVENUES> 23,799,232
<CGS> 0
<TOTAL-COSTS> 5,138,249
<OTHER-EXPENSES> 4,145,466
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,409,517
<INCOME-PRETAX> 18,131,408
<INCOME-TAX> 0
<INCOME-CONTINUING> 18,131,408
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,131,408
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0.70
</TABLE>
<PAGE>
EXHIBIT 99.1(a)
VOTING SECURITIES
The record of shareholders entitled to vote was taken at the close of business
on April 8, 1998. At such date, the Company had outstanding and entitled to
vote 24,865,205 shares of Common Stock, $.01 par value. Each share of Common
Stock entitles the holder to one vote. Holders of a majority of the outstanding
Common Stock must be present in person or represented by proxy to constitute a
quorum at the annual meeting.
The Company is a Florida corporation the principal shareholders of which
consist of members of the Stein family, who founded the Company, and the
Company's major investor, Security Capital U.S. Realty ("SC-USREALTY"). The
following table shows certain information relating to the beneficial ownership
as of April 8, 1998 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, (iii) each of the named executive officers shown in the Summary
Compensation Table elsewhere in this proxy statement, 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.
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF OF VOTING
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP SECURITIES(2)
------------------- --------------------- -------------
<S> <C> <C>
Security Capital U.S. Realty(3) 11,284,439 45.4%
(SC-USREALTY)
LaSalle Advisors Limited 1,804,730 7.3%
Partnership(4)
Joan W. Stein(5) 589,090(6)(7) )
)
Martin E. Stein, Jr.(5) 762,783(6)(8)(9) ) 3.1%(10)
)
Richard W. Stein(11) 578,627(6)(12) )
Edward L. Baker 14,672(13) *
Raymond L. Bank 1,611(13) *
A.R. Carpenter 12,928(13) *
J. Dix Druce, Jr. 30,919(13) *
Albert Ernest, Jr. 13,696(13) *
Douglas S. Luke 14,504(13) *
J. Alexander Branch III 257,389(13)(14) 1.0%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENT
AMOUNT AND NATURE OF OF VOTING
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP SECURITIES(2)
------------------- --------------------- -------------
<S> <C> <C>
Mary Lou Rogers 833 *
Jonathan L. Smith 686 *
Lee S. Wielansky 45,459(16) *
Bruce M. Johnson 93,217(9)(17) *
Robert C. Gillander, Jr. 89,080(17) *
James D. Thompson 79,504(17) *
All Directors, nominees for Director and 1,433,708(14)(18) 5.7%
executive officers as a group (a total of
16 persons)
</TABLE>
<PAGE>
________________________
* 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 10.7% of the Common Stock outstanding immediately following
conversion.
(3) The business address of Security Capital U.S. Realty is 69, route d'Esch,
L-1470 Luxembourg.
(4) The business address of LaSalle Advisors Limited Partnership is 11 South
LaSalle Street, Chicago, Illinois 60603.
(5) The business address of Joan W. Stein and Martin E. Stein, Jr. is 121 West
Forsyth Street, Suite 200, Jacksonville, Florida 32202.
(6) 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.
(7) Also includes 13,445 shares owned individually by Joan W. Stein.
(8) Also includes 187,138 shares owned by Martin E. Stein, Jr. and 34,444
shares subject to presently exercisable options.
(9) 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.
(10) The 762,783 shares over which Martin E. Stein, Jr. has sole or shared
voting and investment power as described in notes (6) and (8) represent, in
the aggregate, 3.1% of the outstanding voting securities of the Company.
Percentages are omitted for the other members of the Stein family to avoid
double counting.
(11) The business address of Richard W. Stein is 76 S. Laura Street, Suite 1400,
Jacksonville, Florida 32201.
(12) Also includes 2,982 shares owned individually by Richard W. Stein.
(13) Includes the following shares covered by presently exercisable options:
Mr. Baker, 5,000 shares; Mr. Branch, 2,000 shares; Mr. Carpenter, 5,000
shares; Mr. Druce, 5,000 shares; Mr. Ernest, 5,000 shares; and Mr. Luke,
5,000 shares.
(14) Includes 122,506 shares issuable upon redemption of limited partnership
units held by Mr. Branch and 2,568 shares issuable upon redemption of
limited partnership units held by Mr. Branch's wife as trustee for the
benefit of their children.
(15) Nominee for Director.
(16) Represents units of limited partnership interest in Regency Centers, L.P.
which may be redeemed at any time for a like number of shares of the
Company's Common Stock.
(17) Includes the following shares covered by presently exercisable options: Mr.
Johnson, 11,802 shares; Mr. Gillander, 11,802 shares; and Mr. Thompson,
10,143 shares.
(18) Includes 95,191 shares subject to presently exercisable options.
<PAGE>
EXHIBIT 99.1(b)
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the Company
for services rendered during fiscal 1997, 1996 and 1995 to the Company's Chief
Executive Officer and to the Company's three Managing Directors, the only other
executive officers whose total salary and bonus exceeded $100,000 during the
year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- --------------------------------
PERFORMANCE SECURITIES
NAME & PRINCIPAL STOCK UNDERLYING SPP LOAN ALL OTHER
POSITION YEAR SALARY(1) BONUS(2) AWARDS(3) OPTIONS/SARS(4) AWARDS(5) COMPENSATION(6)
- ----------------- ---- -------- --------- ------------ -------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Martin E. Stein, Jr. 1997 $275,000 $197,500 $265,800 270,300 $186,338 $17,325
Chairman and Chief 1996 252,391 225,000 $168,000 0 186,338 35,439
Executive Officer 1995 240,000 144,400 0 0 103,950 24,331
Bruce M. Johnson 1997 180,000 104,400 132,900 139,600 84,083 18,143
Managing Director 1996 145,076 115,000 84,000 0 84,083 20,753
and Chief Financial 1995 135,000 71,400 0 0 41,580 15,142
Officer
Robert C. Gillander, Jr. 1997 175,000 100,000 116,288 139,600 80,502 16,480
Managing Director 1996 137,500 108,900 73,500 0 80,502 19,266
Investment Group 1995 125,000 60,000 0 0 41,580 14,175
James D. Thompson 1997 175,000 100,000 107,981 139,600 71,185 16,795
Managing Director 1996 129,826 103,000 68,250 0 71,185 18,929
Operations Group 1995 121,000 62,100 0 0 36,383 13,930
</TABLE>
_________________________
(1) Includes amounts deferred under the 401(k) feature of the Company's profit
sharing plan.
(2) Bonuses for the year ended December 31, 1997 were paid 100% in cash; for
the year ended December 31, 1996 bonuses were paid 45% in cash and 55% in
stock; and for the year ended December 31, 1995 bonuses were paid 40% in
cash and 60% in stock.
(3) Consists of the fair market value of restricted stock awards on December
31, 1997 and December 31, 1996, the date of grants. Awards were earned by
cumulative annual shareholder return exceeding 15% beginning January 1,
1995, when the program was implemented. 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. The executive is entitled to dividends and voting rights on
unvested shares. Shares representing the full amount of the awards listed
above, held by the named executives are as follows: Mr. Stein, 16,000
shares; Mr. Johnson, 8,000 shares; Mr. Gillander, 7,000 shares; and Mr.
Thompson, 6,500 shares. There is currently no additional restricted stock
available for management.
(4) Stock options granted for previous years performance that vest over 5 years
(Annual Options), and stock options granted related to the Company=s Stock
Purchase Plan (SPP Shares and SPP Matching Options), that vest over 1 and 9
years depending upon shares owned by the executive after 5 years, and
certain financial performance measures B see Stock Purchase Plan included
in the Executive Compensation section for specifics related to options
granted and vesting terms.
(5) Represents amounts earned by the named executive officers in the form of
loan forgiveness in accordance with the terms of the Stock Purchase Plan
that is part of the Company's 1993 Long Term Omnibus Plan, based upon FFO
per share growth greater than 7%, annual shareholder return of 15% or more
and cumulative return of 20% or more since January 1, 1996.
(6) Includes contributions in the form of stock to the Company's profit sharing
and 401(k) plan, the profit sharing portion of which was based on the
attainment of predetermined levels of funds from operations per share. The
profit sharing and 401(k) match amount for each executive officer was
$13,750 in 1997 and 1996, and $11,448 in 1995 and 1994. Also includes
amounts allocated in 1996 and 1995 to a deferred compensation plan as
follows: Mr. Stein, $19,879 and $11,073; Mr. Johnson, $5,193 and $1,884;
Mr. Gillander, $3,706 and $917; and Mr. Thompson, $3,369 and $672. The
remainder consists of: (a) annual Christmas compensation of $1,000, and
(b) excess term life insurance premiums.
<PAGE>
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 Messrs. Johnson, Gillander and Thompson that provide for
the payment of salary and benefits for a specified period in the event of a
change of control only.
STOCK PURCHASE PLAN. To 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. These SPP loans 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 annual per share FFO growth of greater than 7%, total annual
shareholder return of at least 15%, and cumulative total annual shareholder
return of 20% or more since January 1, 1996.
In 1997, the Company granted the executive officers the option for 2 years to
purchase approximately 198,000 shares ("SPP Shares") at $25.25 per share, the
stock price on the grant date, 65,300 of which are subject to certain financial
performance goals. The Company will loan the participants 95% of the purchase
price at an interest rate equal to the lower of 6% or the dividend rate. The
loans will be secured by stock, will be full recourse to the employee, and will
mature in 10 years. On January 12, 1998, the executive officers exercised
132,700 SPP Shares. The 1997 SPP loan does not provide for loan forgiveness.
In 1997, the Company granted the executive officers 396,000 SPP Matching
Options, which expire in 10 years. These options are vested after 9 years. The
vesting may be accelerated if the executive exercises the options to purchase
the SPP Shares and then holds those shares in accordance with the plan over 5
years. The Company also granted 95,100 options to the executive officers in
1997 based upon 1996 performance (Annual Options). Annual Options vest over 5
years and expire after 10 years. The SPP Matching Options and the Annual
Options have an exercise price equal to $25.25 per share, the stock price on the
grant date. Annual options accrue dividends (Dividend Equivalents) based on the
Company's annual dividend less the average dividend yield of the S&P 500 for the
corresponding year. Dividend Equivalents are converted into common stock
immediately and vest over 5 years.
<PAGE>
The following table sets forth as of March 1, 1998, the amounts outstanding
under the SPP loan program due from each of the Company's executive officers.
<TABLE>
<CAPTION>
LARGEST BALANCE
SPP LOAN BALANCE DURING FISCAL YEAR ENDED
EXECUTIVE OFFICER MARCH 1, 1998 DECEMBER 31, 1997
----------------- ---------------- ------------------------
<S> <C> <C>
Martin E. Stein, Jr. $1,511,180 $651,662
Bruce M. Johnson 943,114 314,767
Robert C. Gillander, Jr. 926,406 294,479
James D. Thompson 903,140 261,896
</TABLE>
STOCK OPTIONS. The following table sets forth information concerning the
value of unexercised options as of December 31, 1997 held by the executive
officers named in the Summary Compensation Table above.
AGGREGATED OPTION EXERCISES DURING FISCAL 1997
AND OPTION YEAR-END VALUES TABLE
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES VALUE OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED UPON REALIZED DECEMBER 31, 1997 DECEMBER 31, 1997
EXERCISE OF UPON EXERCISABLE/ EXERCISABLE/
NAME OPTIONS EXERCISE UNEXERCISABLE UNEXERCISABLE
---- -------------- --------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
Martin E. Stein, Jr. 5,556 $149,328 78,044 (E) / $289,933 (E) /
226,700 (U) $552,581 (U)
Bruce M. Johnson 4,198 $112,812 41,502 (E) / $ 91,171 (E) /
109,900 (U) $267,881 (U)
Robert C. Gillander, Jr. 4,198 $112,812 41,502 (E) / $ 89,652 (E) /
109,900 (U) $267,881 (U)
James D. Thompson 3,857 $103,662 39,843 (E) / $ 83,723 (E) /
109,900 (U) $267,881 (U)
</TABLE>
The following table sets forth information with respect to option grants to the
executive officers named in the Summary Compensation Table above during 1997 and
the potential realizable value of such option grants. See Stock Purchase Plan
for discussion of stock options granted during 1997.
<PAGE>
OPTION GRANTS DURING FISCAL 1997
<TABLE>
<CAPTION>
NUMBER OF OPTIONS % OF TOTAL OPTIONS EXERCISE PRICE EXPIRATION HYPOTHETICAL VALUE
EXECUTIVE OFFICER GRANTED GRANTED DURING 1997 ($/SHARE) DATE AT GRANT DATE
----------------- ----------------- ------------------- -------------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Martin E. Stein, Jr. 270,300 21.6% $25.25 1-13-2007 $842,610
Bruce M. Johnson 139,600 11.2% $25.25 1-13-2007 435,814
Robert L. Gillander, Jr. 139,600 11.2% $25.25 1-13-2007 435,814
James D. Thompson 139,600 11.2% $25.25 1-13-2007 435,814
</TABLE>
(1) The estimated present value at grant date of options granted during 1997 has
been calculated using the Black-Scholes option pricing model, based upon the
following assumptions: estimated time until exercise of 5.7 years; a risk-
free interest rate of 6.3%; a volatility rate of 21%; and a dividend yield
of 6.3%. The approach used in developing the assumptions upon which the
Black-Scholes valuation was calculated is consistent with the requirements
of Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation." The actual value of the options may be
significantly different, and the value actually realized, if any, will
depend upon the excess of the market value of the Common Stock over the
option exercise price at the time of exercise.
COMPENSATION OF DIRECTORS. In 1997, the Company paid an annual fee of $17,000
to each of its non-employee Directors, 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 stock value match equal to 50% of the stock purchased by the
Director, limited 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.
<PAGE>
EXHIBIT 99.1(c)
CERTAIN 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 Richard W. Stein (who are Directors of the Company, and together with Robert
L. 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. At January
1, 1998, all options on the Option Properties expired except for 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 expired Option
Properties consisted of land in Florida that did not meet the Company's
investment objectives.
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, 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, 1997, TRG paid the Management Company an aggregate
of $419,982 for such services.
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 93% of the voting common stock of the
Management Company, and the Company, directly and through its investment in
Regency Centers, L.P., owns 100% of the Management Company's non-voting
preferred stock and 7% 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 former subsidiary RRC JV One, Inc., is a party to a limited partnership with
WLD Realty, Ltd. known as Regency Ocean East Partnership, Ltd. in which Regency
<PAGE>
Centers, L.P., a limited partnership controlled by 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 has contributed their pro
rata share of capital to the partnership. 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 SC-USREALTY AFFILIATE. SC-USREALTY Investment
Research, Inc.("SCII"), an affiliate of SC-USREALTY, provides consulting
services from time to time on an as-needed basis to the various entities in
which SC-USREALTY has invested. During the year ended December 31, 1997, the
Company paid consulting fees of $95,000 to SCII related to due diligence
assistance in connection with its acquisition of assets from Branch.
OTHER. Richard W. Stein, a Director and the son and brother, respectively, of
Joan W. Stein, a Director, and Martin E. Stein, Jr., the Company's Chairman 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, 1997, the Company obtained insurance through Palmer & Cay/Carswell
for which Palmer & Cay/Carswell received commissions in the aggregate amount of
approximately $114,000.
<PAGE>
EXHIBIT 99.2(a)
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company is incorporated herein by
reference to the Company's definitive proxy statement to be filed with the
Securities and Exchange Commission within 120 days after the end of the fiscal
year covered by this Form 10-K with respect to its 1998 Annual Meeting of
Shareholders.
The following table provides information concerning the executive officers of
the Company, several of which were officers of TRG for five years or more prior
to the Company's acquisition of TRG's real estate business in November, 1993.
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY;
NAME PRINCIPAL OCCUPATIONS DURING
(AGE) PAST FIVE YEARS
----- ----------------------------------------------------------------
<S> <C>
Martin E. Stein, Jr. (45) Chairman, Chief Executive Officer and Director of the Company,
and President, Chief Executive Officer and Director of TRG.
Bruce M. Johnson (50) Managing Director and Chief Financial Officer of the Company and
previously Vice President of Investment Management and
Acquisitions for TRG.
Robert C. Gillander, Jr. (44) Managing Director of Investments for the Company and previously
Vice President of Development for TRG.
James D. Thompson (42) Managing Director of Operations for the Company and previously
Vice President of Asset Management in North and Central Florida
regions for TRG.
Lee S. Wielansky (46) Managing Director of Investments and Director of the Company and
previously President and Chief Executive Officer of Midland
Development Group from 1993 to 1998.
</TABLE>
