United States
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
(Mark One)
[X] For the quarterly period ended September 30, 1999
-or-
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________ to ________
Commission File Number 1-12298
REGENCY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Florida 59-3191743
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
(Address of principal executive offices) (Zip Code)
(904) 356-7000
(Registrant's telephone number, including area code)
Unchanged
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No[ ]
(Applicable only to Corporate Registrants)
As of November 8, 1999, there were 59,263,998 shares outstanding of the
Registrant's common stock.
<PAGE>
Part I.
Item 1. Financial Statements
REGENCY REALTY CORPORATION
Consolidated Balance Sheets
September 30, 1999 and December 31, 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Assets
Real estate investments, at cost:
Land $ 560,100,560 257,669,018
Buildings and improvements 1,817,570,069 925,514,995
Construction in progress - development for investment 81,899,349 15,647,659
Construction in progress - development for sale 110,868,541 20,869,915
----------------- -----------------
2,570,438,519 1,219,701,587
Less: accumulated depreciation 92,323,612 58,983,738
----------------- -----------------
2,478,114,907 1,160,717,849
Investments in real estate partnerships 58,567,208 30,630,540
----------------- -----------------
Net real estate investments 2,536,682,115 1,191,348,389
Cash and cash equivalents 23,584,820 19,919,693
Tenant receivables, net of allowance for uncollectible accounts of
$1,632,837 and $1,787,686 at September 30, 1999 and
December 31, 1998, respectively 29,766,946 16,758,917
Deferred costs, less accumulated amortization of $7,641,567 and
$5,295,336 at September 30, 1999 and December 31, 1998 12,051,673 6,872,023
Other assets 6,400,533 5,208,278
----------------- -----------------
$ 2,608,486,087 1,240,107,300
================= =================
Liabilities and Stockholders' Equity
Liabilities:
Notes payable 774,819,893 430,494,910
Acquisition and development line of credit 144,179,310 117,631,185
Accounts payable and other liabilities 41,464,665 19,936,424
Tenants' security and escrow deposits 7,539,864 3,110,370
----------------- -----------------
Total liabilities 968,003,732 571,172,889
----------------- -----------------
Preferred units 284,050,000 78,800,000
Exchangeable operating partnership units 44,906,443 27,834,330
Limited partners' interest in consolidated partnerships 10,580,517 11,558,618
----------------- -----------------
Total minority interest 339,536,960 118,192,948
----------------- -----------------
Stockholders' equity:
Convertible Preferred stock Series 1 and paid in capital $.01
par value per share: 542,532 shares authorized issued and
outstanding; liquidation preference $20.83 per share 12,654,570 -
Convertible Preferred stock Series 2 and paid in capital $.01
par value per share: 1,502,532 shares authorized; 960,000 shares
issued and outstanding, liquidation preference $20.83 per share 22,392,000 -
Common stock $.01 par value per share: 150,000,000 shares
authorized; 59,586,075 and 25,488,989 shares issued and
outstanding at September 30, 1999 and December 31, 1998 595,861 254,889
Special common stock - 10,000,000 shares authorized: Class B
$.01 par value per share, 2,500,000 shares issued
and outstanding at December 31, 1998 - 25,000
Additonal paid in capital 1,302,393,185 578,466,708
Distributions in excess of net income (25,622,779) (19,395,744)
Stock loans (11,467,442) (8,609,390)
----------------- -----------------
Total stockholders' equity 1,300,945,395 550,741,463
----------------- -----------------
Commitments and contingencies
$ 2,608,486,087 1,240,107,300
================= =================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statements of Operations
For the Three Months ended September 30, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Revenues:
Minimum rent $ 58,700,840 27,162,566
Percentage rent 274,372 173,589
Recoveries from tenants 14,535,041 6,419,085
Management, leasing and brokerage fees 4,540,031 3,079,485
Equity in income of investments in
real estate partnerships 1,218,075 364,779
----------------- ----------------
Total revenues 79,268,359 37,199,504
----------------- -----------------
Operating expenses:
Depreciation and amortization 13,112,164 6,600,399
Operating and maintenance 10,560,095 4,605,159
General and administrative 4,795,323 3,325,878
Real estate taxes 7,679,217 3,263,624
Other expenses 375,000 50,000
-----------------
Total operating expenses 36,521,799 17,845,060
----------------- -----------------
Interest expense (income):
Interest expense 15,575,115 7,293,863
Interest income (491,730) (418,671)
----------------- -----------------
Net interest expense 15,083,385 6,875,192
----------------- -----------------
Income before minority interests and sale
of real estate investments 27,663,175 12,479,252
Loss on sale of real estate investments - (8,871)
----------------- -----------------
Income before minority interests 27,663,175 12,470,381
Minority interest of exchangeable partnership units (769,851) (486,954)
Minority interest of limited partners 83,702 (189,385)
Minority interest preferred unit distribution (2,334,376) (1,733,333)
----------------- -----------------
Net income 24,642,650 10,060,709
Preferred stock dividends (677,165) -
----------------- -----------------
Net income for common stockholders $ 23,965,485 10,060,709
================= =================
Net income per share:
Basic $ 0.40 0.34
================= =================
Diluted $ 0.40 0.34
================= =================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statements of Operations
For the Nine Months ended September 30, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Revenues:
Minimum rent $ 156,322,933 74,823,359
Percentage rent 1,150,840 1,835,450
Recoveries from tenants 38,859,254 17,057,500
Management, leasing and brokerage fees 10,553,861 9,067,666
Equity in income of investments in
real estate partnerships 3,354,278 511,189
----------------- -----------------
Total revenues 210,241,166 103,295,164
----------------- -----------------
Operating expenses:
Depreciation and amortization 34,893,216 17,984,954
Operating and maintenance 27,361,566 13,077,060
General and administrative 13,576,216 10,288,327
Real estate taxes 19,871,176 9,051,428
Other expenses 900,000 350,000
----------------- -----------------
Total operating expenses 96,602,174 50,751,769
----------------- -----------------
Interest expense (income):
Interest expense 43,567,458 20,749,045
Interest income (1,612,733) (1,385,054)
----------------- -----------------
Net interest expense 41,954,725 19,363,991
----------------- -----------------
Income before minority interests and sale
of real estate investments 71,684,267 33,179,404
Gain on sale of real estate investments - 10,737,226
----------------- -----------------
Income before minority interests 71,684,267 43,916,630
Minority interest of exchangeable partnership units (2,108,362) (1,378,778)
Minority interest of limited partners (663,331) (389,544)
Minority interest preferred unit distribution (5,584,378) (1,733,333)
----------------- -----------------
Net income 63,328,196 40,414,975
Preferred stock dividends (1,577,165) -
----------------- -----------------
Net income for common stockholders $ 61,751,031 40,414,975
================= =================
Net income per share:
Basic $ 1.16 1.45
================= =================
Diluted $ 1.16 1.42
================= =================
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statement of Stockholders' Equity
For the Nine Months ended September 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Class B Additional
Series 1 Series 2 Common Common Paid In
Preferred Stock Preferred Stock Stock Stock Capital
--------------- --------------- --------- ------------ ---------------
<S> <C> <C> <C> <C>
Balance at
December 31, 1998 $ - - 254,889 25,000 578,466,708
Common stock issued as
compensation or purchased by
directors or officers - - 2,085 - 2,140,046
Common stock issued or cancelled
under stock loans - - (498) - (1,234,741)
Common stock issued for
partnership units exchanged - - 3,961 - 7,591,712
Common stock issued for
class B conversion - - 29,755 (25,000) (4,755)
Preferred stock issued to
acquire Pacific Retail Trust 12,654,570 22,392,000 - - -
Common stock issued to
acquire Pacific Retail Trust - - 305,669 - 715,434,215
Cash dividends declared:
Common stock $.46 per share
and preferred stock - - - - -
Net income - - - - -
-------------- ------------ ----------- ----------- --------------
Balance at
September 30, 1999 $ 12,654,570 22,392,000 595,861 - 1,302,393,185
============== ============ =========== =========== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statement of Stockholders' Equity
For the Nine Months ended September 30, 1999
(unaudited)
continued
<TABLE>
<CAPTION>
Distributions Total
in exess of Stock Stockholders'
Net Income Loans Equity
-------------- -------------- ----------------
<S> <C> <C> <C>
Balance at
December 31, 1998 $ (19,395,744) (8,609,390) 550,741,463
Common stock issued as
compensation or purchased by
directors or officers - - 2,142,131
Common stock issued or cancelled
under stock options - 1,140,902 (94,337)
Common stock issued for
partnership units exchanged - - 7,595,673
Common stock issued for
class B conversion - - -
Preferred stock issued to
acquire Pacific Retail Trust - - 35,046,570
Common stock issued to
acquire Pacific Retail Trust - (3,998,954) 711,740,930
Cash dividends declared:
Common stock $.46 per share
and preferred stock (69,555,231) - (69,555,231)
Net income 63,328,196 - 63,328,196
-------------- -------------- ----------------
Balance at
September 30, 1999 $ (25,622,779) (11,467,442) 1,300,945,395
============== ============== ================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 63,328,196 40,414,975
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 34,893,216 17,984,954
Deferred financing cost and debt premium amortization 347,204 (510,223)
Stock based compensation 1,921,831 1,921,484
Minority interest of exchangeable partnership units 2,108,362 1,378,778
Minority interest preferred unit distribution 5,584,378 1,733,333
Minority interest of limited partners 663,331 389,544
Equity in income of investments in real estate partnerships (3,354,278) (511,189)
Gain on sale of real estate investments - (10,737,226)
Changes in assets and liabilities:
Tenant receivables (9,368,533) (6,559,473)
Deferred leasing commissions (3,378,467) (1,491,666)
Other assets 1,439,804 (6,508,924)
Tenants' security deposits 711,577 608,197
Accounts payable and other liabilities 5,347,438 15,508,988
---------------- ----------------
Net cash provided by operating activities 100,244,059 53,621,552
---------------- ----------------
Cash flows from investing activities:
Acquisition and development of real estate (88,033,694) (174,869,327)
Acquisition of Pacific, net of cash acquired (9,046,230) -
Investment in real estate partnerships (23,714,109) (23,337,738)
Capital improvements (10,894,912) (4,825,026)
Construction in progress for sale, net of reimbursement (57,267,676) 3,445,834
Proceeds from sale of real estate investments - 30,662,197
Distributions received from real estate partnership investments 704,474 35,844
---------------- ----------------
Net cash used in investing activities (188,252,147) (168,888,216)
---------------- ----------------
Cash flows from financing activities:
Net proceeds from common stock issuance 105,809 9,733,060
Proceeds from issuance of exchangeable partnership units - 7,694
Redemption of partnership units (1,377,523) -
Net distributions to limited partners in consolidated partnerships (940,763) (234,577)
Distributions to partnership unit holders (2,576,197) (1,471,599)
Distributions to preferred unit holders (5,584,378) (1,733,333)
Dividends paid to common stockholders (67,978,066) (36,913,032)
Dividends paid to preferred stockholders (1,352,165) -
Net proceeds from term notes 249,845,300 99,758,000
Net proceeds from issuance of preferred units 205,250,000 78,800,000
Repayment of acquisition and development
line of credit, net (245,051,875) (2,200,000)
Proceeds from mortgage and construction loans payable 2,555,836 7,345,000
Repayment of mortgage loans payable (36,875,935) (34,765,133)
Deferred financing costs (4,346,828) (1,244,787)
---------------- ----------------
Net cash provided by financing activities 91,673,215 117,081,293
---------------- ----------------
Net increase in cash and cash equivalents 3,665,127 1,814,629
Cash and cash equivalents at beginning of period 19,919,693 16,586,094
---------------- ----------------
Cash and cash equivalents at end of period $ 23,584,820 18,400,723
================ ================
</TABLE>
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1999 and 1998
(unaudited)
-continued-
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Supplemental disclosure of cash flow information - cash paid for interest
(net of capitalized interest of approximately
$7,485,000 and $3,447,000 in 1999 and 1998 respectively) $ 43,333,640 17,660,318
================ ================
Supplemental disclosure of non-cash transactions:
Mortgage loans assumed for the acquisition of Pacific and real estate $ 402,582,015 131,858,223
================ ================
Common stock and exchangeable operating partnership units issued
to acquire investments in real estate partnerships $ 1,949,020 -
================ ================
Exchangeable operating partnership units, preferred and common
stock issued for the acquisition of Pacific and real estate $ 771,351,617 34,957,703
================ ================
Other liabilities assumed to acquire Pacific $ 13,897,643 -
================ ================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY REALTY CORPORATION
Notes to Consolidated Financial Statements
September 30, 1999
(unaudited)
1. Summary of Significant Accounting Policies
(a) Organization and Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of Regency Realty Corporation, its wholly owned qualified
REIT subsidiaries, and its majority owned or controlled
subsidiaries and partnerships (the "Company" or "Regency"). All
significant intercompany balances and transactions have been
eliminated in the consolidated financial statements. The Company
owns approximately 97% of the outstanding common units of Regency
Centers, L.P., ("RCLP" or the "Partnership") and partnership
interests ranging from 51% to 93% in five majority owned real
estate partnerships (the "Majority Partnerships"). The equity
interests of third parties held in RCLP and the Majority
Partnerships are included in the consolidated financial statements
as preferred or exchangeable operating partnership units and
limited partners' interests in consolidated partnerships. The
Company is a qualified real estate investment trust ("REIT") which
began operations in 1993.
The financial statements reflect all adjustments which are of a
normal recurring nature, and in the opinion of management, are
necessary to properly state the results of operations and
financial position. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted although management believes that the disclosures are
adequate to make the information presented not misleading. The
financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's
December 31, 1998 Form 10-K filed with the Securities and Exchange
Commission.
(b) Reclassifications
Certain reclassifications have been made to the 1998 amounts to
conform to classifications adopted in 1999.
2. Acquisitions
On September 23, 1998, the Company entered into an Agreement of Merger
("Agreement") with Pacific Retail Trust ("Pacific"), a privately held
real estate investment trust. The Agreement, among other matters,
provided for the merger of Pacific into Regency, and the exchange of each
Pacific common or preferred share into 0.48 shares of Regency common or
preferred stock. The stockholders approved the merger at a Special
Meeting of Stockholders held February 26, 1999. At the time of the
merger, Pacific owned 71 retail shopping centers that are operating or
under construction containing 8.4 million SF of gross leaseable area. On
February 28, 1999, the effective date of the merger, the Company issued
equity instruments valued at $770.6 million to the Pacific stockholders
in exchange for their outstanding common and preferred shares and units.
The total cost to acquire Pacific was approximately $1.157 billion based
on the value of Regency shares issued, including the assumption of $379
million of outstanding debt and other liabilities of Pacific, and
estimated closing costs of $7.5 million. The price per share used to
determine the purchase price was $23.325 based on the five day average of
the closing stock price of Regency's common stock as listed on the New
York Stock Exchange immediately before, during and after the date the
terms of the merger were agreed to and announced to the public. The
merger was accounted for as a purchase with the Company as the acquiring
entity.
<PAGE>
During 1998, the Company acquired 31 shopping centers fee simple for
approximately $355.9 million and also invested $28.4 million in 12 joint
ventures ("JV Properties"), for a total investment of $384.3 million in
43 shopping centers ("1998 Acquisitions"). Included in the 1998
Acquisitions are 32 shopping centers acquired from various entities
comprising the Midland Group ("Midland"). Of the 32 Midland centers, 31
are anchored by Kroger, and 12 are owned through joint ventures in which
the Company's ownership interest is 50% or less. The Company's investment
in the properties acquired from Midland is $236.6 million at December 31,
1998. During 1999 and 2000, the Company may pay contingent consideration
of up to an estimated $23 million, through the issuance of Partnership
units and the payment of cash. The amount of such consideration, if
issued, will depend on the satisfaction of certain performance criteria
relating to the assets acquired from Midland. Transferors who received
cash at the initial Midland closing will receive contingent future
consideration in cash rather than units. On April 16, 1999, the Company
paid $5.2 million related to this contingent consideration.
The operating results of Pacific and the 1998 Acquisitions are included
in the Company'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 Pacific and all
1998 Acquisitions had occurred on January 1, 1998. Such pro forma
information reflects adjustments to 1) increase depreciation, interest
expense, and general and administrative costs, 2) remove the office
buildings sold, and 3) adjust the weighted average common shares, and
common equivalent shares outstanding issued to acquire the properties.
Pro forma revenues would have been $233 and $217 million as of September
30, 1999 and 1998, respectively. Pro forma net income for common
stockholders would have been $68.2 and $60.8 million as of September 30,
1999 and 1998, respectively. Pro forma basic net income per share would
have been $1.14 and $1.02 as of September 30, 1999 and 1998,
respectively. Pro forma diluted net income per share would have been
$1.14 and $1.00, as of September 30, 1999 and 1998, respectively. This
data does not purport to be indicative of what would have occurred had
Pacific and the 1998 Acquisitions been made on January 1, 1998, or of
results which may occur in the future.
3. Segments
The Company was formed, and currently operates, for the purpose of 1)
operating and developing Company owned retail shopping centers (Retail
segment), and 2) providing services including property management,
leasing, brokerage, and construction and development management for
third-parties (Service operations segment). The Company had previously
operated four office buildings, all of which were sold in 1998 (Office
buildings segment). The Company's reportable segments offer different
products or services and are managed separately because each requires
different strategies and management expertise. There are no material
inter-segment sales or transfers.
The Company assesses and measures operating results starting with Net
Operating Income for the Retail and Office Buildings segments and Income
for the Service operations segment and converts such amounts into a
performance measure referred to as Funds From Operations (FFO), on a
diluted basis. The operating results for the individual retail shopping
centers have been aggregated since all of the Company's shopping centers
exhibit highly similar economic characteristics as neighborhood shopping
centers, and offer similar degrees of risk and opportunities for growth.
FFO as defined by the National Association of Real Estate Investment
Trusts consists of 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 adjustments for
unconsolidated investments in real estate partnerships and joint
ventures. The Company considers FFO to be the industry standard for
reporting the operations of REITs. Adjustments for investments in real
estate partnerships are calculated to reflect FFO on the same basis.
While management believes that FFO is the most relevant and widely used
measure of the Company's performance, such amount does not represent cash
flow from operations as defined by generally accepted accounting
principles, should not be considered an alternative to net income as an
indicator of the Company's operating performance, and is not indicative
of cash available to fund all cash flow needs. Additionally, the
Company's calculation of FFO, as provided below, may not be comparable to
similarly titled measures of other REITs.
<PAGE>
The accounting policies of the segments are the same as those described
in note 1. The revenues and FFO for each of the reportable segments are
summarized as follows for the nine month periods ended September 30, 1999
and 1998.
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Revenues:
Retail segment $ 199,687,305 93,694,804
Service operations segment 10,553,861 9,067,666
Office buildings segment - 532,694
---------------- ----------------
Total revenues $ 210,241,166 103,295,164
================ ================
Funds from Operations:
Retail segment net operating income $ 152,454,563 71,635,608
Service operations segment income 10,553,861 9,067,666
Office buildings segment net operating income - 463,402
Adjustments to calculate consolidated FFO:
Interest expense (43,567,458) (20,749,045)
Interest income 1,612,733 1,385,054
Earnings from recurring land sales - 901,854
General and administrative and other expenses (14,476,216) (10,638,327)
Non-real estate depreciation (661,600) (464,949)
Minority interests of limited partners (663,331) (389,544)
Minority interests in depreciation
and amortization (433,578) (385,924)
Share of joint venture depreciation
and amortization 461,768 447,841
Dividends on preferred units (5,584,378) (1,733,333)
---------------- ----------------
Funds from Operations 99,696,364 49,540,303
---------------- ----------------
Reconciliation to net income:
Real estate related depreciation
and amortization (34,231,616) (17,520,005)
Minority interests in depreciation
and amortization 433,578 385,924
Share of joint venture depreciation
and amortization (461,768) (447,841)
Earnings from property sales - 9,835,372
Minority interests of exchangeable
partnership units (2,108,362) (1,378,778)
---------------- ----------------
Net income $ 63,328,196 40,414,975
================ ================
</TABLE>
Assets by reportable segment as of September 30, 1999 and December 31,
1998 are as follows. Non-segment assets to reconcile to total assets
include cash, accounts receivable and deferred financing costs.
Assets (in thousands): 1999 1998
---------------------- ---- ----
Retail segment $ 2,425,814 1,170,478
Service operations segment 110,869 20,870
Cash and other assets 71,803 48,759
---------------- ---------------
Total assets $ 2,608,486 1,240,107
================ ================
<PAGE>
4. Notes Payable and Acquisition and Development Line of Credit
The Company's outstanding debt at September 30, 1999 and December 31,
1998 consists of the following (in thousands):
1999 1998
---- ----
Notes Payable:
Fixed rate mortgage loans $ 390,476 298,148
Variable rate mortgage loans 13,517 11,051
Fixed rate unsecured loans 370,827 121,296
----------- -----------
Total notes payable 774,820 430,495
Acquisition and development line of credit 144,179 117,631
------------ ------------
Total $ 918,999 548,126
============ ============
During February, 1999, the Company modified the terms of its unsecured
line of credit (the "Line") by increasing the commitment to $635 million.
This credit agreement also provides for a competitive bid facility of up
to $250 million of the commitment amount. Maximum availability under the
Line is based on the discounted value of a pool of eligible unencumbered
assets (determined on the basis of capitalized net operating income) less
the amount of the Company's outstanding unsecured liabilities. The Line
matures in February 2001, but may be extended annually for one year
periods. The Company is required to comply, and is in compliance, with
certain financial and other covenants customary with this type of
unsecured financing. These financial covenants include among others (i)
maintenance of minimum net worth, (ii) ratio of total liabilities to
gross asset value, (iii) ratio of secured indebtedness to gross asset
value, (iv) ratio of EBITDA to interest expense, (v) ratio of EBITDA to
debt service and reserve for replacements, and (vi) ratio of unencumbered
net operating income to interest expense on unsecured indebtedness. The
Line is used primarily to finance the acquisition and development of real
estate, but is also available for general working capital purposes.
Mortgage loans are secured by certain real estate properties, and may be
prepaid subject to a prepayment of a yield-maintenance premium. Mortgage
loans are generally due in monthly installments of interest and principal
and mature over various terms through 2019. Variable interest rates on
mortgage loans are currently based on LIBOR plus a spread in a range of
125 basis points to 150 basis points. Fixed interest rates on mortgage
loans range from 7.04% to 9.8%.
During 1999, the Company assumed debt with a fair value of $402.6 million
related to the acquisition of real estate, which includes debt premiums
of $4.1 million based upon the above market interest rates of the debt
instruments. Debt premiums are being amortized over the terms of the
related debt instruments.
On April 15, 1999 the Company, through RCLP, completed a $250 million
unsecured debt offering in two tranches. The Company issued $200 million
7.4% notes due April 1, 2004, priced at 99.922% to yield 7.42%, and $50
million 7.75% notes due April 1, 2009, priced at 100%. The net proceeds
of the offering were used to reduce the balance of the Line.
As of September 30, 1999, scheduled principal repayments on notes payable
and the Line were as follows (in thousands):
<TABLE>
<CAPTION>
Scheduled
Principal Term Loan Total
Scheduled Payments by Year Payments Maturities Payments
--------------- -------------- ---------------
<S> <C> <C> <C>
1999 $ 1,718 - 1,718
2000 5,711 98,608 104,319
2001 5,621 194,572 200,193
2002 4,943 44,114 49,057
2003 4,933 13,301 18,234
Beyond 5 Years 42,210 490,227 532,437
Net unamortized debt payments - 13,041 13,041
--------------- -------------- ---------------
Total $ 65,136 853,863 918,999
=============== ============== ===============
</TABLE>
<PAGE>
Unconsolidated partnerships and joint ventures had mortgage loans payable
of $54.9 million at September 30, 1999, and the Company's proportionate
share of these loans was $23.5 million.
5. Stockholders' Equity and Minority Interest
On June 11, 1996, the Company entered into a Stockholders Agreement (the
"Agreement") with SC-USREALTY granting it certain rights such as
purchasing common stock, nominating representatives to the Company's
Board of Directors, and subjecting SC-USREALTY to certain restrictions
including voting and ownership restrictions. In connection with the Units
and shares of common stock issued in March 1998 related to earnout
payments, SC-USREALTY acquired 435,777 shares at $22.125 per share in
accordance with their rights as provided for in the Agreement. In
conjunction with the acquisition of Pacific, SC-USREALTY exchanged their
Pacific shares for 22.6 million Regency common shares. As of September
30, 1999, SC-USREALTY owned approximately 34.3 million shares of common
stock or 57.5% of the outstanding common shares.
In connection with the acquisition of shopping centers, RCLP has issued
Exchangeable Operating Partnership Units to limited partners convertible
on a one for one basis into shares of common stock of the Company.
On June 29, 1998, the Company through RCLP issued $80 million of 8.125%
Series A Cumulative Redeemable Preferred Units ("Series A Preferred
Units") to an institutional investor in a private placement. The issuance
involved the sale of 1.6 million Series A Preferred Units for $50.00 per
unit. The Series A Preferred Units, which may be called by the
Partnership at par on or after June 25, 2003, have no stated maturity or
mandatory redemption, and pay a cumulative, quarterly dividend at an
annualized rate of 8.125%. At any time after June 25, 2008, the Series A
Preferred Units may be exchanged for shares of 8.125% Series A Cumulative
Redeemable Preferred Stock of the Company at an exchange rate of one
share of Series A Preferred Stock for one Series A Preferred Unit. The
Series A Preferred Units and Series A Preferred Stock are not convertible
into common stock of the Company. The net proceeds of the offering were
used to reduce the acquisition and development line of credit.
On September 3, 1999, the Company through RCLP issued $85 million of
8.75% Series B Cumulative Redeemable Preferred Units ("Series B Preferred
Units") to an institutional investor in a private placement. The issuance
involved the sale of 850,000 Series B Preferred Units for $100.00 per
unit. The Series B Preferred Units, which may be called by the
Partnership at par on or after September 3, 2004, have no stated maturity
or mandatory redemption, and pay a cumulative, quarterly dividend at an
annualized rate of 8.75%. At any time after September 3, 2009, the Series
B Preferred Units may be exchanged for shares of 8.75% Series B
Cumulative Redeemable Preferred Stock of the Company at an exchange rate
of one share of Series B Preferred Stock for one Series B Preferred Unit.
The Series B Preferred Units and Series B Preferred Stock are not
convertible into common stock of the Company. The net proceeds of the
offering were used to reduce the acquisition and development line of
credit.
On September 3, 1999, the Company through RCLP issued $75 million of 9.0%
Series C Cumulative Redeemable Preferred Units ("Series C Preferred
Units") to an institutional investor in a private placement. The issuance
involved the sale of 750,000 Series C Preferred Units for $100.00 per
unit. The Series C Preferred Units, which may be called by the
Partnership at par on or after September 3, 2004, have no stated maturity
or mandatory redemption, and pay a cumulative, quarterly dividend at an
annualized rate of 9.0%. At any time after September 3, 2009, the Series
C Preferred Units may be exchanged for shares of 9.0% Series C Cumulative
Redeemable Preferred Stock of the Company at an exchange rate of one
share of Series C Preferred Stock for one Series C Preferred Unit. The
Series C Preferred Units and Series C Preferred Stock are not convertible
into common stock of the Company. The net proceeds of the offering were
used to reduce the acquisition and development line of credit.
<PAGE>
On September 29, 1999, the Company through RCLP issued $50 million of
9.125% Series D Cumulative Redeemable Preferred Units ("Series D
Preferred Units") to an institutional investor in a private placement.
The issuance involved the sale of 500,000 Series D Preferred Units for
$100.00 per unit. The Series D Preferred Units, which may be called by
the Partnership at par on or after September 29, 2004, have no stated
maturity or mandatory redemption, and pay a cumulative, quarterly
dividend at an annualized rate of 9.125%. At any time after September 29,
2009, the Series D Preferred Units may be exchanged for shares of 9.125%
Series D Cumulative Redeemable Preferred Stock of the Company at an
exchange rate of one share of Series D Preferred Stock for one Series D
Preferred Unit. The Series D Preferred Units and Series D Preferred Stock
are not convertible into common stock of the Company. The net proceeds of
the offering were used to reduce the acquisition and development line of
credit.
As part of the acquisition of Pacific Retail Trust, the Company issued
Series 1 and Series 2 preferred shares. Series 1 preferred shares are
convertible into Series 2 preferred shares on a one-for-one basis and
contain provisions for adjustment to prevent dilution. The Series 1
preferred shares are entitled to a quarterly dividend in an amount equal
to $0.0271 less than the common dividend and are cumulative. Series 2
preferred shares are convertible into common shares on a one-for-one
basis. The Series 2 preferred shares are entitled to quarterly dividends
in an amount equal to the common dividend and are cumulative. The Company
may redeem the preferred shares any time after October 20, 2010 at a
price of $20.83 per share, plus all accrued but unpaid dividends.
During the fourth quarter, the Board of Directors authorized the
repurchase of up to $65 million of the Company's outstanding shares from
time to time through periodic open market transactions or through
privately negotiated transactions.
During 1999, the holders of all of Regency's Class B stock converted
2,500,000 shares into 2,975,468 shares of common stock.
6. Earnings Per Share
The following summarizes the calculation of basic and diluted earnings
per share for the three month periods ended, September 30, 1999 and 1998
(in thousands except per share data):
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Basic Earnings Per Share (EPS) Calculation:
Weighted average common shares outstanding 59,572 25,457
--------------- ---------------
Net income for common stockholders $ 23,965 10,061
Less: dividends paid on Class B common stock - (1,344)
--------------- ---------------
Net income for Basic EPS $ 23,965 8,717
=============== ===============
Basic EPS $ 0.40 0.34
=============== ===============
Diluted Earnings Per Share (EPS) Calculation:
Weighted average shares outstanding for Basic EPS 59,572 25,457
Exchangeable operating partnership units 2,085 1,307
Incremental shares to be issued under common stock options using
the Treasury Method 5 -
Contingent units or shares for the acquisition of real estate - 493
--------------- ---------------
Total diluted shares 61,662 27,257
=============== ===============
Net income for Basic EPS $ 23,965 8,717
Add: minority interest of exchangeable partnership units 770 487
--------------- ---------------
Net income for Diluted EPS $ 24,735 9,204
=============== ===============
Diluted EPS $ 0.40 0.34
=============== ===============
</TABLE>
<PAGE>
The Preferred Series 1 and Series 2 stock and the Class B common stock
are not included in the above calculation because their effects are
anti-dilutive.
The following summarizes the calculation of basic and diluted earnings
per share for the nine month periods ended, September 30, 1999 and 1998
(in thousands except per share data):
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Basic Earnings Per Share (EPS) Calculation:
Weighted average common shares outstanding 51,796 25,045
--------------- ---------------
Net income for common stockholders $ 61,751 40,415
Less: dividends paid on Class B common stock (1,410) (4,033)
--------------- ---------------
Net income for Basic EPS $ 60,341 36,382
--------------- ---------------
Basic EPS $ 1.16 1.45
=============== ===============
Diluted Earnings Per Share (EPS)Calculation:
Weighted average shares outstanding for Basic EPS 51,796 25,045
Exchangeable operating partnership units 1,979 1,193
Incremental shares to be issued under common stock options using
the Treasury Method 4 -
Contingent units or shares for the acquisition of real estate - 418
--------------- ---------------
Total diluted shares 53,779 26,656
=============== ===============
Net income for Basic EPS $ 60,341 36,382
Add: minority interest of exchangeable partnership units 2,108 1,379
--------------- ---------------
Net income for Diluted EPS $ 62,449 37,761
=============== ===============
Diluted EPS $ 1.16 1.42
=============== ===============
</TABLE>
The Preferred Series 1 and Series 2 stock and the Class B common stock are not
included in the above calculation because their effects are anti-dilutive.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the accompanying
Consolidated Financial Statements and Notes thereto of Regency Realty
Corporation ("Regency" or "Company") appearing elsewhere within.
Organization
The Company is a qualified real estate investment trust ("REIT") which began
operations in 1993. The Company invests in real estate primarily through its
general partnership interest in Regency Centers, L.P., ("RCLP" or "Partnership")
an operating partnership in which the Company currently owns approximately 97%
of the outstanding common partnership units ("Units"). Of the 216 properties
included in the Company's portfolio at September 30, 1999, 198 properties were
owned either fee simple or through partnerships interests by RCLP. At September
30, 1999, the Company had an investment in real estate, at cost, of
approximately $2.5 billion of which $2.4 billion or 95% was owned by RCLP.
Shopping Center Business
The Company's principal business is owning, operating and developing grocery
anchored neighborhood infill shopping centers. Infill refers to shopping centers
within a targeted investment market offering sustainable competitive advantages
such as barriers to entry resulting from zoning restrictions, growth management
laws, or limited new competition from development or expansions. The Company's
properties summarized by state (including properties under development) in order
by their gross leasable areas (GLA) follows:
<TABLE>
September 30, 1999 December 31, 1998
------------------ -----------------
Location # Properties GLA % Leased # Properties GLA % Leased
-------- ------------ --------- -------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Florida 48 5,896,902 91.4% 46 5,728,347 91.4%
Texas 30 4,103,182 86.6% 5 479,900 84.7%
California 36 3,820,946 97.5% - - -
Georgia 27 2,715,350 93.5% 27 2,737,590 93.1%
Ohio 14 1,890,510 92.9% 13 1,786,521 93.4%
North Carolina 12 1,241,634 97.7% 12 1,239,783 98.3%
Washington 9 1,066,962 87.4% - - -
Colorado 10 902,848 92.5% 5 447,569 89.4%
Oregon 6 583,464 94.1% - - -
Alabama 5 516,060 99.5% 5 516,060 99.0%
Tennessee 4 388,357 99.2% 4 295,179 96.8%
Arizona 2 326,984 99.7% - - -
Delaware 1 232,752 97.6% 1 232,752 94.8%
Kentucky 1 205,060 91.3% 1 205,060 95.6%
Virginia 2 197,324 96.1% 2 197,324 97.7%
Mississippi 2 185,06 96.6% 2 185,061 97.6%
Illinois 1 178,600 85.9% 1 178,600 86.9%
Michigan 2 177,316 81.5% 2 177,929 81.5%
South Carolina 2 162,056 98.2% 2 162,056 100.0%
Missouri 1 82,498 98.4% 1 82,498 99.8%
Wyoming 1 75,000 81.3% - - -
-------------- --------------- ---------------- -------------- --------------- -------------
Total 216 24,948,866 92.6% 129 14,652,229 92.9%
============== =============== ================ ============== =============== =============
</TABLE>
The Company is focused on building a platform of grocery anchored neighborhood
shopping centers because grocery stores provide convenience shopping of daily
necessities, foot traffic for adjacent local tenants, and should withstand
adverse economic conditions. The Company's current investment markets have
continued to offer strong stable economies, and accordingly, the Company expects
to realize growth in net income as a result of increasing occupancy in the
portfolio, increasing rental rates, development and acquisition of shopping
centers in targeted markets, and redevelopment of existing shopping centers. The
following table summarizes the four largest grocery tenants occupying the
Company's shopping centers or expected to occupy shopping centers currently
under construction at September 30, 1999:
Grocery Anchor Number of % of % of Annualized
Stores Total GLA Base Rent
-------------- ---------- ---------- --------------
Kroger 53 12.3% 10.85%
Publix 36 6.4% 4.33%
Safeway 27 5.1% 4.41%
Winn-Dixie 16 3.0% 2.08%
<PAGE>
Acquisition and Development of Shopping Centers
On September 23, 1998, the Company entered into an Agreement of Merger
("Agreement") with Pacific Retail Trust ("Pacific"), a privately held real
estate investment trust. The Agreement, among other matters, provided for the
merger of Pacific into Regency, and the exchange of each Pacific common or
preferred share into 0.48 shares of Regency common or preferred stock. The
stockholders approved the merger at a Special Meeting of Stockholders held
February 26, 1999. At the time of the merger, Pacific owned 71 retail shopping
centers that are operating or under construction containing 8.4 million SF of
gross leaseable area. On February 28, 1999, the effective date of the merger,
the Company issued equity instruments valued at $770.6 million to the Pacific
stockholders in exchange for their outstanding common and preferred shares and
units. The total cost to acquire Pacific was approximately $1.157 billion based
on the value of Regency shares issued including the assumption of $379 million
of outstanding debt and other liabilities of Pacific, and estimated closing
costs of $7.5 million. The price per share used to determine the purchase price
was $23.325 based on the five day average of the closing stock price of
Regency's common stock as listed on the New York Stock Exchange immediately
before, during and after the date the terms of the merger were agreed to and
announced to the public. The merger was accounted for as a purchase with the
Company as the acquiring entity.
During 1998, the Company acquired 31 shopping centers fee simple for
approximately $355.9 million and also invested $28.4 million in 12 joint
ventures ("JV Properties"), for a total investment of $384.3 million in 43
shopping centers ("1998 Acquisitions"). Included in the 1998 Acquisitions are 32
shopping centers acquired from various entities comprising the Midland Group
("Midland"). Of the 32 Midland centers, 31 are anchored by Kroger, and 12 are
owned through joint ventures in which the Company's ownership interest is 50% or
less. The Company's investment in the properties acquired from Midland is $236.6
million at December 31, 1998. During 1999 and 2000, the Company may pay
contingent consideration of up to an estimated $23 million, through the issuance
of Partnership units and the payment of cash. The amount of such consideration,
if issued, will depend on the satisfaction of certain performance criteria
relating to the assets acquired from Midland. Transferors who received cash at
the initial Midland closing will receive contingent future consideration in cash
rather than units. On April 16, 1999, the Company paid $5.2 million related to
this contingent consideration.
Results from Operations
Comparison of the nine months ended September 30, 1999 to 1998
Revenues increased $106.9 million or 104% to $210.2 million in 1999. The
increase was due primarily to Pacific and the 1998 Acquisitions providing
increases in revenues of $101.2 million during 1999. At September 30, 1999, the
real estate portfolio contained approximately 24.9 million SF and was 92.6%
leased. Minimum rent increased $81.5 million or 109%, and recoveries from
tenants increased $21.8 million or 128%. On a same property basis (excluding
Pacific, the 1998 Acquisitions, and the office portfolio sold during 1998) gross
rental revenues increased $4.8 million or 6%, primarily due to higher base
rents. Revenues from property management, leasing, brokerage, and development
services (service operation segment) provided on properties not owned by the
Company were $10.6 million and $9.1 million in 1999 and 1998, respectively.
During 1998, the Company sold four office buildings and a parcel of land for
$30.7 million, and recognized a gain on the sale of $10.7 million. As a result
of these transactions the Company's real estate portfolio is comprised entirely
of retail shopping centers. The proceeds from the sale were used to reduce the
balance of the line of credit.
Operating expenses increased $45.9 million or 90% to $96.6 million in 1999.
Combined operating and maintenance, and real estate taxes increased $25.1
million or 113% during 1999 to $47.2 million. The increases are due to Pacific
and the 1998 Acquisitions generating operating and maintenance expenses and real
estate tax increases of $24.4 million during 1999. On a same property basis,
operating and maintenance expenses and real estate taxes increased $860,000 or
4.5%. General and administrative expenses increased 32% during 1999 to $13.6
million due to the hiring of new employees and related office expenses necessary
to manage the shopping centers acquired during 1999 and 1998. Depreciation and
amortization increased $16.9 million during 1999 or 94% primarily due to Pacific
and the 1998 Acquisitions.
Interest expense increased to $43.6 million in 1999 from $20.7 million in 1998
or 110% due to increased average outstanding loan balances related to the
financing of the 1998 Acquisitions on the Line, the assumption of debt for
Pacific and the debt offerings completed in 1999. Weighted average interest
rates decreased .15% during 1999. See further discussion under Acquisition and
Development of Shopping Centers and Liquidity and Capital Resources.
<PAGE>
Net income for common stockholders was $61.8 million in 1999 vs. $40.4 million
in 1998, a $21.3 million or 53% increase for the reasons previously described.
Diluted earnings per share in 1999 was $1.16 vs. $1.42 in 1998 due to the gain
offset by the dilutive impact from the increase in weighted average common
shares and equivalents of 27.1 million primarily due to the acquisition of
Pacific Retail Trust and the issuance of shares to SC-USREALTY during 1998.
Comparison of the three months ended September 30, 1999 to 1998
Revenues increased $42.1 million or 113% to $79.3 million in 1999. The increase
was due primarily to Pacific and the 1998 Acquisitions providing increases in
revenues of $39.1 million during 1999. Minimum rent increased $31.5 million or
116%, and recoveries from tenants increased $8.1 million or 126%. On a same
property basis (excluding Pacific, the 1998 Acquisitions, and the office
portfolio sold during 1998) gross rental revenues increased $1.6 million or 6%,
primarily due to higher base rents. Revenues from property management, leasing,
brokerage, and development services (service operation segment) provided on
properties not owned by the Company were $4.5 million in 1999 compared to $3.1
million in 1998, the increase is due primarily to a increase in brokerage fees.
Operating expenses increased $18.7 million or 105% to $36.5 million in 1999.
Combined operating and maintenance, and real estate taxes increased $10.4
million or 132% during 1999 to $18.2 million. The increases are due to Pacific
and the 1998 Acquisitions generating operating and maintenance expenses and real
estate tax increases of $9.8 million during 1999. On a same property basis,
operating and maintenance expenses and real estate taxes increased $550,000 or
8.8%. General and administrative expenses increased 44% during 1999 to $4.8
million due to the hiring of new employees and related office expenses necessary
to manage the shopping centers acquired during 1999 and 1998. Depreciation and
amortization increased $6.5 million during 1999 or 99% primarily due to Pacific
and the 1998 Acquisitions.
Interest expense increased to $15.6 million in 1999 from $7.3 million in 1998 or
114% due to increased average outstanding loan balances related to the financing
of the 1998 Acquisitions on the Line and the assumption of debt for Pacific and
the debt offerings completed in 1999. See further discussion under Acquisition
and Development of Shopping Centers and Liquidity and Capital Resources.
Net income for common stockholders was $24 million in 1999 vs. $10.1 million in
1998, a $13.9 million or 138% increase for reasons previously described. Diluted
earnings per share in 1999 was $.40 vs. $.34 in 1998 due to the increase in net
income offset by the dilutive impact from the increase in weighted average
common shares and equivalents of 34.4 million primarily due to the acquisition
of Pacific Retail Trust and the issuance of shares to SC-USREALTY during 1998.
Funds from Operations
The Company considers funds from operations ("FFO"), as defined by the National
Association of Real Estate Investment Trusts as net income (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring and sales of income producing property held for
investment, plus depreciation and amortization of real estate, and after
adjustments for unconsolidated investments in real estate partnerships and joint
ventures, to be the industry standard for reporting the operations of real
estate investment trusts ("REITs"). Adjustments for investments in real estate
partnerships are calculated to reflect FFO on the same basis. While management
believes that FFO is the most relevant and widely used measure of the Company's
performance, such amount does not represent cash flow from operations as defined
by generally accepted accounting principles, should not be considered an
alternative to net income as an indicator of the Company's operating
performance, and is not indicative of cash available to fund all cash flow
needs. Additionally, the Company's calculation of FFO, as provided below, may
not be comparable to similarly titled measures of other REITs.
<PAGE>
FFO increased by 101% from 1998 to 1999 as a result of the activity discussed
above under "Results of Operations". FFO for the nine months ended September 30,
1999 and 1998 are summarized in the following table (in thousands):
1999 1998
------------ ------------
Net income for common stockholders $ 61,751 40,415
Real estate depreciation and amortization 34,260 17,582
(Gain) on sale of operating property - (9,835)
Convertible preferred dividends 1,577 -
Minority interests in net income of
exchangeable partnership units 2,108 1,378
------------ ------------
Funds from operations - diluted $ 99,696 49,540
============ ============
Cash flow provided by (used in):
Operating activities $ 100,244 53,622
Investing activities (188,252) (168,888)
Financing activities 91,673 117,081
Liquidity and Capital Resources
Management anticipates that cash generated from operating activities will
provide the necessary funds on a short-term basis for its operating expenses,
interest expense and scheduled principal payments on outstanding indebtedness,
recurring capital expenditures necessary to properly maintain the shopping
centers, and distributions to share and unit holders. Net cash provided by
operating activities was $100.2 million and $53.6 million for the nine months
ended September 30, 1999 and 1998, respectively. The Company incurred recurring
and non-recurring capital expenditures (non-recurring expenditures pertain to
immediate building improvements on new acquisitions and anchor tenant
improvements on new leases) of $10.9 million and $4.8 million, during 1999 and
1998, respectively. The Company paid scheduled principal payments of $4.3
million and $2.3 during 1999 and 1998, respectively. The Company paid dividends
and distributions of $77.5 million and $40.1 million, during 1999 and 1998,
respectively, to its share and unit holders.
Management expects to meet long-term liquidity requirements for term debt
payoffs at maturity, non-recurring capital expenditures, and acquisition,
renovation and development of shopping centers from: (i) excess cash generated
from operating activities, (ii) working capital reserves, (iii) additional debt
borrowings, and (iv) additional equity raised in the public markets. Net cash
used in investing activities was $188.3 million and $168.9 million, during 1999
and 1998, respectively, primarily for purposes discussed above under
Acquisitions and Development of Shopping Centers. Net cash provided by financing
activities was $91.7 million and $117.1 million during 1999 and 1998,
respectively. At September 30, 1999, the Company had 47 retail properties under
construction or undergoing major renovations, with costs to date of $414.1
million. Total committed costs necessary to complete the properties under
development is estimated to be $157.5 million and will be expended through 1999
and 2000. At September 30, 1999, the Company had approximately $164 million
available on its Line.
The Company's outstanding debt at September 30, 1999 and December 31, 1998
consists of the following (in thousands):
1999 1998
-------------- ---------------
Notes Payable:
Fixed rate mortgage loans $ 390,476 298,148
Variable rate mortgage loans 13,517 11,051
Fixed rate unsecured loans 370,827 121,296
-------------- ---------------
Total notes payable 774,820 430,495
Acquisition and development line of credit 144,179 117,631
-------------- ---------------
Total $ 918,999 548,126
============== ===============
<PAGE>
The weighted average interest rate on total debt at September 30, 1999 and
December 31, 1998 and was 7.2% and 7.4%, respectively. The Company's debt is
typically cross-defaulted, but not cross-collateralized, and includes usual and
customary affirmative and negative covenants.
During February, 1999, the Company modified the terms of its unsecured line of
credit (the "Line") by increasing the commitment to $635 million. Maximum
availability under the Line is based on the discounted value of a pool of
eligible unencumbered assets (determined on the basis of capitalized net
operating income) less the amount of the Company's outstanding unsecured
liabilities. The Line matures in February 2001, but may be extended annually for
one year periods. The Company is required to comply, and is in compliance, with
certain financial and other covenants customary with this type of unsecured
financing. These financial covenants include among others (i) maintenance of
minimum net worth, (ii) ratio of total liabilities to gross asset value, (iii)
ratio of secured indebtedness to gross asset value, (iv) ratio of EBITDA to
interest expense, (v) ratio of EBITDA to debt service and reserve for
replacements, and (vi) ratio of unencumbered net operating income to interest
expense on unsecured indebtedness. The Line is used primarily to finance the
acquisition and development of real estate, but is also available for general
working capital purposes.
On June 29, 1998, the Company through RCLP issued $80 million of 8.125% Series A
Cumulative Redeemable Preferred Units ("Series A Preferred Units") to an
institutional investor in a private placement. The issuance involved the sale of
1.6 million Series A Preferred Units for $50.00 per unit. The Series A Preferred
Units, which may be called by the Company at par on or after June 25, 2003, have
no stated maturity or mandatory redemption, and pay a cumulative, quarterly
dividend at an annualized rate of 8.125%. At any time after June 25, 2008, the
Series A Preferred Units may be exchanged for shares of 8.125% Series A
Cumulative Redeemable Preferred Stock of the Company at an exchange rate of one
share of Series A Preferred Stock for one Series A Preferred Unit. The Series A
Preferred Units and Series A Preferred Stock are not convertible into common
stock of the Company. The net proceeds of the offering were used to reduce the
Line.
On September 3, 1999, the Company through RCLP issued $85 million of 8.75%
Series B Cumulative Redeemable Preferred Units ("Series B Preferred Units") to
an institutional investor in a private placement. The issuance involved the sale
of 850,000 Series B Preferred Units for $100.00 per unit. The Series B Preferred
Units, which may be called by the Partnership at par on or after September 3,
2004, have no stated maturity or mandatory redemption, and pay a cumulative,
quarterly dividend at an annualized rate of 8.75%. At any time after September
3, 2009, the Series B Preferred Units may be exchanged for shares of 8.75%
Series B Cumulative Redeemable Preferred Stock of the Company at an exchange
rate of one share of Series B Preferred Stock for one Series B Preferred Unit.
The Series B Preferred Units and Series B Preferred Stock are not convertible
into common stock of the Company. The net proceeds of the offering were used to
reduce the acquisition and development line of credit.
On September 3, 1999, the Company through RCLP issued $75 million of 9.0% Series
C Cumulative Redeemable Preferred Units ("Series C Preferred Units") to an
institutional investor in a private placement. The issuance involved the sale of
750,000 Series C Preferred Units for $100.00 per unit. The Series C Preferred
Units, which may be called by the Partnership at par on or after September 3,
2004, have no stated maturity or mandatory redemption, and pay a cumulative,
quarterly dividend at an annualized rate of 9.0%. At any time after September 3,
2009, the Series C Preferred Units may be exchanged for shares of 9.0% Series C
Cumulative Redeemable Preferred Stock of the Company at an exchange rate of one
share of Series C Preferred Stock for one Series C Preferred Unit. The Series C
Preferred Units and Series C Preferred Stock are not convertible into common
stock of the Company. The net proceeds of the offering were used to reduce the
acquisition and development line of credit.
On September 29, 1999, the Company through RCLP issued $50 million of 9.125%
Series D Cumulative Redeemable Preferred Units ("Series D Preferred Units") to
an institutional investor in a private placement. The issuance involved the sale
of 500,000 Series D Preferred Units for $100.00 per unit. The Series D Preferred
Units, which may be called by the Partnership at par on or after September 29,
2004, have no stated maturity or mandatory redemption, and pay a cumulative,
quarterly dividend at an annualized rate of 9.125%. At any time after September
29, 2009, the Series D Preferred Units may be exchanged for shares of 9.125%
Series D Cumulative Redeemable Preferred Stock of the Company at an exchange
rate of one share of Series D Preferred Stock for one Series D Preferred Unit.
The Series D Preferred Units and Series D Preferred Stock are not convertible
into common stock of the Company. The net proceeds of the offering were used to
reduce the acquisition and development line of credit.
<PAGE>
On April 15, 1999 the Company, through RCLP, completed a $250 million debt
offering in two tranches. The Company issued $200 million, 7.4% notes due April
1, 2004, priced at 99.922% to yield 7.42%, and $50 million, 7.75% notes due
April 1, 2009, priced at 100%. The net proceeds of the offering were used to
reduce the balance of the Line.
Mortgage loans are secured by certain real estate properties, and generally may
be prepaid subject to a prepayment of a yield-maintenance premium. Mortgage
loans are generally due in monthly installments of interest and principal and
mature over various terms through 2019. Variable interest rates on mortgage
loans are currently based on LIBOR plus a spread in a range of 125 basis points
to 150 basis points. Fixed interest rates on mortgage loans range from 7.04% to
9.8%.
During 1999, the Company assumed debt with a fair value of $402.6 million
related to the acquisition of real estate, which includes debt premiums of $4.1
million based upon the above market interest rates of the debt instruments. Debt
premiums are being amortized over the terms of the related debt instruments.
As of September 30, 1999, scheduled principal repayments on notes payable and
the Line for the next five years were as follows (in thousands):
<TABLE>
Scheduled
Principal Term Loan Total
Scheduled Payments by Year Payments Maturities Payments
--------------- -------------- ---------------
<S> <C> <C> <C>
1999 $ 1,718 - 1,718
2000 5,711 98,608 104,319
2001 5,621 194,572 200,193
2002 4,943 44,114 49,057
2003 4,933 13,301 18,234
Beyond 5 Years 42,210 490,227 532,437
Net unamortized debt payments - 13,041 13,041
--------------- -------------- ---------------
Total $ 65,136 853,863 918,999
=============== ============== ===============
</TABLE>
Unconsolidated partnerships and joint ventures had mortgage loans payable of
$54.9 million at September 30, 1999 and the Company's proportionate share of
these loans was $23.5 million.
The Company qualifies and intends to continue to qualify as a REIT under the
Internal Revenue Code. As a REIT, the Company is allowed to reduce taxable
income by all or a portion of its distributions to stockholders. As
distributions have exceeded taxable income, no provision for federal income
taxes has been made. While the Company intends to continue to pay dividends to
its stockholders, it also will reserve such amounts of cash flow as it considers
necessary for the proper maintenance and improvement of its real estate, while
still maintaining its qualification as a REIT.
The Company's real estate portfolio has grown substantially during 1999 as a
result of the acquisitions and development discussed above. The Company intends
to continue to acquire and develop shopping centers in the near future, and
expects to meet the related capital requirements from borrowings on the Line.
The Company expects to repay the Line from time to time from additional public
and private equity or debt offerings, such as those completed in previous years.
Because such acquisition and development activities are discretionary in nature,
they are not expected to burden the Company's capital resources currently
available for liquidity requirements. The Company expects that cash provided by
operating activities, unused amounts available under the Line, and cash reserves
are adequate to meet liquidity requirements.
<PAGE>
New Accounting Standards and Accounting Changes
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities " (FAS 133), which is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. FAS 133 establishes accounting and
reporting standards for derivative instruments and hedging activities. FAS 133
requires entities to recognize all derivatives as either assets or liabilities
in the balance sheet and measure those instruments at fair value. The Company
does not believe FAS 133 will materially effect its financial statements.
Environmental Matters
The Company like others in the commercial real estate industry, is subject to
numerous environmental laws and regulations and the operation of dry cleaning
plants at the Company's shopping centers is the principal environmental concern.
The Company believes that the dry cleaners are operating in accordance with
current laws and regulations and has established procedures to monitor their
operations. The Company has approximately 38 properties that will require or are
currently undergoing varying levels of environmental remediation. These
remediations are not expected to have a material financial effect on the Company
due to financial statement reserves and various state-regulated programs that
shift the responsibility and cost for remediation to the state. Based on
information presently available, no additional environmental accruals were made
and management believes that the ultimate disposition of currently known matters
will not have a material effect on the financial position, liquidity, or
operations of the Company.
Inflation
Inflation has remained relatively low during 1999 and 1998 and has had a minimal
impact on the operating performance of the shopping centers; however,
substantially all of the Company's long-term leases contain provisions designed
to mitigate the adverse impact of inflation. Such provisions include clauses
enabling the Company to receive percentage rentals based on tenants' gross
sales, which generally increase as prices rise, and/or escalation clauses, which
generally increase rental rates during the terms of the leases. Such escalation
clauses are often related to increases in the consumer price index or similar
inflation indices. In addition, many of the Company's leases are for terms of
less than ten years, which permits the Company to seek increased rents upon
re-rental at market rates. Most of the Company's leases require the tenants to
pay their share of operating expenses, including common area maintenance, real
estate taxes, insurance and utilities, thereby reducing the Company's exposure
to increases in costs and operating expenses resulting from inflation.
Year 2000 System Compliance
Management recognizes the potential effect Year 2000 may have on the Company's
operations and, as a result, has implemented a Year 2000 Compliance Project. The
term "Year 2000 compliant" means that the software, hardware, equipment, goods
or systems utilized by, or material to the physical operations, business
operations, or financial reporting of an entity will properly perform date
sensitive functions before, during and after the year 2000.
The Company's Year 2000 Compliance Project included an awareness phase, an
assessment phase, a renovation phase, and a testing phase of our data processing
network, accounting and property management systems, computer and operating
systems, software packages, and building management systems. The project also
included surveying our major tenants, financial institutions, and utility
companies.
The Company's computer hardware, operating systems, general accounting and
property management systems and principal desktop software applications are Year
2000 compliant as certified by the various vendors. We have tested, and remedied
as needed, our general accounting and property management information system,
all servers and their operating systems, all principal desktop software
applications, personal computers and PC operating systems. Based on the test
results, Management does not anticipate any Year 2000 problems that will
materially impact operations or operating results.
An assessment of the Company's building management systems has been completed.
This assessment has resulted in the identification of certain lighting,
telephone, and voice mail systems that may not be Year 2000 compliant. These
non-compliant systems have been replaced or updated to be compliant.
<PAGE>
The Company has surveyed its major tenants, financial institutions, and utility
companies in order to determine the extent to which the Company is vulnerable to
third party Year 2000 failures. We have received responses from 100% of our
principal tenants, financial institutions and utility companies. All parties
have indicated that they are Year 2000 compliant or will be by September 30,
1999. However, there are no assurances that these entities will not experience
failures that might disrupt the operations of the Company.
Management believes the Year 2000 Compliance Project, summarized above, has
adequately addressed the Year 2000 risk. Certain events are beyond the control
of Management, primarily related to the readiness of customers and suppliers,
and can not be tested. Management believes this risk is mitigated by the fact
that the Company deals with numerous geographically disbursed customers and
suppliers. Any third party failures should be isolated and short term, however,
there can be no guarantee that the systems of unrelated entities will be
corrected on a timely basis and will not have an adverse effect on the Company.
As a result, the Company has developed a formal Year 2000 contingency plan which
has been communicated to tenants and employees allowing for communication and
resolution of any disruption that may occur.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Risk
The Company is exposed to interest rate changes primarily as a result of its
line of credit and long-term debt used to maintain liquidity and fund capital
expenditures and expansion of the Company's real estate investment portfolio and
operations. The Company's interest rate risk management objective is to limit
the impact of interest rate changes on earnings and cash flows and to lower its
overall borrowing costs. To achieve its objectives the Company borrows primarily
at fixed rates and may enter into derivative financial instruments such as
interest rate swaps, caps and treasury locks in order to mitigate its interest
rate risk on a related financial instrument. The Company has no plans to enter
into derivative or interest rate transactions for speculative purposes, and at
September 30, 1999, the Company did not have any borrowings hedged with
derivative financial instruments.
The Company's interest rate risk is monitored using a variety of techniques. The
table below presents the principal amounts maturing (in thousands), weighted
average interest rates of remaining debt, and the fair value of total debt (in
thousands), by year of expected maturity to evaluate the expected cash flows and
sensitivity to interest rate changes.
<TABLE>
<CAPTION>
Fair
1999 2000 2001 2002 2003 Thereafter Total Value
---- ---- ---- ---- ---- ---------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed rate debt 1,688 104,188 42,659 49,057 18,234 532,436 748,262 761,303
Average interest rate for all debt 7.73% 7.81% 7.78% 7.70% 7.66% 7.81% - -
Variable rate LIBOR debt 30 132 157,534 - - - 157,696 157,696
Average interest rate for all debt 6.19% 6.18% - - - - - -
</TABLE>
As the table incorporates only those exposures that exist as of September 30,
1999, it does not consider those exposures or positions which could arise after
that date. Moreover, because firm commitments are not presented in the table
above, the information presented therein has limited predictive value. As a
result, the Company's ultimate realized gain or loss with respect to interest
rate fluctuations will depend on the exposures that arise during the period, the
Company's hedging strategies at that time, and interest rates.
<PAGE>
Forward Looking Statements
This report contains certain forward-looking statements (as such term is defined
in the Private Securities Litigation Reform Act of 1995) and information
relating to the Company that is based on the beliefs of the Company's
management, as well as assumptions made by and information currently available
to management. When used in this report, 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
acquisitions, including Pacific; changes in business strategy; the indebtedness
of the Company; quality of management, business abilities and judgment of the
Company's personnel; the availability, terms and deployment of capital; and
various other factors referenced in this report. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof. The Company does not undertake any obligation to publicly
release any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
<PAGE>
Item 6 Exhibits and Reports on Form 8-K:
(a) Exhibits
3 Articles of Incorporation
(a) Restated Articles of Incorporation of Regency Realty Corporation
as last amended October 14, 1999.
(i) Amendment to Restated Articles
of Incorporation of Regency Realty Corporation as amended to date.
(ii) Amendment to Restated Articles of Incorporation, as last amended
February 28, 1999.
(iii) Form of Articles of Amendment to Articles of
Incorporation Amending the Designation of
Preferences, Rights and Limitations of Series 1 Cumulative
Convertible Redeemable Preferred Stock
(iv) Form of Articles of Amendment to Articles of Incorporation
Amending the Designation of Preferences, Rights and Limitations of
Series 2 Cumulative Convertible Redeemable Preferred Stock
10. Material Contracts
(a) Amendment No. 4 to Stockholders Agreement dated December 4, 1997
(incorporated by reference to Exhibit 6.2 to Schedule 13D/A filed by
Security Capital U.S. Realty on December 11, 1997)
(b) Reports on Form 8-K
An 8-K was filed on September 2, 1999 under Item 5. Other Information
for supplemental information to include pro forma financial statements
for Regency Realty Corporation as of June 30, 1999 and December 31,
1998.
27. Financial Data Schedule
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 8, 1999 REGENCY REALTY CORPORATION
By: /s/ J. Christian Leavitt
Senior Vice President
and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM REGENCY
REALTY CORPORATION'S QUARTERLY REPORT FOR THE PERIOD ENDED 9/30/99
</LEGEND>
<CIK> 0000910606
<NAME> REGENCY REALTY CORPORATION
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 23,584,820
<SECURITIES> 0
<RECEIVABLES> 31,399,783
<ALLOWANCES> 1,632,837
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,629,005,727
<DEPRECIATION> 92,323,612
<TOTAL-ASSETS> 2,608,486,087
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 595,861
<OTHER-SE> 1,300,349,534
<TOTAL-LIABILITY-AND-EQUITY> 2,608,486,087
<SALES> 0
<TOTAL-REVENUES> 210,241,166
<CGS> 0
<TOTAL-COSTS> 47,232,742
<OTHER-EXPENSES> 34,893,216
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,567,458
<INCOME-PRETAX> 63,328,196
<INCOME-TAX> 0
<INCOME-CONTINUING> 63,328,196
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,751,031
<EPS-BASIC> 1.16
<EPS-DILUTED> 1.16
</TABLE>
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
REGENCY REALTY CORPORATION
AMENDING AND RESTATING THE DESIGNATION OF THE PREFERENCES,
RIGHTS AND LIMITATIONS OF 1,600,000 SHARES OF
8.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
$0.01 Par Value
Pursuant to Section 607.0602 of the Florida Business
Corporation Act ("FBCA"), Regency Realty Corporation, a Florida corporation (the
"Corporation"), does hereby certify that the Articles of Amendment to the
Articles of Incorporation of the Corporation Designating the Preferences, Rights
and Limitations of 1,600,000 shares of 8.125% Series A Cumulative Redeemable
Preferred Stock, as filed in the Office of the Florida Secretary of State on
June 24, 1998, shall be amended and restated in its entirety as follows:
FIRST : Pursuant to the authority expressly vested in the Board of Directors of
the Corporation by Section 4.2 of the Amended and Restated Articles of
Incorporation of the Corporation (the "Charter") and Section 607.0602 of the
FBCA, the Board of Directors of the Corporation (the "Board of Directors"), by
resolutions duly adopted on May 26, 1998 has classified 1,600,000 shares of the
authorized but unissued Preferred Stock par value $.01 per share ("Preferred
Stock") as a separate class of Preferred Stock, authorized the issuance of a
maximum of 1,600,000 shares of such class of Preferred Stock, set certain of the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, terms and conditions of redemption
and other terms and conditions of such class of Preferred Stock, and pursuant to
the powers contained in the Bylaws of the Corporation and the FBCA, appointed a
committee (the "Committee") of the Board of Directors and delegated to the
Committee, to the fullest extent permitted by the FBCA and the Charter and
Bylaws of the Corporation, all powers of the Board of Directors with respect to
designating, and setting all other preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of, such
class of Preferred Stock determining the number of shares of such class of
Preferred Stock (not in excess of the aforesaid maximum number) to be issued and
the consideration and other terms and conditions upon which such shares of such
class of Preferred Stock are to be issued. Shareholder approval was not required
under the Charter with respect to such designation.
SECOND: Pursuant to the authority conferred upon the Committee
as aforesaid, the Committee has unanimously adopted resolutions designating the
aforesaid class of Preferred Stock as the "8.125% Series A Cumulative Redeemable
Preferred Stock," setting the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, terms and
conditions of redemption and other terms and conditions of such 8.125% Series A
Cumulative Redeemable Preferred Stock (to the extent not set by the Board of
Directors in the resolutions referred to in Article FIRST of these Articles of
Amendment) and authorizing the issuance of up to 1,600,000 shares of 8.125%
Series A Cumulative Redeemable Preferred Stock.
THIRD: Pursuant to the authority conferred upon the Committee,
the Committee has, by unanimous written consent dated September 29, 1999,
adopted resolutions amending and restating the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, terms and conditions of redemption and other terms and
conditions of such 8.125% Series A Cumulative Redeemable Preferred Stock (to the
extent not set by the Board of Directors in the resolutions referred to in
Article FIRST of these Articles of Amendment). There are no shares of 8.125%
Series A Cumulative Redeemable Preferred Stock outstanding and, accordingly, no
shareholder approval was required. The class of Preferred Stock of the
Corporation created by the resolutions duly adopted by the Board of Directors of
the Corporation and by the Committee and referred to in Articles FIRST and
SECOND of these Articles of Amendment and amended hereby shall have the
following designation, number of shares, preferences, conversion and other
rights, voting powers, restrictions and limitation as to dividends,
qualifications, terms and conditions of redemption and other terms and
conditions:
<PAGE>
Section 1. Designation and Number. A series of Preferred Stock, designated the
"8.125% Series A Cumulative Redeemable Preferred Stock" (the "Series A Preferred
Stock") is hereby established. The number of shares of Series A Preferred Stock
shall be 1,600,000.
Section 2. Rank. The Series A Preferred Stock will, with respect to
distributions or rights upon voluntary or involuntary liquidation, winding-up or
dissolution of the Corporation, or both, rank senior to all classes or series of
Common Stock (as defined in the Charter) and to all classes or series of equity
securities of the Corporation now or hereafter authorized, issued or
outstanding, other than any class or series of equity securities of the
Corporation expressly designated as ranking on a parity with or senior to the
Series A Preferred Stock as to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Corporation, or both.
For purposes of these Articles of Amendment, the term "Parity Preferred Stock"
shall be used to refer to any class or series of equity securities of the
Corporation now or hereafter authorized, issued or outstanding expressly
designated by the Corporation to rank on a parity with Series A Preferred Stock
with respect to distributions or rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Corporation, or both, as the
context may require, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or conversion rights or exchange
rights shall be different from those of the Series A Preferred Stock. The term
"equity securities" does not include debt securities, which will rank senior to
the Series A Preferred Stock prior to conversion. Section 3. Distributions. (a)
Payment of Distributions. Subject to the rights of holders of Parity Preferred
Stock as to the payment of distributions and holders of equity securities issued
after the date hereof in accordance herewith ranking senior to the Series A
Preferred Stock as to payment of distributions, holders of Series A Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors of the Corporation, out of funds legally available for the payment of
distributions, cumulative cash distributions at the rate per annum of 8.125% of
the $50.00 liquidation preference per share of Series A Preferred Stock. Such
distributions shall be cumulative, shall accrue from the original date of
issuance and will be payable in cash (A) quarterly in arrears, on or before
March 31, June 30, September 30 and December 31 of each year commencing on the
first of such dates to occur after the original date of issuance and, (B) in the
event of a redemption, on the redemption date (each a "Preferred Stock
Distribution Payment Date"). The amount of the distribution payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months
and for any period shorter than a full quarterly period for which distributions
are computed, the amount of the distribution payable will be computed on the
basis of the actual number of days elapsed in such a 30-day month. If any date
on which distributions are to be made on the Series A Preferred Stock is not a
Business Day (as defined herein), then payment of the distribution to be made on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date. Distributions on the Series A
Preferred Stock will be made to the holders of record of the Series A Preferred
Stock on the relevant record dates to be fixed by the Board of Directors of the
Corporation, which record dates shall be not less than 10 days and not more than
30 Business Days prior to the relevant Preferred Stock Distribution Payment Date
(each a "Distribution Record Date"). Notwithstanding anything to the contrary
set forth herein, each share of Series A Preferred Stock shall also continue to
<PAGE>
accrue all accrued and unpaid distributions, whether or not declared, up to the
exchange date on any Series A Preferred Unit (as defined in the Second Amended
and Restated Agreement of Limited Partnership of Regency Centers, L.P., dated as
March 5, 1998 as amended by that certain Amendment No. One to Second Amendment
and Restatement of Agreement of Limited Partnership dated as of June 25, 1998
(as amended the "Partnership Agreement")) validly exchanged into such share of
Series A Preferred Stock in accordance with the provisions of such Partnership
Agreement.
The term "Business Day" shall mean each day, other than a
Saturday or a Sunday, which is not a day on which banking institutions in New
York, New York are authorized or required by law, regulation or executive order
to close.
(b) Limitation on Distributions. No distribution on the Series
A Preferred Stock shall be declared or paid or set apart for payment by the
Corporation at such time as the terms and provisions of any agreement of the
Corporation (other than any agreement with a holder or affiliate of holder of
Capital Stock of the Corporation) relating to its indebtedness, prohibit such
declaration, payment or setting apart for payment or provide that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration, payment or setting
apart for payment shall be restricted or prohibited by law. Nothing in this
Section 3(b) shall be deemed to modify or in any manner limit the provisions of
Section 3(c) and 3(d).
(c) Distributions Cumulative. Distributions on the Series A
Preferred Stock will accrue whether or not the terms and provisions of any
agreement of the Corporation, including any agreement relating to its
indebtedness at any time prohibit the current payment of distributions, whether
or not the Corporation has earnings, whether or not there are funds legally
available for the payment of such distributions and whether or not such
distributions are authorized or declared. Accrued but unpaid distributions on
the Series A Preferred Stock will accumulate as of the Preferred Stock
Distribution Payment Date on which they first become payable. Distributions on
account of arrears for any past distribution periods may be declared and paid at
any time, without reference to a regular Preferred Stock Distribution Payment
Date to holders of record of the Series A Preferred Stock on the record date
fixed by the Board of Directors which date shall be not less than 10 days and
not more than 30 Business Days prior to the payment date. Accumulated and unpaid
distributions will not bear interest.
(d) Priority as to Distributions. (i) So long as any Series A
Preferred Stock is outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Common Stock or any class or series of other stock of the
Corporation ranking junior as to the payment of distributions to the Series A
Preferred Stock (such Common Stock or other junior stock, collectively, "Junior
Stock"), nor shall any cash or other property be set aside for or applied to the
purchase, redemption or other acquisition for consideration of any Series A
Preferred Stock, any Parity Preferred Stock with respect to distributions or any
Junior Stock, unless, in each case, all distributions accumulated on all Series
A Preferred Stock and all classes and series of outstanding Parity Preferred
Stock as to payment of distributions have been paid in full. The foregoing
sentence will not prohibit (i) distributions payable solely in Junior Stock,
(ii) the conversion of Series A Preferred Stock, Junior Stock or Parity
Preferred Stock into stock of the Corporation ranking junior to the Series A
Preferred Stock as to distributions, and (iii) purchases by the Corporation of
such Series A Preferred Stock or Parity Preferred Stock with respect to
<PAGE>
distributions or Junior Stock pursuant to Article 5 of the Charter to the extent
required to preserve the Corporation's status as a real estate investment trust.
(ii) So long as distributions have not been paid in full
(or a sum sufficient for such full payment is not irrevocably deposited in trust
for payment) upon the Series A Preferred Stock, all distributions authorized
and declared on the Series A Preferred Stock and all classes or series of
outstanding Parity referred Stock with respect to distribution shall be
authorized and declared so that the amount of distributions authorized and
declared per share of Series A Preferred Stock and such other classes or series
of Parity Preferred Stock shall in all cases bear to each other the same ratio
that accrued distributions per share on the Series A Preferred Stock and such
other classes or series of Parity Preferred Stock (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such class or series of Parity Preferred Stock do not have cumulative
distribution rights) bear to each other.
(e) No Further Rights. Holders of Series A Preferred Stock
shall not be entitled to any distributions, whether payable in cash, other
property or otherwise, in excess of the full cumulative distributions described
herein.
Section 4. Liquidation Preference. (a) Payment of Liquidating Distributions.
Subject to the rights of holders of Parity Preferred Stock with respect to
rights upon any voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation and subject to equity securities ranking senior to the Series
A Preferred Stock with respect to rights upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, the holders of Series
A Preferred Stock shall be entitled to receive out of the assets of the
Corporation legally available for distribution or the proceeds thereof, after
payment or provision for debts and other liabilities of the Corporation, but
before any payment or distributions of the assets shall be made to holders of
Common Stock or any other class or series of shares of the Corporation that
ranks junior to the Series A Preferred Stock as to rights upon liquidation,
dissolution or winding-up of the Corporation, an amount equal to the sum of (i)
a liquidation preference of $50 per share of Series A Preferred Stock, and (ii)
an amount equal to any accumulated and unpaid distributions thereon, whether or
not declared, to the date of payment. In the event that, upon such voluntary or
involuntary liquidation, dissolution or winding-up, there are insufficient
assets to permit full payment of liquidating distributions to the holders of
Series A Preferred Stock and any Parity Preferred Stock as to rights upon
liquidation, dissolution or winding-up of the Corporation, all payments of
liquidating distributions on the Series A Preferred Stock and such Parity
Preferred Stock shall be made so that the payments on the Series A Preferred
Stock and such Parity Preferred Stock shall in all cases bear to each other the
same ratio that the respective rights of the Series A Preferred Stock and such
other Parity Preferred Stock (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such Parity
Preferred Stock do not have cumulative distribution rights) upon liquidation,
dissolution or winding-up of the Corporation bear to each other.
(b) Notice. Written notice of any such voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, stating
the payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be given by (i) fax
and (ii) by first class mail, postage pre-paid, not less than 30 and not more
that 60 days prior to the payment date stated therein, to each record holder of
the Series A Preferred Stock at the respective addresses of such holders as the
same shall appear on the share transfer records of the Corporation.
(c) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series A
Preferred Stock will have no right or claim to any of the remaining assets of
the Corporation.
<PAGE>
(d) Consolidation, Merger or Certain Other Transactions. The
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the Corporation to, or the consolidation or merger or
other business combination of the Corporation with or into, any corporation,
trust or other entity (or of any corporation, trust or other entity with or into
the Corporation) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Corporation.
(e) Permissible Distributions. In determining whether a
distribution (other than upon voluntary liquidation) by dividend, redemption or
other acquisition of shares of stock of the Corporation or otherwise is
permitted under the FBCA, no effect shall be given to amounts that would be
needed, if the Corporation were to be dissolved at the time of the distribution,
to satisfy the preferential rights upon dissolution of holders of shares of
stock of the Corporation whose preferential rights upon dissolution are superior
to those receiving the distribution.
Section 5. Optional Redemption. (a) Right of Optional Redemption. The Series A
Preferred Stock may not be redeemed prior to June 25, 2003. On or after such
date, the Corporation shall have the right to redeem the Series A Preferred
Stock, in whole or in part, at any time or from time to time, upon not less than
30 nor more than 60 days' written notice, at a redemption price, payable in
cash, equal to $50 per share of Series A Preferred Stock plus accumulated and
unpaid distributions, whether or nor declared, to the date of redemption. If
fewer than all of the outstanding shares of Series A Preferred Stock are to be
redeemed, the shares of Series A Preferred Stock to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional shares).
(b) Limitation on Redemption. (i) The redemption price of the
Series A Preferred Stock (other than the portion thereof consisting of
accumulated but unpaid distributions) will be payable solely out of sale
proceeds of capital stock of the Corporation and from no other source. For
purposes of the preceding sentence, "capital stock" means any equity securities
(including Common Stock and Preferred Stock), shares, participation or other
ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options to
purchase any of the foregoing.
(ii) The Corporation may not redeem fewer than all of
the outstanding shares of Series A Preferred Stock unless all accumulated and
unpaid distributions have been paid on all Series A Preferred Stock for all
quarterly distribution periods terminating on or prior to the date of
redemption.
(c) Procedures for Redemption. (i) Notice of redemption will
be (i) faxed, and (ii) mailed by the Corporation, postage prepaid, not less than
30 nor more than 60 days prior to the redemption date, addressed to the
respective holders of record of the Series A Preferred Stock to be redeemed at
their respective addresses as they appear on the transfer records of the
Corporation. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series A Preferred Stock
except as to the holder to whom such notice was defective or not given. In
addition to any information required by law or by the applicable rules of any
exchange upon which the Series A Preferred Stock may be listed or admitted to
trading, each such notice shall state: (i) the redemption date, (ii) the
redemption price, (iii) the number of shares of Series A Preferred Stock to be
redeemed, (iv) the place or places where such shares of Series A Preferred Stock
are to be surrendered for payment of the redemption price, (v) that
distributions on the Series A Preferred Stock to be redeemed will cease to
accumulate on such redemption date and (vi) that payment of the redemption price
<PAGE>
and any accumulated and unpaid distributions will be made upon presentation and
surrender of such Series A Preferred Stock. If fewer than all of the shares of
Series A Preferred Stock held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of shares of Series A
Preferred Stock held by such holder to be redeemed.
(ii) If the Corporation gives a notice of redemption in
respect of Series A Preferred Stock (which notice will be irrevocable) then, by
12:00 noon, New York City time, on the redemption date, the Corporation will
deposit irrevocably in trust for the benefit of the Series A Preferred Stock
being redeemed funds sufficient to pay the applicable redemption price, plus
any accumulated and unpaid distributions, whether or not declared, if any,
on such shares to the date fixed for redemption, without interest, and will
give irrevocable instructions and authority to pay such redemption price and any
accumulated and unpaid distributions, if any, on such shares to the holders of
the Series A Preferred Stock upon surrender of the certificate evidencing the
Series A Preferred Stock by such holders at the place designated in the notice
of redemption. If fewer than all Series A Preferred Stock evidenced by any
certificate is being redeemed, a new certificate shall be issued upon surrender
of the certificate evidencing all Series A Preferred Stock, evidencing the
unredeemed Series A Preferred Stock without cost to the holder thereof. On and
after the date of redemption, distributions will cease to accumulate on the
Series A Preferred Stock or portions thereof called for redemption, unless the
Corporation defaults in the payment thereof. If any date fixed for redemption of
Series A Preferred Stock is not a Business Day, then payment of the redemption
price payable on such date will be made on the next succeeding day that is a
Business Bay (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
payment of the redemption price or any accumulated or unpaid distributions in
respect of the Series A Preferred Stock is improperly withheld or refused and
not paid by the Corporation, distributions on such Series A Preferred Stock will
continue to accumulate from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the applicable redemption price and any
accumulated and unpaid distributions.
(d) Status of Redeemed Stock. Any Series A Preferred Stock
that shall at any time have been redeemed shall after such redemption, have the
status of authorized but unissued Preferred Stock, without designation as to
class or series until such shares are once more designated as part of a
particular class or series by the Board of Directors.
Section 6. Voting Rights. (a) General. Holders of the Series A Preferred Stock
will not have any voting rights, except as set forth below.
(b) Right to Elect Directors. (i) If at any time distributions
shall be in arrears (which means that, as to any such quarterly distributions,
the same have not been paid in full) with respect to six (6) prior quarterly
distribution periods (including quarterly periods on the Series A Preferred
Units prior to the exchange into Series A Preferred Stock), whether or not
consecutive, and shall not have been paid in full (a "Preferred Distribution
Default"), the authorized number of members of the Board of Directors shall
automatically be increased by two and the holders of record of such Series A
Preferred Stock, voting together as a single class with the holders of each
class or series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable, will be entitled to fill the vacancies so
created by electing two additional directors to serve on the Corporation's Board
of Directors (the "Preferred Stock Directors") at a special meeting called in
accordance with Section 6(b)(ii) or at the next annual meeting of stockholders
and at each subsequent annual meeting of stockholders or special meeting held in
place thereof, until all such distributions in arrears and distributions for the
current quarterly period on the Series A Preferred Stock and each such class or
series of Parity Preferred Stock have been paid in full.
<PAGE>
(ii) At any time when such voting rights shall have
vested, a proper officer of the Corporation shall call or cause to be called,
upon written request of holders of record of at least 10% of the outstanding
shares of Series A Preferred Stock, a special meeting of the holders of Series A
Preferred Stock and all the series of Parity Preferred Stock upon which like
voting rights have been conferred and are exercisable (collectively, the
"Parity Securities") by mailing or causing to be mailed to such holders a notice
of such special meeting to be held not less than ten and not more than 45 days
after the date such notice is given. The record date for determining holders
of the Parity Securities entitled to notice of and to vote at such special
meeting will be the close of business on the third Business Day preceding
the day on which such notice is mailed. At any annual or special meeting at
which Parity Securities are entitled to vote, all of the holders of the
Parity Securities, by plurality vote, voting together as a single class without
regard to series will be entitled to elect two directors on the basis of one
vote per $25.00 of liquidation preference to which such Parity Securities
are entitled by their terms (excluding amounts in respect of accumulated and
unpaid dividends) and not cumulatively. The holder or holders of Parity
Securities representing one-third of the total voting power of the Parity
Securities then outstanding, present in person or by proxy, will constitute a
quorum for the election of the Preferred Stock Directors except as otherwise
provided by law. Notice of all meetings at which holders of the Series A
Preferred Stock shall be entitled to vote will be given to such holders at their
addresses as they appear in the transfer records. At any such meeting or
adjournment thereof in the absence of a quorum, subject to the provisions of any
applicable law, the holders of Parity Securities representing a majority of the
voting power of the Parity Securities present in person or by proxy shall have
the power to adjourn the meeting for the election of the Preferred Stock
Directors, without notice other than an announcement at the meeting, until a
quorum is present. If a Preferred Distribution Default shall terminate after the
notice of an annual or special meeting has been given but before such special
meeting has been held, the Corporation shall, as soon as practicable after such
termination, mail or cause to be mailed notice of such termination to holders of
the Series A Preferred Stock that would have been entitled to vote at such
meeting.
(iii) If and when all accumulated distributions and
the distribution for the current
distribution period on the Series A Preferred Stock shall have been paid in full
or a sum sufficient for such payment is irrevocably deposited in trust for
payment, the holders of the Series A Preferred Stock shall be divested of the
voting rights set forth in Section 6(b) herein (subject to revesting in the
event of each and every Preferred Distribution Default) and, if all
distributions in arrears and the distributions for the current distribution
period have been paid in full or set aside for payment in full on all other
classes or series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable, the term and office of each Preferred Stock
Director so elected shall terminate. Any Preferred Stock Director may be removed
at any time with or without cause by the vote of, and shall not be removed
otherwise than by the vote of, the holders of record of a majority of the
outstanding Series A Preferred Stock when they have the voting rights set forth
in Section 6(b) (voting separately as a single class with all other classes or
series of Parity Preferred Stock upon which like voting rights have been
conferred and are exercisable). So long as a Preferred Distribution Default
shall continue, any vacancy in the office of a Preferred Stock Director may be
<PAGE>
filled by written consent of the Preferred Stock Director remaining in office,
or if none remains in office, by a vote of the holders of record of a majority
of the outstanding Series A Preferred Stock when they have the voting rights set
forth in Section 6(b) (voting separately as a single class with all other
classes or series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable). The Preferred Stock Directors shall each be
entitled to one vote per director on any matter.
(c) Certain Voting Rights. So long as any Series A Preferred
Stock remains outstanding, the Corporation shall not, without the affirmative
vote of the holders of at least two-thirds of the Series A Preferred Stock and
Series A Preferred Units outstanding at such time and not previously surrendered
in exchange for Series A Preferred Stock together, if applicable, voting as a
single class based on the number of shares into which such Series A Preferred
Units are then convertible (collectively, the "Voting Securities") (i) designate
or create, or increase the authorized or issued amount of, any class or series
of shares ranking prior to the Series A Preferred Stock with respect to payment
of distributions or rights upon liquidation, dissolution or winding-up or
reclassify any authorized shares of the Corporation into any such shares, or
create, authorize or issue any obligations or securities convertible into or
evidencing the right to purchase any such shares, (ii) designate or create, or
increase the authorized or issued amount of, any Parity Preferred Stock or
reclassify any authorized shares of the Corporation into any such shares, or
create, authorize or issue any obligations or securities convertible into or
evidencing the right to purchase any such shares, but only to the extent such
Parity Preferred Stock is issued to an affiliate of the Corporation (other than
Security Capital U.S. Realty, Security Capital Holdings, S.A. or their
affiliates), or (iii) either (A) consolidate, merge into or with, or convey,
transfer or lease its assets substantially as an entirety, to any corporation or
other entity, or (B) amend, alter or repeal the provisions of the Corporation's
Charter (including these Articles of Amendment) or By-laws, whether by merger,
consolidation or otherwise, in each case that would materially and adversely
affect the powers, special rights, preferences, privileges or voting power of
the Series A Preferred Stock or the holders thereof; provided, however, that
with respect to the occurrence of a merger, consolidation or a sale or lease of
all of the Corporation's assets as an entirety, so long as (a) the Corporation
is the surviving entity and the Series A Preferred Stock remains outstanding
with the terms thereof unchanged, or (b) the resulting, surviving or transferee
entity is a corporation organized under the laws of any state and substitutes
the Series A Preferred Stock for other preferred stock having substantially the
same terms and same rights as the Series A Preferred Stock, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series A Preferred Stock and no vote of the Series A Voting
Securities shall be required in such case and provided further that any increase
in the amount of authorized Preferred Stock or the creation or issuance of any
other class or series of Preferred Stock, or any increase in an amount of
authorized shares of each class or series, in each case ranking either (a)
junior to the Series A Preferred Stock with respect to payment of distributions
or the distribution of assets upon liquidation, dissolution or winding-up, or
(b) on a parity with the Series A Preferred Stock with respect to payment of
distributions or the distribution of assets upon liquidation, dissolution or
winding-up to the extent such Preferred Stock is not issued to a affiliate of
the Corporation, shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers and no vote of the Voting
Securities shall be required in such case.
<PAGE>
Section 7. No Conversion Rights. The holders of the Series A Preferred Stock
shall not have any rights to convert such shares into shares of any other class
or series of stock or into any other securities of, or interest in, the
Corporation.
Section 8. No Sinking Fund. No sinking fund shall be established for the
retirement or redemption of Series A Preferred Stock.
Section 9. No Preemptive Rights. No holder of the Series A Preferred
Stock of the Corporation shall, as such holder, have any preemptive rights to
purchase or subscribe for additional shares of stock of the Corporation or any
other security of the Corporation which it may issue or sell.
FOURTH: The Series A Preferred Stock have been classified and
designated by the Board of Directors under the authority contained in the
Charter.
FIFTH: These Articles of Amendment have been approved by the
Board of Directors in the manner and by the vote required by law.
SIXTH: The undersigned President of the Corporation
acknowledges these Articles of Amendment to be the corporate act of the
Corporation and, as to all matters or facts required to be verified under oath,
the undersigned President acknowledges that to the best of his knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties for perjury.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment to be executed under seal in its name and on its behalf by its
Executive Vice President and attested to by its Secretary on this ________ day
of September, 1999
REGENCY REALTY CORPORATION
By:__________________________________
Name: Bruce M. Johnson
Title: Executive Vice President
[SEAL]
ATTEST:
- ----------------------------
Name: J. Christian Leavitt
Title: Secretary
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
REGENCY REALTY CORPORATION
DESIGNATING THE PREFERENCES, RIGHTS AND
LIMITATIONS OF 850,000 SHARES OF
8.75% SERIES B CUMULATIVE REDEEMABLE PREFERRED STOCK
$0.01 Par Value
Pursuant to Section 607.0602 of the Florida Business
Corporation Act ("FBCA"), Regency Realty Corporation, a Florida corporation (the
"Corporation"), does hereby certify that:
FIRST : Pursuant to the authority expressly vested in the Board of Directors of
the Corporation by Section 4.2 of the Amended and Restated Articles of
Incorporation of the Corporation (as amended, the "Charter") and Section
607.0602 of the FBCA, the Board of Directors of the Corporation (the "Board of
Directors"), by resolutions duly adopted on August 23, 1999 has classified
850,000 shares of the authorized but unissued Preferred Stock par value $.0l per
share ("Preferred Stock") as a separate class of Preferred Stock, authorized the
issuance of a maximum of 850,000 shares of such class of Preferred Stock, set
certain of the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, terms and conditions
of redemption and other terms and conditions of such class of Preferred Stock,
and pursuant to the powers contained in the Bylaws of the Corporation and the
FBCA, appointed a committee (the "Committee") of the Board of Directors and
delegated to the Committee, to the fullest extent permitted by the FBCA and the
Charter and Bylaws of the Corporation, all powers of the Board of Directors with
respect to designating, and setting all other preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of, such
class of Preferred Stock, determining the number of shares of such class of
Preferred Stock (not in excess of the aforesaid maximum number) to be issued and
the consideration and other terms and conditions upon which such shares of such
class of Preferred Stock are to be issued. Shareholder approval was not required
under the Charter with respect to such designation. Capitalized terms used and
not otherwise defined herein shall have the meaning assigned thereto in the
Charter.
SECOND : Pursuant to the authority conferred upon the Committee as aforesaid,
the Committee has unanimously adopted resolutions designating the aforesaid
class of Preferred Stock as the "8.75% Series B Cumulative Redeemable Preferred
Stock," setting the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, terms and conditions
of redemption and other terms and conditions of such 8.75% Series B Cumulative
Redeemable Preferred Stock (to the extent not set by the Board of Directors in
the resolutions referred to in Article First of these Articles of Amendment) and
authorizing the issuance of up to 850,000 shares of 8.75% Series B Cumulative
Redeemable Preferred Stock. THIRD : The class of Preferred Stock of the
Corporation created by the resolutions duly adopted by the Board of Directors of
the Corporation and by the Committee and referred to in Articles First and
Second of these Articles of Amendment shall have the following designation,
number of shares, preferences, conversion and other rights, voting powers,
restrictions and limitation as to dividends, qualifications, terms and
conditions of redemption and other terms and conditions: Section 1. Designation
and Number. A series of Preferred Stock, designated the "8.75% Series B
Cumulative Redeemable Preferred Stock" (the "Series B Preferred Stock") is
hereby established. The number of shares of Series B Preferred Stock shall be
850,000.
<PAGE>
Section 2. Rank. The Series B Preferred Stock will, with respect to
distributions or rights upon voluntary or involuntary liquidation, winding-up or
dissolution of the Corporation, or both, rank senior to all classes or series of
Common Stock (as defined in the Charter) and to all classes or series of equity
securities of the Corporation now or hereafter authorized, issued or outstanding
other than any class or series of equity securities of the Corporation expressly
designated as ranking on a parity with or senior to the Series B Preferred Stock
as to distributions or rights upon voluntary or involuntary liquidation,
winding-up or dissolution of the Corporation, or both. For purposes of these
Articles of Amendment, the term "Parity Preferred Stock" shall be used to refer
to any class or series of equity securities of the Corporation now or hereafter
authorized, issued or outstanding expressly designated by the Corporation to
rank on a parity with Series B Preferred Stock with respect to distributions or
rights upon voluntary or involuntary liquidation, winding-up or dissolution of
the Corporation, or both, as the context may require, whether or not the
dividend rates, dividend payment dates or redemption or liquidation prices per
share or conversion rights or exchange rights shall be different from those of
the Series B Preferred Stock. The term "equity securities" does not include debt
securities, which will rank senior to the Series B Preferred Stock prior to
conversion. The Series B Preferred Stock is expressly designated as ranking on a
parity with the Series A Preferred Stock.
Section 3. Distributions
. (a) Payment of Distributions. Subject to the rights of
holders of Parity Preferred Stock as to the payment of distributions and holders
of equity securities issued after the date hereof in accordance herewith ranking
senior to the Series B Preferred Stock as to payment of distributions, holders
of Series B Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors of the Corporation, out of funds legally
available for the payment of distributions, cumulative cash distributions at the
rate per annum of 8.75% of the $100.00 liquidation preference per share of
Series B Preferred Stock (the "Distribution Rate"). Notwithstanding anything
herein to the contrary, the Distribution Rate shall be equal to the Coupon Rate
(as defined in Amendment No. 1 to the Third Amended and Restated Agreement of
Limited Partnership of Regency Centers, L.P.) in effect at the time of issuance
of the Series C Preferred Stock. Such distributions shall be cumulative, shall
accrue from the original date of issuance and will be payable in cash (A)
quarterly in arrears, on or before March 1, June 1, September 1 and December 1
of each year commencing on the first of such dates to occur after the original
date of issuance and, (B) in the event of a redemption, on the redemption date
(each a "Series B Preferred Stock Distribution Payment Date"). The amount of the
distribution payable for any period will be computed based on the ratio 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 quarterly period to 90 days. If any date on which distributions
are to be made on the Series B Preferred Stock is not a Business Day (as defined
herein), then payment of the distribution to be made on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day is
in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series B Preferred Stock will be
made to the holders of record of the Series B Preferred Stock on the relevant
record dates to be fixed by the Board of Directors of the Corporation, which
record dates shall be not less than 10 days and not more than 30 Business Days
prior to the relevant Series B Preferred Stock Distribution Payment Date (each a
<PAGE>
"Distribution Record Date"). Notwithstanding anything to the contrary set forth
herein, each share of Series B Preferred Stock shall also continue to accrue all
accrued and unpaid distributions, whether or not declared, up to the exchange
date on any Series B Preferred Unit (as defined in the Third Amended and
Restated Agreement of Limited Partnership of Regency Centers, L.P., dated as
September 1, 1999 as amended by that certain Amendment No. 1 to Third Amended
and Restated Agreement of Limited Partnership dated as of September 3, 1999 (as
amended, the "Partnership Agreement")) validly exchanged into such share of
Series B Preferred Stock in accordance with the provisions of such Partnership
Agreement.
The term "Business Day" shall mean each day, other than a
Saturday or a Sunday, which is not a day on which banking institutions in New
York, New York are authorized or required by law, regulation or executive order
to close.
(b) Distributions Cumulative. Distributions on the Series B Preferred Stock will
accrue whether or not the terms and provisions of any agreement of the
Corporation, including any agreement relating to its indebtedness at any time
prohibit the current payment of distributions, whether or not the Corporation
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized or
declared. Accrued but unpaid distributions on the Series B Preferred Stock will
accumulate as of the Series B Preferred Stock Distribution Payment Date on which
they first become payable. Distributions on account of arrears for any past
distribution periods may be declared and paid at any time, without reference to
a regular Series B Preferred Stock Distribution Payment Date to holders of
record of the Series B Preferred Stock on the record date fixed by the Board of
Directors which date shall be not less than 10 days and not more than 30
Business Days prior to the payment date. Accumulated and unpaid distributions
will not bear interest.
(c) Priority as to Distributions. (i) So long as any Series B Preferred Stock is
outstanding, no distribution of cash or other property shall be authorized,
declared, paid or set apart for payment on or with respect to any class or
series of Common Stock or any class or series of other stock of the Corporation
ranking junior as to the payment of distributions to the Series B Preferred
Stock (such Common Stock or other junior stock, collectively, "Junior Stock"),
nor shall any cash or other property be set aside for or applied to the
purchase, redemption or other acquisition for consideration of any Series B
Preferred Stock, any Parity Preferred Stock with respect to distributions or any
Junior Stock, unless in each case, all distributions accumulated on all Series B
Preferred Stock and all classes and series of outstanding Parity Preferred Stock
as to payment of distributions have been paid in full. The foregoing sentence
will not prohibit (i) distributions payable solely in Junior Stock, (ii) the
conversion of Series B Preferred Stock, Junior Stock or Parity Preferred Stock
into stock of the Corporation ranking junior to the Series B Preferred Stock as
to distributions, and (iii) purchases by the Corporation of such Series B
Preferred Stock or Parity Preferred Stock with respect to distributions or
Junior Stock pursuant to Article 5 of the Charter to the extent required to
preserve the Corporation's status as a real estate investment trust. (ii) So
long as distributions have not been paid in full (or a sum sufficient for such
full payment is not irrevocably deposited in trust for payment) upon the Series
B Preferred Stock, all distributions authorized and declared on the Series B
Preferred Stock and all classes or series of outstanding Parity Preferred Stock
with respect to distributions shall be authorized and declared so that the
amount of distributions authorized and declared per share of Series B Preferred
Stock and such other classes or series of Parity Preferred Stock shall in all
cases bear to each other the same ratio that accrued distributions per share on
the Series B Preferred Stock and such other classes or series of Parity
Preferred Stock (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Stock do not have cumulative distribution rights) bear to each other.
(d) No Further Rights. Holders of Series B Preferred Stock shall not be entitled
to any distributions, whether payable in cash, other property or otherwise, in
excess of the full cumulative distributions described herein.
Section 4. Liquidation Preference. (a) Payment of Liquidation Distributions.
Subject to the rights of holders of Parity Preferred Stock with respect to
rights upon any voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation, the holders of Series B Preferred Stock shall be entitled to
receive out of the assets of the Corporation legally available for distribution
or the proceeds thereof, after payment or provision for debts and other
liabilities of the Corporation, but before any payment or distributions of the
assets shall be made to holders of Common Stock or any other class or series of
shares of the Corporation that ranks junior to the Series B Preferred Stock as
to rights upon liquidation, dissolution or winding-up of the Corporation, an
amount equal to the sum of (i) a liquidation preference of $100.00 per share of
Series B Preferred Stock, and (ii) an amount equal to any accumulated and unpaid
distributions thereon, whether or not declared, to the date of payment. In the
<PAGE>
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 B Preferred Stock and any Parity
Preferred Stock as to rights upon liquidation, dissolution or winding-up of the
Corporation, all payments of liquidating distributions on the Series B Preferred
Stock and such Parity Preferred Stock shall be made so that the payments on the
Series B Preferred Stock and such Parity Preferred Stock shall in all cases bear
to each other the same ratio that the respective rights of the Series B
Preferred Stock and such other Parity Preferred Stock (which shall not include
any accumulation in respect of unpaid distributions for prior distribution
periods if such Parity Preferred Stock do not have cumulative distribution
rights) upon liquidation, dissolution or winding-up of the Corporation bear to
each other.
(b) Notice. Written notice of any such voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, stating the payment date or dates
when, and the place or places where, the amounts distributable in such
circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than 30 and not more that 60 days prior
to the payment date stated therein, to each record holder of the Series B
Preferred Stock at the respective addresses of such holders as the same shall
appear on the share transfer records of the Corporation.
(c) No Further Rights. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series B Preferred
Stock will have no right or claim to any of the remaining assets of the
Corporation. (d) Consolidation Merger or Certain Other Transactions. The
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the Corporation to, or the consolidation or merger or
other business combination of the Corporation with or into, any corporation,
trust or other entity (or of any corporation, trust or other entity with or into
the Corporation) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Corporation. (e) Permissible Distributions. In determining
whether a distribution (other than upon voluntary liquidation) by dividend,
redemption or other acquisition of shares of stock of the Corporation or
otherwise is permitted under the FBCA, no effect shall be given to amounts that
would be needed, if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of holders of
shares of stock of the Corporation whose preferential rights upon dissolution
are superior to those receiving the distribution. Section 5. Optional
Redemption. (a) Right of Optional Redemption. The Series B Preferred Stock may
not be redeemed prior to September 3, 2004. On or after such date, the
Corporation shall have the right to redeem the Series B Preferred Stock, in
whole or in part, at any time or from time to time, upon not less than 30 nor
more than 60 days' written notice, at a redemption price, payable in cash, equal
to $100.00 per share of Series B Preferred Stock plus accumulated and unpaid
distributions, whether or nor declared, to the date of redemption. If fewer than
all of the outstanding shares of Series B Preferred Stock are to be redeemed,
the shares of Series B Preferred Stock to be redeemed shall be selected pro rata
(as nearly as practicable without creating fractional shares).
(b) Limitation on Redemption. (i) The redemption price of the Series B Preferred
Stock (other than the portion thereof consisting of accumulated but unpaid
distributions) will be payable solely out of sale proceeds of capital stock of
the Corporation and from no other source. For purposes of the preceding
sentence, "capital stock" means any equity securities (including Common Stock
and Preferred Stock), shares, participation or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable for equity securities) or options to purchase any of the
foregoing.
(ii) The Corporation may not redeem fewer than all of the outstanding shares of
Series B Preferred Stock unless all accumulated and unpaid distributions have
been paid on all Series B Preferred Stock for all quarterly distribution periods
terminating on or prior to the date of redemption.
(c) Procedures for Redemption. (i) Notice of redemption will be (i) faxed, and
(ii) mailed by the Corporation, postage prepaid, not less than 30 nor more than
60 days prior to the redemption date, addressed to the respective holders of
record of the Series B Preferred Stock to be redeemed at their respective
addresses as they appear on the transfer records of the Corporation. No failure
to give or defect in such notice shall affect the validity of the proceedings
for the redemption of any Series B Preferred Stock except as to the holder to
whom such notice was defective or not given. In addition to any information
required by law or by the applicable rules of any exchange upon which the Series
B Preferred Stock may be listed or admitted to trading, each such notice shall
state: (i) the redemption date, (ii) the redemption price, (iii) the number of
shares of Series B Preferred Stock to be redeemed, (iv) the place or places
where such shares of Series B Preferred Stock are to be surrendered for payment
of the redemption price, (v) that distributions on the Series B Preferred Stock
to be redeemed will cease to accumulate on such redemption date and (vi) that
payment of the redemption price and any accumulated and unpaid distributions
will be made upon presentation and surrender of such Series B Preferred Stock.
If fewer than all of the shares of Series B Preferred Stock held by any holder
are to be redeemed, the notice mailed to such holder shall also specify the
number of shares of Series B Preferred Stock held by such holder to be redeemed.
<PAGE>
(ii) If the Corporation gives a notice of redemption in respect of Series B
Preferred Stock (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Corporation will deposit irrevocably in
trust for the benefit of the Series B Preferred Stock being redeemed funds
sufficient to pay the applicable redemption price' plus any accumulated and
unpaid distributions, whether or not declared, if any, on such shares to the
date fixed for redemption, without interest, and will give irrevocable
instructions and authority to pay such redemption price and any accumulated and
unpaid distributions, if any, on such shares to the holders of the Series B
Preferred Stock upon surrender of the certificate evidencing the Series B
Preferred Stock by such holders at the place designated in the notice of
redemption. If fewer than all Series B Preferred Stock evidenced by any
certificate is being redeemed, a new certificate shall be issued upon surrender
of the certificate evidencing all Series B Preferred Stock, evidencing the
unredeemed Series B Preferred Stock without cost to the holder thereof. On and
after the date of redemption, distributions will cease to accumulate on the
Series B Preferred Stock or portions thereof called for redemption, unless the
Corporation defaults in the payment thereof. If any date fixed for redemption of
Series B Preferred Stock is not a Business Day, then payment of the redemption
price payable on such date will be made on the next succeeding day that is a
Business 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 or any accumulated or unpaid distributions in
respect of the Series B Preferred Stock is improperly withheld or refused and
not paid by the Corporation, distributions on such Series B Preferred Stock will
continue to accumulate from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the applicable redemption price and any
accumulated and unpaid distributions.
(d) Status of Redeemed Stock. Any Series B Preferred Stock that shall at any
time have been redeemed shall after such redemption, have the status of
authorized but unissued Preferred Stock, without designation as to class or
series until such shares are once more designated as part of a particular class
or series by the Board of Directors.
Section 6. Voting Rights
(a) General. Holders of the Series B Preferred Stock will not have any
voting rights, except as set forth below.
(b) Right to Elect Directors. (i) If at any time distributions shall be in
arrears (which means that as to any such quarterly distributions, the same have
not been paid in full) with respect to six (6) prior quarterly distribution
periods (including quarterly periods on the Series B Preferred Units prior to
the exchange into Series B Preferred Stock), whether or not consecutive, and
shall not have been paid in full (a "Series B Preferred Distribution Default"),
the authorized number of members of the Board of Directors shall automatically
be increased by two and the holders of record of such Series B Preferred Stock,
voting together as a single class with the holders of each class or series of
<PAGE>
Parity Preferred Stock upon which like voting rights have been conferred and are
exercisable, will be entitled to fill the vacancies so created by electing two
additional directors to serve on the Corporation's Board of Directors (the
"Preferred Stock Directors") at a special meeting called in accordance with
Section 6(b)(ii), and at each subsequent annual meeting of stockholders or
special meeting held in place thereof, until all such distributions in arrears
and distributions for the current quarterly period on the Series B Preferred
Stock and each such class or series of Parity Preferred Stock have been paid in
full.
(ii) At any time when such voting rights shall have vested, a proper officer of
the Corporation shall call or cause to be called, upon written request of
holders of record of at least 10% of the outstanding shares of Series B
Preferred Stock, a special meeting of the holders of Series B Preferred Stock
and all the series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable (collectively, the "Parity Securities") by
mailing or causing to be mailed to such holders a notice of such special meeting
to be held not less than ten and not more than 45 days after the date such
notice is given. The record date for determining holders of the Parity
Securities entitled to notice of and to vote at such special meeting will be the
close of business on the third Business Day preceding the day on which such
notice is mailed. At any annual or special meeting at which Parity Securities
are entitled to vote, all of the holders of the Parity Securities, by plurality
vote, voting together as a single class without regard to series will be
entitled to elect two directors on the basis of one vote per $25.00 of
liquidation preference to which such Parity Securities are entitled by their
terms (excluding amounts in respect of accumulated and unpaid dividends) and not
cumulatively. The holder or holders of the Parity Securities representing
one-third of the total voting power of the Parity Securities then outstanding,
present in person or by proxy, will constitute a quorum for the election of the
Preferred Stock Directors except as otherwise provided by law. Notice of all
meetings at which holders of the Series B Preferred Stock shall be entitled to
vote will be given to such holders at their addresses as they appear in the
transfer records. At any such meeting or adjournment thereof in the absence of a
quorum, subject to the provisions of any applicable law, the holders of the
Parity Securities representing a majority of the voting power of the Parity
Securities present in person or by proxy shall have the power to adjourn the
meeting for the election of the Preferred Stock Directors, without notice other
than an announcement at the meeting, until a quorum is present. If a Series B
Preferred Distribution Default shall terminate after the notice of an annual or
special meeting has been given but before such special meeting has been held,
the Corporation shall, as soon as practicable after such termination, mail or
cause to be mailed notice of such termination to holders of the Series B
Preferred Stock that would have been entitled to vote at such meeting.
(iii) If and when all accumulated distributions and the distribution for the
current distribution period on the Series B Preferred Stock shall have been paid
in full or a sum sufficient for such payment is irrevocably deposited in trust
for payment, the holders of the Series B Preferred Stock shall be divested of
the voting rights set forth in Section 6(b) herein (subject to revesting in the
event of each and every Series B Preferred Distribution Default) and, if all
distributions in arrears and the distributions for the current distribution
period have been paid in full or set aside for payment in full on all other
classes or series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable, the terms and office of each Preferred Stock
Director so elected shall terminate. Any Preferred Stock Director may be removed
at any time with or without cause by the vote of, and shall not be removed
otherwise than by the vote of, the holders of record of a majority of the
outstanding Series B Preferred Stock when they have the voting rights set forth
in Section 6(b) (voting separately as a single class with all other classes or
series of Parity Preferred Stock upon which like voting rights have been
conferred and are exercisable). So long as a Series B Preferred Distribution
Default shall continue, any vacancy in the office of a Preferred Stock Director
may be filled by written consent of the Preferred Stock Director remaining in
office, or if none remains in office, by a vote of the holders of record of a
majority of the outstanding Series B Preferred Stock when they have the voting
rights set forth in Section 6(b) (voting separately as a single class with all
other classes or series of Parity Preferred Stock upon which like voting rights
have been conferred and are exercisable). The Preferred Stock Directors shall
each be entitled to one vote per director on any matter. (c) Certain Voting
Rights. So long as any Series B Preferred Stock or Series C Preferred Unit
remains outstanding, the Corporation shall not, without the affirmative vote of
the holders of at least two-thirds of the Series B Preferred Stock and Series B
Preferred Units outstanding at the time (together, if applicable, voting as a
single class) (collectively, the "Voting Securities") (i) designate or create,
or increase the authorized or issued amount of, any class or series of shares
ranking prior to the Series B Preferred Stock with respect to payment of
distributions or rights upon liquidation, dissolution or winding-up or
<PAGE>
reclassify any authorized shares of the Corporation into any such shares, or
create, authorize or issue any obligations or securities convertible into or
evidencing the right to purchase any such shares, (ii) designate or create, or
increase the authorized or issued amount of, any Parity Preferred Stock or
reclassify any authorized shares of the Corporation into any such shares, or
create, authorize or issue any obligations or securities convertible into or
evidencing the right to purchase any such shares, but only to the extent such
Parity Preferred Stock is issued to an affiliate of the Corporation (other than
Security Capital U.S. Realty, Security Capital Holdings, S.A. or their
affiliates purchasing preferred stock of the same series on the same terms as
non-affiliates), or (iii) either (A) consolidate, merge into or with, or convey,
transfer or lease its assets substantially as an entirety, to any corporation or
other entity, or (B) amend, alter or repeal the provisions of the Corporation's
Charter (including these Articles of Amendment) or By-laws, whether by merger,
consolidation or otherwise, in each case that would materially and adversely
affect the powers, special rights, preferences, privileges or voting power of
the Series B Preferred Stock or the holders thereof; provided, however, that
with respect to the occurrence of a merger, consolidation or a sale or lease of
all of the Corporation's assets as an entirety, so long as (a) the Corporation
is the surviving entity and the Series B Preferred Stock remains outstanding (or
remains exchangeable for Series B Preferred Units) with the terms thereof
unchanged, or (b) the resulting, surviving or transferee entity is a corporation
organized under the laws of any state and substitutes the Series B Preferred
Stock for other preferred stock having substantially the same terms and same
rights as the Series B Preferred Stock, including with respect to distributions,
voting rights and rights upon liquidation, dissolution or winding-up, then the
occurrence of any such event shall not be deemed to materially and adversely
affect such rights, privileges or voting powers of the holders of the Series B
Preferred Stock and no vote of the Series B Preferred Stock shall be required in
such case and provided further that any increase in the amount of authorized
Preferred Stock or the creation or issuance of any other class or series of
Preferred Stock, or any increase in an amount of authorized shares of each class
or series, in each case ranking either (a) junior to the Series B Preferred
Stock with respect to payment of distributions and the distribution of assets
upon liquidation, dissolution or winding-up, or (b) on a parity with the Series
B Preferred Stock with respect to payment of distributions and the distribution
of assets upon liquidation, dissolution or winding-up to the extent such
Preferred Stock is not issued to an affiliate of the Corporation (other than
Security Capital U.S. Realty, Security Capital Holdings, S.A. or their
affiliates purchasing preferred stock of the same series on the same terms as
non-affiliates), shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers and no vote of the Voting
Securities shall be required in such case.
<PAGE>
Section 7. No Conversion Rights. The holders of the Series B Preferred Stock
shall not have any rights to convert such shares into shares of any other class
or series of stock or into any other securities of, or interest in, the
Corporation.
Section 8. No Sinking Fund. No sinking fund shall be established for the
retirement or redemption of Series B Preferred Stock.
Section 9. No Preemptive Rights. No holder of the Series B Preferred Stock of
the Corporation shall, as such holder, have any preemptive rights to purchase or
subscribe for additional shares of stock of the Corporation or any other
security of the Corporation which it may issue or sell.
FOURTH : The Series B Preferred Stock have been classified and designated by the
Board of Directors under the authority contained in the Charter.
FIFTH : These Articles of Amendment have been approved by the Board of Directors
in the manner and by the vote required by law. SIXTH : The undersigned Officer
of the Corporation acknowledges these Articles of Amendment to be the corporate
act of the Corporation and, as to all matters or facts required to be verified
under oath, the undersigned Officer acknowledges that to the best of his
knowledge, information and belief, these matters and facts are true in all
material respects and that this statement is made under the penalties for
perjury.
[Signature Page Follows]
<PAGE>
Fax Audit No.
11
004.165011.4
Fax Audit No.
Fax Audit No. ________________________
Signature Page to Series B Articles of Amendment
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment to be executed under seal in its name and on its behalf by its
Executive Vice President and attested to by its Secretary on this
day of September, 1999.
REGENCY REALTY CORPORATION
By:
Name: Bruce M. Johnson
Title: Executive Vice President
[SEAL]
[ATTEST]
Name: J. Christian Leavitt
Title: Secretary
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
REGENCY REALTY CORPORATION
DESIGNATING THE PREFERENCES, RIGHTS AND
LIMITATIONS OF 750,000 SHARES OF
9.0% SERIES C CUMULATIVE REDEEMABLE PREFERRED STOCK
$0.01 Par Value
Pursuant to Section 607.0602 of the Florida Business
Corporation Act ("FBCA"), Regency Realty Corporation, a Florida corporation (the
"Corporation"), does hereby certify that:
FIRST : Pursuant to the authority expressly vested in the Board of Directors of
the Corporation by Section 4.2 of the Amended and Restated Articles of
Incorporation of the Corporation (as amended, the "Charter") and Section
607.0602 of the FBCA, the Board of Directors of the Corporation (the "Board of
Directors"), by resolutions duly adopted on August 23, 1999 has classified
750,000 shares of the authorized but unissued Preferred Stock par value $.0l per
share ("Preferred Stock") as a separate class of Preferred Stock, authorized the
issuance of a maximum of 750,000 shares of such class of Preferred Stock, set
certain of the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, terms and conditions
of redemption and other terms and conditions of such class of Preferred Stock,
and pursuant to the powers contained in the Bylaws of the Corporation and the
FBCA, appointed a committee (the "Committee") of the Board of Directors and
delegated to the Committee, to the fullest extent permitted by the FBCA and the
Charter and Bylaws of the Corporation, all powers of the Board of Directors with
respect to designating, and setting all other preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of, such
class of Preferred Stock, determining the number of shares of such class of
Preferred Stock (not in excess of the aforesaid maximum number) to be issued and
the consideration and other terms and conditions upon which such shares of such
class of Preferred Stock are to be issued. Shareholder approval was not required
under the Charter with respect to such designation. Capitalized terms used and
not otherwise defined herein shall have the meaning assigned thereto in the
Charter.
SECOND : Pursuant to the authority conferred upon the Committee as aforesaid,
the Committee has unanimously adopted resolutions designating the aforesaid
class of Preferred Stock as the "9.0% Series C Cumulative Redeemable Preferred
Stock," setting the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, terms and conditions
of redemption and other terms and conditions of such 9.0% Series C Cumulative
Redeemable Preferred Stock (to the extent not set by the Board of Directors in
the resolutions referred to in Article First of these Articles of Amendment) and
authorizing the issuance of up to 750,000 shares of 9.0% Series C Cumulative
Redeemable Preferred Stock. THIRD : The class of Preferred Stock of the
Corporation created by the resolutions duly adopted by the Board of Directors of
the Corporation and by the Committee and referred to in Articles First and
Second of these Articles of Amendment shall have the following designation,
number of shares, preferences, conversion and other rights, voting powers,
restrictions and limitation as to dividends, qualifications, terms and
conditions of redemption and other terms and conditions: Section 1. Designation
and Number. A series of Preferred Stock, designated the "9.0% Series C
Cumulative Redeemable Preferred Stock" (the "Series C Preferred Stock") is
hereby established. The number of shares of Series C Preferred Stock shall be
750,000.
<PAGE>
Section 2. Rank. The Series C Preferred Stock will, with respect to
distributions or rights upon voluntary or involuntary liquidation, winding-up or
dissolution of the Corporation, or both, rank senior to all classes or series of
Common Stock (as defined in the Charter) and to all classes or series of equity
securities of the Corporation now or hereafter authorized, issued or outstanding
other than any class or series of equity securities of the Corporation expressly
designated as ranking on a parity with or senior to the Series C Preferred Stock
as to distributions or rights upon voluntary or involuntary liquidation,
winding-up or dissolution of the Corporation, or both. For purposes of these
Articles of Amendment, the term "Parity Preferred Stock" shall be used to refer
to any class or series of equity securities of the Corporation now or hereafter
authorized, issued or outstanding expressly designated by the Corporation to
rank on a parity with Series C Preferred Stock with respect to distributions or
rights upon voluntary or involuntary liquidation, winding-up or dissolution of
the Corporation, or both, as the context may require, whether or not the
dividend rates, dividend payment dates or redemption or liquidation prices per
share or conversion rights or exchange rights shall be different from those of
the Series C Preferred Stock. The term "equity securities" does not include debt
securities, which will rank senior to the Series C Preferred Stock prior to
conversion. The Series C Preferred Stock is expressly designated as ranking on a
parity with the Series A Preferred Stock and the Series B Preferred Stock.
Section 3. Distributions
. (a) Payment of Distributions. Subject to the rights of
holders of Parity Preferred Stock as to the payment of distributions and holders
of equity securities issued after the date hereof in accordance herewith ranking
senior to the Series C Preferred Stock as to payment of distributions, holders
of Series C Preferred Stock shall be entitled to receive, out of funds legally
available for the payment of distributions, cumulative preferential cash
distributions at the rate per annum of 9.0% of the $100.00 liquidation
preference per share of Series C Preferred Stock. Such distributions shall be
cumulative, shall accrue from the original date of issuance and will be payable
in cash when, as and if declared by the Board of Directors of the Corporation
(A) quarterly in arrears, on or before March 31, June 30, September 30 and
December 31 of each year commencing on the first of such dates to occur after
the original date of issuance and, (B) in the event of a redemption, on the
redemption date (each a "Series C Preferred Stock Distribution Payment Date").
The amount of the distribution payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months and for any period shorter than
a full quarterly period for which distributions are computed, the amount of the
distribution payable will be computed based on the ratio of the actual number of
days elapsed in such quarterly period to 90 days. If any date on which
distributions are to be made on the Series C Preferred Stock is not a Business
Day (as defined herein), then payment of the distribution to be made on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. Distributions on the Series C Preferred Stock
will be made to the holders of record of the Series C Preferred Stock on the
relevant record dates to be fixed by the Board of Directors of the Corporation,
which record dates shall be not less than 10 days and not more than 30 Business
Days prior to the relevant Series C Preferred Stock Distribution Payment Date
(each a "Distribution Record Date"). Notwithstanding anything to the contrary
set forth herein, each share of Series C Preferred Stock shall also continue to
accrue all accrued and unpaid distributions, whether or not declared, up to the
exchange date on any Series C Preferred Unit (as defined in the Third Amended
and Restated Agreement of Limited Partnership of Regency Centers, L.P., dated as
September 1, 1999 as amended by that certain Amendment No. 2 to Third Amended
and Restated Agreement of Limited Partnership dated as of September 3, 1999 (as
amended, the "Partnership Agreement")) validly exchanged into such share of
Series C Preferred Stock in accordance with the provisions of such Partnership
Agreement.
The term "Business Day" shall mean each day, other than a
Saturday or a Sunday, which is not a day on which banking institutions in New
York, New York are authorized or required by law, regulation or executive order
to close.
<PAGE>
(b) Distributions Cumulative. Distributions on the Series C Preferred Stock will
accrue whether or not the terms and provisions of any agreement of the
Corporation, including any agreement relating to its indebtedness at any time
prohibit the current payment of distributions, whether or not the Corporation
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized or
declared. Accrued but unpaid distributions on the Series C Preferred Stock will
accumulate as of the Series C Preferred Stock Distribution Payment Date on which
they first become payable. Distributions on account of arrears for any past
distribution periods may be declared and paid at any time, without reference to
a regular Series C Preferred Stock Distribution Payment Date to holders of
record of the Series C Preferred Stock on the record date fixed by the Board of
Directors which date shall be not less than 10 days and not more than 30
Business Days prior to the payment date. Accumulated and unpaid distributions
will not bear interest.
(c) Priority as to Distributions. (i) So long as any Series C Preferred Stock is
outstanding, no distribution of cash or other property shall be authorized,
declared, paid or set apart for payment on or with respect to any class or
series of Common Stock or any class or series of other stock of the Corporation
ranking junior as to the payment of distributions to the Parity Preferred Stock
(such Common Stock or other junior stock, collectively, "Junior Stock"), nor
shall any cash or other property be set aside for or applied to the purchase,
redemption or other acquisition for consideration of any Series C Preferred
Stock, any Parity Preferred Stock with respect to distributions or any Junior
Stock, unless in each case, all distributions accumulated on all Series C
Preferred Stock and all classes and series of outstanding Parity Preferred Stock
as to payment of distributions have been paid in full. The foregoing sentence
will not prohibit (i) distributions payable solely in Junior Stock, (ii) the
conversion of Series C Preferred Stock, Junior Stock or Parity Preferred Stock
into stock of the Corporation ranking junior to the Series C Preferred Stock as
to distributions, and (iii) purchases by the Corporation of such Series C
Preferred Stock or Parity Preferred Stock with respect to distributions or
Junior Stock pursuant to Article 5 of the Charter to the extent required to
preserve the Corporation's status as a real estate investment trust. (ii) So
long as distributions have not been paid in full (or a sum sufficient for such
full payment is not irrevocably deposited in trust for payment) upon the Series
C Preferred Stock, all distributions authorized and declared on the Series C
Preferred Stock and all classes or series of outstanding Parity Preferred Stock
with respect to distributions shall be authorized and declared so that the
amount of distributions authorized and declared per share of Series C Preferred
Stock and such other classes or series of Parity Preferred Stock shall in all
cases bear to each other the same ratio that accrued distributions per share on
the Series C Preferred Stock and such other classes or series of Parity
Preferred Stock (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Stock does not have cumulative distribution rights) bear to each
other.
(d) No Further Rights. Holders of Series C Preferred Stock shall not be entitled
to any distributions, whether payable in cash, other property or otherwise, in
excess of the full cumulative distributions described herein.
<PAGE>
Section 4. Liquidation Preference. (a) Payment of Liquidation Distributions.
Subject to the rights of holders of Parity Preferred Stock with respect to
rights upon any voluntary or involuntary liquidation, dissolution or winding-up
of the Corporation and subject to equity securities ranking senior to the Series
C Preferred Stock with respect to rights upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, the holders of Series
C Preferred Stock shall be entitled to receive out of the assets of the
Corporation legally available for distribution or the proceeds thereof, after
payment or provision for debts and other liabilities of the Corporation, but
before any payment or distributions of the assets shall be made to holders of
Common Stock or any other class or series of shares of the Corporation that
ranks junior to the Series C Preferred Stock as to rights upon liquidation,
dissolution or winding-up of the Corporation, an amount equal to the sum of (i)
a liquidation preference of $100.00 per share of Series C Preferred Stock, and
(ii) an amount equal to any accumulated and unpaid distributions thereon,
whether or not declared, to the date of payment. In the event that, upon such
voluntary or involuntary liquidation, dissolution or winding-up, there are
insufficient assets to permit full payment of liquidating distributions to the
holders of Series C Preferred Stock and any Parity Preferred Stock as to rights
upon liquidation, dissolution or winding-up of the Corporation, all payments of
liquidating distributions on the Series C Preferred Stock and such Parity
Preferred Stock shall be made so that the payments on the Series C Preferred
Stock and such Parity Preferred Stock shall in all cases bear to each other the
same ratio that the respective rights of the Series C Preferred Stock and such
other Parity Preferred Stock (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such Parity
Preferred Stock does not have cumulative distribution rights) upon liquidation,
dissolution or winding-up of the Corporation bear to each other.
(b) Notice. Written notice of any such voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, stating the payment date or dates
when, and the place or places where, the amounts distributable in such
circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than 30 and not more than 60 days prior
to the payment date stated therein, to each record holder of the Series C
Preferred Stock at the respective addresses of such holders as the same shall
appear on the share transfer records of the Corporation.
(c) No Further Rights. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series C Preferred
Stock will have no right or claim to any of the remaining assets of the
Corporation. (d) Consolidation Merger or Certain Other Transactions. The
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the Corporation to, or the consolidation or merger or
other business combination of the Corporation with or into, any corporation,
trust or other entity (or of any corporation, trust or other entity with or into
the Corporation) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Corporation. (e) Permissible Distributions. In determining
whether a distribution (other than upon voluntary liquidation) by dividend,
redemption or other acquisition of shares of stock of the Corporation or
otherwise is permitted under the FBCA, no effect shall be given to amounts that
would be needed, if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of holders of
shares of stock of the Corporation whose preferential rights upon dissolution
are superior to those receiving the distribution. Section 5. Optional
Redemption. (a) Right of Optional Redemption. The Series C Preferred Stock may
not be redeemed prior to September 3, 2004. On or after such date, the
Corporation shall have the right to redeem the Series C Preferred Stock, in
whole or in part, at any time or from time to time, upon not less than 30 nor
more than 60 days' written notice, at a redemption price, payable in cash, equal
to $100.00 per share of Series C Preferred Stock plus accumulated and unpaid
distributions, whether or nor declared, to the date of redemption. If fewer than
all of the outstanding shares of Series C Preferred Stock are to be redeemed,
the shares of Series C Preferred Stock to be redeemed shall be selected pro rata
(as nearly as practicable without creating fractional shares).
(b) Limitation on Redemption. (i) The redemption price of the Series C Preferred
Stock (other than the portion thereof consisting of accumulated but unpaid
distributions) will be payable solely out of sale proceeds of capital stock of
the Corporation and from no other source. For purposes of the preceding
sentence, "capital stock" means any equity securities (including Common Stock
and Preferred Stock), shares, participation or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable for equity securities) or options to purchase any of the
foregoing.
<PAGE>
(ii) The Corporation may not redeem fewer than all of the outstanding shares of
Series C Preferred Stock unless all accumulated and unpaid distributions have
been paid on all Series C Preferred Stock for all quarterly distribution periods
terminating on or prior to the date of redemption.
(c) Procedures for Redemption. (i) Notice of redemption will be (i) faxed, and
(ii) mailed by the Corporation, postage prepaid, not less than 30 nor more than
60 days prior to the redemption date, addressed to the respective holders of
record of the Series C Preferred Stock to be redeemed at their respective
addresses as they appear on the transfer records of the Corporation. No failure
to give or defect in such notice shall affect the validity of the proceedings
for the redemption of any Series C Preferred Stock except as to the holder to
whom such notice was defective or not given. In addition to any information
required by law or by the applicable rules of any exchange upon which the Series
C Preferred Stock may be listed or admitted to trading, each such notice shall
state: (i) the redemption date, (ii) the redemption price, (iii) the number of
shares of Series C Preferred Stock to be redeemed, (iv) the place or places
where such shares of Series C Preferred Stock are to be surrendered for payment
of the redemption price, (v) that distributions on the Series C Preferred Stock
to be redeemed will cease to accumulate on such redemption date and (vi) that
payment of the redemption price and any accumulated and unpaid distributions
will be made upon presentation and surrender of such Series C Preferred Stock.
If fewer than all of the shares of Series C Preferred Stock held by any holder
are to be redeemed, the notice mailed to such holder shall also specify the
number of shares of Series C Preferred Stock held by such holder to be redeemed.
(ii) If the Corporation gives a notice of redemption in respect of Series C
Preferred Stock (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Corporation will deposit irrevocably in
trust for the benefit of the Series C Preferred Stock being redeemed funds
sufficient to pay the applicable redemption price, plus any accumulated and
unpaid distributions, whether or not declared, if any, on such shares to the
date fixed for redemption, without interest, and will give irrevocable
instructions and authority to pay such redemption price and any accumulated and
unpaid distributions, if any, on such shares to the holders of the Series C
Preferred Stock upon surrender of the certificate evidencing the Series C
Preferred Stock by such holders at the place designated in the notice of
redemption. If fewer than all Series C Preferred Stock evidenced by any
certificate is being redeemed, a new certificate shall be issued upon surrender
of the certificate evidencing all Series C Preferred Stock, evidencing the
unredeemed Series C Preferred Stock without cost to the holder thereof. On and
after the date of redemption, distributions will cease to accumulate on the
Series C Preferred Stock or portions thereof called for redemption, unless the
Corporation defaults in the payment thereof. If any date fixed for redemption of
Series C Preferred Stock is not a Business Day, then payment of the redemption
price payable on such date will be made on the next succeeding day that is a
Business 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 or any accumulated or unpaid distributions in
respect of the Series C Preferred Stock is improperly withheld or refused and
not paid by the Corporation, distributions on such Series C Preferred Stock will
continue to accumulate from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the applicable redemption price and any
accumulated and unpaid distributions.
<PAGE>
(d) Status of Redeemed Stock. Any Series C Preferred Stock that shall at any
time have been redeemed shall after such redemption, have the status of
authorized but unissued Preferred Stock, without designation as to class or
series until such shares are once more designated as part of a particular class
or series by the Board of Directors.
Section 6. Voting Rights
. (a) General. Holders of the Series C Preferred Stock will
not have any voting rights, except as set forth below.
(b) Right to Elect Directors. (i) If at any time distributions shall be in
arrears (which means that as to any such quarterly distributions, the same have
not been paid in full) with respect to six (6) prior quarterly distribution
periods (including quarterly periods on the Series C Preferred Units prior to
the exchange into Series C Preferred Stock), whether or not consecutive, and
shall not have been paid in full (a "Series C Preferred Distribution Default"),
the authorized number of members of the Board of Directors shall automatically
be increased by two and the holders of record of such Series C Preferred Stock,
voting together as a single class with the holders of each class or series of
Parity Preferred Stock upon which like voting rights have been conferred and are
exercisable, will be entitled to fill the vacancies so created by electing two
additional directors to serve on the Corporation's Board of Directors (the
"Preferred Stock Directors") at a special meeting called in accordance with
Section 6(b)(ii), and at each subsequent annual meeting of stockholders or
special meeting held in place thereof, until all such distributions in arrears
and distributions for the current quarterly period on the Series C Preferred
Stock and each such class or series of Parity Preferred Stock have been paid in
full.
(ii) At any time when such voting rights shall have vested, a proper officer of
the Corporation shall call or cause to be called, upon written request of
holders of record of at least 10% of the outstanding shares of Series C
Preferred Stock, a special meeting of the holders of Series C Preferred Stock
and all the series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable (collectively, the "Parity Securities") by
mailing or causing to be mailed to such holders a notice of such special meeting
to be held not less than ten and not more than 45 days after the date such
notice is given. The record date for determining holders of the Parity
Securities entitled to notice of and to vote at such special meeting will be the
close of business on the third Business Day preceding the day on which such
notice is mailed. At any annual or special meeting at which Parity Securities
are entitled to vote, all of the holders of the Parity Securities, by plurality
vote, voting together as a single class without regard to series will be
entitled to elect two directors on the basis of one vote per $25.00 of
liquidation preference to which such Parity Securities are entitled by their
terms (excluding amounts in respect of accumulated and unpaid dividends) and not
cumulatively. The holder or holders of the Parity Securities representing
one-third of the total voting power of the Parity Securities then outstanding,
present in person or by proxy, will constitute a quorum for the election of the
Preferred Stock Directors except as otherwise provided by law. Notice of all
meetings at which holders of the Series C Preferred Stock shall be entitled to
vote will be given to such holders at their addresses as they appear in the
transfer records. At any such meeting or adjournment thereof in the absence of a
quorum, subject to the provisions of any applicable law, the holders of the
Parity Securities representing a majority of the voting power of the Parity
Securities present in person or by proxy shall have the power to adjourn the
meeting for the election of the Preferred Stock Directors, without notice other
than an announcement at the meeting, until a quorum is present. If a Series C
Preferred Distribution Default shall terminate after the notice of an annual or
special meeting has been given but before such meeting has been held, the
Corporation shall, as soon as practicable after such termination, mail or cause
to be mailed notice of such termination to holders of the Series C Preferred
Stock that would have been entitled to vote at such meeting.
<PAGE>
(iii) If and when all accumulated distributions and the distribution for the
current distribution period on the Series C Preferred Stock shall have been paid
in full or a sum sufficient for such payment is irrevocably deposited in trust
for payment, the holders of the Series C Preferred Stock shall be divested of
the voting rights set forth in Section 6(b) herein (subject to revesting in the
event of each and every Series C Preferred Distribution Default) and, if all
distributions in arrears and the distributions for the current distribution
period have been paid in full or set aside for payment in full on all other
classes or series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable, the terms and office of each Preferred Stock
Director so elected shall terminate. Any Preferred Stock Director may be removed
at any time with or without cause by the vote of, and shall not be removed
otherwise than by the vote of, the holders of record of a majority of the
outstanding Series C Preferred Stock when they have the voting rights set forth
in Section 6(b) (voting separately as a single class with all other classes or
series of Parity Preferred Stock upon which like voting rights have been
conferred and are exercisable). So long as a Series C Preferred Distribution
Default shall continue, any vacancy in the office of a Preferred Stock Director
may be filled by written consent of the Preferred Stock Director remaining in
office, or if none remains in office, by a vote of the holders of record of a
majority of the outstanding Series C Preferred Stock when they have the voting
rights set forth in Section 6(b) (voting separately as a single class with all
other classes or series of Parity Preferred Stock upon which like voting rights
have been conferred and are exercisable). The Preferred Stock Directors shall
each be entitled to one vote per director on any matter. (c) Certain Voting
Rights. So long as any Series C Preferred Stock remains outstanding, the
Corporation shall not, without the affirmative vote of the holders of at least
two-thirds of the Series C Preferred Stock outstanding at the time (i)
authorize, designate or create, or increase the authorized or issued amount of,
any class or series of shares ranking prior to the Series C Preferred Stock with
respect to payment of distributions or rights upon liquidation, dissolution or
winding-up or reclassify any authorized shares of the Corporation into any such
shares, or create, authorize or issue any obligations or securities convertible
into or evidencing the right to purchase any such shares, (ii) authorize,
designate or create, or increase the authorized or issued amount of, any Parity
Preferred Stock or reclassify any authorized shares of the Corporation into any
such shares, or create, authorize or issue any obligations or securities
convertible into or evidencing the right to purchase any such shares, but only
to the extent such Parity Preferred Stock is issued to an affiliate of the
Corporation (other than Security Capital U.S. Realty, Security Capital Holdings,
S.A. or their affiliates), or (iii) either (A) consolidate, merge into or with,
or convey, transfer or lease its assets substantially as an entirety, to any
corporation or other entity, or (B) amend, alter or repeal the provisions of the
Corporation's Charter (including these Articles of Amendment) or By-laws,
whether by merger, consolidation or otherwise, in each case in a manner that
would materially and adversely affect the powers, special rights, preferences,
privileges or voting power of the Series C Preferred Stock or the holders
thereof; provided, however, that with respect to the occurrence of a merger,
consolidation or a sale or lease of all of the Corporation's assets as an
entirety, so long as (a) the Corporation is the surviving entity and the Series
C Preferred Stock remains outstanding with the terms thereof unchanged, or (b)
the resulting, surviving or transferee entity is a corporation organized under
the laws of any state and substitutes the Series C Preferred Stock for other
preferred stock having substantially the same terms and same rights as the
Series C Preferred Stock, including with respect to distributions, redemptions,
transfers, 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 C Preferred Stock and no vote of the Series C Preferred Stock shall be
required in such case and provided further that any increase in the amount of
authorized Preferred Stock or the creation or issuance of any other class or
series of Preferred Stock, or any increase in an amount of authorized shares of
each class or series, in each case ranking either (a) junior to the Series C
Preferred Stock with respect to payment of distributions and the distribution of
assets upon liquidation, dissolution or winding-up, or (b) on a parity with the
Series C Preferred Stock with respect to payment of distributions and the
distribution of assets upon liquidation, dissolution or winding-up to the extent
such Preferred Stock is not issued to an affiliate of the Corporation (other
than Security Capital U.S. Realty, Security Capital Holdings, S.A. or their
affiliates), shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers and no vote of the Series C Preferred
Stock shall be required in such case.
<PAGE>
Section 7. No Conversion Rights. The holders of the Series C Preferred Stock
shall not have any rights to convert such shares into shares of any other class
or series of stock or into any other securities of, or interest in, the
Corporation.
Section 8. No Sinking Fund. No sinking fund shall be established for the
retirement or redemption of Series C Preferred Stock.
Section 9. No Preemptive Rights. No holder of the Series C Preferred Stock of
the Corporation shall, as such holder, have any preemptive rights to purchase or
subscribe for additional shares of stock of the Corporation or any other
security of the Corporation which it may issue or sell.
FOURTH : The Series C Preferred Stock have been classified and designated by the
Board of Directors under the authority contained in the Charter.
FIFTH : These Articles of Amendment have been approved by the Board of Directors
in the manner and by the vote required by law. SIXTH : The undersigned Officer
of the Corporation acknowledges these Articles of Amendment to be the corporate
act of the Corporation and, as to all matters or facts required to be verified
under oath, the undersigned Officer acknowledges that to the best of his
knowledge, information and belief, these matters and facts are true in all
material respects and that this statement is made under the penalties for
perjury.
[Signature Page Follows]
<PAGE>
Fax Audit No.
10
004.164394.4
Fax Audit No.
Fax Audit No. H99000022256
Fax Audit No. H99000022256
Signature Page to Series C Articles of Amendment
004.164394.4
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment to be executed under seal in its name and on its behalf by its
Executive Vice President and attested to by its Secretary on this
day of September, 1999.
REGENCY REALTY CORPORATION
By:
Name: Bruce M. Johnson
Title: Executive Vice President
[SEAL]
[ATTEST]
Name: J. Christian Leavitt
Title: Secretary
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF
REGENCY REALTY CORPORATION
DESIGNATING THE PREFERENCES, RIGHTS AND
LIMITATIONS OF 500,000 SHARES OF
9.125% SERIES D CUMULATIVE REDEEMABLE PREFERRED STOCK
$0.01 Par Value
Pursuant to Section 607.0602 of the Florida Business
Corporation Act ("FBCA"), Regency Realty Corporation, a Florida corporation (the
"Corporation"), does hereby certify that:
FIRST: Pursuant to the authority expressly vested in the Board
of Directors of the Corporation by Section 4.2 of the Amended and Restated
Articles of Incorporation of the Corporation (the "Charter") and Section
607.0602 of the FBCA, the Board of Directors of the Corporation (the "Board of
Directors"), by resolutions duly adopted on August 23, 1999 and resolutions duly
adopted by a committee of the Board of Directors on September 29, 1999 has
classified 500,000 shares of the authorized but unissued Preferred Stock par
value $.01 per share ("Preferred Stock") as a separate class of Preferred Stock,
authorized the issuance of a maximum of 500,000 shares of such class of
Preferred Stock, set certain of the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, terms
and conditions of redemption and other terms and conditions of such class of
Preferred Stock, and pursuant to the powers contained in the Bylaws of the
Corporation and the FBCA, appointed a committee (the "Committee") of the Board
of Directors and delegated to the Committee, to the fullest extent permitted by
the FBCA and the Charter and Bylaws of the Corporation, all powers of the Board
of Directors with respect to designating, and setting all other preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications and terms and conditions of
redemption of, such class of Preferred Stock determining the number of shares of
such class of Preferred Stock (not in excess of the aforesaid maximum number) to
be issued and the consideration and other terms and conditions upon which such
shares of such class of Preferred Stock are to be issued. Shareholder approval
was not required under the Charter with respect to such designation.
11
NYDOCS03/486174 6
SECOND: Pursuant to the authority conferred upon the Committee
as aforesaid, the Committee has unanimously adopted resolutions designating the
aforesaid class of Preferred Stock as the A9.125% Series D Cumulative Redeemable
Preferred Stock," setting the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, terms and
conditions of redemption and other terms and conditions of such 9.125% Series D
Cumulative Redeemable Preferred Stock (to the extent not set by the Board of
Directors in the resolutions referred to in Article FIRST of these Articles of
Amendment) and authorizing the issuance of up to 500,000 shares of 9.125% Series
D Cumulative Redeemable Preferred Stock.
THIRD: The class of Preferred Stock of the Corporation created
by the resolutions duly adopted by the Board of Directors of the Corporation and
by the Committee and referred to in Articles FIRST and SECOND of these Articles
of Amendment shall have the following designation, number of shares,
preferences, conversion and other rights, voting powers, restrictions and
limitation as to dividends, qualifications, terms and conditions of redemption
and other terms and conditions:
Section 1. Designation and Number. A series of Preferred
Stock, designated the "9.125% Series D Cumulative Redeemable Preferred Stock"
(the "Series D Preferred Stock") is hereby established. The number of shares of
Series D Preferred Stock shall be 500,000.
<PAGE>
Section 2. Rank. The Series D Preferred Stock will, with
respect to distributions and rights upon voluntary or involuntary liquidation,
winding-up or dissolution of the Corporation, rank senior to all classes or
series of Common Stock (as defined in the Charter) and to all classes or series
of equity securities of the Corporation now or hereafter authorized, issued or
outstanding, other than any class or series of equity securities of the
Corporation expressly designated as ranking on a parity with or senior to the
Series D Preferred Stock as to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Corporation or both.
For purposes of these Articles of Amendment, the term "Parity Preferred Stock"
shall be used to refer to any class or series of equity securities of the
Corporation now or hereafter authorized, issued or outstanding expressly
designated by the Corporation to rank on a parity with Series D Preferred Stock
with respect to distributions or rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Corporation or both, as the
context may require, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or conversion rights or exchange
rights shall be different from those of the Series D Preferred Stock and
includes the Series A Cumulative Redeemable Preferred Stock, the Series B
Cumulative Redeemable Preferred Stock, the Series C Cumulative Redeemable
Preferred Stock, the Series 1 Cumulative Convertible Redeemable Preferred Stock
and the Series 2 Cumulative Convertible Redeemable Preferred Stock of the
Corporation. The term "equity securities" does not include debt securities,
which will rank senior to the Series D Preferred Stock prior to conversion.
Section 3. Distributions. (a) Payment of Distributions.
Subject to the rights of holders of Parity Preferred Stock as to the payment of
distributions and holders of equity securities issued after the date hereof in
accordance herewith ranking senior to the Series D Preferred Stock as to payment
of distributions, holders of Series D Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation,
out of funds legally available for the payment of distributions, cumulative cash
distributions at the rate per annum of 9.125% of the $100.00 liquidation
preference per share of Series D Preferred Stock. Such distributions shall be
cumulative, shall accrue from the original date of issuance and will be payable
in cash (A) quarterly (such quarterly periods for purposes of payment and
accrual will be the quarterly periods ending on the dates specified in this
sentence) in arrears, on or before March 31, June 30, September 30 and December
31 of each year commencing on the first of such dates to occur after the
original date of issuance and, (B) in the event of a redemption, on the
redemption date (each a "Preferred Stock Distribution Payment Date"). The amount
of the distribution payable for any period will be computed on the basis of a
360-day year of twelve 30-day months and for any period shorter than a full
quarterly period for which distributions are computed, the amount of the
distribution payable will be computed on the basis of the ratio of the actual
number of days elapsed in such period to ninety (90) days. If any date on which
distributions are to be made on the Series D Preferred Stock is not a Business
Day (as defined herein), then payment of the distribution to be made on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. Distributions on the Series D Preferred Stock
will be made to the holders of record of the Series D Preferred Stock on the
relevant record dates to be fixed by the Board of Directors of the Corporation,
which record dates shall be not less than 10 days and not more than 30 Business
Days prior to the relevant Preferred Stock Distribution Payment Date (each a
"Distribution Record Date"). Notwithstanding anything to the contrary set forth
herein, each share of Series D Preferred Stock shall also continue to accrue all
accrued and unpaid distributions, whether or not declared, up to the exchange
date on any Series D Preferred Unit (as defined in the Third Amended and
Restated Agreement of Limited Partnership of Regency Centers, L.P., dated as
September 1, 1999 as amended by Amendment No. 1 to the Third Amended and
Restated Agreement of Limited Partnership of Operating Partnership, dated as of
September 3, 1999, Amendment No. 2 to the Third Amended and Restated Agreement
of Limited Partnership of Operating Partnership, dated as of September 3, 1999
and that certain Third Amendment to Third Amended and Restated Agreement of
Limited Partnership dated as of September 29, 1999 (as amended the APartnership
Agreement")) validly exchanged into such share of Series D Preferred Stock in
accordance with the provisions of such Partnership Agreement.
The term "Business Day" shall mean each day, other than a
Saturday or a Sunday, which is not a day on which banking institutions in New
York, New York are authorized or required by law, regulation or executive order
to close.
<PAGE>
(b) Limitation on Distributions. No distribution on the Series
D Preferred Stock shall be declared or paid or set apart for payment by the
Corporation at such time as the terms and provisions of any agreement of the
Corporation (other than any agreement with a holder or affiliate of holder of
Capital Stock of the Corporation) relating to its indebtedness, prohibit such
declaration, payment or setting apart for payment or provide that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration, payment or setting
apart for payment shall be restricted or prohibited by law. Nothing in this
Section 3(b) shall be deemed to modify or in any manner limit the provisions of
Section 3(c) and 3(d).
(c) Distributions Cumulative. Distributions on the Series D
Preferred Stock will accrue whether or not the terms and provisions of any
agreement of the Corporation, including any agreement relating to its
indebtedness at any time prohibit the current payment of distributions, whether
or not the Corporation has earnings, whether or not there are funds legally
available for the payment of such distributions and whether or not such
distributions are authorized or declared. Accrued but unpaid distributions on
the Series D Preferred Stock will accumulate as of the Preferred Stock
Distribution Payment Date on which they first become payable. Distributions on
account of arrears for any past distribution periods may be declared and paid at
any time, without reference to a regular Preferred Stock Distribution Payment
Date to holders of record of the Series D Preferred Stock on the record date
fixed by the Board of Directors which date shall be not less than 10 days and
not more than 30 Business Days prior to the payment date. Accumulated and unpaid
distributions will not bear interest.
(d) Priority as to Distributions. (i) So long as any Series D
Preferred Stock is outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Common Stock or any class or series of other stock of the
Corporation ranking junior to the Series D Preferred Stock as to the payment of
distributions (such Common Stock or other junior stock, collectively, "Junior
Stock"), nor shall any cash or other property be set aside for or applied to the
purchase, redemption or other acquisition for consideration of any Series D
Preferred Stock, any Parity Preferred Stock with respect to distributions or any
Junior Stock, unless, in each case, all distributions accumulated on all Series
D Preferred Stock and all classes and series of outstanding Parity Preferred
Stock with respect to distributions have been paid in full. Without limiting
Section 6(b) hereof, the foregoing sentence will not prohibit (i) distributions
payable solely in shares of Junior Stock, (ii) the conversion of Junior Stock or
Parity Preferred Stock into Junior Stock, and (iii) purchases by the Corporation
of such Series D Preferred Stock or Parity Preferred Stock or Junior Stock
pursuant to Article 5 of the Charter to the extent required to preserve the
Corporation=s status as a real estate investment trust.
(ii) So long as distributions have not been paid in full
(or a sum sufficient for such full payment is not irrevocably deposited in trust
for payment) upon the Series D Preferred Stock, all distributions authorized
and declared on the Series D Preferred Stock and all classes or series of
outstanding Parity Preferred Stock with respect to distributions shall be
authorized and declared so that the amount of distributions authorized and
declared per share of Series D Preferred Stock and such other classes or series
of Parity Preferred Stock shall in all cases bear to each other the same ratio
that accrued distributions per share on the Series D Preferred Stock and such
other classes or series of Parity Preferred Stock (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such class or series of Parity Preferred Stock do not have cumulative
distribution rights) bear to each other.
(e) No Further Rights. Holders of Series D Preferred Stock
shall not be entitled to any distributions, whether payable in cash, other
property or otherwise, in excess of the full cumulative distributions described
herein.
<PAGE>
Section 4. Liquidation Preference. (a) Payment of Liquidating
Distributions. Subject to the rights of holders of Parity Preferred Stock with
respect to rights upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation and subject to equity securities ranking senior to
the Series D Preferred Stock with respect to rights upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, the
holders of Series D Preferred Stock shall be entitled to receive out of the
assets of the Corporation legally available for distribution or the proceeds
thereof, after payment or provision for debts and other liabilities of the
Corporation, but before any payment or distributions of the assets shall be made
to holders of Common Stock or any other class or series of shares of the
Corporation that ranks junior to the Series D Preferred Stock as to rights upon
liquidation, dissolution or winding-up of the Corporation, an amount equal to
the sum of (i) a liquidation preference of $100 per share of Series D Preferred
Stock, and (ii) an amount equal to any accumulated and unpaid distributions
thereon, whether or not declared, to the date of payment. In the event that,
upon such voluntary or involuntary liquidation, dissolution or winding-up, there
are insufficient assets to permit full payment of liquidating distributions to
the holders of Series D Preferred Stock and any Parity Preferred Stock as to
rights upon liquidation, dissolution or winding-up of the Corporation, all
payments of liquidating distributions on the Series D Preferred Stock and such
Parity Preferred Stock shall be made so that the payments on the Series D
Preferred Stock and such Parity Preferred Stock shall in all cases bear to each
other the same ratio that the respective rights of the Series D Preferred Stock
and such other Parity Preferred Stock (which shall not include any accumulation
in respect of unpaid distributions for prior distribution periods if such Parity
Preferred Stock do not have cumulative distribution rights) upon liquidation,
dissolution or winding-up of the Corporation bear to each other.
(b) Notice. Written notice of any such voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, stating
the payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be given by (i) fax
and (ii) by first class mail, postage pre-paid, not less than 30 and not more
than 60 days prior to the payment date stated therein, to each record holder of
the Series D Preferred Stock at the respective addresses of such holders as the
same shall appear on the share transfer records of the Corporation.
(c) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series D
Preferred Stock will have no right or claim to any of the remaining assets of
the Corporation.
(d) Consolidation, Merger or Certain Other Transactions. The
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the Corporation to, or the consolidation or merger or
other business combination of the Corporation with or into, any corporation,
trust or other entity (or of any corporation, trust or other entity with or into
the Corporation) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Corporation.
(e) Permissible Distributions. In determining whether a
distribution (other than upon voluntary liquidation) by dividend, redemption or
other acquisition of shares of stock of the Corporation or otherwise is
permitted under the FBCA, no effect shall be given to amounts that would be
needed, if the Corporation were to be dissolved at the time of the distribution,
to satisfy the preferential rights upon dissolution of holders of shares of
stock of the Corporation whose preferential rights upon dissolution are superior
to those receiving the distribution.
Section 5. Optional Redemption. (a) Right of Optional
Redemption. The Series D Preferred Stock may not be redeemed prior to September
29, 2004. On or after such date, the Corporation shall have the right to redeem
the Series D Preferred Stock, in whole or in part, at any time or from time to
time, upon not less than 30 nor more than 60 days' written notice, at a
redemption price, payable in cash, equal to $100 per share of Series D Preferred
Stock plus accumulated and unpaid distributions, whether or nor declared, to the
date of redemption. If fewer than all of the outstanding shares of Series D
Preferred Stock are to be redeemed, the shares of Series D Preferred Stock to be
redeemed shall be selected pro rata (as nearly as practicable without creating
fractional units).
<PAGE>
(b) Limitation on Redemption. (i) The redemption
price of the Series D Preferred Stock (other than the portion thereof
consisting of accumulated but unpaid distributions) will be payable solely
out of sale proceeds of capital stock of the Corporation and from no other
source. For purposes of the preceding sentence, "capital stock" means any
equity securities (including Common Stock and Preferred Stock), shares,
participation or other ownership interests (however designated) and any
rights (other than debt securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing.
(ii) The Corporation may not redeem fewer than
all of the outstanding shares of Series D Preferred Stock unless all accumulated
and unpaid distributions have been paid on all Series D Preferred Stock for
all quarterly distribution periods terminating on or prior to the date of
redemption.
(c) Procedures for Redemption. (i) Notice of redemption will
be (i) faxed, and (ii) mailed by the Corporation, postage prepaid, not less than
30 nor more than 60 days prior to the redemption date, addressed to the
respective holders of record of the Series D Preferred Stock to be redeemed at
their respective addresses as they appear on the transfer records of the
Corporation. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series D Preferred Stock
except as to the holder to whom such notice was defective or not given. In
addition to any information required by law or by the applicable rules of any
exchange upon which the Series D Preferred Stock may be listed or admitted to
trading, each such notice shall state: (i) the redemption date, (ii) the
redemption price, (iii) the number of shares of Series D Preferred Stock to be
redeemed, (iv) the place or places where such shares of Series D Preferred Stock
are to be surrendered for payment of the redemption price, (v) that
distributions on the Series D Preferred Stock to be redeemed will cease to
accumulate on such redemption date and (vi) that payment of the redemption price
and any accumulated and unpaid distributions will be made upon presentation and
surrender of such Series D Preferred Stock. If fewer than all of the shares of
Series D Preferred Stock held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of shares of Series D
Preferred Stock held by such holder to be redeemed.
(ii) If the Corporation gives a notice of
redemption in respect of Series D Preferred Stock (which notice will be
irrevocable) then, by 12:00 noon, New York City time, on the redemption date,
the Corporation will deposit irrevocably in trust for the benefit of the
Series D Preferred Stock being redeemed funds sufficient to pay the
applicable redemption price, plus any accumulated and unpaid distributions,
whether or not declared, if any, on such shares to the date fixed for
redemption, without interest, and will give irrevocable instructions and
authority to pay such redemption price and any accumulated and unpaid
distributions, if any, on such shares to the holders of the Series D
Preferred Stock upon surrender of the certificate evidencing the Series D
Preferred Stock by such holders at the place designated in the notice of
redemption. If fewer than all Series D Preferred Stock evidenced by any
certificate is being redeemed, a new certificate shall be issued upon surrender
of the certificate evidencing all Series D Preferred Stock, evidencing the
unredeemed Series D Preferred Stock without cost to the holder thereof. On and
after the date of redemption, distributions will cease to accumulate on the
Series D Preferred Stock or portions thereof called for redemption, unless the
Corporation defaults in the payment thereof. If any date fixed for redemption of
Series D Preferred Stock is not a Business Day, then payment of the redemption
price payable on such date will be made on the next succeeding day that is a
Business Bay (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
payment of the redemption price or any accumulated or unpaid distributions in
respect of the Series D Preferred Stock is improperly withheld or refused and
not paid by the Corporation, distributions on such Series D Preferred Stock will
continue to accumulate from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the applicable redemption price and any
accumulated and unpaid distributions.
<PAGE>
(d) Status of Redeemed Stock. Any Series D Preferred Stock
that shall at any time have been redeemed shall after such redemption, have the
status of authorized but unissued Preferred Stock, without designation as to
class or series until such shares are once more designated as part of a
particular class or series by the Board of Directors.
Section 6. Voting Rights. (a) General. Holders of the Series
D Preferred Stock will not have any voting rights, except as set forth below.
(b) Right to Elect Directors. (i) If at any time distributions
shall be in arrears (which means that, as to any such quarterly distributions,
the same have not been paid in full) with respect to six (6) prior quarterly
distribution periods (including quarterly periods on the Series D Preferred
Units prior to the exchange into Series D Preferred Stock), whether or not
consecutive, and shall not have been paid in full (a "Preferred Distribution
Default"), the authorized number of members of the Board of Directors shall
automatically be increased by two and the holders of record of such Series D
Preferred Stock, voting together as a single class with the holders of each
class or series of Parity Securities (as defined below), will be entitled to
fill the vacancies so created by electing two additional directors to serve on
the Corporation's Board of Directors (the "Preferred Stock Directors") at a
special meeting called in accordance with Section 6(b)(ii) or at the next annual
meeting of stockholders, and at each subsequent annual meeting of stockholders
or special meeting held in place thereof, until all such distributions in
arrears and distributions for the current quarterly period on the Series D
Preferred Stock and each such class or series of Parity Securities have been
paid in full.
(ii) At any time when such voting rights shall have vested, a
proper officer of the Corporation shall call or cause to be called, upon written
request of holders of record of at least 10% of the outstanding shares of Series
D Preferred Stock, a special meeting of the holders of Series D Preferred Stock
and all the series of Parity Preferred Stock which are (i) on parity with the
Series D Preferred Stock both as to distributions and rights upon liquidation,
dissolution and winding up, (ii) with respect to Parity Preferred Stock
outstanding as a result of an acquisition of another corporation, on parity with
the Series D Preferred Stock as to distributions only or with respect to
distributions and rights upon liquidation, dissolution or winding up or (iii) on
parity with the Series D Preferred Stock as to distributions, but junior as to
rights upon liquidation, dissolution and winding up, but if any such Parity
Preferred Stock referred to in this clause (iii) was issued for an amount less
than its liquidation preference, the holders thereof shall be entitled to one
vote for each $25.00 of issuance price, in lieu of one vote for each $25.00 of
liquidation preference, and upon which like voting rights have been conferred
and are exercisable (collectively, the AParity Securities@) by mailing or
causing to be mailed to such holders a notice of such special meeting to be held
not less than ten and not more than 45 days after the date such notice is given.
The record date for determining holders of the Parity Securities entitled to
notice of and to vote at such special meeting will be the close of business on
the third Business Day preceding the day on which such notice is mailed. At any
annual or special meeting at which Parity Securities are entitled to vote, all
of the holders of the Parity Securities, by plurality vote, voting together as a
single class without regard to series will be entitled to elect two directors on
the basis of one vote per $25.00 of liquidation preference to which such Parity
Securities are entitled by their terms (excluding amounts in respect of
accumulated and unpaid dividends) and not cumulatively. The holder or holders of
the Parity Securities representing one-third of the total voting power of the
Parity Securities then outstanding, present in person or by proxy, will
constitute a quorum for the election of the Preferred Stock Directors except as
<PAGE>
otherwise provided by law. Notice of all meetings at which holders of the Series
D Preferred Stock shall be entitled to vote will be given to such holders at
their addresses as they appear in the transfer records. At any such meeting or
adjournment thereof in the absence of a quorum, subject to the provisions of any
applicable law, the holders of the Parity Securities representing a majority of
the voting power of the Parity Securities present in person or by proxy shall
have the power to adjourn the meeting for the election of the Preferred Stock
Directors, without notice other than an announcement at the meeting, until a
quorum is present. If a Preferred Distribution Default shall terminate after the
notice of an annual or special meeting has been given but before such meeting
has been held, the Corporation shall, as soon as practicable after such
termination, mail or cause to be mailed notice of such termination to holders of
the Series D Preferred Stock that would have been entitled to vote at such
meeting.
(iii) If and when all accumulated distributions and the
distribution for the current distribution period on the Series D Preferred Stock
shall have been paid in full or a sum sufficient for such payment is irrevocably
deposited in trust for payment, the holders of the Series D Preferred Stock
shall be divested of the voting rights set forth in Section 6(b) herein (subject
to revesting in the event of each and every Preferred Distribution Default) and,
if all distributions in arrears and the distributions for the current
distribution period have been paid in full or set aside for payment in full on
all other classes or series of Parity Securities upon which like voting rights
have been conferred and are exercisable, the term and office of each Preferred
Stock Director so elected shall terminate. Any Preferred Stock Director may be
removed at any time with or without cause by the vote of, and shall not be
removed otherwise than by the vote of, the holders of record of a majority of
the outstanding Series D Preferred Stock when they have the voting rights set
forth in Section 6(b) (voting separately as a single class with all other
classes or series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable). So long as a Preferred Distribution Default
shall continue, any vacancy in the office of a Preferred Stock Director may be
filled by written consent of the Preferred Stock Director remaining in office,
or if none remains in office, by a vote of the holders of record of a majority
of the outstanding Series D Preferred Stock when they have the voting rights set
forth in Section 6(b) (voting separately as a single class with all other
classes or series of Parity Securities upon which like voting rights have been
conferred and are exercisable). The Preferred Stock Directors shall each be
entitled to one vote per director on any matter.
(c) Certain Voting Rights. So long as any Series D Preferred
Stock remains outstanding, the Corporation shall not, without the affirmative
vote of the holders of at least two-thirds of the Series D Preferred Stock and
the Series D Preferred Units outstanding at such time and not previously
surrendered in exchange for Series D Preferred Stock together, if applicable,
voting as a single class based on the number of shares into which such Series D
Preferred Units are then convertible (collectively, the "Series D Voting
Securities") (i) designate or create, or increase the authorized or issued
amount of, any class or series of shares ranking senior to the Series D
Preferred Stock with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any authorized shares of
the Corporation into any such shares, or create, authorize or issue any
obligations or securities convertible into or evidencing the right to purchase
any such shares, (ii) designate or create, or increase the authorized or issued
amount of, any Parity Preferred Stock or reclassify any authorized shares of the
Corporation into any such shares, or create, authorize or issue any obligations
or securities convertible into or evidencing the right to purchase any such
shares, but only to the extent such Parity Preferred Stock is issued to an
affiliate of the Corporation (other than Security Capital U.S. Realty, Security
Capital Holdings, S.A. or their affiliates if issued upon arms-length terms in
the good faith determination of the Board of Directors), or (iii) either (A)
consolidate, merge into or with, or convey, transfer or lease its assets
substantially as an entirety, to any corporation or other entity, or (B) amend,
alter or repeal the provisions of the Corporation=s Charter (including these
Articles of Amendment) or By-laws, whether by merger, consolidation or
otherwise, in each case that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series D
Preferred Stock or the holders thereof; provided, however, that with respect to
the occurrence of a merger, consolidation or a sale or lease of all of the
<PAGE>
Corporation=s assets as an entirety, so long as (a) the Corporation is the
surviving entity and the Series D Preferred Stock remains outstanding with the
terms thereof unchanged, or (b) the resulting, surviving or transferee entity is
a corporation organized under the laws of any state and substitutes the Series D
Preferred Stock for other preferred stock having substantially the same terms
and same rights as the Series D Preferred Stock, including with respect to
distributions, voting rights and rights upon liquidation, dissolution or
winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series D Preferred Stock and no vote of the Series D Voting
Securities shall be required in such case; and provided further that any
increase in the amount of authorized Preferred Stock or the creation or issuance
of any other class or series of Preferred Stock, or any increase in an amount of
authorized shares of each class or series, in each case ranking either (a)
junior to the Series D Preferred Stock with respect to payment of distributions
or the distribution of assets upon liquidation, dissolution or winding-up, or
(b) on a parity with the Series D Preferred Stock with respect to payment of
distributions or the distribution of assets upon liquidation, dissolution or
winding-up to the extent such Preferred Stock is not issued to a affiliate of
the Corporation (other than Security Capital U.S. Realty, Security Capital
Holdings, S.A. or their affiliates if issued upon arms-length terms in the good
faith determination of the Board of Directors), shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers and no vote of the Series D Preferred Stock shall be required in such
case.
NYDOCS03/486174 6
Section 7. No Conversion Rights. The holders of the Series D
Preferred Stock shall not have any rights to convert such shares into shares of
any other class or series of stock or into any other securities of, or interest
in, the Corporation.
Section 8. No Sinking Fund. No sinking fund shall be
established for the retirement or redemption of Series D Preferred Stock.
Section 9. No Preemptive Rights. No holder of the Series D
Preferred Stock of the Corporation shall, as such holder, have any preemptive
rights to purchase or subscribe for additional shares of stock of the
Corporation or any other security of the Corporation which it may issue or sell.
FOURTH: The Series D Preferred Stock have been classified and
designated by the Board of Directors under the authority contained in the
Charter.
FIFTH: These Articles of Amendment have been approved by the
Board of Directors in the manner and by the vote required by law.
SIXTH: The undersigned officer of the Corporation acknowledges
these Articles of Amendment to be the corporate act of the Corporation and, as
to all matters or facts required to be verified under oath, the undersigned
officer acknowledges that to the best of his knowledge, information and belief,
these matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment to be executed under seal in its name and on its behalf by its
__________ and attested to by its Secretary on this 29th day of September, 1999.
REGENCY REALTY CORPORATION
By:_____________________________
Name:
Title:
[SEAL]
ATTEST:
----------------------------
Name: J. Christian Leavitt
<PAGE>
11
NYDOCS03/486174 6
Title: Secretary
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
REGENCY REALTY CORPORATION
AMENDING THE DESIGNATION OF THE PREFERENCES, RIGHTS
AND LIMITATIONS OF 542,532 SHARES OF
SERIES 1 CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK
$0.01 Par Value
Pursuant to Section 607.1003 of the Florida Business Corporation Act
("FBCA"), Regency Realty Corporation, a Florida corporation (the "Corporation"),
does hereby certify that:
The Corporation was incorporated on July 8, 1993, effective July 9,
1993, under the name Regency Realty Corporation. By resolutions duly adopted on
July 29, 1999, the Board of Directors of the Corporation has approved an
amendment ("Amendment") to the Articles of Amendment to the Charter (the
"Designation") designating the preferences, rights and limitations of 542,532
shares of Series 1 Cumulative Convertible Redeemable Preferred Stock, par value
$0.01 per share (the "Series 1 Preferred Stock"). Pursuant to Section 9(c) of
the Designation and pursuant to Sections 607.0704 and 607.1004 of the FBCA, the
Amendment was approved by the written consent of the holders of record of a
majority of the outstanding shares of the Series 1 Preferred Stock effective
August ___, 1999. The number of votes cast by such voting group was sufficient
for approval of the Amendment by such voting group. No other voting group was
entitled to vote on the Amendment.
The definition in the Designation of "Dividend Payment Date" is hereby
amended to read in full as follows:
"'Dividend Payment Date' shall mean the date on which any
cash dividend is paid on the Common Stock."
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned Chief Executive Officer of the
Corporation has executed these Articles of Amendment this _____ day of
______________, 1999.
REGENCY REALTY CORPORATION
By:
Name: Bruce M. Johnson
Title: Executive Vice President and
Managing Director
[SEAL]
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF
REGENCY REALTY CORPORATION
AMENDING THE DESIGNATION OF THE PREFERENCES, RIGHTS
AND LIMITATIONS OF 1,502,532 SHARES OF
SERIES 2 CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK
$0.01 Par Value
Pursuant to Section 607.1003 of the Florida Business Corporation Act
("FBCA"), Regency Realty Corporation, a Florida corporation (the "Corporation"),
does hereby certify that:
The Corporation was incorporated on July 8, 1993, effective July 9,
1993, under the name Regency Realty Corporation. By resolutions duly adopted on
July 29, 1999, the Board of Directors of the Corporation has approved an
amendment ("Amendment") to the Articles of Amendment to the Charter (the
"Designation") designating the preferences, rights and limitations of 1,502,532
shares of Series 2 Cumulative Convertible Redeemable Preferred Stock, par value
$0.01 per share (the "Series 2 Preferred Stock"). Pursuant to Section 9(c) of
the Designation and pursuant to Sections 607.0704 and 607.1004 of the FBCA, the
Amendment was approved by the written consent of the holders of record of a
majority of the outstanding shares of the Series 2 Preferred Stock effective
August ___, 1999. The number of votes cast by such voting group was sufficient
for approval of the Amendment by such voting group. No other voting group was
entitled to vote on the Amendment.
The definition in the Designation of "Dividend Payment Date" is hereby
amended to read in full as follows:
"'Dividend Payment Date' shall mean the date on which any cash
dividend is paid on the Common Stock."
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the undersigned Chief Executive Officer of the
Corporation has executed these Articles of Amendment this _____ day of
______________, 1999.
REGENCY REALTY CORPORATION
By:
Name: Bruce M. Johnson
Title: Executive Vice President and Managing Director
[SEAL]
-7-
W/383321v6
[EXECUTION COUNTERPART]
AMENDMENT NO. 4 TO STOCKHOLDERS AGREEMENT
THIS AMENDMENT NO. 4 TO STOCKHOLDERS AGREEMENT (this "Amendment"),
dated as of September 2, 1999, is made by and among Regency Realty Corporation,
a Florida corporation (the "Company"), Security Capital U.S. Realty, a
Luxembourg corporation, and Security Capital Holdings S.A., a Luxembourg
corporation (together with Security Capital U.S. Realty and others specified in
the Stockholders Agreement, "Investor").
Background:
WHEREAS, the Company, Investor and The Regency Group, Inc. entered into
a Stockholders Agreement, dated as of July 10, 1996, as amended by Amendment
No.1 to Stockholders Agreement dated as of February 10, 1997 ("Amendment No.1"),
Amendment No. 2 to Stockholders Agreement dated as of December 4, 1997
("Amendment No. 2"), and Amendment No. 3 to Stockholders Agreement dated as of
September 23, 1998 ("Amendment No. 3") (as so amended, the "Agreement"); and
WHEREAS, the parties wish to amend the Agreement in the manner set
forth herein;
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
1. Additional Section 1.28a. The Agreement is hereby amended by adding
a new Section 1.28a following Section 1.28, as follows:
Section 1.28a. "Operating Partnership" shall mean Regency Centers, L.P.
(formerly known as Regency Retail Partnership, L.P.), a Delaware limited
partnership.
2. Additional Section 1.28b. The Agreement is hereby amended by adding
a new Section 1.28b following Section 1.28a, as follows:
"Operating Partnership Units" shall mean any class of limited
partnership units representing partnership or other equity
interests in the Operating Partnership.
3. Participation Rights. Section 4.2 of the Agreement is hereby
restated in its entirety as follows:
Section 4.2 Participation Rights. (a) Right to
Participate. From and after the date hereof until the 15%
Termination Date, if any, Investor shall be entitled to a
participation right to purchase or subscribe for up to that
number of additional shares of capital stock (including as
"capital stock" for purposes of this Section 4.2, any stock,
unit, partnership unit or participation, or other equity
security, and including any security, option, warrant, call,
commitment, subscription, right to purchase or other agreement
of any character that is convertible into or exchangeable or
redeemable for shares of capital stock or other similar equity
interests of the Company or any Subsidiary or the Operating
Partnership (and all references in this Section 4.2 to capital
stock shall, as appropriate, be deemed to be references to any
such securities), and also including additional shares of
capital stock to be issued pursuant to the conversion,
exchange or redemption of any security, option, warrant, call,
commitment, subscription, right to purchase or other agreement
of any character that is convertible into or exchangeable or
redeemable for shares of capital stock, as if the price at
which such additional shares of capital stock is issued
pursuant to any such conversion, exchange or redemption were
the market price on the date of such issuance) to be issued or
sold by the Company or the Operating Partnership which
represents the same proportion of the total number of shares
of capital stock to be issued or sold by the Company or the
Operating Partnership (including the shares of capital stock
to be issued to Investor upon exercise of its participation
rights hereunder; it being understood and agreed that the
Company or the Operating Partnership will accordingly be
required to either increase the number of shares of capital
stock to be issued or sold so that Investor may purchase
additional shares to maintain its proportionate interest, or
to reduce the number of shares of capital stock to be issued
or sold to Persons other than Investor) as is represented by
the number of shares of Company Common Stock owned by Investor
prior to such sale or issuance relative to the number of
shares of Company Common Stock outstanding prior to such sale
or issuance (but in no event more than 49% of the total number
of shares of capital stock to be issued or sold by the Company
at all subsequent offerings); provided, however, that in lieu
of any participation right of Investor under the provisions of
this Section 4.2 which arises in connection with the issuance
of any capital stock of the Operating Partnership, Investor
shall have the right to acquire equivalent shares of capital
stock of the Company (it being understood and agreed that the
Company will accordingly be required to issue such shares of
capital stock to Investor); provided, further, that the
provisions of this Section 4.2 shall not apply to (i) the
issuance or sale by the Company or the Operating Partnership
of any of its capital stock issued to the Company or any of
its Subsidiaries or pursuant to options, rights or warrants or
other commitments or securities in effect or outstanding on
the date of the Stock Purchase Agreement, or (ii) the issuance
of capital stock pursuant to the conversion, exchange or
redemption of any other capital stock, and with respect to the
original issuance of which other capital stock Investor had
and fully exercised participation rights pursuant to this
Section 4.2, but shall, without limitation, apply to the
issuance by the Company of any of its capital stock pursuant
to benefit, option, stock purchase, or other similar plans or
arrangements, including pursuant to or upon the exercise of
options, rights, warrants, or other securities or agreements
(including those issued pursuant to the Company's benefit
plans), as if the price at which such capital stock is issued
were the market price on the date of such issuance.
(b) Notice. In the event the Company or the Operating
Partnership proposes to issue or sell any shares of capital
stock in a transaction giving rise to the participation rights
provided for in this Section, the Company shall send a written
notice (the "Participation Notice") to Investor setting forth
the number of shares of such capital stock of the Company or
the Operating Partnership that the Company or the Operating
Partnership proposes to sell or issue, the price (before any
commission or discount) at which such shares are proposed to
be issued (or, in the case of an underwritten or privately
placed offering in which the price is not known at the time
the Participation Notice is given, the method of determining
such price and an estimate thereof), and all other relevant
information as to such proposed transaction as may be
necessary for Investor to determine whether or not to exercise
the rights granted in this Section. At any time within 20 days
after its receipt of the Participation Notice, Investor may
exercise its participation rights to purchase or subscribe for
shares of such shares of capital stock, as provided for in
this Section, by so informing the Company in writing (an
"Exercise Notice"). Each Exercise Notice shall state the
percentage of the proposed sale or issuance that the Investor
elects to purchase. Each Exercise Notice shall be irrevocable,
subject to the conditions to the closing of the transaction
giving rise to the participation right provided for in this
Section.
(c) Abandonment of Sale or Issuance. The Company or
the Operating Partnership, as the case may be, shall have the
right, in its sole discretion, at all times prior to
consummation of any proposed sale or issuance giving rise to
the participation right granted by this Section, to abandon,
rescind, annul, withdraw or otherwise terminate such sale or
issuance, whereupon all participation rights in respect of
such proposed sale or issuance pursuant to this Section shall
become null and void, and neither the Company nor the
Operating Partnership shall have no any liability or
obligation to Investor or any Affiliate thereof who has
acquired shares of Company Stock pursuant to the Stock
Purchase Agreement or from Investor with respect thereto by
virtue of such abandonment, rescission, annulment, withdrawal
or termination.
(d) Terms of Sale. The purchase or subscription by
Investor or an Affiliate thereof, as the case may be, pursuant
to this Section shall be on the same price and other terms and
conditions, including the date of sale or issuance, as are
applicable to the purchasers or subscribers of the additional
shares of capital stock of the Company or the Operating
Partnership whose purchases or subscriptions give rise to the
participation rights, which price and other terms and
conditions shall be substantially as stated in the relevant
Participation Notice (which standard shall be satisfied if the
price, in the case of a negotiated transaction, is not greater
than 110% of the estimated price set forth in the relevant
Participation Notice or, in the case of an underwritten or
privately placed offering, is not greater than the greater of
(i) 110% of the estimated price set forth in the relevant
Participation Notice, and (ii) the most recent closing price
on or prior to the date of the pricing of the offering);
provided, however, that in the event the consideration to be
received by the Company or the Operating Partnership in
connection with the issuance of shares of capital stock giving
rise to participation rights hereunder is other than cash or
cash equivalents, the price per share at which the
participation rights may be exercised shall be the price per
share set forth in the Participation Notice or determined in
the manner set forth in the Participation Notice (which shall
in either event be the price as set forth in the agreement
pursuant to which such shares are to be issued, provided that
the consideration to be received therefor is valued based upon
the fair market value thereof, as determined in good faith by
the Company's independent directors, after consultation with
appropriate financial and legal advisors, or the price
determined in accordance with paragraph (a) of this Section
4.2); provided, further, however, that in the event the
consideration to be received by the Company or the Operating
Partnership in connection with the issuance of shares of
capital stock giving rise to participation rights hereunder is
other than cash or cash equivalents, and the fair market value
of the consideration to be received is not determinable, the
price per share at which the participation rights may be
exercised shall, (i) in the event that shares of capital stock
with an established trading market are being issued or sold,
be the average ten-day trailing market price of such shares as
of the date of receipt of the Participation Notice, and (ii)
in the event any other shares of capital stock are being
issued or sold, be determined by reference to the amount set
forth above, adjusted as may be appropriate to reflect the
relationship between those shares of capital stock with an
established trading market and those shares of capital stock
to be issued in the relevant transaction; provided, however,
that if the consideration otherwise covered by the second
proviso of this Section 4.2(d) is received in connection with
a merger or consolidation by the Company or the Operating
Partnership, the price per share at which the participation
rights may be exercised shall be the market value per share of
Company Common Stock or Operating Partnership Units, as the
case may be, issued in respect of such merger or consolidation
as of the date of the merger or consolidation agreement; and
provided, finally, that in the event the purchases or
subscriptions giving rise to the participation rights are
effected by an offering of securities registered under the
1933 Act and in which offering it is not legally permissible
for the securities to be purchased by Investor to be included,
such securities to be purchased by Investor will be purchased
in a concurrent private placement.
(e) Timing of Sale. If, with respect to any
Participation Notice, Investor fails to deliver an Exercise
Notice within the requisite time period, the Company or the
Operating Partnership, as the case may be, shall have 120 days
after the expiration of the time in which the Exercise Notice
is required to be delivered in which to sell not more than
110% of the number of shares of capital stock of the Company
or the Operating Partnership, as the case may be, described in
the Participation Notice (plus, in the event such shares are
to be sold in an underwritten public offering, an additional
number of shares of capital stock of the Company or the
Operating Partnership, as the case may be, not in excess of
15% of 110% of the number of shares of capital stock of the
Company or the Operating Partnership, as the case may be,
described in the Participation Notice, in respect of any
underwriters overallotment option) and not less than 90% of
the number of shares of capital stock of the Company or the
Operating Partnership, as the case may be, described in the
Participation Notice on terms not more favorable to the
purchaser than were set forth in the Participation Notice. If,
at the end of 120 days following the expiration of the time in
which the Exercise Notice is required to be delivered, the
Company or the Operating Partnership, as the case may be, has
not completed the sale or issuance of capital stock of the
Company or the Operating Partnership, as the case may be, in
accordance with the terms described in the Participation
Notice (or at a price which is at least 90% of the estimated
price set forth in the Participation Notice), or in the event
of any contemplated sale or issuance within such 120-day
period but outside such price parameters, the Company or the
Operating Partnership, as the case may be, shall again be
obligated to comply with the provisions of this Section with
respect to, and provide the opportunity to participate in, any
proposed sale or issuance of shares of capital stock of the
Company or the Operating Partnership, as the case may be;
provided, however, that notwithstanding the foregoing, if the
price at which such capital stock is to be sold in an
underwritten offering (or a privately placed offering in which
the price is not less than 97% of the most recent closing
price at the time of the pricing of the offering) is not at
least 90% of the estimated price set forth in the
Participation Notice, the Company or the Operating
Partnership, as the case may be, may inform Investor of such
fact and Investor shall be entitled to elect, by written
notice delivered within two Business Days following such
notice from the Company, to participate in such offering in
accordance with the provisions of this Section 4.2.
4. Standstill Period; Ownership Limit. Section 5.2(a)(iii) of the
Agreement is hereby restated in its entirety as follows:
(iii) purchase or otherwise acquire shares of Company Common
Stock (or options, rights or warrants or other commitments to
purchase and securities convertible into (or exchangeable or
redeemable for) shares of Company Common Stock) as a result of
which, after giving effect to such pur
<PAGE>
chase or acquisition, Investor will own more than 60% of the
outstanding shares of Company Common Stock, on a fully diluted
basis;
5. Exception to Special Shareholder Limit; Application of Section
5.1(r) of Company Charter. Pursuant to and in accordance with the provisions of
Section 5.11 of the Company Charter, the Board of Directors of the Company shall
duly approve, and the Company shall otherwise take all other action necessary
pursuant to Section 5.11 of the Company Charter and otherwise by no later than
Monday, September 13, 1999, to irrevocably and permanently grant, an exception
to the Special Shareholder Limit such that, from and after the date hereof,
Section 5.1(r) of the Company Charter (setting forth the definition of "Special
Shareholder Limit") shall apply to the Special Shareholder (as defined in the
Company Charter) in all respects and for all purposes as if the first sentence
of Section 5.1(r) did not contain the proviso "provided, however, that if at any
time after the effective date of this Amendment a Special Shareholder's
ownership of Common Stock, on a fully diluted basis, of the Corporation shall
have been below 45% for a continuous period of 180 days, then the definition of
`Special Shareholder Limit' shall mean 49% of the outstanding shares of Common
Stock, on a fully diluted basis, of the Corporation". At the request of
Investor, the Board of Directors will authorize and recommend for approval (and
shall not thereafter withdraw or modify such recommendation) by the shareholders
of the Company at the next annual or special meeting of the Company's
shareholders following the date of such request an amendment to the Company's
Charter in a form reasonably approved by Investor to amend Section 5.1(r) of the
Company Charter so as to eliminate the foregoing proviso, and to replace it with
the phrase "or such other percentage of the outstanding shares of Common Stock
as the Board of Directors may from time to time determine".
6. No Effect on Consistent Terms. All terms of the Agreement not
inconsistent with this Amendment shall remain in place and in full force and
effect and shall be unaffected by this Amendment, and shall continue to apply
(i) to the Agreement as amended hereby and (ii) to this Amendment. From and
after the date hereof, each reference to the Agreement in any other instrument
or document shall be deemed a reference to the Agreement as amended by Amendment
No. 1, Amendment No. 2, Amendment No. 3, and as amended hereby, unless the
context otherwise requires.
7. Headings. The headings contained in this Amendment are inserted for
convenience of reference only and shall not affect the meaning or interpretation
of this Amendment.
8. Counterparts. This Amendment may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party.
<PAGE>
IN WITNESS WHEREOF, this Amendment has been signed by or on behalf of
each of the parties hereto as of the day first above written.
REGENCY REALTY CORPORATION
By:
Name:
Title:
SECURITY CAPITAL HOLDINGS S.A.
By:
Name:
Title:
SECURITY CAPITAL U.S. REALTY
By:
Name:
Title:
DocumentID186401v3 -3-
EXHIBIT "C"
AMENDMENT TO ARTICLES OF INCORPORATION
OF
REGENCY REALTY CORPORATION
This corporation was incorporated on July 8, 1993 effective July 9,
1993 under the name Regency Realty Corporation. Pursuant to Sections 607.1001,
607.1003, 607.1004 and 607.1006 of the Florida Business Corporation Act,
amendments to Section 5.1(r) and Section 5.14 of the Articles of Incorporation
of Regency Realty Corporation were approved by the Board of Directors at a
meeting held on September 23, 1998, and adopted by the shareholders of the
corporation on February 26, 1999.
Section 5.1(r) is hereby amended in its entirety as follows:
(r) "Special Shareholder Limit" for a Special Shareholder
shall initially mean 60% of the outstanding shares of Common Stock, on a fully
diluted basis, of the Corporation; provided, however, that if at any time after
the effective date of this Amendment a Special Stockholder's ownership of Common
Stock, on a fully diluted basis, of the Corporation shall have been below 45%
for a continuous period of 180 days, then the definition of "Special Shareholder
Limit" shall mean 49% of the outstanding shares of Common Stock, on a fully
diluted basis, of the Corporation. After any adjustment pursuant to Section 5.8,
the definition of "Special Shareholder Limit" shall mean the percentage of the
outstanding Common Stock as so adjusted, and the definition of "Special
Shareholder Limit" shall also be appropriately and equitably adjusted in the
event of a repurchase of shares of Common Stock of the Corporation or other
reduction in the number of outstanding shares of Common Stock of the
Corporation. Notwithstanding the foregoing, if any Person and its Affiliates
(taken as a whole), other than the Special Shareholder, shall directly or
indirectly own in the aggregate more than 45% of the outstanding shares of
Common Stock, on a fully diluted basis, of the Corporation, the definition of
"Special Shareholder Limit" shall be revised in accordance with Section 5.8 of
the Stockholders Agreement. Notwithstanding the foregoing provisions of this
definition, if, as the result of any Special Shareholder's ownership (taking
into account for this purpose constructive ownership under Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code) of shares of Capital
Stock, any Person who is an individual within the meaning of Section 542(a)(2)
of the Code (taking into account the ownership attribution rules under Section
544 of the Code, as modified by Section 856(h) of the Code) and who is the
Beneficial Owner of any interest in a Special Shareholder would be considered to
Beneficially Own more than 9.8% of the outstanding shares of Capital Stock, then
unless such individual reduces his or her interest in the Special Shareholder so
that such Person no longer Beneficially Owns more than 9.8% of the outstanding
shares of Capital Stock, the Special Shareholder Limit shall be reduced to such
percentage as would result in such Person not being considered to Beneficially
Own more than 9.8% of the outstanding Shares of Capital Stock. Notwithstanding
anything contained herein to the contrary, in no event shall the Special
Shareholder Limit be reduced below the Ownership Limit. At the request of the
Special Shareholders, the Secretary of the Corporation shall maintain and, upon
request, make available to each Special Shareholder a schedule which sets forth
the then current Special Shareholder Limits for each Special Shareholder.
Section 5.14 is hereby amended in its entirety as follows:
Section 5.14 Certain Transfers to Non-U.S. Persons Void.
(a) At any time that Non-U.S. Persons (including Special Shareholders
who will at all times be presumed to be Non-U.S. Persons) own directly or
indirectly 50% or more of the fair market value of the issued and outstanding
shares of Capital Stock of the Corporation, any Transfer of shares of Capital
Stock of the Corporation by any Person (other than a Special Shareholder) on or
after the effective date of this Amendment that results in such shares being
owned directly or indirectly by a Non-U.S. Person (other than a Special
Shareholder) shall be void ab initio to the fullest extent permitted under
applicable law and the intended transferee shall be deemed never to have had an
interest therein.
(b) At any time that Non-U.S. Persons (including Special Shareholders
who will at all times be presumed to be Non-U.S. Persons) own directly or
indirectly less than 50% of the fair market value of the issued and outstanding
shares of Capital Stock of the Corporation, any Transfer of shares of Capital
Stock of the Corporation by any Person (other than a Special Shareholder) to any
Person on or after the effective date of this Amendment shall be void ab initio
to the fullest extent permitted under applicable law and the intended transferee
shall be deemed never to have had an interest therein if such Transfer
(i) occurs prior to the 10% Termination Date and results in the
fair market value of the shares of Capital Stock of the
Corporation owned directly or indirectly by Non-U.S. Persons
(other than Special Shareholders) comprising 4.9 percent
(4.9%) or more of the fair market value of the issued and
outstanding shares of Capital Stock of the Corporation; or
(ii) results in the fair market value of the shares of Capital
Stock of the Corporation owned directly or indirectly by
Non-U.S. Persons (including Special Shareholders who will at
all times be presumed to be Non-U.S. Persons) comprising fifty
percent (50%) or more of the fair market value of the issued
and outstanding shares of Capital Stock the Corporation.
(c) If any of the foregoing provisions is determined to be void or
invalid by virtue of any legal decision, statute, rule or regulation, then the
shares of Capital Stock of the Corporation held or purported to
Directors or otherwise:e shall, automatically and without the necessity of any
action by the Board of
(i) be prohibited from being voted;
(ii) not be entitled to dividends with respect thereto;
(iii) be considered held in trust by the transferee for the benefit
of the Corporation and shall be subject to the provisions of
Section 5.3(c) as if such shares of Capital Stock were the
subject
Transfer that violates Section 5.2; and
(iv) not be considered outstanding for the purpose of determining a
quorum at any meeting of shareholders.
(d) The Special Shareholders may, in their sole discretion, with prior
notice to the Board of Directors, waive, alter or revise in writing all or any
portion of the Transfer restrictions set forth in this Section 5.14 from and
after the date on which such notice is given, on such terms and conditions as
they in their sole discretion determine.
IN WITNESS WHEREOF, the undersigned President of this corporation has
executed these Articles of Amendment this 26th day of February, 1999.
-------------------------------
Mary Lou Rogers, President
ARTICLES OF MERGER AND PLAN OF MERGER
Merging
PACIFIC RETAIL TRUST
(a real estate investment trust formed under the laws of the State of Maryland)
with and into
REGENCY REALTY CORPORATION
(a corporation incorporated under the laws of the State of Florida)
Pursuant to Sections 607.1101 and 607.1108, Florida Statutes and
Sections 3-109 and 8-501.1 of the Corporations and Associations Article of the
Annotated Code of Maryland, as amended.
Regency Realty Corporation, a corporation organized and existing under
the laws of the State of Florida ("Regency"), and Pacific Retail Trust, a real
estate investment trust formed and existing under the laws of the State of
Maryland ("Pacific Retail"), agree that Pacific Retail shall be merged with and
into Regency, the latter of which is to survive the merger, and hereby adopt the
following Articles of Merger. The terms and conditions of the merger and the
mode of carrying the same into effect are as herein set forth in these Articles
of Merger.
FIRST: The parties to these Articles of Merger are Pacific Retail, a
real estate investment trust formed and existing under the laws of the State of
Maryland, and Regency, a corporation organized and existing under the general
laws of the State of Florida. Regency was incorporated on July 9, 1993 under the
Florida Business Corporation Act (the "Florida Act") and qualified to do
business in Maryland on February 9, 1999.
SECOND: Pacific Retail shall be merged with and into Regency in
accordance with Title 8 of the Corporations and Associations Article of the
Annotated Code of Maryland (the "Maryland Code") and the Florida Act and Regency
shall survive the merger and continue under its present name (the "Surviving
Entity"). At the effective time of the merger (the "Effective Time"), the
separate existence of Pacific Retail shall cease in accordance with the
provisions of the Maryland Code. From and after the Effective Time, the
Surviving Entity shall continue its existence as a corporation under the Florida
Act, shall succeed to all of the rights, privileges, properties, real, personal
and mixed, liabilities and other assets without the necessity of any separate
deed or other transfer and shall be subject to all of the liabilities and
obligations of Pacific Retail without further action by either of the parties
hereto, and will continue to be governed by the laws of the State of Florida. If
at any time after the Effective Time the Surviving Entity shall consider or be
advised that any deeds, bills of sale, assignments or assurances or any other
acts or things are necessary, desirable or proper (a) to vest, perfect or
confirm, of record or otherwise, in the Surviving Entity, its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of Pacific Retail acquired or to be acquired as a result of
the merger, or (b) otherwise to carry out the purposes of these Articles, the
Surviving Entity and its officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of Pacific Retail,
all deeds, bills of sale, assignments and assurances, and to do, in the name and
on behalf of Pacific Retail, all other acts or things necessary, desirable or
proper to vest, perfect or confirm the Surviving Entity's right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of Pacific Retail acquired or to be acquired as a result of
the merger and otherwise to carry out the purposes of these Articles.
THIRD: The principal office of Pacific Retail in the State of Maryland
is located at 11 East Chase Street, the City of Baltimore, Maryland. The name
and address of the registered agent of Regency is CSC Lawyers Incorporating
Service Company, 11 East Chase Street, Baltimore, Maryland 21202 The principal
office of Regency is located at 121 W. Forsyth Street, Suite 200, Jacksonville,
Florida 32202. Neither Regency nor Pacific Retail owns any interest in land in
any county in the State of Maryland or in Baltimore City.
FOURTH: The terms and conditions of the transaction set forth in these
Articles of Merger were advised, authorized and approved by each party to these
Articles of Merger in the manner and by the vote required by Regency's articles
of incorporation and the Florida Act or Pacific Retail's declaration of trust
and the Maryland Code, as the case may be.
FIFTH: The merger was duly (a) advised by the board of directors of
Regency by the adoption of a resolution declaring that the merger set forth in
these Articles of Merger was advisable on substantially the terms and conditions
set forth in the resolution and directing that the proposed merger be submitted,
together with the board's recommendation, for consideration at a special meeting
of the shareholders of Regency and (b) approved by the shareholders of Regency
on February 26, 1999 by the vote required by its articles of incorporation and
the Florida Act. The only voting group of Regency entitled to vote on the
adoption of the Plan was the holders of Regency Common Stock. The number of
votes cast by such voting group was sufficient for approval by that group.
SIXTH: The merger was duly (a) advised by the board of trustees of
Pacific Retail by the adoption of a resolution declaring that the merger set
forth in these Articles of Merger was advisable on substantially the terms and
conditions set forth or referred to in the resolution and directing that the
proposed merger be submitted for consideration at a special meeting of the
shareholders of Pacific Retail and (b) approved by the shareholders of Pacific
Retail on February 26, 1999 by the vote required by its declaration of trust and
the Maryland Code.
SEVENTH: The total number of shares of beneficial interest of all
classes which Pacific Retail has authority to issue is 150,000,000 shares of
beneficial interest, of the par value of $.01 each, all such shares having an
aggregate par value of $1,500,000. Of such shares of beneficial interest,
142,739,448 shares are classified as common shares ("Pacific Retail Common
Stock"), 1,130,276 shares have been classified as Series A Cumulative
Convertible Redeemable Preferred Shares of Beneficial Interest ("Pacific Retail
Series A Preferred Stock"), and 6,130,276 shares have been classified as Series
B Cumulative Convertible Redeemable Preferred Shares of Beneficial Interest
("Pacific Retail Series B Preferred Stock").
Immediately before the Effective Time, the total number of shares of
stock of all classes which Regency had authority to issue is 170,000,000 shares,
of the par value of $.01 each, all such shares having an aggregate par value of
$1,700,000. Of such 170,000,000 shares, 150,000,000 shares were classified as
common stock ("Regency Common Stock"), 10,000,000 shares were classified as
Special Common Stock (of which 2,500,000 have been classified as Class B
Non-Voting Stock) and 10,000,000 shares were classified as Preferred Stock (of
which 1,600,000 have been classified as 8.125% Series A Cumulative Redeemable
Preferred Stock). Immediately after the Effective Time, the total number of
shares of stock of all classes which Regency has authority to issue is
170,000,000 shares, of the par value of $0.01 each, all such shares having an
aggregate par value of $1,700,000. Of such 170,000,000 shares, 150,000,000
shares are classified as Regency Common Stock, 10,000,000 shares are classified
as Special Common Stock (of which 2,500,000 are classified as Class B Non-Voting
Common Stock) and 10,000,000 shares are classified as Preferred Stock (of which
542,532 shares have been classified as Series 1 Cumulative Convertible
Redeemable Preferred Stock and 1,502,532 shares have been classified as Series 2
Cumulative Convertible Redeemable Preferred Stock and 1,600,000 have been
classified as 8.125% Series A Cumulative Redeemable Preferred Stock).
EIGHTH: As of the Effective Time, by virtue of the Merger and
without any action on the part of Regency, Pacific Retail, or any holder of
any of the following securities:
(a) Cancellation of Treasury Stock and Regency-Owned Shares of Beneficial
Interest of Pacific Retail. Each share of beneficial interest of Pacific Retail
that is owned by Pacific Retail or any subsidiary of Pacific Retail or Regency
or any subsidiary of Regency shall automatically be cancelled and retired and
shall cease to exist, and no consideration shall be delivered or deliverable in
exchange therefor.
(b) Conversion of Pacific Retail Common Stock. Each issued and outstanding share
of Pacific Retail Common Stock, other than shares cancelled pursuant to
paragraph (a) of this Article or shares as to which a demand for dissenter's
rights has been duly perfected in accordance with the Maryland Code, shall be
converted into the right to receive 0.48 validly issued, fully paid, and
nonassessable shares of Regency Common Stock. The consideration to be issued to
the holders of Pacific Retail Common Stock is referred to herein as the "Common
Stock Merger Consideration." No fractional shares shall be issued as part of the
Common Stock Merger Consideration. (c) Conversion of Pacific Retail Series A
Preferred Stock. Each issued and outstanding share of Pacific Retail Series A
Preferred Stock, other than shares cancelled pursuant to paragraph (a) of this
Article or shares as to which a demand for dissenters rights has been duly
perfected in accordance with the Maryland Code, shall be converted into the
right to receive 0.48 validly issued, fully paid and nonassessable shares of
Series 1 Cumulative Convertible Redeemable Preferred Stock of Regency ("Regency
Series 1 Preferred Stock"). The consideration to be issued to holders of Pacific
Retail Series A Preferred Stock is referred to as the "Series A Merger
Consideration." (d) Conversion of Pacific Retail Series B Preferred Stock. Each
issued and outstanding share of Pacific Retail Series B Preferred Stock, other
than shares cancelled pursuant to paragraph (a) of this Article or shares as to
which a demand for dissenters rights has been duly perfected in accordance with
the Maryland Code, shall be converted into the right to receive 0.48 validly
issued, fully paid and nonassessable shares of Series 2 Cumulative Convertible
Redeemable Preferred Stock of Regency ("Regency Series 2 Preferred Stock"). The
consideration to be issued to holders of Pacific Retail Series B Preferred Stock
is referred to as the "Series B Merger Consideration." The Common Stock Merger
Consideration, Series A Merger Consideration and Series B Merger Consideration
are referred to collectively herein as the "Merger Consideration." (e) No
Fractional Shares. Each holder of Pacific Retail Common Stock, Pacific Retail
Series A Preferred Stock or Pacific Retail Series B Preferred Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of (i) Regency Common Stock, (ii) Regency Series A Preferred
Stock or (iii) Regency Series B Preferred Stock, as the case may be (after
taking into account all shares of Pacific Retail Common Stock, Pacific Retail
Series A Preferred Stock or Pacific Retail Series B Preferred Stock held of
record by such holder at the Effective Time), shall receive, in lieu of such
fraction of a share, cash in an amount arrived at by multiplying such fraction
times the average closing price of a share of Regency Common Stock on the New
York Stock Exchange on the ten (10) consecutive trading days ending on the fifth
day immediately preceding the Effective Time. (f) Cancellation and Retirement of
Shares of Beneficial Interest of Pacific Retail. As of the Effective Time, all
shares of beneficial interest of Pacific Retail converted into the right to
receive the applicable Merger Consideration pursuant to this Article shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate evidencing any such shares of
beneficial interest of Pacific Retail shall cease to have any rights with
respect thereto, except the right to receive the applicable Merger Consideration
in accordance with this Article, and any cash in lieu of fractional shares of
Regency Common Stock, Regency Series 1 Preferred Stock or Regency Series 2
Preferred Stock paid in cash by Regency based on the average of the closing
price of the Regency Common Stock on the New York Stock Exchange for the ten
(10) consecutive trading days ending on the fifth day immediately preceding the
Effective Time. (g) Conversion of Pacific Retail Stock Options. Each option
granted by Pacific Retail to purchase shares of Pacific Retail Common Stock (a
"Pacific Retail Stock Option") which is outstanding and unexercised immediately
prior to the Effective Time shall cease to represent a right to acquire such
shares and shall be converted into an option to purchase shares of Regency
Common Stock (a "Regency Stock Option") in an amount and at an exercise price
determined as provided below and otherwise subject to the terms and conditions
of Regency's Long-Term Omnibus Plan and the agreements evidencing grants
thereunder but having the same vesting, exercise, and termination dates that
such Pacific Retail Stock Options had immediately prior to the Effective Time
except that departing officers' options shall fully vest and shall terminate on
the dates set forth in agreements between the departing officers and Regency.
(i) the number of shares of Regency Common Stock to be subject to the new
Regency Stock Option will be equal to the product of (A) the number of shares of
Pacific Retail Common Stock subject to the existing Pacific Retail Stock Option
immediately prior to the Effective Time and (B) the ratio of the value per share
of Pacific Retail Common Stock immediately prior to the Effective Time to the
value per share of Regency Common Stock immediately after the Effective Time,
and
(ii) the exercise price per share of Regency Common Stock under the new Regency
Stock Option will be equal to (A) the value per share of Regency Common Stock
immediately after the Effective Time multiplied by (B) the ratio of the exercise
price per share of Pacific Retail Common Stock to the value per share of Pacific
Retail Common Stock immediately prior to the Effective Time.
NINTH: The parties hereto intend that the execution of these Articles
of Merger constitute the adoption of a "plan of reorganization" within the
meaning of Section 368 of the Internal Revenue Code of 1996, as amended.
TENTH: The merger shall be effective at 11:59 p.m. Eastern Standard
Time on February 28, 1999.
<PAGE>
ELEVENTH: The merger may be abandoned at any time prior to the
Effective Time by either Pacific Retail or the Surviving Entity, without further
shareholder action by filing a Notice of Abandonment with each state authority
with which these Articles of Merger are filed.
TWELFTH: The Articles of Incorporation of Regency shall continue to
be the Articles of Incorporation of Regency on and after the Effective Time,
except for the following amendments:
(a) The Articles of Incorporation of Regency are hereby amended to add the
Certificate of Designations, Rights, Preferences and Limitations of Series 1
Cumulative Convertible Redeemable Preferred Stock of Regency attached hereto as
Exhibit A.
(b) The Articles of Incorporation of Regency are hereby amended to add the
Certificate of Designations, Rights, Preferences and Limitations of Series 2
Cumulative Convertible Redeemable Preferred Stock of Regency attached hereto as
Exhibit B. (c) Article V of the Articles of Incorporation of Regency is hereby
amended as set forth in Exhibit C hereto.
IN WITNESS WHEREOF, Regency Realty Corporation, a Florida corporation,
and Pacific Retail Trust, a Maryland real estate investment trust, the entities
parties to the merger, have caused these Articles of Merger to be signed in
their respective names and on their behalf and witnessed or attested all as of
the 26th day of February, 1999. Each of the individuals signing these Articles
of Merger on behalf of Regency Realty Corporation or Pacific Retail Trust
acknowledges these Articles of Merger to be the act of such respective entity
and, as to all other matters or facts required to be verified under oath, that
to the best of his or her knowledge, information and belief, these matters are
true in all material respects and that this statement is made under the
penalties for perjury.
REGENCY REALTY CORPORATION,
a Florida corporation
By: ___________________________________
Mary Lou Rogers, President
Attest:
- -------------------------------
J. Christian Leavitt, Secretary
<PAGE>
PACIFIC RETAIL TRUST,
a Maryland real estate investment trust
By: ___________________________________
Jane E. Mody, Managing Director and Chief
Financial Officer
Attest:
- --------------------------------
Kelli Hlavenka, Assistant Secretary
shapeType1fFlipH0fFlipV0lineColor16777215fPreferRelativeResize0
7
EXHIBIT "B"
004.105541.4
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
REGENCY REALTY CORPORATION
DESIGNATING THE PREFERENCES, RIGHTS AND
LIMITATIONS OF 1,502,532 SHARES OF
SERIES 2 CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK
$0.01 Par Value
Pursuant to Section 607.0602 of the Florida Business Corporation Act
("FBCA"), Regency Realty Corporation, a Florida corporation (the "Corporation"),
does hereby certify that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation by Section 4.2 of the Restated Articles of
Incorporation of the Corporation, as amended (the "Charter") and Section
607.0602 of the FBCA, the Board of Directors of the Corporation, by resolutions
duly adopted on September 23, 1998 has classified 1,502,532 shares of the
authorized but unissued Preferred Stock par value $.01 per share (the "Series 2
Preferred Stock") as a separate class of Preferred Stock, authorized the
issuance of a maximum of 1,502,532 shares of such class of Series 2 Preferred
Stock, set certain of the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, terms and
conditions of redemption and other terms and conditions of such class of Series
2 Preferred Stock. Shareholder approval was not required under the Charter with
respect to such designation.
SECOND: The class of Series 2 Preferred Stock of the Corporation
created by the resolutions duly adopted by the Board of Directors of the
Corporation shall have the following designation, number of shares, preferences,
conversion and other rights, voting powers, restrictions and limitation as to
dividends, qualifications, terms and conditions of redemption and other terms
and conditions:
Section 1. Number of Shares and Designation. The number of shares of Series 2
Preferred Stock which shall constitute such series shall not be more than
1,502,532 shares, par value $0.01 per share, which number may be decreased (but
not below the number thereof then outstanding plus the number required to
fulfill the Corporation's obligations under certain agreements, options,
warrants or similar rights issued by the Corporation) from time to time by the
Board of Directors of the Corporation. Except as otherwise specifically stated
herein, the Series 2 Preferred Stock shall have the same rights and privileges
as Common Stock under Florida law.
Section 2. Definitions. For purposes of the Series 2 Preferred Stock, the
following terms shall have the eanings indicated:
"Board" shall mean the Board of Directors of the Corporation or any
committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series 2 Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York City,
New York are not required to be open.
"Call Date" shall mean the date specified in the notice to holders
required under subparagraph (d) of Section 5 as the Call Date.
"Common Stock" shall mean the common capital stock of the Corporation,
par value $0.01 per share.
"Constituent Person" shall have the meaning set forth in paragraph (e)
of Section 6 hereof.
"Conversion Price" shall mean the conversion price per share of Common
Stock for which the Series 2 Preferred Stock is convertible, as such Conversion
Price may be adjusted pursuant to Section 6. The initial conversion price shall
be $20.8333 (equivalent to a conversion rate of one (1) share of Common Stock
for each share of Series 2 Preferred Stock).
"Current Market Price" of publicly traded Common Stock or any other
class of capital stock or other security of the Corporation or any other issuer
for any day shall mean the last reported sales price on such day, regular way,
or, if no sale takes place on such day, the average of the reported closing bid
and asked prices on such day, regular way, in either case as reported on the New
York Stock Exchange ("NYSE") or, if such security is not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on the National Market System of
the National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or, if such security is not quoted on such National Market System,
the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by NASDAQ or, if bid and asked prices for
such security on such day shall not have been reported through NASDAQ, as
reported by the National Quotation Bureau, Incorporated, or, if not so reported,
the average of the closing bid and asked prices as furnished by any member of
the National Association of Securities Dealers, Inc. selected from time to time
by the Corporation for such purpose, or, if no such prices are furnished, the
fair market value of the security as determined in good faith by the Board.
"Dividend Payment Date" shall mean the last calendar day of March,
June, September and December, in each year, commencing on March 31, 1999;
provided, however, that if any Dividend Payment Date falls on any day other than
a Business Day, the dividend payment due on such Dividend Payment Date shall be
paid on the Business Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing on
April 1, July 1, October 1 and January 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
(other than the initial Dividend Period, which shall commence on the Issue
Date).
"Fully Junior Stock" shall mean any class or series of capital stock of
the Corporation now or hereafter issued and outstanding over which the Series 2
Preferred Stock has preference or priority in both (i) the payment of dividends
and (ii) the distribution of assets on any liquidation, dissolution or winding
up of the Corporation.
"Funds from Operations per Share" shall mean the amount determined by
dividing (a) the net income of the Corporation before extraordinary items
(determined in accordance with generally accepted accounting principles) as
reported by the Corporation in its year-end audited financial statements, minus
gains (or losses) from debt restructuring and sales of property, plus real
property depreciation and amortization and amortization of capitalized leasing
expenses and tenant allowances or improvements (to the extent such allowances or
improvements are capital items), and after adjustments for unconsolidated
partnerships, corporations and joint ventures (such items of depreciation and
amortization and such gains, losses and adjustments as determined in accordance
with generally accepted accounting principles and as reported by the Corporation
in its year-end audited financial statements) by (b) the weighted average number
of shares of common stock of the Corporation outstanding as reported by the
Corporation in its year-end audited financial statements. Adjustments for
unconsolidated partnerships, corporations and joint ventures shall be calculated
to reflect Funds from Operations per Share on the same basis. If the Corporation
shall after the Issue Date (A) pay a dividend or make a distribution in shares
of common stock on its outstanding shares of common stock, (B) subdivide its
outstanding shares of common stock into a greater number of shares, (C) combine
its outstanding Common Stock into a smaller number of shares or (D) issue any
shares of common stock by reclassification of its outstanding shares of common
stock, the Funds from Operations per Share shall be appropriately adjusted to
give effect to such events.
"Issue Date" shall mean the first date on which the Series 2 Preferred
Stock is issued.
"Junior Stock" shall mean the Common Stock and any other class or
series of capital stock of the Corporation now or hereafter issued and
outstanding over which the Series 2 Preferred Stock has preference or priority
in the payment of dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"Minimum Amount" shall mean the greater of (A) $0.2083 and (B) 65% of
the highest amount of Funds from Operations per Share for any preceding fiscal
year, beginning with the fiscal year ending December 31, 1996, divided by four.
"Non-Electing Share" shall have the meaning set forth in paragraph (e)
of Section 6 hereof.
"Parity Stock" shall have the meaning set forth in paragraph (b) of
Section 8.
"Person" shall mean any individual, firm, partnership, corporation, or
trust or other entity, and shall include any successor (by merger or otherwise)
of such entity.
"Securities" and "Security" shall have the meanings set forth in
paragraph (d)(iv) of Section 6 hereof.
"Series 1 Preferred Stock" shall mean the Series 1 Cumulative
Convertible Redeemable Preferred Stock of the Corporation, par value $0.01 per
share.
"Series 2 Preferred Stock" shall have the meaning set forth in Article
FIRST hereof.
"set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Corporation in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board, the allocation of
funds to be so paid on any series or class of capital stock of the Corporation;
provided, however, that if any funds for any class or series of Junior Stock,
Fully Junior Stock or any class or series of shares of capital stock ranking on
a parity with the Series 2 Preferred Stock as to the payment of dividends are
placed in a separate account of the Corporation or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with respect to the
Series 2 Preferred Stock shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Transaction" shall have the meaning set forth in paragraph (e) of
Section 6 hereof.
"Transfer Agent" means initially the Corporation and shall include such
other agent or agents of the Corporation as may be designated by the Board or
their designee as the transfer agent for the Series 2 Preferred Stock.
"Voting Preferred Stock" shall have the meaning set forth in Section 9
hereof.
Section 3. Dividends.
(a) The holders of Series 2 Preferred Stock shall be entitled to receive, when,
as and if declared by the Board out of funds legally available for that purpose,
quarterly dividends payable in cash in an amount per share equal to the greater
of (i) the Minimum Amount or (ii) an amount equal to the dividend (determined on
each Dividend Payment Date) on a share of Common Stock, or portion thereof, into
which a share of Series 2 Preferred Stock is convertible. For purposes of clause
(ii) of the preceding sentence, such dividends shall equal the number of shares
of Common Stock, or portion thereof, into which a share of Series 2 Preferred
Stock is convertible, multiplied by the most current quarterly dividend paid or
payable on a share of Common Stock on or before the applicable Dividend Payment
Date. Dividends on the Series 2 Preferred Stock shall begin to accrue and shall
be fully cumulative from the Issue Date, whether or not for any Dividend Period
or Periods there shall be funds of the Corporation legally available for the
payment of such dividends, and shall be payable quarterly, when, as and if
declared by the Board, in arrears on Dividend Payment Dates, commencing on the
first Dividend Payment Date after the Issue Date. Accrued and unpaid dividends
on shares of Series 2 Preferred Stock shall include any accrued and unpaid
dividends on the Series B Cumulative Convertible Redeemable Preferred Shares of
Beneficial Interest of Pacific Retail Trust which are exchanged by operation of
law into such shares of Series 2 Preferred Stock pursuant to the merger of
Pacific Retail Trust into the Corporation. Each dividend on the Series 2
Preferred Stock shall be payable to the holders of record of Series 2 Preferred
Stock, as they appear on the stock records of the Corporation at the close of
business on such record dates as shall be fixed by the Board. Accrued and unpaid
dividends for any past Dividend Periods may be declared and paid at any time and
for such interim periods, without reference to any regular Dividend Payment
Date, to holders of record on such date as may be fixed by the Board.
(b) The amount of dividends payable for any dividend period shorter or longer
than a full Dividend Period, on the Series 2 Preferred Stock shall be computed
on the basis of twelve 30-day months and a 360-day year. Holders of Series 2
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of current and cumulative but unpaid dividends, as
herein provided, on the Series 2 Preferred Stock. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series 2 Preferred Stock that may be in arrears. (c) So long as
any Series 2 Preferred Stock is outstanding, no dividends, except as described
in the immediately following sentence, shall be declared or paid or set apart
for payment on any class or series of Parity Stock for any period unless full
cumulative dividends have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for such payment
on the Series 2 Preferred Stock for all Dividend Periods terminating on or prior
to the Dividend Payment Date on such class or series of Parity Stock. When
dividends are not paid in full or a sum sufficient for such payment is not set
apart, as aforesaid, all dividends declared upon Series 2 Preferred Stock and
all dividends declared upon any other class or series of Parity Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Series 2 Preferred Stock and accumulated and
unpaid on such Parity Stock. (d) So long as any Series 2 Preferred Stock is
outstanding, no dividends (other than dividends or distributions paid solely in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Fully Junior Stock) shall be declared or paid or set apart for payment or
other distribution declared or made upon Junior Stock, nor shall any Junior
Stock be redeemed, purchased or otherwise acquired (other than a redemption,
purchase or other acquisition of Common Stock made for purposes of an employee
incentive or benefit plan of the Corporation or any subsidiary) for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation, directly or
indirectly (except by conversion into or exchange for Fully Junior Stock),
unless in each case (i) the full cumulative dividends on all outstanding Series
2 Preferred Stock and any other Parity Stock of the Corporation shall have been
paid or declared and set apart for payment for all past Dividend Periods with
respect to the Series 2 Preferred Stock and all past dividend periods with
respect to such Parity Stock and (ii) sufficient funds shall have been paid or
declared and set apart for the payment of the dividend for the current Dividend
Period with respect to the Series 2 Preferred Stock and the current dividend
period with respect to such Parity Stock. Section 4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for payment to the holders of Junior Stock or Fully
Junior Stock, the holders of the Series 2 Preferred Stock shall be entitled to
receive $20.8333 per share of Series 2 Preferred Stock plus an amount equal to
all dividends declared but unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment. If,
upon any liquidation, dissolution or winding up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable among the holders of the
Series 2 Preferred Stock shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any other shares of any class or
series of Parity Stock, then such assets, or the proceeds thereof, shall be
distributed among the holders of Series 2 Preferred Stock and any such other
Parity Stock ratably in accordance with the respective amounts that would be
payable on such Series 2 Preferred Stock and any such other Parity Stock if all
amounts payable thereon were paid in full. For the purposes of this Section 4,
(i) a consolidation or merger of the Corporation with one or more Persons, (ii)
a sale or transfer of all or substantially all of the Corporation's assets or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Corporation.
(b) Subject to the rights of the holders of shares of any series or class or
classes of shares of capital stock ranking on a parity with or prior to the
Series 2 Preferred Stock upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Corporation, after payment shall
have been made in full to the holders of the Series 2 Preferred Stock, as
provided in this Section 4, any other series or class or classes of Junior Stock
or Fully Junior Stock shall, subject to the respective terms and provisions (if
any) applying thereto, be entitled to receive any and all assets remaining to be
paid or distributed, and the holders of the Series 2 Preferred Stock shall not
be entitled to share therein. Section 5. Redemption at the Option of the
Corporation.
(a) The Series 2 Preferred Stock shall not be redeemable by the Corporation
prior to October 20, 2010. On and after October 20, 2010, the Corporation, at
its option, may redeem the Series 2 Preferred Stock, in whole at any time or
from time to time in part, at the option of the Corporation at a redemption
price of $20.8333 per share of Series 2 Preferred Stock, plus the amounts
indicated in Section 5(b).
(b) Upon any redemption of Series 2 Preferred Stock pursuant to this Section 5,
the Corporation shall pay in full any and all accrued and unpaid dividends
(without interest or sum of money in lieu of interest) for any and all Dividend
Periods ending on or prior to the Call Date. If the Call Date falls after a
dividend payment record date and prior to the corresponding Dividend Payment
Date, then each holder of Series 2 Preferred Stock at the close of business on
such dividend payment record date shall be entitled to the dividend payable on
such shares on the corresponding dividend payment date notwithstanding the
redemption of such shares before such Dividend Payment Date. (c) If full
cumulative dividends on the Series 2 Preferred Stock and any other class or
series of Parity Stock of the Corporation have not been paid or declared and set
apart for payment, the Series 2 Preferred Stock may not be redeemed under this
Section 5 in part and the Corporation may not purchase or acquire shares of
Series 2 Preferred Stock, otherwise than pursuant to a voluntary purchase or
exchange offer made on the same terms to all holders of Series 2 Preferred
Stock. (d) Notice of the redemption of any Series 2 Preferred Stock under this
Section 5 shall be mailed by first-class mail to each holder of record of Series
2 Preferred Stock to be redeemed at the address of each such holder as shown on
the Corporation's record, not less than 30 nor more than 90 days prior to the
Call Date. Neither the failure to mail any notice required by this paragraph
(d), nor any defect therein or in the mailing thereof, to any particular holder,
shall affect the sufficiency of the notice or the validity of the proceedings
for redemption with respect to the other holders. Any notice which was mailed in
the manner herein provided shall be conclusively presumed to have been duly
given on the date mailed whether or not the holder receives the notice. Each
such mailed notice shall state, as appropriate: (1) the Call Date; (2) the
number of shares of Series 2 Preferred Stock to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the number of such shares
to be redeemed from such holder; (3) the place or places at which certificates
for such shares are to be surrendered; and (4) that dividends on the shares to
be redeemed shall cease to accrue on such Call Date except as otherwise provided
herein. Notice having been mailed as aforesaid, from and after the Call Date
(unless the Corporation shall fail to make available an amount of cash necessary
to effect such redemption), (i) except as otherwise provided herein, dividends
on the Series 2 Preferred Stock so called for redemption shall cease to accrue,
(ii) said shares shall no longer be deemed to be outstanding and (iii) all
rights of the holders thereof as holders of Series 2 Preferred Stock of the
Corporation shall cease (except the rights to convert and to receive cash
payable upon such redemption, without interest thereon, upon surrender and
endorsement of their certificates if so required and to receive any dividends
payable thereon). The Corporation's obligation to provide cash in accordance
with the preceding sentence shall be deemed fulfilled if, on or before the Call
Date, the Corporation shall deposit with a bank or trust company (which may be
an affiliate of the Corporation) that has an office in the Borough of Manhattan,
City of New York, and that has, or is an affiliate of a bank or trust company
that has, capital and surplus of at least $50,000,000, sufficient cash necessary
for such redemption, in trust, with irrevocable instructions that such cash be
applied to the redemption of the Series 2 Preferred Stock so called for
redemption. No interest shall accrue for the benefit of the holders of Series 2
Preferred Stock to be redeemed on any cash so set aside by the Corporation.
Subject to applicable escheat laws and other unclaimed property laws, any such
cash unclaimed at the end of two years from the Call Date shall revert to the
general funds of the Corporation, after which reversion the holders of such
shares so called for redemption shall look only to the general funds of the
Corporation for the payment of such cash. Notwithstanding the above, at any time
after such redemption notice is received and on or prior to the Call Date, any
holder may exercise its conversion rights under Section 6 below.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the Corporation shall so require and if the notice
shall so state), such shares shall be exchanged for any cash (including
accumulated and unpaid dividends but without interest thereon) for which such
shares have been redeemed. If fewer than all the outstanding shares of Series 2
Preferred Stock are to be redeemed, shares to be redeemed shall be selected by
the Corporation from outstanding Series 2 Preferred Stock not previously called
for redemption by lot or pro rata (as nearly as may be) or by any other method
determined by the Corporation in its sole discretion to be equitable. If fewer
than all shares of the Series 2 Preferred Stock represented by any certificate
are redeemed, then new certificates representing the unredeemed shares shall be
issued without cost to the holder thereof.
Section 6. Conversion. Holders of Series 2 Preferred Stock shall
have the right, at any time and from time to time, to convert all or a portion
of such shares into Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this Section 6, a
holder of Series 2 Preferred Stock shall have the right, at such holder's
option, at any time to convert each share of Series 2 Preferred Stock into the
number of fully paid and non-assessable shares of Common Stock obtained by
dividing the aggregate liquidation preference of such shares by the Conversion
Price (as in effect at the time and on the date provided for in the last
paragraph of paragraph (b) of this Section 6) by surrendering such shares to be
converted, such surrender to be made in the manner provided in paragraph (b) of
this Section 6.
(b) In order to exercise the conversion right, each holder of shares of Series 2
Preferred Stock to be converted shall surrender the certificate representing
such shares, duly endorsed or assigned to the Corporation or in blank, at the
office of the Transfer Agent, accompanied by written notice to the Corporation
that the holder thereof elects to convert such Series 2 Preferred Stock. Unless
the shares issuable on conversion are to be issued in the same name as the name
in which such Series 2 Preferred Stock is registered, each share surrendered for
conversion shall be accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Corporation demonstrating that such
taxes have been paid).
Holders of Series 2 Preferred Stock at the close of business on a
dividend payment record date shall be entitled to receive the dividend payable
on such shares on the corresponding dividend payment date notwithstanding the
conversion thereof following such dividend payment record date and on or prior
to such dividend payment date. In no event shall a holder of Series 2 Preferred
Stock be entitled to receive a dividend payment on Common Stock issued or
issuable upon conversion of Series 2 Preferred Stock if such holder is entitled
to receive a dividend in respect of the Series 2 Preferred Stock surrendered for
conversion. The Corporation shall make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for dividends on
the Common Stock issued upon such conversion.
As promptly as practicable after the surrender of certificates for
Series 2 Preferred Stock as aforesaid, the Corporation shall issue and shall
deliver at such office to such holder, or such holder's written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with provisions of
this Section 6, and any fractional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as provided in paragraph (c)
of this Section 6.
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the certificates for Series 2
Preferred Stock shall have been surrendered and such notice received by the
Corporation as aforesaid, and the person or persons in whose name or names any
certificate or certificates for Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time on such date and such conversion shall
be at the Conversion Price in effect at such time on such date unless the stock
transfer books of the Corporation shall be closed on that date, in which event
such person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion Price in
effect on the date on which such shares shall have been surrendered and such
notice received by the Corporation.
(c) No fractional shares or scrip representing fractions of a share of Common
Stock shall be issued upon conversion of the Series 2 Preferred Stock. Instead
of any fractional interest in a share of Common Stock that would otherwise be
deliverable upon the conversion of a share of Series 2 Preferred Stock, the
Corporation shall pay to the holder of such share an amount in cash based upon
the Current Market Price of Common Stock on the Business Day immediately
preceding the date of conversion. If more than one share shall be surrendered
for conversion at one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of Series 2 Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time to time as follows:
(i)If the Corporation shall after the Issue Date (A) pay a dividend or make
a distribution in shares of Common Stock on its Common Stock, (B) subdivide
its outstanding shares of Common Stock into a greater number of shares, (C)
combine its outstanding shares of Common Stock into a smaller number of shares
or (D) issue any shares of Common Stock by reclassification of its Common
Stock, the Conversion Price in effect at the opening of business on the
day following the date fixed for the determination of shareholders
entitled to receive such dividend or distribution or at the opening of
business on the Business Day next following the day on which such subdivision,
combination or reclassification becomes effective, as the case may be, shall
be adjusted so that the holder of any shares of Series 2 Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number
of shares of Common Stock that such holder would have owned or have been
entitled to receive after the happening of any of the events described above
as if such shares of Series 2 Preferred Stock had been converted immediately
prior to the record date in the case of a dividend or distribution or the
effective date in the case of a subdivision, combination or reclassification.
An adjustment made pursuant to this subparagraph (i) shall become effective
immediately after the opening of business on the Business Day next following the
record date (except as provided in paragraph (g) below) in the case of a
dividend or distribution and shall become effective immediately after the
opening of business on the Business Day next following the effective date in the
case of a subdivision, combination or reclassification.
(ii) If the Corporation shall issue after the Issue Date rights, options or
warrants to subscribe for or purchase Common Stock, or to subscribe for or
purchase any security convertible into Common Stock, and the price per share for
which Common Stock is issuable upon exercise of such rights, options or
warrants, or upon the conversion or exchange of such convertible securities, is
less than the lesser of the Conversion Price then in effect and the Current
Market Price per share of Common Stock on the date such rights, options or
warrants are issued, then the Conversion Price in effect at the opening of
business on the Business Day next following such issue date shall be adjusted to
equal the price determined by multiplying (A) the Conversion Price in effect
immediately prior to the opening of business on the date for such issuance by
(B) a fraction, the numerator of which shall be the sum of (I) the number of
shares of Common Stock outstanding immediately prior to such issuance and (II)
the number of shares that the aggregate proceeds to the Corporation from the
exercise of such rights, options or warrants for Common Stock, or in the case of
rights to purchase convertible securities, the aggregate proceeds from the
exercise of such rights, options or warrants and the subsequent conversion of
such convertible securities, would purchase at such Conversion Price or Current
Market Price, as applicable, and the denominator of which shall be the sum of
(A) the number of shares of Common Stock outstanding immediately prior to such
issuance and (B) the number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights, options or warrants. Such
adjustment shall become effective immediately after the opening of business on
the day next following such issue date (except as provided in paragraph (g)
below). In determining whether any rights, options or warrants entitle the
holders of Common Stock to subscribe for or purchase Common Stock or any
security convertible into or exchangeable for Common Stock at less than such
Conversion Price or Current Market Price, as applicable, there shall be taken
into account any consideration received by the Corporation upon issuance and
upon exercise of such rights, options or warrants, and in the case of rights,
options or warrants to subscribe for or purchase convertible securities, upon
the subsequent conversion of such securities, the value of such consideration,
if other than cash, to be determined in good faith by the Board. In the event
that the securities referenced in this subparagraph (ii) are only issued to all
holders of Common Stock, no adjustment shall be made to the Conversion Price
under this subparagraph (ii) if the Corporation shall issue to all holders of
Series 2 Preferred Stock, the same number of rights, options or warrants to
subscribe for or purchase Common Stock or any security convertible into or
exchangeable for Common Stock, as those issued to holders of Common Stock, based
upon the number of shares of Common Stock into which each share of Series 2
Preferred Stock is then convertible. (iii) If the Corporation shall issue after
the Issue Date any shares of capital stock or security convertible or
exchangeable for Common Stock (excluding rights, options or warrants referred to
in subparagraph (ii) above) and the price per share for which Common Stock is
issuable upon the conversion or exchange of such convertible or exchangeable
securities is less than the lesser of the Conversion Price then in effect and
the Current Market Price per share of Common Stock on the date such convertible
or exchangeable securities are issued, then the Conversion Price in effect at
the opening of business on the Business Day next following such issue date shall
be adjusted to equal the price determined by multiplying (A) the Conversion
Price in effect immediately prior to the opening of business on the Business Day
next following the issue date by (B) a fraction, the numerator of which shall be
the sum of (I) the number of shares of Common Stock outstanding on the close of
business on the Business Day immediately preceding the issue date and (II) the
number of shares of Common Stock that the aggregate proceeds to the Corporation
from the conversion into or in exchange for Common Stock would purchase at such
Conversion Price or Current Market Price, as applicable, and the denominator of
which shall be the sum of (A) the number of shares of Common Stock outstanding
on the close of business on the Business Day immediately preceding the issue
date and (B) the number of additional shares of Common Stock issuable upon
conversion or exchange of such convertible or exchangeable securities. Such
adjustment shall become effective immediately after the opening of business on
the day next following such issue date (except as provided in paragraph (g)
below). In determining whether any securities are convertible for or
exchangeable into Common Stock at less than such Conversion Price or Current
Market Price, as applicable, there shall be taken into account any consideration
received by the Corporation upon issuance and upon conversion or exchange of
such convertible or exchangeable securities, the value of such consideration, if
other than cash, to be determined in good faith by the Board. (iv) If the
Corporation shall distribute to all holders of its Common Stock any shares of
capital stock of the Corporation (other than Common Stock) or evidence of its
indebtedness or assets (excluding cash dividends or distributions) or rights,
options or warrants to subscribe for or purchase any of its securities
(excluding those rights, options and warrants referred to in subparagraph (ii)
above and excluding those convertible or exchangeable securities referred to in
subparagraph (iii) above (any of the foregoing being hereinafter in this
subparagraph (iv) collectively called the "Securities" and individually a
"Security"), then in each such case the Conversion Price shall be adjusted so
that it shall equal the price determined by multiplying (A) the Conversion Price
in effect immediately prior to the close of business on the date fixed for the
determination of shareholders entitled to receive such distribution by (B) a
fraction, the numerator of which shall be the lesser of the Conversion Price
then in effect and the Current Market Price per share of Common Stock on the
record date mentioned below less the then fair market value (as determined in
good faith by the Board) of the portion of the shares of capital stock or assets
or evidences of indebtedness so distributed or of such rights, options or
warrants applicable to one share of Common Stock, and the denominator of which
shall be the lesser of the Conversion Price then in effect and the Current
Market Price per share of Common Stock on the record date mentioned below. Such
adjustment shall become effective immediately at the opening of business on the
Business Day next following (except as provided in paragraph (g) below) the
record date for the determination of shareholders entitled to receive such
distribution. For the purposes of this clause (iv), the distribution of a
Security, which is distributed not only to the holders of the Common Stock on
the date fixed for the determination of shareholders entitled to such
distribution of such Security, but also is distributed with each share of Common
Stock delivered to a Person converting Series 2 Preferred Stock after such
determination date, shall not require an adjustment of the Conversion Price
pursuant to this clause (iv); provided that on the date, if any, on which a
Person converting a share of Series 2 Preferred Stock would no longer be
entitled to receive such Security with a share of Common Stock (other than as a
result of the termination of all such Securities), a distribution of such
Securities shall be deemed to have occurred and the Conversion Price shall be
adjusted as provided in this clause (iv) (and such day shall be deemed to be
"the date fixed for the determination of the shareholders entitled to receive
such distribution" and "the record date" within the meaning of the two preceding
sentences). (v) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease of at least 1%
in such price; provided, however, that any adjustments that by reason of this
subparagraph (v) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment until made; and provided, further,
that any adjustment shall be required and made in accordance with the provisions
of this Section 6 (other than this subparagraph (v)) not later than such time as
may be required in order to preserve the tax-free nature of a distribution to
the holders of Common Stock. Notwithstanding any other provisions of this
Section 6, the Corporation shall not be required to make any adjustment of the
Conversion Price for the issuance of any Common Stock pursuant to (A) any plan
providing for the reinvestment of dividends or interest payable on securities of
the Corporation and the investment of additional optional amounts in Common
Stock under such plan or (B) any right, option or warrant to acquire Common
Stock granted to any employee (as such term is defined in General Instruction A
to Form S-8 under the Securities Act) of the Corporation under a plan providing
for the granting of such securities to employees; provided, however, that such
plan is approved by the shareholders and the aggregate amount of Common Stock
issuable under the rights, options and warrants granted under such plan shall
not exceed 20% of the shares of Common Stock issued and outstanding on the date
such plan is approved by shareholders. In addition, the Corporation shall not be
required to make any adjustment of the Conversion Price for the issuance of any
Common Stock or any other class or series of shares of capital stock pursuant to
the terms of that certain Shareholders' Agreement among Pacific Retail Trust (to
which the Corporation is successor by merger), Security Capital Holdings S.A.
and Opportunity Capital Partners Limited Partnership. All calculations under
this Section 6 shall be made to the nearest cent (with $.005 being rounded
upward) or to the nearest one-tenth of a share (with .05 of a share being
rounded upward), as the case may be. Anything in this paragraph (d) to the
contrary notwithstanding, the Corporation shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in addition
to those required by this paragraph (d), as it in its discretion shall determine
to be advisable in order that any share dividends, subdivision of shares,
reclassification or combination of shares, distribution of rights, options or
warrants to purchase stock or securities, or a distribution of other assets
(other than cash dividends) hereafter made by the Corporation to its
shareholders shall not be taxable. (e) If the Corporation shall be a party to
any transaction (including without limitation a merger, consolidation, statutory
share exchange, self tender offer for all or substantially all Common Stock,
sale of all or substantially all of the Corporation's assets or recapitalization
of the Common Stock and excluding any transaction as to which subparagraph
(d)(i) of this Section 6 applies) (each of the foregoing being referred to
herein as a "Transaction"), in each case as a result of which all or
substantially all shares of Common Stock are converted into the right to receive
stock, securities or other property (including cash or any combination thereof)
of another Person, each share of Series 2 Preferred Stock, which is not
converted into the right to receive stock, securities or other property of such
Person prior to such Transaction (and each share of Series 2 Preferred Stock
issuable after such Transaction upon conversion of securities convertible into
Series 2 Preferred Stock), shall thereafter be convertible into the kind and
amount of shares of stock, securities and other property (including cash or any
combination thereof) receivable upon the consummation of such Transaction by a
holder of that number of shares of Common Stock into which one share of Series 2
Preferred Stock was convertible immediately prior to such Transaction, assuming
such holder of Common Stock (i) is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the case may be
("Constituent Person"), or an affiliate of a Constituent Person and (ii) failed
to exercise his rights of election, if any, as to the kind or amount of stock,
securities and other property (including cash) receivable upon such Transaction
(provided that if the kind or amount of stock, securities and other property
(including cash) receivable upon such Transaction is not the same for each share
of Common Stock held immediately prior to such Transaction by other than a
Constituent Person or an affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-Electing Share"), then for the
purpose of this paragraph (e) the kind and amount of stock, securities and other
property (including cash) receivable upon such Transaction by each Non-Electing
Share shall be deemed to be the kind and amount so receivable per share by a
plurality of the Non-Electing Shares). The Corporation shall not be a party to
any Transaction unless the terms of such Transaction are consistent with the
provisions of this paragraph (e), and it shall not consent or agree to the
occurrence of any Transaction until the Corporation has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Series 2 Preferred Stock (and securities
convertible into Series 2 Preferred Stock) that will contain provisions enabling
the holders of the Series 2 Preferred Stock that remain outstanding (or are
issuable upon conversion of securities convertible into Series 2 Preferred
Stock) after such Transaction to convert into the consideration received by
holders of Common Stock at the Conversion Price in effect immediately prior to
such Transaction. The provisions of this paragraph (e) shall similarly apply to
successive Transactions.
(f) Whenever the Conversion Price is adjusted as herein provided, the
Corporation shall promptly mail notice of such adjustment of the Conversion
Price to each holder of Series 2 Preferred Stock at such holder's last address
as shown on the share records of the Corporation. (g) In any case in which
paragraph (d) of this Section 6 provides that an adjustment shall become
effective on the day next following the record date for an event, the
Corporation may defer until the occurrence of such event (A) issuing to the
holder of any Series 2 Preferred Stock converted after such record date and
before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such conversion before
giving effect to such adjustment and (B) paying to such holder any amount of
cash in lieu of any fraction pursuant to paragraph (c) of this Section 6. (h)
There shall be no adjustment of the Conversion Price in case of the issuance of
any shares of capital stock of the Corporation in a reorganization, acquisition
or other similar transaction except as specifically set forth in this Section 6.
If any action or transaction would require adjustment of the Conversion Price
pursuant to more than one paragraph of this Section 6, only one adjustment shall
be made and such adjustment shall be the adjustment that yields the highest
absolute value. (i) The Corporation covenants that it will at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock, for the purpose of effecting conversion of
the Series 2 Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding Series 2 Preferred Stock not
theretofore converted. For purposes of this paragraph (i), the number of shares
of Common Stock that shall be deliverable upon the conversion of all outstanding
Series 2 Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single holder.
The Corporation covenants that any shares of Common Stock issued upon
conversion of the Series 2 Preferred Stock shall be validly issued, fully paid
and non-assessable. Before taking any action that would cause an adjustment
reducing the Conversion Price below the then-par value of the Common Stock
deliverable upon conversion of the Series 2 Preferred Stock, the Corporation
will take any corporate action that, in the opinion of its counsel, may be
necessary in order that the Corporation may validly and legally issue fully paid
and non-assessable shares of Common Stock at such adjusted Conversion Price.
Prior to the delivery of any securities that the Corporation shall be
obligated to deliver upon conversion of the Series 2 Preferred Stock, the
Corporation shall endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof by, any governmental
authority.
(j) The Corporation will pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of Common Stock or
other securities or property on conversion of the Series 2 Preferred Stock
pursuant hereto; provided, however, that the Corporation shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issue or delivery of Common Stock or other securities or property in a name
other than that of the holder of the Series 2 Preferred Stock to be converted,
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Corporation the amount of any
such tax or established, to the reasonable satisfaction of the Corporation, that
such tax has been paid.
Section 7. Shares to Be Retired. All shares of Series 2 Preferred Stock which
shall have been issued and reacquired in any manner by the Corporation shall be
restored to the status of authorized but unissued shares of Preferred Stock of
the Corporation, without designation as to class or series.
Section 8. Ranking. Any class or series of shares of capital stock of the
Corporation shall be deemed to rank: (a) prior to the Series 2 Preferred Stock,
as to the payment of dividends and as to distribution of assets upon
liquidation, dissolution or winding up, if the holders of such class or series
shall be entitled to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of Series 2 Preferred Stock;
(b) on a parity with the Series 2 Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
liquidation prices per share thereof shall be different from those of the Series
2 Preferred Stock, if the holders of such class or series and the Series 2
Preferred Stock shall be entitled to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding up in proportion to their
respective amounts of accrued and unpaid dividends per share or liquidation
preferences, without preference or priority one over the other ("Parity Stock");
(c) junior to the Series 2 Preferred Stock, as to the payment of dividends or as
to the distribution of assets upon liquidation, dissolution or winding up, if
such class or series shall be Junior Stock; and (d) junior to the Series 2
Preferred Stock, as to the payment of dividends and as to the distribution of
assets upon liquidation, dissolution or winding up, if such class or series
shall be Fully Junior Stock.
The Corporation's Series 1 Cumulative Convertible Redeemable Preferred
Stock and the Corporation's 8.125% Series A Cumulative Redeemable Preferred
Stock shall constitute Parity Stock.
Section 9. Voting.
(a) Each issued and outstanding share of Series 2 Preferred Stock shall entitle
the holder thereof to the number of votes per share of Common Stock into which
such share of Series 2 Preferred Stock is convertible (as of the close of
business on the record date for determination of shareholders entitled to vote
on a matter) on all matters presented for a vote of shareholders of the
Corporation and, except as required by applicable law and subject to the further
provisions of this Section 9, the Series 2 Preferred Stock shall be voted
together with all issued and outstanding Common Stock and Series 1 Preferred
Stock voting as a single class.
(b) If and whenever twelve consecutive quarterly dividends payable on the Series
2 Preferred Stock or any series or class of Parity Stock shall be in arrears
(which shall, with respect to any such quarterly dividend, mean that any such
dividend has not been paid in full), whether or not earned or declared, the
number of directors then constituting the Board shall be increased by one and
the holders of Series 2 Preferred Stock, together with the holders of shares of
every other series of Parity Stock, including the Series 1 Preferred Stock (any
such other series, the "Voting Preferred Stock"), voting as a single class
regardless of series, shall be entitled to elect, at a special meeting of the
holders of the Series 2 Preferred Stock and the Voting Preferred Stock called as
hereinafter provided, the additional director to serve on the Board. Whenever
all arrearages in dividends on the Series 2 Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been paid or declared and set
apart for payment, then the right of the holders of the Series 2 Preferred Stock
and the Voting Preferred Stock to elect such additional director shall cease
(but subject always to the same provision for the vesting of such voting rights
in the case of any similar future arrearages in twelve quarterly dividends), and
the terms of office of the person elected as director by the holders of the
Series 2 Preferred Stock and the Voting Preferred Stock shall forthwith
terminate and the number of members of the Board shall be reduced accordingly.
At any time after such voting power shall have been so vested in the holders of
Series 2 Preferred Stock and the Voting Preferred Stock (or if any vacancy shall
occur in respect of the director previously elected by the holders of the Series
2 Preferred Stock and the Voting Preferred Stock), the secretary of the
Corporation shall call a special meeting of the holders of the Series 2
Preferred Stock and of the Voting Preferred Stock for the election of the
director to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the shareholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the secretary
within 30 days after the end of the most recent Dividend Period during which the
right to elect such additional director arose or such vacancy occurred, then any
holder of Series 2 Preferred Stock may call such meeting, upon the notice above
provided, and for that purpose shall have access to the stock records of the
Corporation. The director elected at any such special meeting shall hold office
until the next annual meeting of the shareholders or special meeting held in
lieu thereof if such office shall not have previously terminated as above
provided. (c) So long as any Series 2 Preferred Stock is outstanding, in
addition to any other vote or consent of shareholders required by law or by the
Charter, the affirmative vote of at least 66 2/3% of the votes entitled to be
cast by the holders of the Series 2 Preferred Stock, together with the holders
of Voting Preferred Stock, at the time outstanding, acting as a single class
regardless of series, given in person or by proxy, either in writing without a
meeting or by vote at any meeting called for the purpose, shall be necessary for
effecting or validating: (i) Any amendment, alteration or repeal of any of the
provisions of the Charter or these Articles of
Amendment that materially and adversely affects the voting powers,
rights or preferences of the holders of the Series 2 Preferred Stock or
the Voting Preferred Stock; provided, however, that the amendment of
the provisions of the Charter so as to authorize or create or to
increase the authorized amount of, any Fully Junior Stock, Junior Stock
that is not senior in any respect to the Series 2 Preferred Stock, or
any stock of any class ranking on a parity with the Series 2 Preferred
Stock or the Voting Preferred Stock shall not be deemed to materially
adversely affect the voting powers, rights or preferences of the
holders of Series 2 Preferred Stock; and provided, further, that if any
such amendment, alteration or repeal would materially and adversely
affect any voting powers, rights or preferences of the Series 2
Preferred Stock or another series of Voting Preferred Stock that are
not enjoyed by some or all of the other series otherwise entitled to
vote in accordance herewith, the affirmative vote of at least 66 2/3%
of the votes entitled to be cast by the holders of all series similarly
affected, similarly given, shall be required in lieu of the affirmative
vote of at least 66 2/3% of the votes entitled to be cast by the
holders of the Series 2 Preferred Stock and the Voting Preferred Stock
otherwise entitled to vote in accordance herewith; or
(ii) A share exchange that affects the Series 2 Preferred Stock, a consolidation
with or merger of the Corporation into another Person, or a consolidation with
or merger of another Person into the Corporation, unless in each such case each
share of Series 2 Preferred Stock (A) shall remain outstanding without a
material and adverse change to its terms and rights or (B) shall be converted
into or exchanged for convertible preferred stock of the surviving entity having
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms or conditions of
redemption thereof identical to that of a share of Series 2 Preferred Stock
(except for changes that do not materially and adversely affect the holders of
the Series 2 Preferred Stock); or (iii) The authorization or creation of, or the
increase in the authorized amount of, any shares of any class or any security
convertible into shares of any class ranking prior to the Series 2 Preferred
Stock in the distribution of assets on any liquidation, dissolution or winding
up of the Corporation or in the payment of dividends. (d) For purposes of voting
in respect to those matters referred to in subparagraphs (b) and (c) of this
Section 9, unless otherwise provided under applicable law, each Series 2
Preferred Stock shall have one (1) vote per share, except that when any other
series of Preferred Stock shall have the right to vote with the Series 2
Preferred Stock as a single class on any matter, then the Series 2 Preferred
Stock and such other series shall have with respect to such matters one (1) vote
per $20.8333 of stated liquidation preference. Except as otherwise required by
applicable law or as set forth herein, the Series 2 Preferred Stock shall not
have any relative, participating, optional or other special voting rights and
powers other than as set forth herein, and the consent of the holders thereof
shall not be required for the taking of any corporate action.
Section 10. Record Holders. The Corporation and the Transfer Agent may deem and
treat the record holder of any shares of Series 2 Preferred Stock as the true
and lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
Section 11. Sinking Fund. The Series 2 Preferred Stock shall not be entitled to
the benefits of any retirement or sinking fund.
THIRD: The Series 2 Preferred Stock has been classified and designated
by the Board of Directors under the authority contained in Section 4.2 of the
Charter.
FOURTH: These Articles of Amendment have been approved by the
Board of Directors in the manner and by the vote required by law.
FIFTH: The undersigned President of the Corporation acknowledges these
Articles of Amendment to be the corporate act of the Corporation and, as to all
matters or facts required to be verified under oath, the undersigned President
acknowledges that to the best of her knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed under seal in its name and on its behalf by its
President and attested to by its Secretary on this 26th day of February, 1999.
REGENCY REALTY CORPORATION
By:
Name: Mary Lou Rogers
Title: President
[SEAL]
ATTEST:
Name: J. Christian Leavitt
Title: Secretary
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF
REGENCY REALTY CORPORATION
DESIGNATING THE PREFERENCES, RIGHTS AND
LIMITATIONS OF 1,600,000 SHARES OF
8.125% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
$0.01 Par Value
Pursuant to Section 607.0602 of the Florida Business
Corporation Act ("FBCA"), Regency Realty Corporation, a Florida corporation (the
"Corporation"), does hereby certify that:
FIRST: Pursuant to the authority expressly vested in the Board
of Directors of the Corporation by Section 4.2 of the Amended and Restated
Articles of Incorporation of the Corporation (the "Charter") and Section
607.0602 of the FBCA, the Board of Directors of the Corporation (the "Board of
Directors"), by resolutions duly adopted on May 26, 1998 has classified
1,600,000 shares of the authorized but unissued Preferred Stock par value $.01
per share ("Preferred Stock") as a separate class of Preferred Stock, authorized
the issuance of a maximum of 1,600,000 shares of such class of Preferred Stock,
set certain of the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, terms and conditions
of redemption and other terms and conditions of such class of Preferred Stock,
and pursuant to the powers contained in the Bylaws of the Corporation and the
FBCA, appointed a committee (the "Committee") of the Board of Directors and
delegated to the Committee, to the fullest extent permitted by the FBCA and the
Charter and Bylaws of the Corporation, all powers of the Board of Directors with
respect to designating, and setting all other preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of, such
class of Preferred Stock determining the number of shares of such class of
Preferred Stock (not in excess of the aforesaid maximum number) to be issued and
the consideration and other terms and conditions upon which such shares of such
class of Preferred Stock are to be issued. Shareholder approval was not required
under the Charter with respect to such designation.
<PAGE>
2
NYDOCS03/321456 7
SECOND: Pursuant to the authority conferred upon the Committee
as aforesaid, the Committee has unanimously adopted resolutions designating the
aforesaid class of Preferred Stock as the A8.125% Series A Cumulative Redeemable
Preferred Stock," setting the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, terms and
conditions of redemption and other terms and conditions of such 8.125% Series A
Cumulative Redeemable Preferred Stock (to the extent not set by the Board of
Directors in the resolutions referred to in Article FIRST of these Articles of
Amendment) and authorizing the issuance of up to 1,600,000 shares of 8.125%
Series A Cumulative Redeemable Preferred Stock.
THIRD: The class of Preferred Stock of the Corporation created
by the resolutions duly adopted by the Board of Directors of the Corporation and
by the Committee and referred to in Articles FIRST and SECOND of these Articles
of Amendment shall have the following designation, number of shares,
preferences, conversion and other rights, voting powers, restrictions and
limitation as to dividends, qualifications, terms and conditions of redemption
and other terms and conditions:
Section 1.Designation and Number. A series of Preferred Stock, designated the
"8.125% Series A Cumulative Redeemable Preferred Stock" (the "Series A Preferred
Stock") is hereby established. The number of shares of Series A Preferred
Stock shall be 1,600,000.
Section 2. Rank. The Series A Preferred Stock will, with
respect to distributions or rights upon voluntary or involuntary liquidation,
winding-up or dissolution of the Corporation, or both, rank senior to all
classes or series of Common Stock (as defined in the Charter) and to all classes
or series of equity securities of the Corporation now or hereafter authorized,
issued or outstanding, other than any class or series of equity securities of
the Corporation expressly designated as ranking on a parity with or senior to
the Series A Preferred Stock as to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Corporation, or both.
For purposes of these Articles of Amendment, the term "Parity Preferred Stock"
shall be used to refer to any class or series of equity securities of the
Corporation now or hereafter authorized, issued or outstanding expressly
designated by the Corporation to rank on a parity with Series A Preferred Stock
with respect to distributions or rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Corporation, or both, as the
context may require, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or conversion rights or exchange
rights shall be different from those of the Series A Preferred Stock. The term
"equity securities" does not include debt securities, which will rank senior to
the Series A Preferred Stock prior to conversion.
Section 3. Distributions. (a) Payment of Distributions.
Subject to the rights of holders of Parity Preferred Stock as to the payment of
distributions and holders of equity securities issued after the date hereof in
accordance herewith ranking senior to the Series A Preferred Stock as to payment
of distributions, holders of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors of the Corporation,
out of funds legally available for the payment of distributions, cumulative cash
distributions at the rate per annum of 8.125% of the $50.00 liquidation
preference per share of Series A Preferred Stock. Such distributions shall be
cumulative, shall accrue from the original date of issuance and will be payable
in cash (A) quarterly in arrears, on or before March 31, June 30, September 30
and December 31 of each year commencing on the first of such dates to occur
after the original date of issuance and, (B) in the event of a redemption, on
the redemption date (each a "Preferred Stock Distribution Payment Date"). The
amount of the distribution payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months and for any period shorter than a full
quarterly period for which distributions are computed, the amount of the
distribution payable will be computed on the basis of the actual number of days
elapsed in such a 30-day month. If any date on which distributions are to be
made on the Series A Preferred Stock is not a Business Day (as defined herein),
then payment of the distribution to be made on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. Distributions on the Series A Preferred Stock will be made to the
holders of record of the Series A Preferred Stock on the relevant record dates
to be fixed by the Board of Directors of the Corporation, which record dates
shall be not less than 10 days and not more than 30 Business Days prior to the
relevant Preferred Stock Distribution Payment Date (each a "Distribution Record
Date"). Notwithstanding anything to the contrary set forth herein, each share of
Series A Preferred Stock shall also continue to accrue all accrued and unpaid
distributions, whether or not declared, up to the exchange date on any Series A
Preference Unit (as defined in the Second Amended and Restated Agreement of
Limited Partnership of Regency Centers, L.P., dated as March 5, 1998 as amended
by that certain Amendment No. One to Second Amendment and Restatement of
Agreement of Limited Partnership dated as of June 25, 1998 (as amended the
APartnership Agreement")) validly exchanged into such share of Series A
Preferred Stock in accordance with the provisions of such Partnership Agreement.
<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 Stock shall be declared or paid or set apart for payment by the
Corporation at such time as the terms and provisions of any agreement of the
Corporation (other than any agreement with a holder or affiliate of holder of
Capital Stock of the Corporation) relating to its indebtedness, prohibit such
declaration, payment or setting apart for payment or provide that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration, payment or setting
apart for payment shall be restricted or prohibited by law. Nothing in this
Section 3(b) shall be deemed to modify or in any manner limit the provisions of
Section 3(c) and 3(d).
(c) Distributions Cumulative. Distributions on the Series A
Preferred Stock will accrue whether or not the terms and provisions of any
agreement of the Corporation, including any agreement relating to its
indebtedness at any time prohibit the current payment of distributions, whether
or not the Corporation has earnings, whether or not there are funds legally
available for the payment of such distributions and whether or not such
distributions are authorized or declared. Accrued but unpaid distributions on
the Series A Preferred Stock will accumulate as of the Preferred Stock
Distribution Payment Date on which they first become payable. Distributions on
account of arrears for any past distribution periods may be declared and paid at
any time, without reference to a regular Preferred Stock Distribution Payment
Date to holders of record of the Series A Preferred Stock on the record date
fixed by the Board of Directors which date shall be not less than 10 days and
not more than 30 Business Days prior to the payment date. Accumulated and unpaid
distributions will not bear interest.
(d) Priority as to Distributions. (i) So long as any Series A
Preferred Stock is outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Common Stock or any class or series of other stock of the
Corporation ranking junior as to the payment of distributions to the Series A
Preferred Stock (such Common Stock or other junior stock, collectively, "Junior
Stock"), nor shall any cash or other property be set aside for or applied to the
purchase, redemption or other acquisition for consideration of any Series A
Preferred Stock, any Parity Preferred Stock with respect to distributions or any
Junior Stock, unless, in each case, all distributions accumulated on all Series
A Preferred Stock and all classes and series of outstanding Parity Preferred
Stock as to payment of distributions have been paid in full. The foregoing
sentence will not prohibit (i) distributions payable solely in Junior Stock,
(ii) the conversion of Series A Preferred Stock, Junior Stock or Parity
Preferred Stock into stock of the Corporation ranking junior to the Series A
Preferred Stock as to distributions, and (iii) purchases by the Corporation of
such Series A Preferred Stock or Parity Preferred Stock with respect to
distributions or Junior Stock pursuant to Article 5 of the Charter to the extent
required to preserve the Corporation=s status as a real estate investment trust.
(ii)So long as distributions have not been paid in full (or a sum sufficient for
such full payment is not irrevocably deposited in trust for payment) upon the
Series A Preferred Stock, all distributions authorized and declared on the
Series A Preferred Stock and all classes or series of outstanding Parity
Preferred Stock with respect to distributions shall be authorized and declared
so that the amount of distributions authorized and declared per share of Series
A Preferred Stock and such other classes or series of Parity Preferred Stock
shall in all cases bear to each other the same ratio that accrued distributions
per share on the Series A Preferred Stock and such other classes or series of
Parity Preferred Stock (which shall not include any accumulation in respect of
unpaid distributions for prior distribution periods if such class or series of
Parity Preferred Stock do not have cumulative distribution rights) bear to each
other.
<PAGE>
(e) No Further Rights. Holders of Series A Preferred Stock
shall not be entitled to any distributions, whether payable in cash, other
property or otherwise, in excess of the full cumulative distributions described
herein.
Section 4. Liquidation Preference. (a) Payment of Liquidating
Distributions. Subject to the rights of holders of Parity Preferred Stock with
respect to rights upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation and subject to equity securities ranking senior to
the Series A Preferred Stock with respect to rights upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, the
holders of Series A Preferred Stock shall be entitled to receive out of the
assets of the Corporation legally available for distribution or the proceeds
thereof, after payment or provision for debts and other liabilities of the
Corporation, but before any payment or distributions of the assets shall be made
to holders of Common Stock or any other class or series of shares of the
Corporation that ranks junior to the Series A Preferred Stock as to rights upon
liquidation, dissolution or winding-up of the Corporation, an amount equal to
the sum of (i) a liquidation preference of $50 per share of Series A Preferred
Stock, and (ii) an amount equal to any accumulated and unpaid distributions
thereon, whether or not declared, to the date of payment. In the event that,
upon such voluntary or involuntary liquidation, dissolution or winding-up, there
are insufficient assets to permit full payment of liquidating distributions to
the holders of Series A Preferred Stock and any Parity Preferred Stock as to
rights upon liquidation, dissolution or winding-up of the Corporation, all
payments of liquidating distributions on the Series A Preferred Stock and such
Parity Preferred Stock shall be made so that the payments on the Series A
Preferred Stock and such Parity Preferred Stock shall in all cases bear to each
other the same ratio that the respective rights of the Series A Preferred Stock
and such other Parity Preferred Stock (which shall not include any accumulation
in respect of unpaid distributions for prior distribution periods if such Parity
Preferred Stock do not have cumulative distribution rights) upon liquidation,
dissolution or winding-up of the Corporation bear to each other.
(b) Notice. Written notice of any such voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, stating
the payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be given by (i) fax
and (ii) by first class mail, postage pre-paid, not less than 30 and not more
that 60 days prior to the payment date stated therein, to each record holder of
the Series A Preferred Stock at the respective addresses of such holders as the
same shall appear on the share transfer records of the Corporation.
(c) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series A
Preferred Stock will have no right or claim to any of the remaining assets of
the Corporation.
(d) Consolidation, Merger or Certain Other Transactions. The
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the Corporation to, or the consolidation or merger or
other business combination of the Corporation with or into, any corporation,
trust or other entity (or of any corporation, trust or other entity with or into
the Corporation) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Corporation.
(e) Permissible Distributions. In determining whether a
distribution (other than upon voluntary liquidation) by dividend, redemption or
other acquisition of shares of stock of the Corporation or otherwise is
permitted under the FBCA, no effect shall be given to amounts that would be
needed, if the Corporation were to be dissolved at the time of the distribution,
to satisfy the preferential rights upon dissolution of holders of shares of
stock of the Corporation whose preferential rights upon dissolution are superior
to those receiving the distribution.
Section 5. Optional Redemption. (a) Right of Optional
Redemption. The Series A Preferred Stock may not be redeemed prior to June 25,
2003. On or after such date, the Corporation shall have the right to redeem the
Series A Preferred Stock, in whole or in part, at any time or from time to time,
upon not less than 30 nor more than 60 days' written notice, at a redemption
price, payable in cash, equal to $50 per share of Series A Preferred Stock plus
accumulated and unpaid distributions, whether or nor declared, to the date of
redemption. If fewer than all of the outstanding shares of Series A Preferred
Stock are to be redeemed, the shares of Series A Preferred Stock to be redeemed
shall be selected pro rata (as nearly as practicable without creating fractional
shares).
<PAGE>
(b)Limitation on Redemption. (i) The redemption price of the Series A Preferred
Stock (other than the portion thereof consisting of accumulated but unpaid
distributions) will be payable solely out of sale proceeds of capital stock of
the Corporation and from no other source. For purposes of the preceding
sentence, "capital stock" means any equity securities (including Common Stock
and Preferred Stock), shares, participation or other ownership interests
(however designated) and any rights (other than debt securities convertible into
or exchangeable for equity securities) or options to purchase any of the
foregoing.
(ii)The Corporation may not redeem fewer than all of the outstanding shares of
Series A Preferred Stock unless all accumulated and unpaid distributions have
been paid on all Series A Preferred Stock for all quarterly distribution periods
terminating on or prior to the date of redemption.
(c) Procedures for Redemption. (i) Notice of redemption will
be (i) faxed, and (ii) mailed by the Corporation, postage prepaid, not less than
30 nor more than 60 days prior to the redemption date, addressed to the
respective holders of record of the Series A Preferred Stock to be redeemed at
their respective addresses as they appear on the transfer records of the
Corporation. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series A Preferred Stock
except as to the holder to whom such notice was defective or not given. In
addition to any information required by law or by the applicable rules of any
exchange upon which the Series A Preferred Stock may be listed or admitted to
trading, each such notice shall state: (i) the redemption date, (ii) the
redemption price, (iii) the number of shares of Series A Preferred Stock to be
redeemed, (iv) the place or places where such shares of Series A Preferred Stock
are to be surrendered for payment of the redemption price, (v) that
distributions on the Series A Preferred Stock to be redeemed will cease to
accumulate on such redemption date and (vi) that payment of the redemption price
and any accumulated and unpaid distributions will be made upon presentation and
surrender of such Series A Preferred Stock. If fewer than all of the shares of
Series A Preferred Stock held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of shares of Series A
Preferred Stock held by such holder to be redeemed.
(ii) If the Corporation gives a notice of redemption in respect of Series A
Preferred Stock (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Corporation will deposit irrevocably in
trust for the benefit of the Series A Preferred Stock being redeemed funds
sufficient to pay the applicable redemption price, plus any accumulated and
unpaid distributions, whether or not declared, if any, on such shares to the
date fixed for redemption, without interest, and will give irrevocable
instructions and authority to pay such redemption price and any accumulated and
unpaid distributions, if any, on such shares to the holders of the Series A
Preferred Stock upon surrender of the certificate evidencing the Series A
Preferred Stock by such holders at the place designated in the notice of
redemption. If fewer than all Series A Preferred Stock evidenced by any
certificate is being redeemed, a new certificate shall be issued upon surrender
of the certificate evidencing all Series A Preferred Stock, evidencing the
unredeemed Series A Preferred Stock without cost to the holder thereof. On and
after the date of redemption, distributions will cease to accumulate on the
Series A Preferred Stock or portions thereof called for redemption, unless the
Corporation defaults in the payment thereof. If any date fixed for redemption of
Series A Preferred Stock is not a Business Day, then payment of the redemption
price payable on such date will be made on the next succeeding day that is a
Business Bay (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
payment of the redemption price or any accumulated or unpaid distributions in
respect of the Series A Preferred Stock is improperly withheld or refused and
not paid by the Corporation, distributions on such Series A Preferred Stock will
continue to accumulate from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the applicable redemption price and any
accumulated and unpaid distributions.
(d) Status of Redeemed Stock. Any Series A Preferred Stock
that shall at any time have been redeemed shall after such redemption, have the
status of authorized but unissued Preferred Stock, without designation as to
class or series until such shares are once more designated as part of a
particular class or series by the Board of Directors.
Section 6. Voting Rights.(a) General. Holders of the Series A Preferred Stock
will not have any voting rights, except as set forth below.
(b) Right to Elect Directors. (i) If at any time distributions
shall be in arrears (which means that, as to any such quarterly distributions,
the same have not been paid in full) with respect to six (6) prior quarterly
distribution periods (including quarterly periods on the Series A Preferred
Units prior to the exchange into Series A Preferred Stock), whether or not
consecutive, and shall not have been paid in full (a "Preferred Distribution
Default"), the authorized number of members of the Board of Directors shall
automatically be increased by two and the holders of record of such Series A
Preferred Stock, voting together as a single class with the holders of each
class or series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable, will be entitled to fill the vacancies so
created by electing two additional directors to serve on the Corporation's Board
of Directors (the "Preferred Stock Directors") at a special meeting called in
accordance with Section 6(b)(ii) at the next annual meeting of stockholders, and
at each subsequent annual meeting of stockholders or special meeting held in
place thereof, until all such distributions in arrears and distributions for the
current quarterly period on the Series A Preferred Stock and each such class or
series of Parity Preferred Stock have been paid in full.
(ii) At any time when such voting rights shall have vested, a
proper officer of the Corporation shall call or cause to be called, upon written
request of holders of record of at least 10% of the outstanding Shares of Series
A Preferred Stock, a special meeting of the holders of Series A Preferred Stock
and all the series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable (collectively, the AParity Securities@) by
mailing or causing to be mailed to such holders a notice of such special meeting
to be held not less than ten and not more than 45 days after the date such
notice is given. The record date for determining holders of the Parity
Securities entitled to notice of and to vote at such special meeting will be the
close of business on the third Business Day preceding the day on which such
notice is mailed. At any such special meeting, all of the holders of the Parity
Securities, by plurality vote, voting together as a single class without regard
to series will be entitled to elect two directors on the basis of one vote per
$25.00 of liquidation preference to which such Parity Securities are entitled by
their terms (excluding amounts in respect of accumulated and unpaid dividends)
and not cumulatively. The holder or holders of one-third of the Parity
Securities then outstanding, present in person or by proxy, will constitute a
quorum for the election of the Preferred Stock Directors except as otherwise
provided by law. Notice of all meetings at which holders of the Series A
Preferred Shares shall be entitled to vote will be given to such holders at
their addresses as they appear in the transfer records. At any such meeting or
adjournment thereof in the absence of a quorum, subject to the provisions of any
applicable law, a majority of the holders of the Parity Securities present in
person or by proxy shall have the power to adjourn the meeting for the election
of the Preferred Stock Directors, without notice other than an announcement at
the meeting, until a quorum is present. If a Preferred Distribution Default
shall terminate after the notice of a special meeting has been given but before
such special meeting has been held, the Corporation shall, as soon as
practicable after such termination, mail or cause to be mailed notice of such
termination to holders of the Series A Preferred Shares that would have been
entitled to vote at such special meeting.
(iii) If and when all accumulated distributions and the
distribution for the current distribution period on the Series A Preferred Stock
shall have been paid in full or a sum sufficient for such payment is irrevocably
deposited in trust for payment, the holders of the Series A Preferred Stock
shall be divested of the voting rights set forth in Section 6(b) herein (subject
to revesting in the event of each and every Preferred Distribution Default) and,
if all distributions in arrears and the distributions for the current
distribution period have been paid in full or set aside for payment in full on
all other classes or series of Parity Preferred Stock upon which like voting
rights have been conferred and are exercisable, the term and office of each
Preferred Stock Director so elected shall terminate. Any Preferred Stock
Director may be removed at any time with or without cause by the vote of, and
shall not be removed otherwise than by the vote of, the holders of record of a
majority of the outstanding Series A Preferred Stock when they have the voting
rights set forth in Section 6(b) (voting separately as a single class with all
other classes or series of Parity Preferred Stock upon which like voting rights
have been conferred and are exercisable). So long as a Preferred Distribution
Default shall continue, any vacancy in the office of a Preferred Stock Director
may be filled by written consent of the Preferred Stock Director remaining in
office, or if none remains in office, by a vote of the holders of record of a
majority of the outstanding Series A Preferred Stock when they have the voting
rights set forth in Section 6(b) (voting separately as a single class with all
other classes or series of Parity Preferred Stock upon which like voting rights
have been conferred and are exercisable). The Preferred Stock Directors shall
each be entitled to one vote per director on any matter.
(c) Certain Voting Rights. So long as any Series A Preferred
Stock remains outstanding, the Corporation shall not, without the affirmative
vote of the holders of at least two-thirds of the Series A Preferred Stock
outstanding at the time (i) designate or create, or increase the authorized or
issued amount of, any class or series of shares ranking prior to the Series A
Preferred Stock with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any authorized shares of
the Corporation into any such shares, or create, authorize or issue any
obligations or securities convertible into or evidencing the right to purchase
any such shares, (ii) designate or create, or increase the authorized or issued
amount of, any Parity Preferred Stock or reclassify any authorized shares of the
Corporation into any such shares, or create, authorize or issue any obligations
or securities convertible into or evidencing the right to purchase any such
shares, but only to the extent such Parity Preferred Stock is issued to an
affiliate of the Corporation (other than Security Capital U.S. Realty, Security
Capital Holdings, S.A. or their affiliates), or (iii) either (A) consolidate,
merge into or with, or convey, transfer or lease its assets substantially as an
entirety, to any corporation or other entity, or (B) amend, alter or repeal the
provisions of the Corporation=s Charter (including these Articles of Amendment)
or By-laws, whether by merger, consolidation or otherwise, in each case that
would materially and adversely affect the powers, special rights, preferences,
privileges or voting power of the Series A Preferred Stock or the holders
thereof; provided, however, that with respect to the occurrence of a merger,
consolidation or a sale or lease of all of the Corporation=s assets as an
entirety, so long as (a) the Corporation is the surviving entity and the Series
A Preferred Stock remains outstanding with the terms thereof unchanged, or (b)
the resulting, surviving or transferee entity is a corporation organized under
the laws of any state and substitutes the Series A Preferred Stock for other
preferred stock having substantially the same terms and same rights as the
Series A Preferred Stock, including with respect to distributions, voting rights
and rights upon liquidation, dissolution or winding-up, then the occurrence of
any such event shall not be deemed to materially and adversely affect such
rights, privileges or voting powers of the holders of the Series A Preferred
Stock and no vote of the Series A Preferred Stock shall be required in such case
and provided further that any increase in the amount of authorized Preferred
Stock or the creation or issuance of any other class or series of Preferred
Stock, or any increase in an amount of authorized shares of each class or
series, in each case ranking either (a) junior to the Series A Preferred Stock
with respect to payment of distributions and the distribution of assets upon
liquidation, dissolution or winding-up, or (b) on a parity with the Series A
Preferred Stock with respect to payment of distributions and the distribution of
assets upon liquidation, dissolution or winding-up to the extent such Preferred
Stock is not issued to a affiliate of the Corporation, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers and no vote of the Series A Preferred Stock shall be required in such
case.
Section 7. No Conversion Rights. The holders of the Series A
Preferred Stock shall not have any rights to convert such shares into shares of
any other class or series of stock or into any other securities of, or interest
in, the Corporation.
Section 8. No Sinking Fund. No sinking fund shall be established for the
retirement or redemption of Series A Preferred Stock.
Section 9. No Preemptive Rights. No holder of the Series A
Preferred Stock of the Corporation shall, as such holder, have any preemptive
rights to purchase or subscribe for additional shares of stock of the
Corporation or any other security of the Corporation which it may issue or sell.
FOURTH: The Series A Preferred Stock have been classified and designated by the
Board of Directors under the authority contained in the Charter.
FIFTH: These Articles of Amendment have been approved by the Board of Directors
in the manner and by the vote required by law.
<PAGE>
NYDOCS03/321456 7
SIXTH: The undersigned President of the Corporation
acknowledges these Articles of Amendment to be the corporate act of the
Corporation and, as to all matters or facts required to be verified under oath,
the undersigned President acknowledges that to the best of his knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties for perjury.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment to be executed under seal in its name and on its behalf by its
Executive Vice President and attested to by its Secretary on this 24th day of
June, 1998.
REGENCY REALTY CORPORATION
By:_____________________________
Name: Bruce M. Johnson
Title: Executive Vice President
[SEAL]
ATTEST:
----------------------------
Name: J. Christian Leavitt
Title: Secretary
REGENCY REALTY CORPORATION
AMENDMENT TO ARTICLES OF INCORPORATION
This corporation was incorporated on July 8, 1993 effective July 9,
1993 under the name Regency Realty Corporation. Pursuant to Sections 607.1001,
607.1003, 607.1004 and 607.1006, Florida Business Corporation Act, amendments to
Section 5.14 of the Articles of Incorporation, as restated on November 4, 1996,
were approved by the Board of Directors at a meeting held on December 5, 1997
and adopted by the shareholders of the corporation on May 26, 1998. The only
voting group entitled to vote on the adoption of the amendment to Section 5.14
of the Articles of Incorporation consists of the holders of the corporation's
common stock. The number of votes cast by such voting group was sufficient for
approval by that voting group. Section 5.14 of the Restated Articles of
Incorporation of the Company is hereby amended in its entirety to read as
follows:
"Section 5.14 Certain Transfers to Non-U.S. Persons Void. Any
Transfer of shares of Capital Stock of the Corporation to any Person on
or after the effective date of this Amendment shall be void ab initio
to the fullest extent permitted under applicable law and the intended
transferee shall be deemed never to have had an interest therein if the
Transfer:
1. occurs prior to the 15% Termination Date and
results in the fair market value of the shares of Capital
Stock of the Corporation owned directly or indirectly by
Non-U.S. Persons (other than a Special Shareholder who is a
Non-U.S. Person) comprising five percent (5%) or more of the
fair market value of the issued and outstanding shares of
Capital Stock of the Corporation; or
2. results in the fair market value of the shares of
Capital Stock of the Corporation owned directly or indirectly
by Non-U.S. Persons (including Special Shareholders who are
Non-U.S. Persons) comprising fifty percent (50%) or more of
the fair market value of the issued and outstanding shares of
Capital Stock of the Corporation.
If either of the foregoing provisions is determined to be void or
invalid by virtue of any legal decision, statute, rule or regulation,
then the shares held or purported to be held by the transferee shall,
automatically and without the necessity of any action by the Board of
Directors or otherwise:
(i) be prohibited from being voted at any time such
securities result in the fair market value of the shares of
Capital Stock of the Corporation owned directly or indirectly
by Non-U.S. Persons (other than Special Shareholders who are
Non-U.S. Persons) or by Non-U.S. Persons (including Special
Shareholders who are Non-U.S. Persons) comprising five percent
(5%) or more or fifty percent (50%) or more, respectively, of
the fair market value of the issued and outstanding shares of
Capital Stock of the Corporation;
<PAGE>
(ii) not be entitled to dividends with respect thereto;
(iii) be considered held in trust by the transferee
for the benefit of the Corporation and shall be subject to the
provisions of Section 5.3(c) as if such shares of Capital
Stock were the subject of a Transfer that violates Section
5.2; and
(iv) not be considered outstanding for the purpose of
determining a quorum at any meeting of shareholders.
The Special Shareholders may, in their sole discretion, with prior
notice to the Board of Directors, waive, alter or revise in writing all
or any portion of the Transfer restrictions set forth in this Section
5.14 from and after the date on which such notice is given, on such
terms and conditions as they in their sole discretion determine."
IN WITNESS WHEREOF, the undersigned Chairman of this corporation has
executed these Articles of Amendment this day of May, 1998.
Martin E. Stein, Jr., Chairman and Chief
Executive Officer
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