United States
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
(Mark One)
[X] For the quarterly period ended June 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 August 10, 1999, there were 59,562,612 shares outstanding of the
Registrant's common stock.
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Balance Sheets
June 30, 1999 and December 31, 1998
<TABLE>
<CAPTION>
1999 1998
(unaudited)
<S> <C> <C>
Assets
Real estate investments, at cost:
Land $ 557,375,983 257,669,018
Buildings and improvements 1,801,402,593 925,514,995
Construction in progress - development for investment 54,783,730 15,647,659
Construction in progress - development for sale 84,535,053 20,869,915
--------------- ---------------
2,498,097,359 1,219,701,587
Less: accumulated depreciation 79,822,694 58,983,738
--------------- ---------------
2,418,274,665 1,160,717,849
Investments in real estate partnerships 43,737,090 30,630,540
--------------- ---------------
Net real estate investments 2,462,011,755 1,191,348,389
Cash and cash equivalents 14,781,701 19,919,693
Tenant receivables, net of allowance for uncollectible accounts of
$1,823,732 and $1,787,686 at June 30, 1999 and
December 31, 1998, respectively 29,656,201 16,758,917
Deferred costs, less accumulated amortization of $6,616,985 and
$5,295,336 at June 30, 1999 and December 31, 1998 11,002,944 6,872,023
Other assets 6,354,589 5,208,278
--------------- ---------------
$ 2,523,807,190 1,240,107,300
=============== ===============
Liabilities and Stockholders' Equity
Liabilities:
Notes payable 787,274,210 430,494,910
Acquisition and development line of credit 243,879,310 117,631,185
Accounts payable and other liabilities 45,322,871 19,936,424
Tenants' security and escrow deposits 6,899,230 3,110,370
--------------- ---------------
Total liabilities 1,083,375,621 571,172,889
--------------- ---------------
Series A preferred units 78,800,000 78,800,000
Exchangeable operating partnership units 46,468,357 27,834,330
Limited partners' interest in consolidated partnerships 11,050,830 11,558,618
--------------- ---------------
Total minority interest 136,319,187 118,192,948
--------------- ---------------
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 issued and
outstanding; liquidation preference $20.83 per share 22,392,000 -
Common stock $.01 par value per share: 150,000,000 shares
authorized; 59,560,212 and 25,488,989 shares issued and
outstanding at June 30, 1999 and December 31, 1998 595,602 254,889
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 1,302,631,875 578,466,708
Distributions in excess of net income (22,180,227) (19,395,744)
Stock loans (11,981,438) (8,609,390)
--------------- ---------------
Total stockholders' equity 1,304,112,382 550,741,463
--------------- ---------------
Commitments and contingencies
$ 2,523,807,190 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 June 30, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Revenues:
Minimum rent $ 58,489,977 25,405,644
Percentage rent 466,022 558,514
Recoveries from tenants 15,081,065 5,817,685
Management, leasing and brokerage fees 4,118,783 3,259,509
Equity in income of investments in
real estate partnerships 1,395,100 145,425
--------------- ------------
Total revenues 79,550,947 35,186,777
--------------- ------------
Operating expenses:
Depreciation and amortization 12,369,778 5,928,251
Operating and maintenance 9,816,763 4,355,499
General and administrative 5,143,534 3,529,341
Real estate taxes 7,431,874 2,999,053
Other expenses 375,000 300,000
------------- ------------
Total operating expenses 35,136,949 17,112,144
------------- ------------
Interest expense (income):
Interest expense 17,171,139 8,015,818
Interest income (654,485) (631,179)
--------------- ------------
Net interest expense 16,516,654 7,384,639
--------------- ------------
Income before minority interests and sale
of real estate investments 27,897,344 10,689,994
Gain on sale of real estate investments - 508,678
--------------- ------------
Income before minority interests 27,897,344 11,198,672
Minority interest of exchangeable partnership units (760,305) (297,500)
Minority interest of limited partners (486,094) (103,009)
Minority interest preferred unit distribution (1,625,001) -
--------------- ------------
Net income 25,025,944 10,798,163
Preferred stock dividends (696,000) -
--------------- ------------
Net income for common stockholders $ 24,329,944 10,798,163
=============== ============
Net income per share:
Basic $ 0.41 0.38
=============== ============
Diluted $ 0.41 0.36
=============== ============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statements of Operations
For the Six Months ended June 30, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Revenues:
Minimum rent $ 97,622,093 47,660,793
Percentage rent 876,468 1,661,861
Recoveries from tenants 24,324,213 10,638,415
Management, leasing and brokerage fees 6,013,830 5,988,181
Equity in income of investments in
real estate partnerships 2,136,203 146,411
--------------- ---------------
Total revenues 130,972,807 66,095,661
--------------- ---------------
Operating expenses:
Depreciation and amortization 21,781,052 11,384,555
Operating and maintenance 16,801,471 8,471,901
General and administrative 8,780,893 6,962,449
Real estate taxes 12,191,959 5,787,804
Other expenses 525,000 300,000
--------------- ---------------
Total operating expenses 60,080,375 32,906,709
--------------- ---------------
Interest expense (income):
Interest expense 27,992,343 13,455,183
Interest income (1,121,003) (966,383)
--------------- ---------------
Net interest expense 26,871,340 12,488,800
--------------- ---------------
Income before minority interests and sale
of real estate investments 44,021,092 20,700,152
Gain on sale of real estate investments - 10,746,097
--------------- ---------------
Income before minority interests 44,021,092 31,446,249
Minority interest of exchangeable partnership units (1,338,511) (891,824)
Minority interest of limited partners (747,033) (200,159)
Minority interest preferred unit distribution (3,250,002) -
--------------- ---------------
Net income 38,685,546 30,354,266
Preferred stock dividends (900,000) -
--------------- ---------------
Net income for common stockholders $ 37,785,546 30,354,266
=============== ===============
Net income per share:
Basic $ 0.76 1.11
=============== ===============
Diluted $ 0.76 1.06
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statement of Stockholders' Equity
For the Six Months ended June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Class B
Series 1 Series 2 Common Common
Preferred Stock Preferred Stock Stock Stock
--------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Balance at
December 31, 1998 $ - - 254,889 -
Common stock issued as
compensation, purchased by
directors or officers, or issued
under stock options - - 1,380 -
Common stock issued for
partnership units exchanged - - 3,909 -
Common stock issued for
class B conversion - - 29,755 (25,000)
Preferred stock issued to
acquire Pacific Retail Trust 12,654,570 22,392,000 - -
Common stock issued to
acquire Pacific Retail Trust - - 305,669 -
Cash dividends declared:
Common and preferred stock, $.46 per share - - - -
Net income for common stockholders - - - -
--------------- ------------- ------------- --------------
Balance at
June 30, 1999 $ 12,654,570 22,392,000 595,602 (25,000)
=============== ============= ============= ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statement of Stockholders' Equity
For the Six Months ended June 30, 1999
(unaudited)
(continued)
<TABLE>
<CAPTION>
Additional Distributions Total
Paid In in exess of Stock Stockholders'
Capital Net Income Loans Equity
--------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Balance at
December 31, 1998 $ 578,466,708 (19,395,744) (8,609,390) 550,741,463
Common stock issued as
compensation, purchased by
directors or officers, or issued
under stock options 1,156,250 - 626,906 1,784,536
Common stock issued for
partnership units exchanged 7,579,457 - - 7,583,366
Common stock issued for
class B conversion (4,755) - - 0
Preferred stock issued to
acquire Pacific Retail Trust - - - 35,046,570
Common stock issued to
acquire Pacific Retail Trust 715,434,215 - (3,998,954) 711,740,930
Cash dividends declared:
Common and preferred stock, $.46 per share - (41,470,029) - (41,470,029)
Net income for common stockholders - 38,685,546 - 38,685,546
--------------- ------------- ------------- --------------
Balance at
June 30, 1999 $ 1,302,631,875 (22,180,227) (11,981,438) 1,304,112,382
=============== ============= ============= ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 38,685,546 30,354,266
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 21,781,052 11,384,555
Deferred financing cost and debt premium amortization 125,466 46,002
Stock based compensation 1,264,038 1,306,757
Minority interest of exchangeable partnership units 1,338,511 891,824
Minority interest preferred unit distribution 3,250,002 -
Minority interest of limited partners 747,033 200,159
Equity in income of investments in real estate partnerships (2,136,203) (146,411)
Gain on sale of real estate investments - (10,746,097)
Changes in assets and liabilities:
Tenant receivables (9,255,288) (676,428)
Deferred leasing commissions (2,086,950) (554,373)
Other assets 1,791,661 (5,917,878)
Tenants' security deposits 70,943 442,565
Accounts payable and other liabilities 8,577,067 6,100,218
----------------- ------------------
Net cash provided by operating activities 64,152,878 32,685,159
----------------- ------------------
Cash flows from investing activities:
Acquisition and development of real estate (45,209,185) (120,592,104)
Acquisition of Pacific, net of cash acquired (9,046,230) -
Investment in real estate partnerships (10,104,935) (21,276,350)
Capital improvements (6,648,509) (2,842,069)
Construction in progress for sale, net of reimbursement (30,934,188) (1,013,407)
Proceeds from sale of real estate investments - 30,662,197
Distributions received from real estate partnership investments 704,474 21,123
----------------- ------------------
Net cash used in investing activities (101,238,573) (115,040,610)
----------------- ------------------
Cash flows from financing activities:
Net proceeds from common stock issuance 70,809 9,685,435
Proceeds from issuance of exchangeable partnership units - 7,667
Distributions to partnership unit holders (1,634,263) (897,817)
Net distributions to limited partners in consolidated partnerships (458,450) (157,292)
Distributions to preferred unit holders (3,250,002) -
Dividends paid to stockholders (40,570,029) (24,361,304)
Net proceeds from term notes 249,845,300 -
Net proceeds from issuance of Series A preferrerd units - 78,800,000
(Repayment) proceeds from acquisition and development
line of credit, net (145,351,875) 41,600,000
Proceeds from mortgage loans payable - 7,345,000
Repayment of mortgage loans payable (23,138,753) (32,903,271)
Deferred financing costs (3,565,034) (616,359)
----------------- ------------------
Net cash provided by financing activities 31,947,703 78,502,059
----------------- ------------------
Net decrease in cash and cash equivalents (5,137,992) (3,853,392)
Cash and cash equivalents at beginning of period 19,919,693 16,586,094
----------------- ------------------
Cash and cash equivalents at end of period $ 14,781,701 12,732,702
================= ==================
</TABLE>
<PAGE>
REGENCY REALTY CORPORATION
Consolidated Statements of Cash Flows
For the Six Months Ended June 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
$3,935,000 and $1,700,000 in 1999 and 1998 respectively) $ 21,346,560 12,414,983
================= ==================
Supplemental disclosure of non-cash transactions:
Mortgage loans assumed for the acquisition of Pacific and real estate $ 402,582,015 113,945,176
================= ==================
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 33,938,977
================= ==================
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
June 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 $153.8 and $144.9 million as of June
30, 1999 and 1998, respectively. Pro forma net income for common
stockholders would have been $44.3 and $40.5 million as of June 30, 1999
and 1998, respectively. Pro forma basic net income per share would have
been $.74 and $.68 as of June 30, 1999 and 1998, respectively. Pro forma
diluted net income per share would have been $.74 and $.67, as of June
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.
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 six month periods ended as of June 30, 1999
and 1998.
<PAGE>
<TABLE>
1999 1998
<CAPTION>
<S> <C> <C>
Revenues:
Retail segment $ 124,958,977 59,574,786
Service operations segment 6,013,830 5,988,181
Office buildings segment - 532,694
---------------- ----------------
Total revenues $ 130,972,807 66,095,661
================ ================
Funds from Operations:
Retail segment net operating income $ 95,965,547 45,384,373
Service operations segment income 6,013,830 5,988,181
Office buildings segment net operating income - 463,402
Adjustments to calculate consolidated FFO:
Interest expense (27,992,343) (13,455,183)
Interest income 1,121,003 966,383
Earnings from recurring land sales - 901,854
General and administrative and other expenses (9,305,893) (7,262,449)
Non-real estate depreciation (391,511) (285,147)
Minority interests of limited partners (747,033) (200,159)
Minority interests in depreciation
and amortization (359,452) (256,722)
Share of joint venture depreciation
and amortization 286,549 154,599
Dividends on preferred units (3,250,002) -
---------------- ----------------
Funds from Operations 61,340,695 32,399,132
---------------- ----------------
Reconciliation to net income:
Real estate related depreciation
and amortization (21,389,541) (11,099,408)
Minority interests in depreciation
and amortization 359,452 256,722
Share of joint venture depreciation
and amortization (286,549) (154,599)
Earnings from property sales - 9,844,243
Minority interests of exchangeable
partnership units (1,338,511) (891,824)
---------------- ----------------
Net income $ 38,685,546 30,354,266
================ ================
</TABLE>
Assets by reportable segment as of June 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 $ 2,377,477 1,170,478
Service operations segment 84,535 20,870
Office buildings segment - -
Cash and other assets 61,795 48,759
---------------- ----------------
Total assets $ 2,523,807 1,240,107
================ ================
4. Notes Payable and Acquisition and Development Line of Credit
The Company's outstanding debt at June 30, 1999 and December 31, 1998
consists of the following (in thousands):
1999 1998
---- ----
Notes Payable:
Fixed rate mortgage loans $ 392,469 298,148
Variable rate mortgage loans 23,862 11,051
Fixed rate unsecured loans 370,944 121,296
-------------- ---------------
Total notes payable 787,275 430,495
Acquisition and development line of credit 243,879 117,631
-------------- ---------------
Total $ 1,031,154 548,126
============== ===============
<PAGE>
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 June 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 $ 3,377 12,899 16,276
2000 5,711 98,590 104,301
2001 5,621 291,689 297,310
2002 4,943 44,120 49,063
2003 4,933 13,286 18,219
Beyond 5 Years 42,205 490,225 532,430
Net unamortized debt payments - 13,555 13,555
--------------- -------------- ---------------
Total $ 66,790 964,364 1,031,154
=============== ============== ===============
</TABLE>
Unconsolidated partnerships and joint ventures had mortgage loans payable
of $64.0 million at June 30, 1999, and the Company's proportionate share
of these loans was $28.1 million.
<PAGE>
5. Stockholders' Equity
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 June 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.
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 1999, the holders of all of Regency's Class B stock converted
2,500,000 shares into 2,975,468 shares of common stock.
<PAGE>
6. Earnings Per Share
The following summarizes the calculation of basic and diluted earnings
per share for the three month periods ended, June 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 58,987 24,945
=============== ===============
Net income for common stockholders $ 24,330 10,798
Less: dividends paid on Class B common stock (1,344)
(235)
--------------- ---------------
Net income for Basic EPS $ 24,095 9,454
=============== ===============
Basic EPS 0.41 0.38
=============== ===============
Diluted Earnings Per Share (EPS) Calculation:
Weighted average shares outstanding for Basic EPS 58,987 24,945
Exchangeable operating partnership units 2,142 1,294
Incremental shares to be issued under common stock options using
the Treasury Method 6 -
Contingent units or shares for the acquisition of real estate - 519
--------------- ---------------
Total diluted shares 61,135 26,758
=============== ===============
Net income for Basic EPS $ 24,095 9,454
Add: minority interest of exchangeable partnership units 760 297
--------------- ---------------
Net income for Diluted EPS $ 24,855 9,751
=============== ===============
Diluted $
EPS 0.41 0.36
=============== ===============
</TABLE>
The Preferred Series 1 and Series 2 stock and the Class B common stock
are not included in the above calculation because they are anti-dilutive.
<PAGE>
The following summarizes the calculation of basic and diluted earnings
per share for the six month periods ended, June 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 47,824 24,837
=============== ===============
Net income for common stockholders $ 37,786 30,354
Less: dividends paid on Class B common stock (1,410) (2,689)
--------------- ---------------
Net income for Basic EPS $ 36,376 27,665
=============== ===============
Basic $
EPS 0.76 1.11
=============== ===============
Diluted Earnings Per Share (EPS)Calculation:
Weighted average shares outstanding for Basic 47,824 24,837
EPS
Exchangeable operating partnership units 1,924 1,135
Incremental shares to be issued under common stock options using
the Treasury Method 3 -
Class B common stock - 2,975
Contingent units or shares for the acquisition of real estate - 428
--------------- --------------
Total diluted shares 49,751 29,375
=============== ===============
Net income for Basic EPS $ 36,376 27,665
Add: Class B dividends - 2,689
Add: minority interest of exchangeable partnership units 1,338 892
--------------- ---------------
Net income for Diluted EPS $ 37,714 31,246
=============== ===============
Diluted $
EPS 0.76 1.06
=============== ===============
</TABLE>
The Preferred Series 1 and Series 2 stock and the Class B common stock are not
included in the above calculation for 1999 because they are anti-dilutive.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On February 28, 1999, the Company issued 542,532 shares of its Series 1
Convertible Preferred Stock and 960,000 shares of its Series 2 Convertible
Preferred Stock as partial consideration for the Company's acquisition of
Pacific. The two classes of Preferred Stock are entitled to a preference in the
payment of dividends and both have a liquidation preference of $20.83 per share.
See Note 5 to the financial statements included elsewhere herein for additional
information concerning the terms of the Preferred Stock. No dividends may be
paid to holders of common stock in the event of any arrearages in the payment of
dividends on the Preferred Stock, and no liquidating distributions may be made
to holders of common stock until the holders of the Preferred Stock have
received an amount equal to their liquidation preferences.
Item 7. 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 214 properties
included in the Company's portfolio at June 30, 1999, 196 properties were owned
either fee simple or through partnerships interests by RCLP. At June 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:
<PAGE>
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Location # Properties GLA % Leased # Properties GLA % Leased
-------- ------------ --------- -------- ------------ ----------- --------
Florida 48 5,894,467 90.5% 46 5,728,347 91.4%
Texas 30 4,084,686 85.6% 5 479,900 84.7%
California 36 3,820,264 96.0% - - -
Georgia 27 2,718,554 93.1% 27 2,737,590 93.1%
Ohio 14 1,892,686 93.3% 13 1,786,521 93.4%
North Carolina 12 1,241,633 97.5% 12 1,239,783 98.3%
Colorado 9 865,031 95.8% 5 447,569 89.4%
Washington 8 851,485 93.7% - - -
Oregon 6 583,704 94.3% - - -
Alabama 5 516,060 99.5% 5 516,060 99.0%
Tennessee 4 388,357 96.8% 4 295,179 96.8%
Arizona 2 326,984 99.8% - - -
Delaware 1 232,752 96.1% 1 232,752 94.8%
Kentucky 1 205,060 92.3% 1 205,060 95.6%
Virginia 2 197,324 96.1% 2 197,324 97.7%
Mississippi 2 185,061 94.7% 2 185,061 97.6%
Illinois 1 178,600 85.9% 1 178,600 86.9%
Michigan 2 177,399 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 214 24,679,661 92.3% 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 June 30, 1999:
Grocery Anchor Number of % of % of Annualized
Stores Total GLA Base Rent
Kroger 49 11.7% 10.42%
Publix 35 6.2% 4.29%
Albertson's 14 3.1% 3.01%
Winn-Dixie 17 3.2% 2.29%
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.
<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.
Results from Operations
Comparison of the six months ended June 30, 1999 to 1998
Revenues increased $64.9 million or 98% to $131 million in 1999. The increase
was due primarily to Pacific and the 1998 Acquisitions providing increases in
revenues of $62.1 million during 1999. At June 30, 1999, the real estate
portfolio contained approximately 24.7 million SF and was 92.3% leased. Minimum
rent increased $50 million or 105%, and recoveries from tenants increased $13.7
million or 129%. On a same property basis (excluding Pacific, the 1998
Acquisitions, and the office portfolio sold during 1998) gross rental revenues
increased $4.7 million or 9.3%, 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 $6
million in both 1999 and 1998. During 1998, the Company sold four office
buildings and a parcel of land for $26.7 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 $27.2 million or 83% to $60.1 million in 1999.
Combined operating and maintenance, and real estate taxes increased $14.7
million or 103% during 1999 to $29 million. The increases are due to Pacific and
the 1998 Acquisitions generating operating and maintenance expenses and real
estate tax increases of $14.6 million during 1999. On a same property basis,
operating and maintenance expenses and real estate taxes increased $580,000 or
4.7%. General and administrative expenses increased 26% during 1999 to $8.8
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 $10.4 million during 1999 or 91% primarily due to Pacific
and the 1998 Acquisitions.
Interest expense increased to $28 million in 1999 from $13.5 million in 1998 or
108% 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.
Weighted average interest rates decreased .15% during 1999. See further
discussion under Acquisition and Development of Shopping Centers and Liquidity
and Capital Resources.
Net income for common stockholders was $37.8 million in 1999 vs. $30.4 million
in 1998, a $7.4 million or 24.5% increase for the reasons previously described.
Diluted earnings per share in 1999 was $.76 vs. $1.06 in 1998 due to the gain
offset by the dilutive impact from the increase in weighted average common
shares and equivalents of 20.4 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 June 30, 1999 to 1998
Revenues increased $44.4 million or 126% to $79.6 million in 1999. The increase
was due primarily to Pacific and the 1998 Acquisitions providing increases in
revenues of $41.4 million during 1999. At June 30, 1999, the real estate
portfolio contained approximately 24.7 million SF and was 92.3% leased. Minimum
rent increased $33.1 million or 130%, and recoveries from tenants increased $9.3
million or 159%. On a same property basis (excluding Pacific, the 1998
Acquisitions, and the office portfolio sold during 1998) gross rental revenues
increased $3.2 million or 13%, 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 $4.1
million in 1999 compared to $3.3 million in 1998, the increase is due primarily
to a increase in brokerage fees. During 1998, the Company sold four office
buildings and a parcel of land for $26.7 million, and recognized a gain on the
sale of $509,000 relating to the transaction in the second quarter of 1998,
after recording a gain of $10.2 million in the first quarter of 1998. 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.
<PAGE>
Operating expenses increased $18 million or 105% to $35.1 million in 1999.
Combined operating and maintenance, and real estate taxes increased $9.9 million
or 134% during 1999 to $17.2 million. The increases are due to Pacific and the
1998 Acquisitions generating operating and maintenance expenses and real estate
tax increases of $9.7 million during 1999. On a same property basis, operating
and maintenance expenses and real estate taxes increased $430,000 or 7.1%.
General and administrative expenses increased 46% during 1999 to $5.1 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 $6.4 million during 1999 or 109% primarily due to Pacific
and the 1998 Acquisitions.
Interest expense increased to $17.2 million in 1999 from $8 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.
Weighted average interest rates decreased .15% during 1999. See further
discussion under Acquisition and Development of Shopping Centers and Liquidity
and Capital Resources.
Net income for common stockholders was $24.3 million in 1999 vs. $10.8 million
in 1998, a $13.5 million or 125% increase for reasons previously described.
Diluted earnings per share in 1999 was $.41 vs. $.36 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.
FFO increased by 89% from 1998 to 1999 as a result of the activity discussed
above under "Results of Operations". FFO for the six months ended June 30, 1999
and 1998 are summarized in the following table (in thousands):
1999 1998
------------ ------------
Net income for common stockholders $ 37,786 30,354
Real estate depreciation and amortization 21,317 10,997
(Gain) on sale of operating property - (9,844)
Convertible preferred stock distribution 900 -
Minority interests in net income of
exchangeable partnership units 1,338 892
------------ ------------
Funds from operations $ 61,341 32,399
============ ============
Cash flow provided by (used in):
Operating activities $ 64,153 32,685
Investing activities (101,239) (115,041)
Financing activities 31,948 78,502
<PAGE>
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 $64.2 million and $32.7 million for the six months
ended June 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 $6.6 million and $2.8 million, during 1999 and
1998, respectively. The Company paid scheduled principal payments of $2.7
million and $1.6 during 1999 and 1998, respectively. The Company paid dividends
and distributions of $45.5 million and $25.3 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 $101.2 million and $115.0 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 $31.9 million and $78.5 million during 1999 and 1998,
respectively. At June 30, 1999, the Company had 45 retail properties under
construction or undergoing major renovations, with costs to date of $203
million. Total committed costs necessary to complete the properties under
development is estimated to be $174 million and will be expended through 1999
and 2000.
The Company's outstanding debt at June 30, 1999 and December 31, 1998 consists
of the following (in thousands):
1999 1998
-------------- ---------------
Notes Payable:
Fixed rate mortgage loans $ 392,469 298,148
Variable rate mortgage loans 23,862 11,051
Fixed rate unsecured loans 370,944 121,296
-------------- ---------------
Total notes payable 787,275 430,495
Acquisition and development line
of credit 243,879 117,631
-------------- ---------------
Total $ 1,031,154 548,126
============== ===============
The weighted average interest rate on total debt at June 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, Belair Capital Fund, LLC, 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.
<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 June 30, 1999, scheduled principal repayments on notes payable and the
Line for the next five years were as follows (in thousands):
<TABLE>
<CAPTION>
Scheduled
Principal Term Loan Total
Scheduled Payments by Year Payments Maturities Payments
<S> <C> <C> <C>
--------------- -------------- ---------------
1999 $ 3,377 12,899 16,276
2000 5,711 98,590 104,301
2001 5,621 291,689 297,310
2002 4,943 44,120 49,063
2003 4,933 13,286 18,219
Beyond 5 Years 42,205 490,225 532,430
Net unamortized debt payments - 13,555 13,555
--------------- -------------- ---------------
Total $ 66,790 964,364 1,031,154
=============== ============== ===============
</TABLE>
Unconsolidated partnerships and joint ventures had mortgage loans
payable of $64.0 million at June 30, 1999 and the Company's proportionate
share of these loans was $28.1 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.
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.
<PAGE>
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 includes 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
includes 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, and 70% of our 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 are in the process of being replaced. All such
replacements will be completed prior to September 30, 1999. It is expected that
the additional costs associated with these replacements will be less than
$100,000.
<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 and financial institutions and 98% of the utility companies
that provide service to our shopping centers. 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.
While the Company does not expect major business interruptions as a result of
the Year 2000 issue, we are currently developing a formal Year 2000 contingency
plan, which is expected to be in place by November 1999.
Item 7a. 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
June 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>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fair
1999 2000 2001 2002 2003 Thereafter Total Value
---- ---- ---- ---- ---- ---------- ----- -----
Fixed rate debt $3,317 104,170 42,660 49,063 18,218 532,430 749,858 763,413
Average interest rate for all debt 7.73% 7.81% 7.78% 7.70% 7.66% 7.81% - -
Variable rate LIBOR debt 12,959 132 254,650 - - - 267,741 267,741
Average interest rate for all debt 6.13% 6.13% - - - - - -
</TABLE>
As the table incorporates only those exposures that exist as of June 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 1. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 6 Exhibits and Reports on Form 8-K:
3 Articles of Incorporation
(a) Restated Articles of Incorporation of Regency Realty Corporation
as amended to date. (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.
10. Material Contracts
Purchase and sale agreement, dated September 25, 1998 between
James Center Associates, L.P. and Pacific Retail Trust (prior
to merger) relating to the acquisition of James Center
Shopping Center.
(a) Long-term Omnibus Plan, as last amended to date.
Reports on Form 8-K
None
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: August 10, 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 6/30/99
</LEGEND>
<CIK> 0000910606
<NAME> REGENCY REALTY CORPORATION
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 14,781,701
<SECURITIES> 0
<RECEIVABLES> 37,499,517
<ALLOWANCES> 7,843,316
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,541,834,449
<DEPRECIATION> 79,822,694
<TOTAL-ASSETS> 2,523,807,190
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 595,602
<OTHER-SE> 1,303,516,780
<TOTAL-LIABILITY-AND-EQUITY> 2,523,807,190
<SALES> 0
<TOTAL-REVENUES> 130,972,807
<CGS> 0
<TOTAL-COSTS> 28,993,430
<OTHER-EXPENSES> 21,781,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,992,343
<INCOME-PRETAX> 38,685,546
<INCOME-TAX> 0
<INCOME-CONTINUING> 38,685,546
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,785,546
<EPS-BASIC> 0.76
<EPS-DILUTED> 0.76
</TABLE>
ARTICLES OF MERGER
OF
REGENCY RETAIL CENTERS OF OHIO, INC.
WITH AND INTO
REGENCY REALTY CORPORATION
Pursuant to the provisions of Sections 607.1104 and 607.1105 of the Florida
Business Corporation Act (the "Florida Act"), the undersigned corporations enter
into these Articles of Merger by which Regency Retail Centers of Ohio, Inc., an
Ohio corporation shall be merged with and into Regency Realty Corporation, a
Florida corporation, and Regency Realty Corporation shall be the surviving
corporation, in accordance with an Agreement and Plan of Merger (the "Plan"),
adopted pursuant to Section 607.1104 of the Act and Section 1701.80 of the Ohio
General Corporation Law (the "Ohio Act"). The undersigned corporations hereby
certify as follows:
FIRST, a copy of the Plan is attached hereto and made a part hereof.
SECOND, the merger shall become effective at the close of business on
the date on which these Articles of Merger are filed with the Department of
State of Florida and a Certificate of Merger is filed with the Secretary of
State of Ohio.
THIRD, pursuant to Section 607.1104 of the Florida Act and Section
1701.80 of the Ohio Act, the Plan was adopted the Board of Directors of Regency
Realty Corporation, the sole shareholder of Regency Retail Centers of Ohio,
Inc., on December 15, 1998. Approval by shareholders of Regency Realty
Corporation was not required.
IN WITNESS WHEREOF, these Articles of Merger have been executed by
Regency Retail Centers of Ohio, Inc., as the merging corporation, and by Regency
Realty Corporation., as the surviving corporation, this 28th day of December,
1998.
WITNESSES REGENCY RETAIL CENTERS OF OHIO,
INC., an Ohio corporation
_________________________________ By:___________________________________
J. Christian Leavitt, Vice President
121 West Forsyth Street, Suite 200
_________________________________ Jacksonville, Florida 32202
<PAGE>
REGENCY REALTY CORPORATION., a
Florida corporation
_________________________________ By:___________________________________
J. Christian Leavitt, Vice President
121 West Forsyth Street, Suite 200
__________________________________ Jacksonville, Florida 32202
STATE OF FLORIDA
COUNTY OF DUVAL
The foregoing instrument was acknowledged before me this 28th day of
December, 1998, by J. Christian Leavitt, Vice President of Regency Retail
Centers of Ohio, Inc. Such person did take an oath and: (notary must
check applicable box)
is/are personally known to me.
produced a current Florida driver's license as identification.
produced _______________________________ as identification.
{Notary Seal must be affixed}shapeType1fFlipH0fFlipV0fillColor0fillBackColor
0fFilled1lineWidth635fLine0fShadow0fBehindDocument1
- ----------------------------------------------
Signature of Notary
- ----------------------------------------------
Name of Notary (Typed, Printed or Stamped)
Commission Number (if not legible on seal): __________________________
My Commission Expires (if not legible on seal): _______________________
<PAGE>
STATE OF FLORIDA
COUNTY OF DUVAL
The foregoing instrument was acknowledged before me this 28th day of
December, 1998, by J. Christian Leavitt, Vice President of Regency Realty
Corporation Such person did take an oath and: (notary must check
applicable box)
is/are personally known to me.
produced a current Florida driver's license as identification.
produced _______________________________ as identification.
{Notary Seal must be affixed}shapeType1fFlipH0fFlipV0fillColor0fillBackColor0f
Filled1lineWidth635fLine0fShadow0fBehindDocument1
- ----------------------------------------------
Signature of Notary
- ----------------------------------------------
Name of Notary (Typed, Printed or Stamped)
Commission Number (if not legible on seal): __________________________
My Commission Expires (if not legible on seal): _______________________
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
C:\WP51\REIT\CORP\AMENDMNT.598|8/13/98|JAXC14|KRP:krp
AMENDMENT NO. 1 TO
REGENCY REALTY CORPORATION
1993 LONG TERM OMNIBUS PLAN
WHEREAS, Regency Realty Corporation ("Regency") has entered into an
Agreement and Plan of Merger dated September 23, 1998 (as it may be amended, the
"Merger Agreement") with Pacific Retail Trust ("PRT"), pursuant to which PRT
will be merged into Regency, and
WHEREAS, pursuant to the Merger Agreement, Regency has agreed (a) to
provide PRT officers and employees and continuing non-employee directors who
hold PRT options and become Regency officers or employees or non-employee
directors with substitute options and (b) to grant substitute options in lieu of
severance compensation to three departing PRT executives even though they will
not be employed by Regency after the merger, and
WHEREAS, in order to satisfy its obligations under the Merger
Agreement, the Board of Directors hereby amends the 1993 Long Term Omnibus Plan
(the "Plan") as set forth herein pursuant to Section 13.1 of the Plan, and
WHEREAS, capitalized terms used and not defined herein have the
meanings assigned thereto in the Plan.
(1) Section 2.10 is hereby amended and restated in its entirety as
follows (added language is underscored):
2.10 Key Employee means any officer or other key
employee of the Company or of any Affiliate who is responsible
for or contributes to the management, growth, or profitability
of the business of the Company or any Affiliate as determined
by the Committee. For purposes of the grant of substitute
options pursuant to the Agreement and Plan of Merger dated
September 23, 1998 between the Company and Pacific Retail
Trust (as it may be amended, the "Merger Agreement"), each of
Dennis H. Alberts, Jane E. Mody and Joshua M. Brown shall be
deemed to be a Key Employee even though such person is not a
Key Employee of the Company or of any Affiliate Agreement.
(2) The introductory paragraph of Section 6.1 is hereby
amended and restated in its entirety as follows (added
language is underscored):
6.1 Grant of Option. The Committee is hereby
authorized to grant Options to Key Employee Participants as
set forth below and with such additional terms and conditions,
in either case not inconsistent with the provisions of the
Plan, as the Committee shall determine. Non-Employee Directors
shall not be eligible to be grant Options under this Article.
Notwithstanding the foregoing, Non-Employee Directors who
<PAGE>
004.132687.1
2
(a) were directors of Pacific Retail Trust immediately prior
to the effective time of the merger of Pacific Retail Trust
into the Company, (b) hold unexercised options under the
Pacific Retail Trust 1996 Share Incentive Plan, and (c) become
non-employee directors of the Company, shall be eligible to
receive substitute options pursuant to and on the terms set
forth in the Merger Agreement.
(3) Section 4.1 is hereby amended and restated in its entirety as
follows (added language is underscored):
4.1 Number of Shares Available. The maximum number of
Shares which may be issued under the Plan and as to which
Awards may be granted is 6 percent of the Shares issued and
outstanding on the Registration Date, plus 6 percent of any
Shares issued pursuant to the exercise by the underwriters of
an over-allotment option described in the Registration
Statement, increased on December 31 of each year by the sum of
(i) 6 percent of any increase in the number of Shares
outstanding for such year as a result of any subsequent public
offering of Shares, and (ii) 2 percent of the number of Shares
outstanding on such December 31 prior to the application of
this formula. In no event, however, except as subject to
adjustment as provided hereunder, shall more than the lesser
of (i) 12 percent of all Shares outstanding on December 31 of
the immediately preceding year, or (ii) 3 million Shares be
cumulatively available for issuance under the Plan. In
addition to the number of Shares available under the Plan
pursuant to the foregoing, there may be issued under the Plan
an additional 2,520,000 Shares (the number of shares
originally authorized under Pacific Retail Trust's long-term
incentive plan multiplied by 0.48). Shares available for
Awards which are not awarded in one particular year may be
awarded in subsequent years. Any and all Shares may be issued
in respect of any of the types of Awards. The Shares to be
offered under the Plan may be authorized and unissued Shares
or treasury Shares. The number of Shares covered by an Award
under the Plan, or to which such Award relates, shall be
counted on the date of grant of such Award against the number
of Shares available for granting Awards under the Plan.
(4) In the event that the Merger Agreement shall be terminated
prior to any merger, or in the event that this Amendment No. 1
shall not be approved by shareholders of the Company within
one year after the date of adoption hereof, this Amendment No.
1 shall be null and void. This Amendment No. 1 shall take
effect simultaneously with the effectiveness of the merger
contemplated by the Merger Agreement.
AGREEMENT OF PURCHASE AND SALE
James Center, Tacoma Washington
ARTICLE 1: PROPERTY/PURCHASE PRICE
1.1 Certain Basic Terms.
(a) Seller and Notice Address:
JS - JAMES CENTER ASSOCIATES, L.P., a ___________________.
Attn: Theodore M. Johnson, Jr.
1019 Pacific Avenue, Suite 1119
Tacoma, Washington 98402
Telephone: 253/272-4499
Facsimile: 253/272-6226
With a copy to:Gordon, Thomas, Honeywell, Malanca, Peterson & Daheim, P.L.L.C.
Attn: Dale L. Carlisle
1201 Pacific Avenue, Suite 2200
Tacoma, Washington 98401
Telephone: 253/620-6401
Facsimile: 253/620-6565
(b) Purchaser and Notice Address:
PACIFIC RETAIL TRUST, a Maryland real estate investment trust
Attn: Craig Ramey
Five Centerpointe Drive, Suite 100
Lake Oswego, Oregon 97035
Telephone: 503/624-6503
Facsimile: 503/624-9132
With a copy to: Pacific Retail Trust
Attn: Morgan L. Scott
8140 Walnut Hill Lane, Suite 400
Dallas, Texas 75231
Telephone: 214/696-9500
Facsimile: 214/750-9033
With a copy to: Mayer, Brown & Platt
Attn: Linda H. Earle, Esq.
700 Louisiana, Suite 3600
Houston, Texas 77002
Telephone: 713/547-9678
Facsimile: 713/224-6410
(c) Date of this Agreement: The later date of execution by Seller and
Purchaser, as indicated on the signature page.
(d) Purchase Price: Twelve Million Five Hundred Thousand and No/100
Dollars ($12,500,000.00).
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(e) Earnest Money: Two Hundred Thousand and No/100 Dollars ($200,000.00), plus
interest thereon.
(f) Due Diligence Period: The period ending sixty (60) days after
September 25, 1998.
(g) Closing Date: As designated by Purchaser upon not less than 5 days'
prior notice to Seller, but except as set forth herein,
no later than thirty (30) days after the Due Diligence
Period. However, in no event shall the Closing Date
occur prior to January 4, 1999 or after January 14, 1999.
(h) Title Company: Chicago Title Insurance Company
700 South Flower Street, Suite 920
Los Angeles, California 90017
Attn: Frank Jansen
Telephone: 213/488-4300
Facsimile: 213/891-0834
(i) Escrow Agent: Chicago Title Insurance Company
2601 South 35th Street, Suite 100
Tacoma, Washington 98409
Attn: Bruce Judson
Telephone: 253/474-2377 Ext. 617
Facsimile: 253/475-4351
(j) Brokers: Pacific NW Partners, LLC and Northwest Retail Partners, LTD.
1.2 Property. Subject to the terms and conditions of this Purchase and
Sale Agreement (this "Agreement"), Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase from Seller, the following property (collectively,
the "Property"):
(a) The "Real Property," being the land described in Exhibit A attached
hereto, together with the following: all improvements and fixtures (other than
trade fixtures owned by tenants pursuant to the Leases, a term which is defined
below) located thereon, including but not limited to the retail building or
buildings located on such land, commonly known as "James Center" (the
"Improvements"); all and singular the rights, benefits, privileges, easements,
tenements, hereditaments, and appurtenances thereon or in anywise appertaining
to such real property; and all right, title, and interest of Seller in and to
all strips and gores and any land lying in the bed of any street, road or alley,
open or proposed, adjoining such real property.
(b) The landlord's interest in the "Leases," being all leases of space
in the Improvements (including leases which may be made by Seller after the date
hereof and before Closing as permitted by this Agreement), and any and all
amendments and supplements thereto, and any and all guarantees and security
received by landlord in connection therewith.
(c) The "Personal Property," being all right, title and interest of
Seller in and to all tangible personal property now or hereafter used in
connection with the operation, ownership, maintenance, management, or occupancy
of the Real Property, including, without limitation, all equipment, machinery,
heating, ventilating and air conditioning units, furniture, art work,
furnishings, trade fixtures, office equipment and supplies, and, whether stored
on or off-site, all tools and maintenance equipment, supplies, and construction
and finish materials not incorporated in the Improvements and held for repairs
and replacements.
(d) The "Intangible Property," being all right, title and interest of
Seller in and to all intangible personal property now or hereafter used in
connection with the operation, ownership, maintenance, management, or occupancy
of the Real Property, including, without limitation, any and all of the
following: trade names and trade marks associated
30177448.6 40899 1702C 98484215
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with the Real Property, including, without limitation the name of the Real
Property; the plans and specifications for the Improvements, including as-built
plans; unexpired warranties, guarantees, indemnities and claims against third
parties; contract rights related to the construction, operation, repair,
renovation, ownership or management of the Real Property that are expressly
assumed by Purchaser pursuant to this Agreement; pending permit or approval
applications, permits, approvals and licenses (to the extent assignable);
insurance proceeds and condemnation awards to the extent provided in Paragraphs
4.2 or 4.3; and books and records relating to the Property.
1.3 Earnest Money. Within three (3) business days after the Date of
this Agreement, Purchaser shall deposit the Earnest Money with the Escrow Agent.
The Escrow Agent shall pay the Earnest Money to Seller pursuant to the terms of
Paragraph 10.3 or at and upon Closing, or otherwise, to the party entitled to
receive the Earnest Money in accordance with this Agreement. The Earnest Money
shall be held and disbursed by the Escrow Agent pursuant to Article 10 of this
Agreement. In the event Purchaser does not elect to terminate this Agreement
prior to the expiration of the Due Diligence Period, the Earnest Money is to be
delivered by Escrow Agent to Seller upon Purchaser's receipt of the SEPA
Approval (as described in Paragraph 2.8) for the Property, and the Earnest Money
shall not be returned to Purchaser unless this transaction fails to close as a
result of an adverse condition as described in Paragraph 2.5 or Seller's failure
to provide the Tenant Estoppels and required updates as described in Paragraph
2.3. For purposes of this paragraph, it is understood and agreed that the SEPA
Approval must be without conditions or restrictions that are unacceptable to
Purchaser, as determined by Purchaser in its sole discretion, and that all
appeal periods with respect to the SEPA Approval shall have expired without any
appeal having been filed, or, if filed, such appeal shall have been resolved to
the satisaction of the Purchaser.
1.4 Fred Meyer Approvals. It is understood and agreed that Purchaser
will have to obtain certain approvals and waivers from Fred Meyer in order to
proceed with Purchaser's planned redevelopment of the Property. Purchaser and
Seller shall cooperate and work together in an effort to reduce or eliminate the
fee to be paid to Fred Meyer for such approvals and waivers. However, in the
event Buyer, in its sole and absolute discretion, determines that a fee must be
paid to Fred Meyer or the rental rate under the Fred Meyer lease must be reduced
to insure the receipt of the necessary approvals and waivers, Purchaser shall
receive a credit against the Purchase Price in an amount equal to (i) fifty
percent (50%) of such fee, up to a maximum credit of One Hundred Thousand and
No/100 Dollars ($100,000.00) or (ii) the aggregate rental reduction to Fred
Meyer for a full lease year divided by ten percent (10%), up to a maximum credit
of One Hundred Thousand and No/100 Dollars ($100,000.00) provided the rental
reduction is approved by the Lender (as hereafter defined). Purchaser shall
deliver to Seller and Escrow Agent written verification of the amount of the fee
paid or to be paid to Fred Meyer or the rental reduction to Fred Meyer prior to
the Closing.
ARTICLE 2: INSPECTION
2.1 Seller's Delivery of Specified Documents. Within 5 business days
after the Date of this Agreement, Seller shall provide to Purchaser or make
available to Purchaser copies of each and every item set forth on Exhibit B to
this Agreement (the "Property Information"). The terms "Rent Roll," "Operating
Statements," "Commission Schedule," and "Service Contracts," used herein are
defined in Exhibit B. Upon delivery of, or making available to Purchaser, the
last item of Property Information, Seller shall deliver to Purchaser a written
notice (the "Property Information Notice") certifying that this obligation has
been satisfied together with an itemization of the matters delivered or made
available to Purchaser. If any such item is not in Seller's possession or
control, Seller shall provide to Purchaser a written acknowledgment to that
effect. The term "Commencement Date" shall mean the date, not earlier than the
Date of this Agreement, upon which the Property Information Notice is received
by Purchaser, or, if Seller does not send a Property Information Notice, then
the date Purchaser reasonably determines that it has received all of the
Property Information. Seller shall have the continuing obligation during the
pendency of this Agreement to provide Purchaser with any document described
above and coming
30177448.6 40899 1702C 98484215
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into Seller's possession or produced by Seller after the initial delivery of the
Property Information.
2.2 Due Diligence. Purchaser shall have through the last day of the Due
Diligence Period in which to examine, inspect, and investigate the Property and,
in Purchaser's sole and absolute judgment and discretion, to determine whether
the Property is satisfactory to Purchaser and to obtain appropriate internal
approval to proceed with this transaction. Purchaser may terminate this
Agreement pursuant to this Paragraph 2.2 by giving notice of termination to
Seller on or before the last day of the Due Diligence Period. This Agreement
shall continue in full force and effect if Purchaser does not give the notice of
termination. Upon such termination, the Earnest Money shall be refunded to
Purchaser immediately upon request, and all further rights and obligations of
the parties under this Agreement shall terminate, except any obligation which by
its terms survives any termination of this Agreement.
Purchaser and its agents, employees and representatives shall have
reasonable access to the Property and all books and records for the Property
that are in Seller's possession or control for the purpose of conducting
analyses, surveys, architectural, engineering, geotechnical and environmental
inspections and tests (including intrusive inspection and sampling), and any
other inspections, studies, or tests reasonably required by Purchaser. Prior to
Closing, Purchaser agrees that all information obtained during the Due Diligence
Period shall be kept in confidence and shall not be disclosed to unrelated third
parties other than to its investors, officers, employees, affiliates, attorneys,
accountants, or agents or as otherwise required by law or for any valid business
purpose of Purchase. During the pendency of this Agreement, Purchaser and its
agents, employees, and representatives shall have a continuing right of
reasonable access to the Property and any office where the records of the
Property are kept for the purpose of examining and making copies of all books
and records and other materials relating to the Property in Seller's or its
property manager's possession. Purchaser shall have the right to conduct a
"walk-through" of the Property before Closing upon appropriate notice to tenants
as permitted under the Leases. In the course of its investigations, Purchaser
may make inquiries to third parties, including, without limitation, tenants,
lenders, contractors, property managers, parties to Service Contracts and
municipal, local and other government officials and representatives, and Seller
consents to such inquiries. In the event of termination hereunder, and at the
request of Seller, Purchaser shall promptly deliver to Seller, without
representation or warranty, complete copies of any non-proprietary written
reports or documents relating to the Property prepared by a third party for
Purchaser during the Due Diligence Period, including engineering reports,
environmental reports, surveys, roof reports and prospective tenant letters of
intent and related correspondence, but it is understood and agreed that
Purchaser shall have no obligation to provide Seller with copies of any
information or reports prepared by Purchaser or financial summaries prepared by
a third party for Purchaser with respect to the Property. Purchaser shall keep
the Property free and clear of any liens and will indemnify, defend, and hold
Seller harmless from all liens or any claims asserted by third parties against
Seller to recover for personal injury or property damage as a result of
Purchaser's entry onto the Property. If any inspection or test disturbs the
Property, Purchaser will restore the Property to its condition before any such
inspection or test. Purchaser's obligations under the preceding two sentences
shall survive Closing or any termination of this Agreement.
Notwithstanding anything to the contrary contained herein, it is
understood and agreed that Purchaser shall notify Seller of any objections to
environmental matters, the physical condition of the Property or Leases (subject
to receipt and approval of Tenant Estoppels) within the first thirty (30) days
of the Due Diligence Period. Prior to the expiration of the Due Diligence
Period, Seller shall notify Purchaser of those objections, if any, which Seller
has attempted to cure.
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2.3 Tenant Estoppels. Seller shall endeavor to secure and shall deliver
to Purchaser, as and when received, but in any event by at least 3 business days
before the expiration of the Due Diligence Period, estoppel certificates
(including such additions or modifications thereto as Purchaser may request
based on its review of the Leases) from tenants under all Leases in the form of
Exhibit C attached hereto or such other form as may be approved by Purchaser in
its sole discretion (the "Tenant Estoppels"). Seller shall provide Purchaser
with copies of the Tenant Estoppels for Purchaser's review and comment before
delivering the Tenant Estoppels to tenants. Purchaser's obligation to close this
transaction is subject to the condition that (a) at least 3 business days prior
to the expiration of the Due Diligence Period, Purchaser shall have received
from Fred Meyer, Kinkos, Ivars, U.S. Bank and 80% of the balance of the tenants
in the Property, Tenant Estoppels in the form of Exhibit C and consistent with
the rent roll delivered as part of the Property Information (the "Rent Roll")
and the representations of Seller in Paragraph 7.1; (b) as of the Closing Date,
the Leases shall be in full force and effect and no material default or claim by
landlord or tenant shall exist or have arisen under any Leases that was not
specifically disclosed in the Rent Roll included in the initial delivery of the
Property Information; (c) as of the Closing Date, no tenant shall have initiated
or had initiated against it any insolvency, bankruptcy, receivership or other
similar proceeding; and (d) at least 5 days before the Closing Date, Purchaser
shall have received updated Tenant Estoppels from the tenants specified above
which are dated no earlier than 30 days prior to the Closing Date. Except for a
current date, the updated Tenant Estoppels shall not contain any additions or
deletions to the Tenant Estoppels delivered prior to the expiration of the Due
Diligence Period other than changes which are acceptable to Purchaser in its
sole discretion. If the required Tenant Estoppels are not delivered to
Purchaser, or if any Tenant Estoppel either does not meet the foregoing
requirements or discloses any facts objectionable to Purchaser in its reasonable
opinion, Purchaser may elect to either: (i) terminate this Agreement by
delivering written notice to Seller on or before Closing (in which event the
Earnest Money shall be promptly returned to Purchaser); or (b) waive the
satisfaction of this condition (and failure to provide such written notice of
termination shall be deemed a waiver) and proceed with Closing.
2.4 Service Contracts. During the Due Diligence Period, Purchaser shall
notify Seller as to which Service Contracts Purchaser will assume and which
Service Contracts will be terminated by Seller at Closing. Purchaser will assume
the obligations arising from and after the Closing Date under those Service
Contracts that are not in default as of the Closing Date and which Purchaser has
elected to assume. Seller shall terminate at Closing all Service Contracts that
are not so assumed. At Purchaser's option, Seller shall terminate or assign to
Purchaser at Closing, any property management agreement affecting the Property.
2.5 Adverse Conditions. As a condition to Purchaser's obligation to
close, there shall be no material change in any condition of or affecting the
Property not caused by Purchaser or its contractors, employees, affiliates or
other related or similar parties that has occurred after the first thirty (30)
days of the Due Diligence Period including without limitation (i) any additions
or modifications to the Title Commitment (as hereafter defined) or Survey (as
hereafter defined) which are not acceptable to Purchaser and are not removed or
modified prior to Closing in accordance with Paragraph 3.2, (ii) any dumping or
discovery of refuse or environmental contamination (excluding any information
disclosed in the environmental report prepared for Buyer during the Due
Diligence Period), or (iii) any default by Seller under this Agreement which is
not cured by Seller to Purchaser's satisfaction within ten (10) days of receipt
of written notice specifying such defaults.
2.6 Transition Information. No later than 5 days prior to the Closing
or on such other date as may be specified in this Paragraph 2.6, Seller will
provide Purchaser with the following information: (i) a tenant contact list that
includes the legal notification address, telephone number and emergency contact
(including individual
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and telephone numbers) for each tenant: (ii) an aged accounts receivable list
for the Property to be generated and delivered to Purchaser on the day preceding
the Closing Date; (iii) a list of all vendors for the Property, including
contacts, addresses and telephone numbers; (iv) a list of all utility providers
and account numbers for the Property; and (v) copies of invoices forwarded to
tenants for the month preceding Closing, and, if then prepared, for the month of
Closing.
2.7 Loan Assumption. The Property is subject to a mortgage lien in
favor of Aegon USA Realty Advisers, Inc. ("Lender"), securing a loan in the
original principal amount of $6,450,000.00 (the "Loan"). The Property is also
subject to a mortgage lien in favor of Seafirst which will be released by Seller
on or before Closing. The Property is to be conveyed without release of, and
Purchaser shall assume, the lien of the existing mortgage and related security
instruments and documents, as so amended and modified (collectively, the
"Existing Mortgage") in favor of Lender, which secures payment of the Loan:
(a) Conditions to Assumption. It shall be a condition precedent to the
obligation of Purchaser to close the transactions contemplated hereby that as of
the Closing: (1) any required consent of Lender to the conveyance of the
Property subject to the Existing Mortgage and the assumption of the Existing
Mortgage by Purchaser shall have been obtained from Lender; (2) such consent of
Lender shall have been granted upon terms and conditions which are satisfactory
to Purchaser in its sole discretion and Seller and which do not obligate
Purchaser to assume any personal liability for any of the undertakings under the
Existing Mortgage, other than exceptions to non-recourse provisions in the
Existing Mortgage that relate to events, acts or omissions first arising from
and after the Closing Date; (3) Lender shall have executed and delivered, and
performed its obligations under, agreements pursuant to which Purchaser shall
assume the borrower's obligations with respect to the Loan under the Existing
Mortgage from and after Closing, which agreements shall be satisfactory to
Purchaser in its sole discretion; (4) as of the Closing there shall not exist
any uncured default under the Existing Mortgage, and Purchaser shall have
obtained from Lender an acknowledgment that it is not aware of any such uncured
default under the Existing Mortgage; and (5) as of the Closing Date the
principal balance of the Loan shall not exceed $6,000,000.00.
(b) Assumption Costs. All transfer or other fees charged by Lender and
any costs and expenses charged by Lender in connection with the transfer of the
Property, recording costs and expenses relating to the recordation of any
mortgage assignment agreement or other documentation relating to the transfer of
the Property, attorneys' fees incurred by Lender, any title insurance premiums
or costs for endorsements required by Lender, and any other costs and expenses
relating to the transfer of the Loan ("Assumption Costs") up to, but not
exceeding, Fifty Thousand and No/100 Dollars ($50,000.00) shall be paid by
Purchaser. All Assumption Costs in excess of $50,000.00 shall be paid by Seller.
(c) Cooperation. The parties shall cooperate in good faith and with
reasonable diligence to secure the approval of the Lender to the conveyance of
the Property to Purchaser. Purchaser shall have the right to negotiate directly
with Lender concerning Lender's consent. Purchaser shall promptly provide to
Lender all information it may reasonably require in order to obtain Lender's
consent. If the conditions set forth in this Paragraph 2.7 have not been
satisfied as of Closing, then Purchaser shall elect, by delivering written
notice to Seller on or before the Closing Date, (i) to terminate this Agreement,
in which event the Earnest Money shall promptly be refunded to Purchaser; or
(ii) to proceed with the Closing, but only if any required consent of Lender to
the assumption of the Existing Mortgage by Purchaser has been obtained. Seller
shall not be obligated to pay off the Loan at Closing.
(d) Adjustment of Purchase Price. At Closing, Purchaser shall receive a
credit against the Purchase Price in the amount of the principal balance of the
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Loan, all accrued and unpaid interest and other sums, if any, then due and
payable pursuant to the Existing Mortgage.
2.8 SEPA Approval. Within forty-five (45) days from the Date of this
Agreement, Purchaser shall submit to the City of Tacoma the SEPA Checklist and
related information necessary to receive environmental approval of the Property
("SEPA Approval"). It shall be a condition to Purchaser's obligation to close
that the SEPA Approval must be received without conditions or restrictions that
are unacceptable to Purchaser, as determined by Purchaser in its sole
discretion, and that all appeal periods with respect to the SEPA Approvals shall
have expired without any appeal having been filed or, if filed, such appeal
shall have been resolved to the satisfaction of Purchaser. In the event the
required SEPA Approval has not been received on or before five (5) days prior to
the Closing Date, Purchaser may elect to (i) terminate this Agreement and
receive a refund of the Earnest Money, (ii) waive the requirement and proceed
with the Closing or (iii) extend the Closing Date for up to thirty (30) days in
an attempt to obtain the SEPA Approval. In the event Purchaser elects to extend
the Closing Date, Purchaser shall notify Seller and Escrow Agent of the
extension at least three (3) days prior to the Closing Date.
ARTICLE 3: TITLE AND SURVEY REVIEW
3.1 Delivery of Title Commitment and Survey. Seller shall cause to be
prepared and delivered to Purchaser within ten (10) business days after the Date
of this Agreement: (a) a current, effective commitment for title insurance (the
"Title Commitment") issued by the Title Company, in the amount of the Purchase
Price with Purchaser as the proposed insured, and accompanied by true, complete,
and legible copies of all documents referred to in the Title Commitment; (b) a
copy of the survey of the Property that was prepared for Lender in connection
with the Loan (the "Existing Survey"); and (c) copies of Uniform Commercial Code
searches in the name of Seller and the Property issued by the Title Company or a
search company acceptable to Purchaser ("UCC Searches").
3.2 Title Review and Cure. During the first thirty (30) days of the Due
Diligence Period, Purchaser shall review title to the Property as disclosed by
the Title Commitment, the Existing Survey and UCC Searches. Within such thirty
(30) day period, Purchaser shall advise Seller, the Title Company and the
surveyor in writing of any matters set forth on those documents to which
Purchaser objects. In the event the Title Commitment, copies of the title
exceptions, the Existing Survey and UCC Searches are not delivered to Purchaser
within ten (10) business days after the Date of this Agreement, the thirty (30)
day period in which Purchaser must object to such matters shall automatically be
extended by the number of days that Seller is delinquent in providing the
specified materials. Seller will reasonably cooperate with Purchaser in curing
Purchaser's objections, but Seller shall not be obligated to cure any such
objections except liens and security interests created by, through or under
Seller (including, without limitation,
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those disclosed by the UCC Searches), all of which liens and security interests
Seller shall cause to be released at Closing. Seller also agrees to remove or
cause to be removed any exceptions or encumbrances to title which arise after
the date of this Agreement. Prior to the expiration of the Due Diligence Period,
the parties shall memorialize in writing those objections which Seller is
obligated to cure as aforesaid, or has elected to cure at Closing, and together
with the Title Company cause a revised Title Commitment to be issued. The term
"Permitted Exceptions" means all those exceptions shown on the Title Commitment,
the Existing Survey and UCC Searches as of the expiration of the first thirty
(30) days of the Due Diligence Period other than those objections that Seller
has elected to cure in writing prior to the expiration of the Due Diligence
Period.
If after the expiration of the first thirty (30) days of the Due
Diligence Period the Title Company revises the Title Commitment to add or modify
exceptions or to add or modify the conditions to obtaining any endorsement
requested by Purchaser during the first thirty (30) days of the Due Diligence
Period, then Purchaser may terminate this Agreement and receive a refund of the
Earnest Money if provision for their removal or modification satisfactory to
Purchaser is not made. Purchaser shall have been deemed to have approved any
title exception that Seller is not obligated to remove and to which either
Purchaser did not object as provided above, or to which Purchaser did object,
but with respect to which Purchaser did not terminate this Agreement.
On or before November 11, 1998, Seller shall cause to be prepared and
delivered to Purchaser a current ALTA/ACSM Urban survey of the Property (the
"Survey") including a certification addressed to Purchaser, in the form attached
hereto as Exhibit D. Within ten (10) days after Purchaser's receipt of the
Survey, Purchaser shall advise Seller, the Title Company and the surveyor in
writing of any matters set forth on the Survey (which were not set forth on the
Existing Survey) to which Purchaser objects. Seller will reasonably cooperate
with Purchaser in curing Purchaser's objections, but Seller shall not be
obligated to cure any such objections except for items that have been created
by, through or under Seller. No later than five (5) days prior to the expiration
of the Due Diligence Period, Seller shall notify Purchaser of those objections
to the Survey that Seller is obligated or has agreed to cure prior to Closing.
If Seller fails to cure the objections specified in such notice in a manner
acceptable to Purchaser, in its sole discretion, on or before the Closing Date,
Purchaser may elect to (i) terminate this Agreement and receive a refund of the
Earnest Money or (ii) waive the Survey objections and proceed with the Closing.
3.3 Delivery of Title Policy at Closing. As a condition to
Purchaser's obligation to close, the Escrow Agent shall deliver to
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Purchaser at Closing an ALTA Owner's Policy (Revised 10-17-70 and 10-17-84) (or
other form if required by state law) of title insurance, with extended coverage
(i.e., with ALTA General Exceptions 1 through 5 deleted, or with corresponding
deletions if the Property is located in a non-ALTA state), issued by the Title
Company as of the date and time of the recording of the Deed, in the amount of
the Purchase Price, containing the Purchaser's Endorsements, insuring Purchaser
as owner of good, marketable and indefeasible fee simple title to the Property,
and subject only to the Permitted Exceptions (the "Title Policy"). "Purchaser's
Endorsements" shall mean, to the extent such endorsements are available under
the laws of the state in which the Property is located: (a) owner's
comprehensive; (b) access; (c) survey (accuracy of survey); (d) location (survey
legal matches title legal); (e) separate tax lot; (f) legal lot; (g) zoning 3.1,
with parking and loading docks; and (h) such other endorsements as Purchaser may
require during the Due Diligence Period based on its review of the Title
Commitment and Survey. Seller shall execute at Closing an ALTA Statement
(Owner's Affidavit) and any other documents or agreements required by the Title
Company to issue the Title Policy in accordance with the provisions of this
Agreement.
3.4 Title and Survey Costs. Seller shall pay for the cost of the
Survey, including any revisions necessary to make the Survey conform to the
requirements of this Agreement, the ALTA portion of the premium for the Title
Policy and the cost of the UCC Searches. Purchaser shall pay the premium for
upgrading the Title Policy to meet the requirements herein set forth, including
the cost of Purchaser's Endorsements.
ARTICLE 4: OPERATIONS AND RISK OF LOSS
4.1 Ongoing Operations. During the pendency of this Agreement, Seller
covenants and agrees as follows:
(a) Preservation of Business. Seller shall cause the Property to be
operated only in the ordinary and usual course of business and consistent with
past practice, shall preserve intact the Property, preserve the good will and
advantageous relationships of Seller with tenants, customers, suppliers,
independent contrac tors, employees and other persons or entities material to
the operation of its business, shall perform its obligations under Leases and
other agreements affecting the Property and shall not take any action or
omission which would cause any of the representations or warranties of Seller
contained herein to become inaccurate or any of the covenants of Seller to be
breached.
(b) Maintenance of Insurance. Seller shall continue to carry its
existing insurance through the Closing Date, and shall not terminate or cancel
such insurance policies.
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(c) New Contracts. Without Purchaser's prior written consent in each
instance, Seller will not amend, terminate, grant concessions regarding, or
enter into any contract or agreement that will be an obligation affecting the
Property or binding on Purchaser after Closing.
(d) Listings and Other Offers. Seller will not list the Property with
any broker or otherwise solicit or make or accept any offers to sell the
Property, engage in any discussions or negotiations with any third party with
respect to the sale or other disposition of the Property, or enter into any
contracts or agreements (whether binding or not) regarding any disposition of
the Property.
(e) Leasing Arrangements. Seller will not amend, terminate, grant
concessions regarding, or enter into any Lease without Purchaser's prior written
consent in each instance.
(f) Removal and Replacement of Tangible Personal Property. Seller will
not remove any Tangible Personal Property unless it is replaced with a
comparable item of equal quality and quantity as existed as of the time of such
removal.
(g) Maintenance of Permits. Seller shall maintain in existence all
licenses, permits and approvals, if any, in its name necessary or reasonably
appropriate to the ownership, operation or improvement of the Property.
4.2 Damage. Seller shall promptly give Purchaser written notice of any
damage to the Property, describing such damage, whether such damage is covered
by insurance and the estimated cost of repairing such damage. If such damage is
not material, then: (a) Seller shall, to the extent possible, begin repairs
prior to Closing out of any insurance proceeds received by Seller for the
damage; (b) Purchaser shall receive all insurance proceeds not applied to the
repair of any such Property prior to Closing (including rent loss insurance
applicable to any period from and after the Closing Date) due to Seller for the
damage; (c) any uninsured damage or deductible (including rent abatement not
covered by rent loss insurance) shall be credited to Purchaser at Closing; and
(d) Purchaser shall assume the responsibility for the repair after Closing. If
such damage is material, then by notice to Seller given within 14 days after
Purchaser is notified of such damage (and Closing shall be extended, if
necessary, to give Purchaser such 14 day period to respond to such notice),
Purchaser may elect to either: (i) proceed in the same manner as in the case of
damage that is not material; or (ii) terminate this Agreement, in which event
the Earnest Money shall be immediately returned to Purchaser. Damage as to any
one or multiple occurrences is material if the cost to repair the damage, plus
the cost of rent abatement after Closing resulting from the damage, exceeds
$500,000
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or entitles any Major Tenant or 2 or more other tenants occupying at least 5% of
the rentable area of the Property to terminate its/their Lease(s).
4.3 Condemnation. By notice to Seller given within 14 days after
Purchaser receives notice of proceedings in eminent domain that are
contemplated, threatened or instituted by any body having the power of eminent
domain with respect to the Property (and if necessary the Closing Date shall be
extended to give Purchaser the full 14 day period to make such election),
Purchaser may either: (a) terminate this Agreement, whereupon the Earnest Money
shall be returned to Purchaser; or (b) proceed under this Agreement, in which
event Seller shall, at Closing, assign to Purchaser its entire right, title and
interest in and to any condemnation award. Purchaser shall have the right during
the pendency of this Agreement to participate in negotiations and other dealings
with the condemning authority in respect of such matter.
ARTICLE 5: CLOSING
5.1 Closing and Escrow. The consummation of the transaction
contemplated herein ("Closing") shall occur on the Closing Date through an
escrow with the Escrow Agent at the offices of the Escrow Agent. Funds shall be
deposited into and held by Escrow Agent in a closing escrow account with a bank
satisfactory to Purchaser and Seller. Upon satisfaction or completion of all
closing conditions and deliveries, the parties shall direct the Escrow Agent to
immediately record and deliver the closing documents to the appropriate parties
and make disbursements according to the closing statements executed by Seller
and Purchaser. The Escrow Agent shall agree in writing with Seller and Purchaser
that: (a) recordation of the Deed constitutes its representation that it is
holding the closing documents, closing funds and closing statement and is
prepared and irrevocably committed to disburse the closing funds in accordance
with the closing statements; and (b) release of funds to Seller shall
irrevocably commit it to issue the Title Policy in accordance with this
Agreement. Provided such supplemental escrow instructions are not in conflict
with this Agreement as it may be amended in writing from time to time, Seller
and Purchaser agree to execute such supplemental escrow instructions as may be
appropriate to enable Escrow Agent to comply with the terms of this Agreement.
5.2 Conditions to the Parties' Obligations to Close. In addition to all
other conditions set forth herein, the obligation of Seller, on the one hand,
and Purchaser, on the other hand, to consummate the transactions contemplated
hereunder shall be contingent upon the following:
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(a) The other party's representations and warranties contained herein
shall be true and correct as of the date of this Agreement and the Closing Date;
(b) As of the Closing Date, the other party shall have performed its
obligations hereunder and all deliveries to be made by the other party at
Closing have been tendered;
(c) As of the Closing Date, no action or proceeding by or before any
governmental authority shall have been instituted or threatened (and not
subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the transactions contemplated by
this Agreement, other than an action or proceeding instituted or threatened by
such party;
(d) Any other condition set forth in this Agreement to such party's
obligation to close is not satisfied by the applicable date; and
(e) As a condition to Purchaser's obligation to close, at Closing
Seller shall not be in default under any agreement to be assigned to, or
obligation to be assumed by, Purchaser under this Agreement.
So long as a party is not in default hereunder, if any condition to
such party's obligation to proceed with Closing hereunder has not been satisfied
as of the Closing Date or other applicable date, such party may, in its sole
discretion, terminate this Agreement by delivering written notice to the other
party on or before the Closing Date or other applicable date, or elect to close,
notwithstanding the non-satisfaction of such condition, in which event such
party shall be deemed to have waived any such condition except for breach by a
party of a covenant in which case Closing shall not relieve such breaching party
from any liability it would otherwise have hereunder.
5.3 Seller's Deliveries in Escrow. Seller shall deliver in
escrow to the Escrow Agent the following:
(a) Deed. A general warranty or grant deed (warranting title against
any party) in form provided for under the law of the state where the Property is
located and materially satisfactory to the parties, executed and acknowledged by
Seller, conveying good, indefeasible and marketable fee simple title to the
Property to Purchaser subject only to the Permitted Exceptions (the "Deed");
(b) Bill of Sale and Assignment of Leases and Contracts. A Bill of Sale
and Assignment of Leases and Contracts in the form of Exhibit E attached hereto
(the "Assignment"), executed and acknowledged by Seller, vesting in Purchaser
good title to the
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property described therein free of any claims, except for the
Permitted Exceptions to the extent applicable;
(c) Certificate. A certificate from Seller that each of the
representations and warranties contained in Paragraph 7.1 hereof is true and
correct as set forth herein as of the Closing Date. Such certificate shall
contain an updated list of the Leases and Service Contracts which Seller shall
certify to be true and correct as of Closing;
(d) Notice to Tenants. A notice to each tenant in the form of Exhibit F
attached hereto;
(e) State Law Disclosures. Such disclosures and reports as
are required by applicable state and local law in connection with
the conveyance of real property;
(f) FIRPTA. A Foreign Investment in Real Property Tax Act affidavit
executed by Seller. If Seller fails to provide the necessary affidavit and/or
documentation of exemption on the Closing Date, Purchaser may proceed in
accordance with the withholding provisions in such Act;
(g) Tenant Estoppels and Service Contract Estoppels.
Estoppel certificates satisfying the conditions in Paragraph 2.3,
dated (or recertified and updated as of a date) not earlier than 30
days before the Closing Date;
(h) Terminations. Terminations, effective no later than Closing, of
those Service Contracts which Purchaser has elected not to assume, including any
management agreements affecting the Property;
(i) Permits and Approvals. Evidence reasonably satisfactory to
Purchaser to the effect that the Seller possesses all licenses, permits,
approvals, zoning exceptions and approvals, consents and orders of governmental,
municipal or regulatory authorities required as of the Closing Date for the full
and unrestricted ownership, operation and use of the Property, including,
without limitation, a certificate of occupancy for each of the buildings which
comprise the Improvements; and written acknowledgments from governmental
authorities with respect to licenses, permits and approvals to be assigned to
Purchaser;
(j) CCRs. If the Property is subject to a declaration of covenants,
conditions and restrictions or similar instrument ("CCRs") governing or
affecting the use, operation, maintenance, management or improvement of the
Property, (i) estoppel certificates in form and substance satisfactory to
Purchaser from the declarant, association, committee, agent and/or other person
or entity having governing or approval rights under the CCRs, or if
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Seller is unable to obtain the estoppel certificates, an affidavit, in form and
substance satisfactory to Purchaser, from the Seller stating that the Seller is
not in default under the CCRs, and (ii) a recordable assignment, in form and
substance satisfactory to Purchaser, assigning any and all developer, declarant
or other related rights or interests of Seller (or any affiliate of Seller), if
any, in or under the CCRs;
(k) Authority. Evidence of the existence, organization and authority of
Seller and of the authority of the persons executing documents on behalf of
Seller reasonably satisfactory to the Escrow Agent and the Title Company; and
(l) Other Deliveries. Any other Closing deliveries required to be made
by or on behalf of Seller hereunder.
5.4 Purchaser's Deliveries in Escrow. At least 3 business days before
the Closing Date (except as otherwise permitted below), Purchaser shall deliver
in escrow to the Escrow Agent the following:
(a) Purchase Price. On the Closing Date, the Purchase Price, less the
Earnest Money that is applied to the Purchase Price and any credit due Purchaser
pursuant to Paragraph 1.4, plus or minus applicable prorations, deposited by
Purchaser with the Escrow Agent in immediate, same-day federal funds wired for
credit into the Escrow Agent's escrow account;
(b) Bill of Sale and Assignment of Leases and Contracts. The
Assignment, executed by Purchaser;
(c) State Law Disclosures. Such disclosures and reports as
are required by applicable state and local law in connection with
the conveyance of real property; and
(d) Other Deliveries. Any other Closing deliveries required to be made
by or on behalf of Purchaser hereunder.
5.5 Closing Statements/Escrow Fees. Seller and Purchaser shall deposit
with the Escrow Agent executed closing statements consistent with this Agreement
in the form required by the Escrow Agent. The Escrow Agent's escrow fee, closing
charges, and any cancellation fee shall be divided equally between and paid by
Seller and Purchaser. If Seller and Purchaser cannot agree on the closing
statement to be deposited as aforesaid because of a dispute over the prorations
and adjustments set forth therein, the Closing nevertheless shall occur, and the
amount in dispute shall be withheld from the Purchase Price and placed in an
escrow with the Title Company, to be paid out upon the joint direction of the
parties or pursuant to court order upon resolution or other final determination
of the dispute.
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5.6 Sales, Transfer, and Documentary Taxes. Seller shall pay all sales,
gross receipts, compensating, stamp, excise, documentary, transfer, deed or
similar taxes and fees imposed in connection with this transaction under
applicable state or local law.
5.7 Possession. At the time of Closing, Seller shall deliver to
Purchaser possession of the Property, subject only to the Permitted Exceptions.
5.8 Delivery of Books and Records. On the Closing Date, and as a
condition to Purchaser's obligation to close, Seller shall deliver to the
Purchaser's corporate office in Dallas, Texas: the original Leases and Service
Contracts or copies thereof if originals are not available; copies or originals
of all books and records of account, contracts, copies of correspondence with
tenants and suppliers, receipts for deposits, unpaid bills and other papers or
documents which pertain to the Property; all permits and warranties; all
advertising materials, booklets, and other items, if any, used in the operation
of the Property. The keys and, if in Seller's possession or control, the
original "as-built" plans and specification; all other available plans and
specifications and all operation manuals shall be delivered to the offices of
Purchaser's property manager on the Closing Date. Seller shall cooperate with
Purchaser after Closing to transfer to Purchaser any such information stored
electronically. The obligations of Seller under this Paragraph 5.8 shall survive
Closing.
ARTICLE 6: PRORATIONS AND ADJUSTMENTS
6.1 Prorations. At least 3 business days prior to Closing, Seller shall
provide to Purchaser such information and verification reasonably necessary to
support the prorations and adjustments under this Article 6. The items in
subparagraphs (a) through (e) of this Paragraph 6.1 shall be prorated between
Seller and Purchaser as of the close of the day immediately preceding the
Closing Date (the"Adjustment Date"), the Closing Date being a day of income and
expense to Purchaser:
(a) Taxes and Assessments. Purchaser shall receive a credit for any
accrued but unpaid real estate taxes (and any assessments imposed by private
covenant) applicable to any period before the Adjustment Date, even if such
taxes and assessments are not yet due and payable. If the amount of any such
taxes have not been determined as of the Adjustment Date, such credit shall be
based on 110 percent of the most recent ascertainable taxes and shall be re-
prorated upon issuance of the final tax bill. Purchaser shall receive a credit
for any special assessments which are levied or charged against the Property,
whether or not then due and payable.
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(b) Rents. Purchaser shall receive a credit for all rent and other
recurring and periodic income for the month in which the Closing occurs
(excluding any income that is specifically treated elsewhere in this Paragraph
6.1) applicable to any period after the Adjustment Date under Leases in effect
on the Adjustment Date based on the Rent Roll. Delinquent tenant rentals shall
be prorated, but if and when collected by Purchaser, shall be applied first to
current months' rents, and then to delinquent rent in the inverse order of
delinquency, with any remaining amounts allocable to the period prior to the
Adjustment Date being paid to Seller. Seller shall have the right to seek
collection from any tenants who are no more than 30 days in arrears as of the
Closing, but shall not have a right to seek recovery from tenants more than 30
days in arrears. In seeking such collection, however, Seller shall not have the
right to terminate any Lease or dispossess a tenant.
(c) Percentage Rents. Percentage rents shall be separately prorated
under each Lease on the basis of the lease year set forth in such Lease for the
payment of percentage rents. All percentage rent payments for the lease year in
which the Closing Date occurs that are made prior to the Adjustment Date shall
be credited to Purchaser. All payments of percentage rent for the lease year in
which the Closing Date occurs that are received by either party on or after the
Adjustment Date shall be retained by, or remitted to, Purchaser, as the case may
be, until determination of Seller's allocable share thereof in each instance, as
provided in Paragraph 6.2 below. Upon final determination of percentage rents
owed by a tenant under its Lease for the lease year in which Closing occurs,
Seller and Purchaser shall adjust between themselves amounts owed for such lease
year on account of percentage rents, and Seller's allocable share of such
percentage rents shall be an amount equal to the amount of percentage rent owed
by such tenant for the lease year multiplied by a fraction, the numerator of
which is the number of days in such lease year prior to and including the
Adjustment Date, and the denominator of which is the total number of days in
such lease year.
(d) Operating Expense Pass-throughs.
(i) Information Provided at Closing. Seller, as landlord under the
Leases, is currently collecting from tenants under the Leases additional rent to
cover taxes, insurance, utilities, maintenance and other operating costs and
expenses (collectively, "Operating Expense Pass-throughs") incurred by Seller in
connection with the ownership, operation, maintenance and management of the
Property. In order for the parties to determine the credits and adjustments
herein provided for, no later than 3 business days prior to the Closing Date,
Seller will deliver to Purchaser copies of all relevant portions of its books
and records and all back-up or supporting documentation, including without
limitation, copies of invoices, evidence of payment and all other information
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corroborating the amount paid by Seller and the amount received from the tenants
in respect of Operating Expense Pass-throughs as of the Adjustment Date, and at
Closing Seller will also deliver to Purchaser copies of the same information for
each year prior to the Closing for which any tenant has audit rights and the
ability to challenge any prior year's reconciliations. With respect to any
Operating Expense Pass-throughs which cannot be billed prior to the Closing,
Purchaser shall bill the tenant(s) for such items in accordance with the
respective Lease terms. Purchaser shall remit to Seller its pro rata portion of
any amounts collected within 30 days after receipt of same.
(ii) Reconciliation as of Adjustment Date. As of the Adjustment Date,
Seller shall, to the extent possible under the terms of the Leases and the
information then available to Seller, make a final determination of the amount,
if any, by which Seller has been over or under collecting from tenants in
respect of Operating Expense Pass-throughs for the period prior to and including
the Adjustment Date. If such reconciliation results in a net amount due to
tenants for the period prior to and including the Adjustment Date, Seller shall
credit such amount to Purchaser and Purchaser will be responsible for paying or
crediting to the tenants, as applicable, amounts due to them in respect of such
over-collections. If amounts are due from tenants, Seller shall bill tenants for
such amounts promptly after Closing.
(iii) Final Reconciliation. As to any Leases for which a final
reconciliation of Operating Expense Pass-throughs cannot be completed between
the Seller, as landlord, and the tenants as of the Adjustment Date in accordance
with Subparagraph (ii), the parties will adjust their prorations made at Closing
when the correct amount of Operating Expense Pass-throughs can be determined
(including without limitation with respect to any amounts under- collected by
Seller) and when, under the terms or the respective Leases, all information
required to make such landlord/tenant adjustment is available. Seller shall be
responsible for providing Purchaser with the final reconciliation for Seller's
period of ownership. If Seller fails timely to provide Purchaser with it final
reconciliation, Seller acknowledges and agrees that Purchaser's ability to make
a final determination of any amounts due to Seller or any additional amounts due
from Seller in respect of Operating Expense Pass-throughs for the period prior
to the Adjustment Date is dependent upon, and expressly conditioned upon,
Seller's delivering all information required by Purchaser, as provided for
Subparagraph (i), and Seller's delivering to Purchaser subsequent to the Closing
Date copies of all invoices and bills received by Seller subsequent to the
Adjustment Date for Operating Expense Pass-through items applicable to the
period on or before the Adjustment Date, as well as evidence of payments made by
Seller in respect of such invoices and bills. Seller agrees to cooperate in good
faith and with reasonable diligence in providing to
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Purchaser as and when needed copies of all invoices, bills, evidence of payment
and other information required by Purchaser to confirm the final reconciliation
performed by Seller for its period of ownership and/or to make any required
post-Closing reconciliations of Operating Expense Pass-throughs.
If when Seller is able to make its year end reconciliation for the
period prior to the Closing, it is determined, after giving effect to any
applicable credit received by Purchaser at Closing under this Paragraph 6.1(d),
that Seller has under- collected from any tenants, then Purchaser shall bill
such tenants for the amounts due to Seller within 60 days after year end, and
remit to Seller Seller's portion of any amounts collected monthly, within 30
days after receipt of same. If, however, it is determined that Seller
over-collected from tenants, again after giving effect to any credits received
by Purchaser at Closing as aforesaid, Seller will pay to Purchaser the amount
over-collected and not previously credited to Purchaser, within 30 days after
receipt from Purchaser of written notice setting forth the amount due,
accompanied by documentation reasonably establishing such amount, and Purchaser
shall be responsible for crediting or repaying amounts to the appropriate
tenants. In order to assist Seller in its confirmation of any required
post-closing adjustments, Purchaser shall make available to Seller upon request,
copies of the tax bills and any other bills and invoices needed by Seller. Each
party shall have the right to audit the other party's books and records, upon
reasonable prior notice and during normal business hours, for purposes of
confirming any calculations made by Purchaser.
(e) Service Contracts. Seller or Purchaser, as the case may be, shall
receive a credit for regular charges under Service Contracts assumed by
Purchaser pursuant to this Agreement paid and applicable to Purchaser's period
of ownership or payable and applicable to Seller's period of ownership,
respectively.
(f) Utilities. Seller shall cause the meters, if any, for utilities to
be read the day on which the Closing Date occurs and to pay the bills rendered
on the basis of such readings. If any such meter reading for any utility is not
available, then adjustment therefor shall be made on the basis of the most
recently issued bills therefor which are based on meter readings no earlier than
30 days before the Closing Date; and such adjustment shall be re-prorated when
the next utility bills are received.
6.2 Tenant Improvements and Allowances. All Tenant improvement
expenses (including all hard and soft construction costs, whether payable to the
contractor or the tenant), tenant allowances, rent abatement, moving expenses
and other out-of-pocket costs which are the obligation of the landlord under
Leases shall be paid by Seller on or before the Closing Date.
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(a) Evidence of Payment. At Closing, Seller shall provide lien waivers,
payment affidavits, certificates of completion, Tenant Estoppels and other
evidence reasonably necessary to confirm Seller's compliance with its
obligations pursuant to this Paragraph 6.2, and, to the extent such coverage is
available, shall provide such indemnity or other assurance to enable the Title
Company to insure against any claims against the Property arising from work
performed before the Closing.
6.3 Leasing Commissions. On or before the Closing Date, Seller shall
pay in full all leasing commissions due to leasing or other agents for the
current remaining term of each Lease (determined without regard to any
unexercised termination or cancellation right); provided, however, that if any
leasing agent will not accept such payment, then Purchaser shall receive a
credit against the Purchase Price at Closing in an amount equal to the
then-unpaid leasing commissions and Purchaser shall assume, in writing, the
obligation to pay any such leasing commissions due thereunder after the Closing
Date up to the amount of such credit.
6.4 Post-Closing Adjustments. Either party shall be entitled to a
post-Closing adjustment for any incorrect proration or adjustment. This
obligation, as well as every other provision in the Article 6 providing for
post-closing adjustments, shall survive the Closing hereunder. No other expense
related to the ownership or operation of the Property shall be charged to or
paid or assumed by Purchaser, whether allocable to any period before or after
Closing, other than those obligations expressly assumed by Purchaser.
6.5 Tenant Deposits. All tenant security deposits (and interest thereon
if required by law or contract to be earned thereon) shall be transferred or
credited to Purchaser at Closing. As of the Closing Date, Purchaser shall assume
Seller's obligations related to tenant security deposits, but only to the extent
they are properly credited and transferred to Purchaser.
6.6 Wages. Purchaser shall not be liable for any wages, fringe
benefits, payroll taxes, unemployment insurance contributions, accrued vacation
pay, accrued pay for unused sick leave, accrued severance pay and other
compensation accruing before Closing for employees at the Property. Purchaser
shall not be liable for any obligations accruing before Closing under any union
contract or multi-employer pension plan applicable to any such employees or
arising from the termination of any such employees at or prior to Closing.
6.7 Utility Deposits. Seller shall receive a credit for the amount of
deposits, if any, with utility companies that are transferable and that are
assigned to Purchaser at Closing.
6.8 Sales Commissions. Seller and Purchaser represent and
warrant each to the other that they have not dealt with any real
estate broker, sales person or finder in connection with this
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transaction other than Brokers. If this transaction is closed, Seller shall pay
Pacific Northwest Partners, LLC in accordance with their separate agreement, and
Pacific Northwest Partners, LLC shall pay Northwest Retail Partners, Ltd. its
share of the commission in accordance with their separate agreement. Brokers are
independent contractors and are not authorized to make any agreement or
representation on behalf of either party. Except as expressly set forth above,
in the event of any claim for broker's or finder's fees or commissions in
connection with the negotiation, execution or consummation of this Agreement or
the transactions contemplated hereby, each party shall indemnify and hold
harmless the other party from and against any such claim based upon any
statement, representation or agreement of such party.
ARTICLE 7: REPRESENTATIONS AND WARRANTIES
7.1 Seller's Representations and Warranties. As a material inducement
to Purchaser to execute this Agreement and consummate this transaction, Seller
represents and warrants to Purchaser that:
(a) Organization and Authority. Seller has been duly organized, is
validly existing, and is in good standing and qualified to do business in the
state of its organization and the state in which the Property is located. Seller
has the full right and authority and has obtained any and all consents required
to enter into this Agreement and to consummate or cause to be consummated the
transactions contemplated hereby. This Agreement has been, and all of the
documents to be delivered by Seller at Closing will be, authorized and properly
executed and constitute, or will constitute, as appropriate, the valid and
binding obligations of Seller, enforceable in accordance with their terms.
(b) Conflicts and Pending Actions or Proceedings. There is no agreement
to which Seller is a party or, to Seller's knowledge, binding on Seller which is
in conflict with this Agreement, or which challenges or impairs Seller's ability
to execute or perform its obligations under this Agreement. There is not now
pending or, to the best of Seller's knowledge, threatened, any action, suit or
proceeding before any court or governmental agency or body against Seller that
would prevent Seller from performing its obligations hereunder or against or
with respect to the Property.
(c) Leases and Rent Roll. The documents constituting the Leases that
are delivered to Purchaser pursuant to Paragraph 2.1 are true, correct and
complete copies of all of the Leases affecting the Property, including and all
amendments and guarantees. All information set forth in each Rent Roll is true,
correct, and complete in all material respects as of its date. Except as set
forth in the Rent Roll first delivered hereunder, there are no leasing or other
fees or commissions due, nor will any
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become due, in connection with any Lease or any renewal or extension or
expansion of any Lease, and no understanding or agreement with any party exists
as to payment of any leasing commissions or fees regarding future leases or as
to the procuring of tenants. To Seller's knowledge, except as disclosed in the
Property Information, no tenants have asserted nor are there any defenses or
offsets to rent accruing after the Closing Date and no default or breach exists
on the part of any tenant. Seller has not received any notice of any default or
breach on the part of the landlord under any Lease, nor, to the best of Seller's
knowledge, does there exist any such default or breach on the part of the
landlord. Except as set forth in the Rent Roll, all of the landlord's
obligations to construct tenant improvements or reimburse the tenants for tenant
improvements under the Leases have been paid and performed in full and all
concessions (other than any unexpired rent abatement set forth in the Leases)
from the landlord under the Leases have been paid and performed in full.
(d) Service Contracts and Operating Statements. The list of Service
Contracts delivered to Purchaser pursuant to this Agreement is true, correct,
and complete as of the date of its delivery. The documents constituting the
Service Contracts that are delivered to Purchaser are true, correct and complete
copies of all of the Service Contracts affecting the Property. Neither Seller
nor, to Seller's knowledge, any other party is in default in any material
respect under any Service Contract. The Operating Statements to be delivered to
Purchaser pursuant to this Agreement show all items of income and expense
(operating and capital) incurred in connection with Seller's ownership,
operation, and management of the Property for the periods indicated and are
true, correct, and complete in all material respects.
(e) Permits, Legal Compliance, and Notice of Defects. Seller
------------------------------------------------
has all licenses, permits and certificates necessary for the use
and operation of the Property, including, without limitation, all
certificates of occupancy necessary for the occupancy of the
Property, all of which are in full force and effect, and Seller has
not taken or failed to take any action that would result in their
revocation, and has not received any written notice of an intention
to revoke any of them. To Seller's knowledge, neither the Property
nor the use thereof violates any governmental law or regulation or
any covenants or restrictions encumbering the Property. To
Seller's knowledge there are no material physical defects in the
Improvements. Seller has not received any written notice from any
insurance company or underwriter of any defects that would
materially adversely affect the insurability of the Property or
cause an increase in insurance premiums. Seller has received no
written notice from any governmental authority or other person of,
and has no knowledge of any violation of zoning, building, fire,
health, environmental, or other statutes, ordinances, regulations
or orders (including those respecting the Americans with
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Disabilities Act), or any restriction, condition, covenant or consent in regard
to the Property or any part thereof which have not been corrected to the
satisfaction of the issuer.
(f) Environmental. Seller has no knowledge of any violation of
Environmental Laws related to the Property or the presence or release of
Hazardous Materials on or from the Property except as disclosed in the Property
Information. Neither Seller nor, to Seller's knowledge, any tenant or other
occupant has manufactured, introduced, released or discharged from or onto the
Property any Hazardous Materials or any toxic wastes, substances or materials
(including, without limitation, asbestos) in violation of any Environmental
Laws, and neither Seller, nor to Seller's knowledge any tenant or other occupant
has used the Property or any part thereof for the generation, treatment,
storage, handling or disposal of any Hazardous Materials in violation of any
Environmental Laws. The term "Environmental Laws" includes without limitation
the Resource Conservation and Recovery Act and the Comprehensive Environmental
Response Compensation and Liability Act and other federal laws governing the
environment as in effect on the Date of this Agreement together with their
implementing regulations and guidelines as of the Date of this Agreement, and
all state, regional, county, municipal and other local laws, regulations and
ordinances that are equivalent or similar to the federal laws recited above or
that purport to regulate Hazardous Materials. The term "Hazardous Materials"
includes petroleum, including crude oil or any fraction thereof, natural gas,
natural gas liquids, liquified natural gas, or synthetic gas usable for fuel (or
mixtures of natural gas or such synthetic gas), and any substance, material
waste, pollutant or contaminant listed or defined as hazardous or toxic under
any Environmental Law.
(g) Utilities. All water, sewer, gas, electric, telephone, and drainage
facilities, and other utilities required for the normal and proper operation of
the Property are installed and connected to the Property with valid permits, and
are adequate to serve the Property for its current use and to permit full
compliance with all requirements of law and the Leases. All permits and
connection fees are fully paid and no action is necessary on the part of
Purchaser to transfer such permits to it. To Seller's knowledge, all utilities
serving the Property enter it through publicly-dedicated roads or through
currently effective public or private easements. To Seller's knowledge, no fact
or condition exists which would result in the termination of such utilities
services to the Property.
(h) Independent Unit. The Property is an independent unit which does
not now rely on any facilities (other than facilities covered by easements
appurtenant to the Property or facilities of municipalities or public utilities)
located on any property that is not part of the Property to fulfill any
municipal or other
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governmental requirement, or for the furnishing to the Property of any essential
building systems or utilities (including drainage facilities, catch basins, and
retention ponds). No other building or other property that is not part of the
Property relies upon any part of the Property to fulfill any municipal or other
governmental requirement, or to provide any essential building systems or
utilities, other than CCR's covered by Paragraph 5.3(j).
(i) Withholding Obligation. Seller's sale of the Property is not
subject to any federal, state or local withholding obligation of Purchaser under
the tax laws applicable to Seller or the Property.
(j) Disclosure. Other than this Agreement, the documents delivered at
Closing pursuant hereto, the Permitted Exceptions, Leases, Service Contracts,
and any commission agreements described in the Commission Schedule, there are no
contracts or agreements of any kind relating to the Property to which Seller or
its agents is a party and which would be binding on Purchaser after Closing.
Copies of Property Information delivered to Purchaser pursuant to Paragraph 2.1
hereof are or will be true, correct and complete copies; and Seller is not aware
of any material inaccuracy or omission in the Property Information delivered
pursuant to Paragraph 2.1. To Seller's knowledge, there are no other facts or
events which could materially affect the Property which have not been disclosed
in writing to Purchaser pursuant to this Agreement.
7.2 Purchaser's Representations and Warranties. As a material
inducement to Seller to execute this Agreement and consummate this transaction,
Purchaser represents and warrants to Seller that:
(a) Organization and Authority. Purchaser has been duly organized and
is validly existing as a Maryland real estate investment trust, in good standing
in the State of Maryland, and will be qualified to do business in the state in
which the Real Property is located on the Closing Date. Purchaser has the full
right and authority and has obtained any and all consents required to enter into
this Agreement and, subject only to obtaining certain internal approvals on or
before the expiration of the Due Diligence Period, to consummate or cause to be
consummated the transactions contemplated hereby. This Agreement has been, and
all of the documents to be delivered by Purchaser at Closing will be, authorized
and properly executed and constitutes, or will constitute, as appropriate, the
valid and binding obligation of Purchaser, enforceable in accordance with their
terms.
(b) Conflicts and Pending Action. There is no agreement to which
Purchaser is a party or to Purchaser's knowledge binding on Purchaser which is
in conflict with this Agreement. There is no action or proceeding pending or, to
Purchaser's knowledge,
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threatened against Purchaser which challenges or impairs Purchaser's ability to
execute or perform its obligations under this Agreement.
7.3 Survival of Representations and Warranties. The representations and
warranties set forth in this Article 7 are made as of the date of this Agreement
and are remade as of the Closing Date and shall not be deemed to be merged into
or waived by the instruments of Closing, but shall survive Closing for a period
of one (1) year. Seller and Purchaser shall have the right to bring an action
thereon only if Seller or Purchaser, as the case may be, has given the other
party written notice of the circumstances giving rise to the alleged breach
within such 1 year period.
ARTICLE 8: INDEMNIFICATION
8.1 Seller's Indemnity. Seller agrees to indemnify, defend and hold
Purchaser harmless from any liability, claim, demand, loss, expense or damage
(collectively, "loss") that is: (a) suffered by, or asserted by any person or
entity against, Purchaser arising from any act or omission of Seller, its
agents, employees or contractors occurring on or before Closing; or (b) arising
from any breach by Seller of any obligation related to the Property other than
those obligations which by this Agreement, or any closing delivery, specifically
becomes the obligation of Purchaser.
8.2 Purchaser's Indemnity. Purchaser agrees to indemnify, defend and
hold Seller harmless of and from any loss that is: (a) suffered by, or asserted
by any person or entity against, Seller arising from any act or omission of
Purchaser, its agents, employees or contractors occurring on or after Closing;
or (b) arising from any breach by Purchaser of any obligation of Purchaser
related to the Property which by this Agreement, or any closing delivery,
specifically becomes the obligation of Purchaser.
8.3 Procedure. The following provisions govern all actions for
indemnity under this Article 8 and any other provision of this Agreement.
Promptly after receipt by an indemnitee of notice of any claim, such indemnitee
will, if a claim in respect thereof is to be made against the indemnitor,
deliver to the indemnitor written notice thereof and the indemnitor shall have
the right to participate in and, if the indemnitor agrees in writing that it
will be responsible for any costs, expenses, judgments, damages, and losses
incurred by the indemnitee with respect to such claim, to assume the defense
thereof, with counsel mutually satisfactory to the parties; provided, however,
that an indemnitee shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnitee, if the indemnitee reasonably believes
that representation of such indemnitee by the counsel retained by
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the indemnitor would be inappropriate due to actual or potential differing
interests between such indemnitee and any other party represented by such
counsel in such proceeding. The failure of indemnitee to deliver written notice
to the indemnitor within a reasonable time after indemnitee receives notice of
any such claim shall relieve such indemnitor of any liability to the indemnitee
under this indemnity only if and to the extent that such failure is prejudicial
to the indemnitor's ability to defend such action, and the omission so to
deliver written notice to the indemnitor will not relieve it of any liability
that it may have to any indemnitee other than under this indemnity. If an
indemnitee settles a claim without the prior written consent of the indemnitor,
then the indemnitor shall be released from liability with respect to such claim
unless the indemnitor has unreasonably withheld such consent.
ARTICLE 9: DEFAULT
9.1 Seller's Default. If this transaction fails to close as a result of
Seller's default, the Earnest Money shall be returned to Purchaser. In addition,
Purchaser shall be entitled to such remedies for breach of contract as may be
available at law and in equity, including without limitation, the remedy of
specific performance.
9.2 Purchaser Default. If this transaction fails to close due to the
default of Purchaser, Seller's sole remedy in such event shall be to terminate
this Agreement and to retain the Earnest Money as liquidated damages, Seller
waiving all other rights or remedies in the event of such default by Purchaser.
The parties acknowledge that Seller's actual damages in the event of a default
by Purchaser under this Agreement will be difficult to ascertain, and that such
liquidated damages represent the parties' best estimate of such damages.
9.3 Other Expenses. If this Agreement is terminated due to the default
of a party, then the defaulting party shall pay any fees due to the Escrow Agent
for holding the Earnest Money and any fees due to the Title Company for
cancellation of the Title Commitment.
ARTICLE 10: EARNEST MONEY PROVISIONS
10.1 Investment and Use of Funds. The Escrow Agent shall invest the
Earnest Money in government insured interest-bearing accounts satisfactory to
Purchaser, shall not commingle the Earnest Money with any funds of the Escrow
Agent or others, and shall promptly provide Purchaser and Seller with
confirmation of the investments made. If the Closing under this Agreement
occurs, the Earnest Money shall be applied as a credit against the Purchase
Price.
10.2 Termination before Expiration of Due Diligence Period.
The Purchaser shall notify the Escrow Agent of the date that the
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Due Diligence Period ends promptly after such date is established under this
Agreement, and Escrow Agent may rely upon such notice. If Purchaser elects to
terminate the Purchase Agreement pursuant to Paragraph 2.2, Escrow Agent shall
pay the entire Earnest Money to Purchaser one business day following receipt of
a copy of the Due Diligence Termination Notice from Purchaser (as long as the
current investment can be liquidated in one day). No notice to Escrow Agent from
Seller shall be required for the release of the Earnest Money to Purchaser by
Escrow Agent. The Earnest Money shall be released and delivered to Purchaser
from Escrow Agent upon Escrow Agent's receipt of a copy of the Due Diligence
Termination Notice despite any objection or potential objection by Seller.
Seller agrees it shall have no right to bring any action against Escrow Agent
which would have the effect of delaying, preventing, or in any way interrupting
Escrow Agent's delivery of the Earnest Money to Purchaser pursuant to this
paragraph, any remedy of Seller being against Purchaser, not Escrow Agent.
10.3 Payment to Seller. In the event Purchaser does not elect to
terminate this Agreement prior to the expiration of the Due Diligence Period,
Escrow Agent shall pay the entire Earnest Money to Seller one (1) business day
following the expiration of the Due Diligence Period. The Earnest Money shall be
applied as a credit against the Purchase Price, but it shall not be refunded to
Purchaser unless this transaction fails to close as a result of an adverse
condition as described in Paragraph 2.5 or the occurrence of any event for which
Purchaser has the express right to terminate this Agreement. If Purchaser elects
to terminate this Agreement as a result of any event described in the preceding
sentence, Seller shall return the Earnest Money to Purchaser within one (1)
business day of such termination.
10.4 Interpleader. Seller and Purchaser mutually agree that in the
event of any controversy regarding the Earnest Money, unless mutual written
instructions are received by the Escrow Agent directing the Earnest Money's
disposition, the Escrow Agent shall not take any action, but instead shall await
the disposition of any proceeding relating to the Earnest Money or, at the
Escrow Agent's option, the Escrow Agent may interplead all parties and deposit
the Earnest Money with a court of competent jurisdiction in which event the
Escrow Agent may recover all of its court costs and reasonable attorneys' fees.
Seller or Purchaser, whichever loses in any such interpleader action, shall be
solely obligated to pay such costs and fees of the Escrow Agent, as well as the
reasonable attorneys' fees of the prevailing party in accordance with the other
provisions of this Agreement.
10.5 Liability of Escrow Agent. The parties acknowledge that the Escrow
Agent is acting solely as a stakeholder at their request and for their
convenience, that the Escrow Agent shall not be deemed to be the agent of either
of the parties, and that the
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Escrow Agent shall not be liable to either of the parties for any action or
omission on its part taken or made in good faith, and not in disregard of this
Agreement, but shall be liable for its negligent acts and for any loss, cost or
expense incurred by Seller or Purchaser resulting from the Escrow Agent's
mistake of law respecting the Escrow Agent's scope or nature of its duties.
Seller and Purchaser shall jointly and severally indemnify and hold the Escrow
Agent harmless from and against all costs, claims and expenses, including
reasonable attorneys' fees, incurred in connection with the performance of the
Escrow Agent's duties hereunder, except with respect to actions or omissions
taken or made by the Escrow Agent in bad faith, in disregard of this Agreement
or involving negligence on the part of the Escrow Agent.
10.6 Escrow Fee. Except as expressly provided herein to the contrary,
the escrow fee, if any, charged by the Escrow Agent for holding the Earnest
Money or conducting the Closing shall be shared equally by Seller and Purchaser.
ARTICLE 11: MISCELLANEOUS
11.1 Parties Bound. Neither party may assign this Agreement without the
prior written consent of the other, and any such prohibited assignment shall be
void; provided, however, that Purchaser may assign this Agreement without
Seller's consent to an Affiliate or to effect an Exchange pursuant to Paragraph
11.18 hereof. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the respective legal representatives, successors,
assigns, heirs, and devisees of the parties. For the purposes of this paragraph,
the term "Affiliate" means: (a) an entity that directly or indirectly controls,
is controlled by or is under common control with Purchaser; or (b) an entity at
least a majority of whose economic interest is owned by Purchaser; and the term
"control" means the power to direct the management of such entity through voting
rights, ownership or contractual obligations.
11.2 Headings. The article and paragraph headings of this Agreement are
for convenience only and in no way limit or enlarge the scope or meaning of the
language hereof.
11.3 Expenses. Except as otherwise expressly provided herein, each
party hereto shall pay its own expenses incident to this Agreement and the
transactions contemplated hereunder, including all legal and accounting fees and
disbursements.
11.4 Invalidity and Waiver. If any portion of this Agreement is held
invalid or inoperative, then so far as is reasonable and possible the remainder
of this Agreement shall be deemed valid and operative, and, to the greatest
extent legally possible, effect
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shall be given to the intent manifested by the portion held invalid or
inoperative. The failure by either party to enforce against the other any term
or provision of this Agreement shall not be deemed to be a waiver of such
party's right to enforce against the other party the same or any other such term
or provision in the future.
11.5 Governing Law. This Agreement shall, in all respects, be governed,
construed, applied, and enforced in accordance with the law of the state in
which the Real Property is located.
11.6 Survival. The provisions of this Agreement that contemplate
performance after Closing and the obligations of the parties not fully performed
at Closing shall survive Closing and shall not be deemed to be merged into or
waived by the instruments of Closing.
11.7 No Third Party Beneficiary. This Agreement is not intended to give
or confer any benefits, rights, privileges, claims, actions, or remedies to any
person or entity as a third party beneficiary, decree, or otherwise.
11.8 Entirety and Amendments. This Agreement embodies the entire
agreement between the parties and supersedes all before agreements and
understandings relating to the Property. This Agreement may be amended or
supplemented only by an instrument in writing executed by the party against whom
enforcement is sought.
11.9 Time. Time is of the essence in the performance of this
Agreement.
11.10 Confidentiality. Seller shall make no public announcement or
disclosure of any information related to this Agreement to outside brokers or
third parties, before or after Closing, without the specific, prior written
consent of Purchaser, except for such disclosures to Seller's lenders,
creditors, officers, employees and agents as are necessary to perform Seller's
obligations hereunder.
11.11 Attorneys' Fees. Should either party employ attorneys to enforce
any of the provisions hereof, the party against whom any final judgment is
entered agrees to pay the prevailing party all reasonable costs, charges, and
expenses, including reasonable attorneys' fees, expended or incurred by the
prevailing party in connection therewith.
11.12 Notices. All notices required or permitted hereunder shall be in
writing and shall be served on the parties at the addresses set forth in
Paragraph 1.1. Any such notices shall be either: (a) sent by overnight delivery
using a nationally recognized overnight courier, in which case notice shall be
deemed delivered one business day after deposit with such courier; (b)
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sent by telefax, in which case notice shall be deemed delivered upon
transmission of such notice; or (c) sent by personal delivery, in which case
notice shall be deemed delivered upon receipt. A party's address may be changed
by written notice to the other party; provided, however, that no notice of a
change of address shall be effective until actual receipt of such notice. Copies
of notices are for informational purposes only, and a failure to give or receive
copies of any notice shall not be deemed a failure to give notice.
11.13 Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any exhibits or amendments hereto.
11.14 Remedies Cumulative. The remedies provided in this Agreement
shall be cumulative and, except as otherwise expressly provided shall not
preclude the assertion or exercise of any other rights or remedies available by
law, in equity or otherwise.
11.15 Calculation of Time Periods. Unless otherwise specified, in
computing any period of time described herein, the day of the act or event after
which the designated period of time begins to run is not to be included and the
last day of the period so computed is to be included at, unless such last day is
a Saturday, Sunday or legal holiday for national banks in the location where the
Property is located, in which event the period shall run until the end of the
next day which is neither a Saturday, Sunday, or legal holiday. The last day of
any period of time described herein shall be deemed to end at 6 p.m, Pacific
Standard Time.
11.16 Information and Audit Cooperation. At Purchaser's request, at any
time before or after Closing, Seller shall provide to Purchaser's designated
independent auditor access to the books and records of the Property, and all
related information regarding the period for which Purchaser is required to have
the Property audited under the regulations of the Securities and Exchange
Commission, and Seller shall provide to such auditor a representation letter
regarding the books and records of the Property, in substantially the form of
Exhibit G attached hereto, in connection with the normal course of auditing the
Property in accordance with generally accepted auditing standards. The Purchaser
agrees to indemnify and hold harmless the Seller from any claim, damage, loss,
or liability to which Seller is at any time subjected by any person who is not a
party to this Agreement as a result of Seller's compliance with this paragraph.
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11.17 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of such counterparts shall constitute one Agreement. To facilitate execution of
this Agreement, the parties may execute and exchange by telephone facsimile
counterparts of the signature pages.
11.18 Section 1031 Exchange. Purchaser and/or Seller may consummate the
purchase and sale of the Property as part of a so-called like kind exchange (the
"Exchange") pursuant to ss. 1031 of the Internal Revenue Code of 1986, as
amended (the "Code"), provided that: (a) Closing shall not be delayed or
affected by reason of the Exchange nor shall the consummation or accomplishment
of the Exchange be a condition precedent or condition subsequent to Purchaser's
obligations under this Agreement; (b) Purchaser and/or Seller shall effect the
Exchange through an assignment of this Agreement, or their respective rights
under this Agreement, to a qualified intermediary; (c) neither Seller nor
Purchaser shall be required to take an assignment of the purchase agreement for
the relinquished property or be required to acquire or hold title to any real
property for purposes of consummating the Exchange; and (d) neither party shall
pay any additional costs that would not otherwise have been incurred by such
party had the other party not consummated its purchase through the Exchange.
Purchaser and Seller shall not, by this agreement or acquiescence to the
Exchange, have their respective rights under this Agreement affected or
diminished in any manner or be responsible for compliance with or be deemed to
have warranted to the other party that the Exchange in fact complies with ss.
1031 of the Code.
11.19 Further Assurances. In addition to the acts and deeds recited
herein and contemplated to be performed, executed and/or delivered by either
party at Closing, each party agrees to perform, execute and deliver, on or after
Closing any further actions, documents, and will obtain such consents, as may be
reasonably necessary or as may be reasonably requested to fully effectuate the
purposes, terms and conditions of this Agreement or to further perfect the
conveyance, transfer and assignment of the Property to Purchaser.
11.20 Limitation of Liability. In accordance with the declaration of
trust of Purchaser, notice is hereby given that all persons dealing with
Purchaser shall look solely to the assets of Purchaser for the enforcement of
any claim against Purchaser, as neither the trustees, officers, employees nor
shareholders of Purchaser assume any personal liability for obligations entered
into by or on behalf of Purchaser.
11.21 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL
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RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[Signature Page Follows]
SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT BETWEEN PACIFIC RETAIL TRUST
AND
JS - JAMES CENTER ASSOCIATES, L.P.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year written below.
JS - JAMES CENTER ASSOCIATES, L.P.,
a ___________________________________
By: ____________________________
Name: ____________________________
Title:____________________________
Dated:__________
"Seller"
PACIFIC RETAIL TRUST, a Maryland
realestate investment trust
By: ___________________________
Name: ___________________________
Title:___________________________
Dated:
"Purchaser"
[signatures continue on following page]
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CONTINUATION OF SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT
BETWEEN PACIFIC RETAIL TRUST
AND
JS - JAMES CENTER ASSOCIATES, L.P.
Escrow Agent has executed this Agreement in order to confirm that
Escrow Agent has received and shall hold the Earnest Money and the interest
earned thereon, in escrow, and shall disburse the Earnest Money, and the
interest earned thereon, pursuant to the provisions of Article 10 hereof.
CHICAGO TITLE INSURANCE COMPANY
By: __________________________
Name: __________________________
Title: __________________________
Dated: __________________ "Escrow Agent"
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EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY
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EXHIBIT B
PROPERTY INFORMATION
o Rent Roll. A rent roll ("Rent Roll") of the Property (and, in
addition, Seller's most recent rent roll of the Property),
containing the following information for each tenant:
o Full name of tenant as shown on the Lease
o Description of space leased to tenant, including suite
number and square feet of net rentable area o Date of Lease
and any amendments or guarantees thereto o Term of Lease with
commencement and expiration dates o Options to extend term o Options to
expand space o Annual base rental o Annual reimbursements for taxes,
CAM, merchants'
association, and other expenses
o Percentage rental
o Concessions, including free rent, construction
allowances, etc.
o Dates through which base and percentage rental have been
paid
o Rental collected in advance
o Defaults by tenant
o Security deposit and interest accrued thereon
o Operating Statements. Operating statements of the Property
for the 36 months preceding the date of this Agreement
("Operating Statements").
o Commission Schedule and Agreements. A schedule ("Commission
Schedule") and copies of all commission agreements related to
the Leases or the Property.
o Service Contracts. A list together with copies of all
management, service, supply, equipment rental and other
contracts related to the operation of the Property ("Service
Contracts").
o Leases. Copies of all leases and occupancy agreements
including all amendments, guarantees, side letters and other
relevant documents.
o Tax Statements. Copies or a summary of ad valorem tax
statements for the current or most recently available tax
period and for the prior 36 months including the Property's
tax identification number(s).
o Tangible Personal Property. A current inventory of all
tangible personal property and fixtures.
30177448.6 40899 1702C 98484215
<PAGE>
o Tenant Information:
o Financial statements of all tenants under Leases covering
prior 2 years
o Information relative to tenant payment history
o CAM, real estate taxes and insurance reconciliations by
tenant
o Tenants' allocation of CAM, real estate taxes and
insurance reimbursements for the prior 2 years
o A gross sales report for the last 3 years (and current year if
available) for each tenant paying percentage rent
o All tenant correspondence
o Maintenance Records. All maintenance work orders for the
prior 12 months.
o List of Capital Improvements. A list of all capital
improvements performed on the Property within the prior 24
months.
o Reports. Any environmental, soil, structural engineering and
drainage reports, assessments, audits and surveys.
o As-Built Survey. All existing as-built surveys of the
Property.
o Site Plans. All site plans relating to the Property.
o Square Footage. A square footage breakdown of the Property by
building.
o As-Built Plans and Specifications. All as-built construction,
architectural, mechanical, electrical, plumbing, landscaping and
grading plans and specifications relating to the Property and any major
capital repairs or tenant improvements (including bay depths and fire
protection specifications).
o Parking Information. A parking plan (which may be reflected in the
Survey) showing the number of parking spaces for the Property, and a
comparison to the number of parking spaces for the Property required by
zoning requirements applicable to the Property.
o Permits and Warranties. Copies of all warranties and
guaranties, permits, certificates of occupancy, licenses and
other approvals.
o Financial Statements. Copies of financial statements
reflecting the operation of the Property for the prior 3
calendar years, including statements of cash flow and year-end
balance sheets, and statements of income, expense, accounts
30177448.6 40899 1702C 98484215
<PAGE>
payable and accounts receivable for each such year, each prepared in
accordance with generally accepted accounting principles consistently
applied, and fairly presenting the financial position of Seller with
respect to the Property at the end of each such year and the results of
the operations thereof for such year.
o Operating Information. Copies of all utilities bills relating
---------------------
to the Property for the prior 12 calendar months and a list of
any utility company deposits, all service contract billings,
all certificates of insurance of each tenant, all tax returns
relating to the Property for the past calendar year, details
of any reserves and the back-up for any projections upon which
the reserves are based, year-to-date general ledger, and
accounts receivable aging report.
o Management Report. Copies of monthly management reports for
the Property for the past 3 calendar years and for the current
year-to-date.
o Budget. Seller's most recent budget for the Property,
including the forthcoming year, if applicable.
o Insurance. Copies of Seller's certificate of insurance for the
Property, all insurance policies, a loss history, a list of any current
claims relating to the Property, and any notices received by insurance
carriers.
o Proceedings. Copies of any documents or materials relating to any
litigation, investigation, condemnation, or proceeding of any kind
pending or threatened affecting any of the Property or the ability of
Seller to consummate the transaction contemplated by this Agreement.
o General. Any other documents or information pertaining to the Property
in Seller's possession or control or in the possession or control of
Seller's agents or independent contractors.
o CCR'S. Copies of all covenants, conditions and restrictions or similar
instruments governing or affecting the use, operation, maintenance,
management or improvement of the Property including all amendments,
modifications, supplements and other relevant documents.
30177448.6 40899 1702C 98484215
<PAGE>
EXHIBIT C
TENANT ESTOPPEL CERTIFICATE
The undersigned ("Tenant") hereby certifies to Pacific Retail Trust, a
Maryland Real Estate Investment Trust, its successors and assigns (collectively,
"Buyer") and each of their mortgagees and their respective successors and
assigns (collectively "Lender") as follows:
1. [Name of Tenant] is the lessee of square feet of leasable area (the
"Premises") in the James Center Shopping Center located in County, Washington
("Property"), under a lease agreement dated , 199 (as modified or amended, the
"Lease") entered into between Tenant and JS - James Center Associates, L.P., or
its predecessor in interest as lessor ("Lessor") as modified by the documents,
if any, attached hereto as Exhibit A.
2. The Lease is in full force and effect, and, to the best of Tenant's
knowledge, Tenant is not in default thereunder. To the best of Tenant's
knowledge, there exist no facts that would constitute a basis for any default
under the Lease upon the lapse of time or the giving of notice or both.
3. The Lease, in the form of Exhibit A hereto, constitutes the entire
agreement between the Lessor and Tenant and there are no amendments, written or
oral, to the Lease except as included in Exhibit A. Tenant has no options or
rights to extend the term of the Lease, expand the Premises, or purchase the
Property or any portion thereof except as set forth in the Lease. The Lease has
not been assigned, transferred or hypothecated by Tenant, nor the Premises or
any portion thereof sublet, except as set forth in the documents attached as
Exhibit A hereto.
4. All construction, maintenance, and repair obligations of Lessor have
been performed in full and all allowances or other amounts payable to Tenant
under the Lease have been paid in full by Lessor. All conditions of the Lease to
be performed by Lessor and necessary to the obligation of Tenant to perform its
obligations under the Lease have been performed. All portions of the Premises
and any additional space required to be delivered to Tenant under the Lease have
been delivered. Tenant does not currently have, and hereby waives, any and all
termination, abatement, or offset rights based on the failure of Lessor to
timely and adequately perform any of its obligations under the Lease prior to
the date hereof. To the extent Tenant's Lease affords Tenant any right to
approve or confirm any matters relating to permitting, signage, zoning or
variances, and other matters pertaining to the use and occupancy of
C-1
<PAGE>
the Premises, all such matters have been approved by Tenant and Tenant waives
any right to object to any such matters.
5. Tenant has accepted the Premises and is paying rent under the Lease.
Tenant has not made any prepayment of rent or other charges more than one (1)
month in advance and no payments have been made by Tenant except as provided in
the Lease.
6. The term of the Lease commenced on , 199 and will end on , 199 at a
monthly base rental (exclusive of Tenant's obligation to pay common area
maintenance costs, percentage rents, expenses, taxes, or insurance) of [Base
Rent] [Increase details]. There are no concessions, bonuses, free rental
periods, rebates, credits or other matters affecting the rental for Tenant under
the Lease except as described in Exhibit A hereto. Tenant is currently paying
[pass-through details] as Tenant's share of common area maintenance costs and
other expense pass-throughs.
7. As of the date of this certificate, to the knowledge of Tenant,
there exist no offsets, abatements, reductions in rent, counterclaims or
defenses of Tenant under the Lease against Lessor, except as expressly described
in Exhibit A, and, to the knowledge of Tenant, there exist no events that would
constitute a basis for such offset, abatement, reduction, counterclaim or
defense against Lessor upon the lapse of time or the giving of notice or both.
Tenant has no right to or claims for the refund of any rents or other sums
heretofore paid to Lessor (excluding the right to a refund of any security
deposit paid by Tenant in the amount set forth in Paragraph 8 hereof).
8. The amount of prepaid rent or lease deposit, however referred to,
paid under the terms of the Lease is $ . To Tenant's knowledge, no portion of
the foregoing amount has been applied by Lessor to the payment of rent or any
other amounts due under the Lease.
9. Tenant acknowledges that the Lessor's interest in the Lease will be
assigned to Buyer and agrees, upon receipt of notice of such assignment from
Buyer, to attorn to Buyer, to recognize Buyer as the Lessor for all purposes,
and to perform all of Tenant's obligations as lessee under the Lease, including,
without limitation, the payment of rent, directly to Buyer, or its agent, as the
Lessor under the Lease, from and after the date of such notice.
10. To the extent Tenant's Lease affords Tenant such rights, Tenant has
approved the site plan for the Property and approves the design, configuration,
location, use, and operation of all improvements located on the Property as
complying with the approved site plan. All common areas located on the Property
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<PAGE>
comply in full with the requirements of the Lease. All parking requirements of
the Lease have been satisfied in full. The exclusive rights and other
restrictions contained in the Lease have been satisfied and there is no
violation thereof by any previous or existing lessor or by any third party.
Tenant has no right to terminate the Lease or cease operating based upon a
breach of any cotenancy provisions or any other provision of the Lease
conditioning Tenant's performance of its obligations under the Lease on the
occupancy of other premises by other tenants.
11. Tenant has not filed and is not the subject of any filing for
bankruptcy or reorganization under federal bankruptcy laws.
12. The address for notices to Tenant under the Lease is correctly set
forth in the Lease.
13. All exhibits attached hereto are by this reference incorporated
fully herein and are true, correct, and complete. The term "this certificate"
shall be considered to include all such exhibits.
14. All guarantors of the Lease ("Guarantor") are identified below and
by their execution below consent to and confirm all obligations under any such
guaranty and all covenants and certifications set forth in this estoppel
certificate.
15. This certificate may be executed in any number of counterparts, any
of which may contain the signatures of less than all of the parties, and all of
which shall be construed together as but a single instrument.
16. This certificate may be relied upon and shall inure to the benefit
of Buyer and Lender and shall be binding upon Tenant, Guarantor and each of
their respective successors and assigns.
[Signature block continued on next page.]
C-3
<PAGE>
[Signature block continued from previous page.]
EXECUTED______________, 1998.
TENANT:
_________________________
By:
Name:
Title:
GUARANTOR 1:
________________________
By:
Name:
Title:
GUARANTOR 2:
________________________
By:
Name:
Title:
C-4
<PAGE>
STATE OF )
-------------------
) ss.
COUNTY OF __________________ )
Sworn to and subscribed before me by _________________ on this day of
_____________, 1998.
_______________________________________
Notary Public
_______________________________________
Printed Name of Notary
My Commission Expires:
STATE OF )
-------------------
) ss.
COUNTY OF __________________ )
Sworn to and subscribed before me by _____________________ on this
_____ day of________________, 1998.
Notary Public
Printed Name of Notary
My Commission Expires:
C-5
<PAGE>
STATE OF )
-------------------
) ss.
COUNTY OF )
Sworn to and subscribed before me by _____________________ on this_____ day
of ___________, 1998.
_______________________________
Notary Public
_______________________________
Printed Name of Notary
My Commission Expires:
C-6
<PAGE>
EXHIBIT D
SURVEY CERTIFICATION FORM
To: Pacific Retail Trust ("Purchaser"), Wells Fargo Realty
Advisors Funding, Incorporated, and Chicago Title Insurance
Company
The undersigned Registered Public Engineer (the "Engineer") hereby
certifies that (a) this plat of survey and the property description set forth
hereon are true and correct and prepared from an actual on-the-ground survey of
the real property (the "Property") shown hereon and is the same property that is
described in Chicago Title Insurance Company Commitment No.
dated , 1998; (b) such survey was conducted by the Engineer, or under his
supervision and was made in accordance with "Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys, "jointly established and adopted
by ALTA and ACSM in 1997, as defined therein and includes Items 1, 2, 3, 4, 6,
7(a), 7(c), 8, 9, 10, 11, 13, 14, 15, and 16 of Table A thereof, indicates all
access easements and off-site easements appurtenant, and meets the accuracy
requirements of an Urban Survey, as defined therein; (c) all monuments shown
hereon actually exist, and the location, size and type of material thereof are
correctly shown; (d) except as shown hereon, there are no encroachments onto the
Property or protrusions therefrom, there are no visible easements or
rights-of-way on the Property and there are no visible discrepancies, conflicts,
shortages in area or boundary line conflicts; (e) the size, location and type of
improvements are as shown hereon, and all are located within the boundaries of
the Property and set back from the Property lines the distances indicated; (f)
the distance from the nearest intersecting street or road is as shown; (g) the
Property has access to and from a public roadway; (h) all recorded easements
have been correctly platted hereon; and (i) the boundaries, dimensions and other
details shown hereon are true and correct.
The survey correctly shows the zone designation of any area shown as
being within a Special Flood Hazard Area according to current Federal Emergency
Management Agency Maps which make up a part of the National Flood Insurance
Administration Report; Community No. , Panel No. dated
.
EXECUTED this ______day of___________________,1998.
Registered Public Engineer
No.
D-1
<PAGE>
No.____________________________
Address:_______________________
_______________________________
_______________________________
(SEAL)
D-2
<PAGE>
EXHIBIT E
BILL OF SALE AND
ASSIGNMENT OF LEASES, CONTRACTS AND PERSONAL PROPERTY
This instrument is executed and delivered pursuant to that certain
Purchase and Sale Agreement (the "Agreement") dated ________________ between JS
- - JAMES CENTER ASSOCIATES, L.P. ("Seller") and PACIFIC RETAIL TRUST
("Purchaser") covering the real property described in Schedule 1 attached hereto
("Real Property"). All capitalized terms that are used by not defined herein
shall have the same meanings ascribed to such terms in the Agreement.
1. Assignment and Assumption. For good and valuable consideration
Seller hereby assigns and conveys to Purchaser, and Purchaser hereby accepts:
(a) Leases. All of Seller's right, title and interest in and to the
leases ("Leases") as set forth on the Rent Roll attached hereto as Schedule 2,
and Purchaser hereby assumes all of Seller's obligations under the Leases
arising from and after Closing (as defined in the Agreement) but as to Seller's
obligations with regard to security deposits and other deposits, only to the
extent the security deposits have been transferred or credited to Purchaser;
(b) Tangible Personalty. All right, title and interest of Seller in and
to all tangible personal property now owned by Seller and used in connection
with the operation, ownership, maintenance, management, or occupancy of the Real
Property, including, without limitation, all equipment, machinery, heating,
ventilating and air conditioning units, furniture, art work, furnishings, trade
fixtures, office equipment and supplies, and, whether stored on or off-site, all
tools and maintenance equipment, supplies, and construction and finish materials
not incorporated in the Improvements and held for repairs and replacements,
except any such tangible personal property belonging to tenants under the Leases
and specifically including the personal property listed on Schedule 3 attached
hereto;
(c) Intangible Personalty. All right, title and interest of Seller in
and to all intangible personal property now owned by Seller and used in
connection with the operation, ownership, maintenance, management, or occupancy
of the Real Property, including, without limitation, any and all of the
following: trade names and trade marks associated with the Real Property,
including, without limitation the name of the Real Property ("James Center");
the plans and specifications for the Improvements, including as-built plans;
unexpired warranties, guarantees, indemnities and claims against third parties;
contract rights related to the
E-1
<PAGE>
construction, operation, repair, renovation, ownership or management of the Real
Property that are expressly assumed by Purchaser pursuant to this Agreement;
pending permit or approval applications, permits, approvals and licenses (to the
extent assignable); insurance proceeds and condemnation awards to the extent
provided in the Agreement; and books and records relating to the Property; and
(d) Contracts. All of Seller's right, title and interest in and to the
contracts ("Contracts") described in Schedule 4 attached hereto, and Purchaser
hereby assumes the obligations of Seller under such contracts arising from and
after Closing.
2. Warranty. Seller represents and warrants to Purchaser that it is the
owner of the property described above, that such property is free and clear of
all liens, charges and encumbrances other than the Permitted Exceptions (as
defined in the Agreement), and Seller warrants and defends title to the
above-described property unto Purchaser, its successors and assigns, against any
person or entity claiming, or to claim, the same or any part thereof, subject
only to the Permitted Exceptions as defined in the Agreement.
3. Indemnification. Seller shall defend, indemnify and hold harmless
Purchaser from and against any liability, damages, causes of action, expenses,
and attorneys' fees incurred by Purchaser by reason of the failure of Seller to
fulfill, perform, discharge, and observe its obligations with respect to the
Leases and the Contracts arising before the Closing Date (as defined in the
Agreement). Purchaser shall defend, indemnify and hold harmless Seller from and
against any liability, damages, causes of action, expenses, and attorneys' fees
incurred by Seller by reason of the failure of Purchaser to fulfill, perform,
discharge, and observe the obligations assumed by it under this instrument with
respect to the Leases or the Service Contracts arising after the date hereof.
4. Limitation of Liability of Trustees. In accordance with the
declaration of trust of Purchaser, notice is hereby given that all persons
dealing with Purchaser shall look to the assets of Purchaser for the enforcement
of any claim against Purchaser, as neither the trustees, officers, employees nor
shareholders of purchasers assume any personal liability for obligations entered
into by or on behalf of Purchaser.
SELLER:
JS - JAMES CENTER ASSOCIATES, L.P.,
a ___________________________________
E-2
<PAGE>
By:____________________________
Name:__________________________
Title:_________________________
PURCHASER:
PACIFIC RETAIL TRUST, a Maryland real
estate investment trust
By:____________________________
Name:__________________________
Title:_________________________
E-3
<PAGE>
EXHIBIT F
NOTICE TO TENANTS
[Date of Sale]
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
P_______________________
FirstName LastName
Job Title
Company
Address
City, State Postal Code
Re: Sale of Property - James Center, Tacoma, Washington
Lease Agreement dated _____________ by and between _________________
("Tenant") and ___________________ ("Landlord")
Dear ____________:
As required in the Notice Provision of your Lease Agreement and by applicable
Washington law, if any, notice from both Seller and Purchaser is hereby given
that effective _____________, 199__, Landlord has sold James Center Shopping
Center, located in Tacoma, Washington to Pacific Retail Trust. All future rental
payments should be sent as follows:
Please note the following:
1) All future rental payments should be sent as follows:
Make checks payable to: Pacific Retail Trust - [Insert Property]
Mail payment to: Pacific Retail Trust - [Insert Property]
P.O. Box [Insert Box #]
Dallas, TX [Insert Zip Code]
F-1
<PAGE>
2) All questions regarding financial payment should be directed to [Insert
Lease Administrator], Lease Administration at 800/529-4506 or
214/340-2330 and 214/503-6026 (fax), 10675 East Northwest Highway,
Suite 2630, Dallas, Texas 75238.
3) Please contact your insurance agent immediately and instruct them to
change the name of the Certificate Holder and Additional Insured as
required in your Lease Agreement to reflect the new owner, Pacific
Retail Trust. Promptly forward a copy via fax and mail the original to
the Dallas address noted above within the next ten days:
4) Your Contact for property management is:
Property Manager: [Insert Director, Property Operations]
Pacific Retail Trust
[Insert Street Address]
[Insert City], [Insert State] [Insert Zip Code]
Telephone Number: [Insert #]
FAX Number: [Insert #]
5) Attached is an Emergency Contact Form. Please complete as requested and
return to [Insert Director, Property Operations] at the above address.
6) Attached you will find a Certificate of Non-Foreign status in which the
Purchaser, Pacific Retail Trust certifies Purchaser is not a foreign
entity. Additionally, the Purchaser's U.S. employer identification
number and Purchaser's principal place of business is also provided for
your records.
All of the Landlord's interest in your lease will be held by the new owner,
Pacific Retail Trust, including transfer and recognition of tenant's security
deposit in the amount of ($Secdep) and the new owner will from and after the
date hereof be responsible for such deposit.
Service of Legal Notice shall be addressed to:
Pacific Retail Trust
8140 Walnut Hill Lane, Suite 400
Dallas, TX 75231
Attn: Dennis H. Alberts
Very truly yours,
[Insert Seller's Signature Block]
[Insert Corporation/Partnership, State]
By:
F-2
<PAGE>
Name:
Title:
"SELLER"
PACIFIC RETAIL TRUST,
a Maryland real estate investment trust
By:
Name: [Name of VP/Due Diligence]
Its: Vice President
"PURCHASER"
30177448.6 40899 1702C 98484215
F-3
<PAGE>
CERTIFICATE OF NON-FOREIGN STATUS
To: Lessee
Definitions: Lessee: [Tenant]
Lease: Lease Agreement by and between Lessee, JS -
James Center Associates, L.P., a
_______________________ ("Seller")
Certain provisions of the Internal Revenue Code of the United Stats (the "Code")
provide that a lessee of a U.S. real property interest must, under certain
circumstances, withhold tax from lease payments if the lessor is a "foreign
person," as that term is used in the Code. The undersigned ("Purchaser") has
purchased the James Center Shopping Center from Seller and assumed the position
of lessor under the Lease, and associated documents. With respect to the
applicable Code provisions, the undersigned hereby certifies:
Purchaser is not a foreign person, foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Code and
associated regulations);
Purchaser's U.S. employer identification number is ID 74-6426985;
Purchaser's principal place of business is:
Pacific Retail Trust
8140 Walnut Hill Lane, Suite 400
Dallas, TX 75231
Purchaser understands and agrees that this certificate may be relied upon by
Lessee and may be disclosed to the Internal Revenue Service by Lessee.
I declare that I have examined this certification and to the best of my
knowledge and belief, it is true, correct, and complete, and I further declare
that I have authority to sign this document on behalf of Purchaser, either as an
officer or an authorized agent of the Purchaser's corporation.
PURCHASER: PACIFIC RETAIL TRUST
By:
Name:
Title:
F-4
<PAGE>
EXHIBIT G
AUDIT LETTER
[Company Letterhead]
(Date)
(date of the auditor's report)
Price Waterhouse LLP
2001 Ross Avenue
Suite 1800
Dallas, Texas 75201
Dear Sirs:
We confirm, to the best of our knowledge and belief, the following
representations made to you during your audit of the financial statements of for
the year ended December 31, 199 for the purpose of expressing an opinion as to
whether the financial statements present fairly the results of operations of
in conformity with generally accepted
accounting principles.
1. We acknowledge management's responsibility for the fair presentation in
the financial statements of results of operations in conformity with
generally accepted accounting principles.
2. All financial and accounting records and related data have been made
available to you. We are not aware of any accounts, transactions or
material agreements not fairly described and properly recorded in the
financial and accounting records underlying the financial statements.
3. We are not aware of (a) any irregularities involving
management or employees who have significant roles in the
system of internal accounting control, or any irregularities
involving other employees that could have a material effect
on the financial statements, or (b) any violations or possible
violations of laws or regulations, the effects of which should
be considered for disclosure in the financial statements or
as a basis for recording a loss contingency. There have been
no communications from regulatory agencies concerning
noncompliance with or deficiencies in financial reporting
practices that could have a material effect on the financial
statements. The company has complied with all aspects of
contractual agreements that would have a material effect on
the financial statements.
4. There are no other material liabilities or gain or loss contingencies
that are required to be accrued or disclosed by
G-1
<PAGE>
Statement of Financial Accounting Standards No. 5 and no
unasserted claims or assessments that our legal counsel has
advised us are probable of assertion and required to be
disclosed in accordance with that Statement.
5. No matters or occurrences have come to our attention up to the date of
this letter that would materially affect the financial statements for
the year ended December 31, 199 or, although not affecting such
financial statements, have caused or are likely to cause any material
change, adverse or otherwise, in the results of operations of the
property.
(Signatures)
G-2
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
[James Center, Tacoma, Pierce County, Washington]
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this "First
Amendment") is made as of the ___ day of November, 1998, by and among JS - JAMES
CENTER ASSOCIATES, L. P., a Washington limited partnership, acting herein by and
through its general partner, Johnson Capital Corp. ("Seller") and PACIFIC REALTY
TRUST, a Maryland real estate investment trust ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have heretofore entered into that certain
Agreement of Purchase and Sale dated October 6, 1998 (the "Agreement"),
pertaining to the real property located in Tacoma, Pierce County, Washington,
such real property being more particularly described in the Agreement;
WHEREAS, Seller and Purchaser hereby desire to amend the Agreement as
more particularly set forth below;
NOW THEREFORE, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, Seller and Purchaser agree as
follows:
1. All capitalized terms used herein shall have the same meaning as
defined in the Agreement, unless otherwise defined in this First
Amendment.
2. The Due Diligence Period as defined in Paragraph 1.1(f) and used in the
Agreement is hereby amended to reflect that the Due Diligence Period
shall be the period ending on December 24, 1998 (the "First Extension
Period"), and the Purchaser shall have the right to extend the Due
Diligence Period for an additional thirty (30) day period thereafter,
ending on January 25, 1999 (the "Second Extension Period").
3. The outside Closing Date described in Paragraph 1.1(g) of the Agreement
is hereby revised to read "or after February 24, 1999 unless further
extended as provided in Paragraph 2.8 below."
4. Notwithstanding anything to the contrary in the Agreement, as
consideration for the extensions, Purchaser and Seller hereby agree
that $12,500.00 of the Earnest Money shall become non refundable and be
paid by Escrow Agent to Seller, subject to the conditions set forth
below, upon the beginning of the First Extension Period and upon the
beginning of the Second Extension Period (the "Extension Fee"). Escrow
Agent shall be authorized to release the Extension Fee for the First
Extension Period and, if extended by Purchaser, the Second
30182176.3 40899 1705C 98484215
1
<PAGE>
Extension Period immediately upon receipt of written notification from
Purchaser that it has elected to proceed with the applicable extension.
In the event Purchaser elects to terminate the Agreement pursuant to
any of the termination rights set forth in Sections 2.3, 2.5, 2.7(c) or
2.8 of the Agreement, the Earnest Money (including, but not limited to,
any Extension Fee) shall be returned to Purchaser. In the event the
Purchaser elects to purchase the Property, the Extension Fee for the
First Extension Period and, if applicable, the Second Extension Period,
shall be treated as Earnest Money and applied to the Purchase Price.
5. Except as amended herein, the Agreement shall remain in full force and
effect. In the event of any conflicts or inconsistencies between the
provisions of this First Amendment and the provisions of the Agreement,
the provisions of this First Amendment shall control.
6. This First Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of such
counterparts shall constitute one agreement. To facilitate execution of
this First Amendment, the parties may execute and exchange facsimile
counterparts of the signature pages, and facsimile counterparts shall
serve as originals.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first above written.
JS - JAMES CENTER ASSOCIATES, L.P.,
a Washington limited partnership
By: JOHNSON CAPITAL CORP.,
its general partner
By: ______________________________
Name: ______________________________
Title:______________________________
"Seller"
PACIFIC RETAIL TRUST,
a Maryland real estate investment trust
By: ______________________________
Name:______________________________
Title:_____________________________
"Purchaser"
30182176.3 40899 1705C 98484215
2
<PAGE>
30182176.3 40899 1705C 98484215
<PAGE>
SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
[James Center, Tacoma, Pierce County, Washington]
THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT (this "Second
Amendment") is made as of the ___ day of December, 1998, by and among JS - JAMES
CENTER ASSOCIATES, L. P., a Washington limited partnership, acting herein by and
through its general partner, Johnson Capital Corp. ("Seller") and PACIFIC RETAIL
TRUST, a Maryland real estate investment trust ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have heretofore entered into that certain
Agreement of Purchase and Sale dated October 6, 1998, as amended by that certain
First Amendment to Agreement of Purchase and Sale dated November 24, 1998 (the
"Agreement"), pertaining to the real property located in Tacoma, Pierce County,
Washington, such real property being more particularly described in the
Agreement;
WHEREAS, Seller and Purchaser hereby desire to amend the Agreement as
more particularly set forth below;
NOW THEREFORE, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, Seller and Purchaser agree as
follows:
1. All capitalized terms used herein shall have the same meaning as
defined in the Agreement, unless otherwise defined in this Second
Amendment.
2. Purchaser hereby exercises its right to extend the Due Diligence Period
for an additional thirty (30) day period ending on January 25, 1999
(the "Second Extension Period").
3. Purchaser hereby instructs Escrow Agent to release $12,500.00 of the
Earnest Money to Seller as the Extension Fee for the Second Extension
Period, subject to the conditions set forth below and in the Agreement.
In the event Purchaser elects to terminate the Agreement pursuant to
any of the termination rights set forth in Section 3.2 of the
Agreement, the Earnest Money (including, but not limited to, any
Extension Fee) shall be returned to Purchaser.
4. Except as amended herein, the Agreement shall remain in full force and
effect. In the event of any conflicts or inconsistencies between the
provisions of this Second Amendment and the provisions of the
Agreement, the provisions of this Second Amendment shall control.
30184728.1 40899 1706C 98484215
1
<PAGE>
5. This Second Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of such
counterparts shall constitute one agreement. To facilitate execution of
this Second Amendment, the parties may execute and exchange facsimile
counterparts of the signature pages, and facsimile counterparts shall
serve as originals.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the date first above written.
JS - JAMES CENTER ASSOCIATES, L.P.,
a Washington limited partnership
By: JOHNSON CAPITAL CORP.,
its general partner
By: ________________________
Name:________________________
Title:_______________________
"Seller"
PACIFIC RETAIL TRUST,
a Maryland real estate investment trust
By: _______________________
Name:_______________________
Title:______________________
"Purchaser"
30184728.1 40899 1706C 98484215
<PAGE>
THIRD AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
[James Center, Tacoma, Pierce County, Washington]
THIS THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT (this "Third
Amendment") is made as of the ___ day of January, 1999, by and among JS - JAMES
CENTER ASSOCIATES, L. P., a Washington limited partnership, acting herein by and
through its general partner, Johnson Capital Corp. ("Seller") and PACIFIC RETAIL
TRUST, a Maryland real estate investment trust ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have heretofore entered into that certain
Agreement of Purchase and Sale dated October 6, 1998, as amended by that certain
First Amendment to Agreement of Purchase and Sale dated November 24, 1998 and
that certain Second Amendment to Agreement of Purchase and Sale dated December
__, 1998 (as amended, the "Agreement"), pertaining to the real property located
in Tacoma, Pierce County, Washington, such real property being more particularly
described in the Agreement;
WHEREAS, Seller and Purchaser hereby desire to amend the Agreement as
more particularly set forth below;
NOW THEREFORE, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, Seller and Purchaser agree as
follows:
1. All capitalized terms used herein shall have the same meaning as
defined in the Agreement, unless otherwise defined in this Third
Amendment.
2. The Due Diligence Period is hereby extended and will expire at 6:00
p.m., Pacific Standard Time on February 8, 1999 (the "Third Extension
Period").
3. As consideration for the Third Extension Period, Purchaser and Seller hereby
agree that $12,500.00 of the Earnest Money shall be released by Escrow Agent
to Seller upon the full execution of this Third Amendment
(the "Third Extension Fee"). Notwithstanding anything to the contrary in
the Agreement, it is understood and agreed that (i) the Extension Fee for
the First Extension Period and Second Extension Period and the Third
Extension Fee (being in the aggregate amount of $37,500.00 and collectively
referred to as the "Extension Fees") shall be treated as Earnest Money and
applied to the Purchase Price in the event Purchaser elects to purchase the
Property and (ii) the Earnest Money (including, but not limited to, the
Extension Fees) shall be fully refunded to Purchaser in the event Purchaser
elects to terminate the Agreement pursuant to any of the termination rights
set forth in Paragraphs 2.3, 2.5, 2.7(c), 2.8 or 3.2 of the Agreement or in
the event that certain Assignment and
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Assumption of Lease and Second Amendment to Lease has not been fully
executed by Fred Meyer and Associated Grocers, the form and content of
which document must be acceptable to Purchaser, prior to the expiration
of the Due Diligence Period.
4. With respect to the termination rights in Paragraph 3.2 of the
Agreement, Purchaser has objected, and continues to object, to numerous
title exceptions which relate to the Real Property. In the event each
of these title exceptions is not resolved to Purchaser's satisfaction
prior to the expiration of the Due Diligence Period and Purchaser
elects to terminate the Agreement, the Earnest Money (including, but
not limited to the Extension Fees) shall be fully refunded to
Purchaser.
5. Except as amended herein, the Agreement shall remain in full force and
effect. In the event of any conflicts or inconsistencies between the
provisions of this Third Amendment and the provisions of the Agreement,
the provisions of this Third Amendment shall control.
6. This Third Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of such
counterparts shall constitute one agreement. To facilitate execution of
this Third Amendment, the parties may execute and exchange facsimile
counterparts of the signature pages, and facsimile counterparts shall
serve as originals.
IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment as of the date first above written.
JS - JAMES CENTER ASSOCIATES, L.P.,
a Washington limited partnership
By: JOHNSON CAPITAL CORP.,
its general partner
By: _________________________
Name:_________________________
Title: _______________________
"Seller"
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PACIFIC RETAIL TRUST,
a Maryland real estate investment trust
By: __________________________
Name:__________________________
Title:_________________________
"Purchaser"
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FOURTH AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
[James Center, Tacoma, Pierce County, Washington]
THIS FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (this "Fourth
Amendment") is made as of the 8th day of February, 1999, by and among JS - JAMES
CENTER ASSOCIATES, L. P., a Washington limited partnership, acting herein by and
through its general partner, Johnson Capital Corp. ("Seller") and PACIFIC RETAIL
TRUST, a Maryland real estate investment trust ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have heretofore entered into that certain
Agreement of Purchase and Sale dated October 6, 1998, as amended by that certain
First Amendment to Agreement of Purchase and Sale dated November 24, 1998, that
certain Second Amendment to Agreement of Purchase and Sale dated December __,
1998 and that certain Third Amendment to Agreement of Purchase and Sale dated
January 25, 1999 (as amended, the "Agreement"), pertaining to the real property
located in Tacoma, Pierce County, Washington, such real property being more
particularly described in the Agreement;
WHEREAS, Seller and Purchaser hereby desire to amend the Agreement as
more particularly set forth below;
NOW THEREFORE, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, Seller and Purchaser agree as
follows:
1. All capitalized terms used herein shall have the same meaning as
defined in the Agreement, unless otherwise defined in this Fourth
Amendment.
2. The Purchase Price is hereby reduced to Twelve Million Four Hundred
Thousand and No/100 Dollars ($12,400,000.00).
3. Purchaser has agreed to give Fred Meyer an aggregate rental reduction
of $30,000.00 per year. Accordingly, it is understood and agreed that
Purchaser shall receive a credit against the Purchase Price at Closing
in the amount of One Hundred Thousand and No/100 Dollars ($100,000.00)
pursuant to Paragraph 1.4 of the Agreement, which will result in a net
Purchase Price to Purchaser of $12,300,000.00.
4. Notwithstanding anything to the contrary set forth in the Agreement, in
the event that certain Assignment and Assumption of Lease and Second
Amendment to Lease (the form and content of which must be acceptable to
Purchaser) has not been fully executed by Associated Grocers, on or
before 6:00 p.m., Pacific Standard Time, on February 15, 1999,
Purchaser
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shall have the right to terminate the Agreement, and the Earnest Money
(including, but not limited to, the Extension Fees) shall be fully
refunded to Purchaser.
5. Purchaser has provided Seller with specific written comments and
objections to the Tenant Estoppels that were previously submitted to
Purchaser which have not been resolved to Purchaser's satisfaction.
The expiration of the Due Diligence Period shall not be deemed a waiver
by Purchaser of any such comments and objections. At least five (5)
days before the Closing Date, Purchaser shall have received updated
Tenant Estoppels from the tenants specified in Paragraph 2.3 of the
Agreement which are dated no earlier than thirty (30) days prior to the
Closing Date and contain all of the revisions requested by Purchaser
but no other changes other than those which are acceptable to Purchaser
in its sole discretion. If the required Tenant Estoppels are not
delivered to Purchaser, Purchaser shall have the rights described in
Paragraph 2.3.
6. Purchaser has objected, and continues to object, to those certain title
exceptions which relate to the Real Property and are described on
Exhibit A attached hereto. Seller agrees that it is obligated to cure
each of the title objections described on Exhibit A prior to Closing.
In the event each of these title exceptions is not resolved to
Purchaser's satisfaction prior to the Closing, Purchaser shall have the
right to terminate the Agreement, and the Earnest Money (including, but
not limited to the Extension Fees) shall be fully refunded to
Purchaser.
7. Except as amended herein, the Agreement shall remain in full force and
effect. In the event of any conflicts or inconsistencies between the
provisions of this Fourth Amendment and the provisions of the
Agreement, the provisions of this Fourth Amendment shall control.
8. This Fourth Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of such
counterparts shall constitute one agreement. To facilitate execution of
this Fourth Amendment, the parties may execute and exchange facsimile
counterparts of the signature pages, and facsimile counterparts shall
serve as originals.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment as of the date first above written.
JS - JAMES CENTER ASSOCIATES, L.P.,
a Washington limited partnership
By: JOHNSON CAPITAL CORP.,
its general partner
By: __________________________
Name:__________________________
Title:_________________________
"Seller"
PACIFIC RETAIL TRUST,
a Maryland real estate investment trust
By: _________________________
Name:_________________________
Title:_________________________
"Purchaser"
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<PAGE>
EXHIBIT A
All exception references relate to Schedule B exceptions as shown on A.L.T.A.
Commitment (Fifth Report) issued by Chicago Title Insurance Company dated
effective January 13, 1999
Exception No.: Objection
36
Disapproved, subject to review and approval
of unrecorded Supplemental Agreement
49
Disapprove, subject
to (i) recordation of
replacement easement,
the form and content
of which must be
acceptable to
Purchaser, which
removes the
encroachments into
the water line by the
Fred Meyer Building
and the U.S. Bank and
(ii) receipt of
revised survey which
shows no permanent
structures
constructed on the
replacement easement
53 Disapprove, subject to review and approval of
unrecorded Supplemental Agreement
54 Disapprove, subject to review and approval of
unrecorded Easement Modification
Agreement
55 Disapprove, subject to review and approval of
unrecorded Easement Modification
Agreement
58 Disapprove, subject
to receipt of revised
Commitment which
indicates that
affirmative title
insurance coverage
will be available for
the Ivars
encroachment into the
gas line easement
64 Disapprove. Seller to provide evidence of
identity and authority for individuals signing
on behalf of the managing general partners of
Seller.
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30187496.1 40899 1709C 98484215
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FIFTH AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
[James Center, Tacoma, Pierce County, Washington]
THIS FIFTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (this "Fifth
Amendment") is made as of the 15th day of February, 1999, by and among JS -
JAMES CENTER ASSOCIATES, L. P., a Washington limited partnership, acting herein
by and through its general partner, Johnson Capital Corp. ("Seller") and PACIFIC
RETAIL TRUST, a Maryland real estate investment trust ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have heretofore entered into that certain
Agreement of Purchase and Sale dated October 6, 1998, as amended by that certain
First Amendment to Agreement of Purchase and Sale dated November 24, 1998, that
certain Second Amendment to Agreement of Purchase and Sale dated December __,
1998, that certain Third Amendment to Agreement of Purchase and Sale dated
January 25, 1999, and that certain Fourth Amendment to Agreement of Purchase and
Sale dated February 8, 1999 (as amended, the "Agreement"), pertaining to the
real property located in Tacoma, Pierce County, Washington, such real property
being more particularly described in the Agreement;
WHEREAS, Seller and Purchaser hereby desire to amend the Agreement as
more particularly set forth below;
NOW THEREFORE, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, Seller and Purchaser agree as
follows:
1. All capitalized terms used herein shall have the same meaning as
defined in the Agreement, unless otherwise defined in this Fifth
Amendment.
2. The Closing Date, as defined in Paragraph 1.1(g) of the Agreement is
hereby deleted in its entirety and replaced with the following:
March 24, 1999, unless further extended as provided in
Paragraph 2.8 below. However, in the event Purchaser elects to
extend the Closing Date, the Closing shall occur on or before
five (5) days after the Purchaser obtains the SEPA Approval
provided all of the conditions relating to the SEPA Approval
set forth in the second sentence of Paragraph 2.8 have been
satisfied.
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<PAGE>
3. Purchaser has received that certain Assignment and Assumption of Lease
and Second Amendment to Lease (the form and content of which is
acceptable to Purchaser) fully executed by Associated Grocers, and this
requirement is no longer a contingency to Closing.
4. Except as amended herein, the Agreement shall remain in full force and
effect. In the event of any conflicts or inconsistencies between the
provisions of this Fifth Amendment and the provisions of the Agreement,
the provisions of this Fifth Amendment shall control.
5. This Fifth Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of such
counterparts shall constitute one agreement. To facilitate execution of
this Fifth Amendment, the parties may execute and exchange facsimile
counterparts of the signature pages, and facsimile counterparts shall
serve as originals.
IN WITNESS WHEREOF, the parties hereto have executed this Fifth
Amendment as of the date first above written.
JS - JAMES CENTER ASSOCIATES, L.P.,
a Washington limited partnership
By: JOHNSON CAPITAL CORP.,
its general partner
By: __________________________
Name:__________________________
Title:_________________________
"Seller"
PACIFIC RETAIL TRUST,
a Maryland real estate investment trust
By: ____________________________
Name:___________________________
Title:__________________________
"Purchaser"
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<PAGE>
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<PAGE>
SIXTH AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
[James Center, Tacoma, Pierce County, Washington]
THIS SIXTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (this "Sixth
Amendment") is made as of the 24th day of March, 1999, by and among JS - JAMES
CENTER ASSOCIATES, L. P., a Washington limited partnership, acting herein by and
through its general partner, Johnson Capital Corp. ("Seller") and REGENCY
CENTERS, L.P. , a Delaware limited partnership ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller and Pacific Retail Trust have heretofore entered into
that certain Agreement of Purchase and Sale dated October 6, 1998, as amended by
that certain First Amendment to Agreement of Purchase and Sale dated November
24, 1998, that certain Second Amendment to Agreement of Purchase and Sale dated
December 23, 1998, that certain Third Amendment to Agreement of Purchase and
Sale dated January 25, 1999, that certain Fourth Amendment to Agreement of
Purchase and Sale dated February 8, 1999 and that certain Fifth Amendment to
Agreement of Purchase and Sale dated February 15, 1999 (as amended, the
"Agreement"), pertaining to the real property located in Tacoma, Pierce County,
Washington, such real property being more particularly described in the
Agreement;
WHEREAS, Regency Realty Corporation, a Florida corporation and the
successor by merger of Pacific Retail Trust, assigned its rights as purchaser
under the Agreement to Purchaser by that certain assignment dated March 22,
1999;
WHEREAS, Seller and Purchaser hereby desire to amend the Agreement as
more particularly set forth below;
NOW THEREFORE, for and in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, Seller and Purchaser agree as
follows:
1. All capitalized terms used herein shall have the same meaning as
defined in the Agreement, unless otherwise defined in this Sixth
Amendment.
2. The Closing Date, as defined in Paragraph 1.1(g) of the Agreement is
hereby deleted in its entirety and replaced with the following:
As designated by Purchaser upon not less than three (3) days
prior notice to Seller, but in no event later than April 7,
1999. However, in the event the assumption documents for the
Loan have not been approved by Purchaser on or before April 5,
1999, Purchaser shall have the right, at its
30190763.1 40899 1711C 98484215
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<PAGE>
sole discretion and for no additional consideration, to extend
the outside Closing Date from April 7, 1999 to April 21, 1999.
If Purchaser elects to exercise such option, Purchaser shall
notify Seller and Escrow Agent.
3. Purchaser hereby instructs Escrow Agent to release the previously
unreleased portion of the Earnest Money in the amount of $162,500.00 to
Seller. In the event Purchaser elects, in its sole and absolute
discretion, to terminate the Agreement because it has been unable to
negotiate acceptable terms for the assumption of the Loan, all Earnest
Money (including the $37,500.00 which has previously been released to
Seller and the $162,500.00 which is to be released to Seller pursuant
to this Sixth Amendment) shall be promptly returned to Purchaser.
4. Purchaser hereby acknowledges that the updated Tenant Estoppels and the
SEPA Approval have been received and approved by Purchaser, and the
title objections described on Exhibit A to the Fourth Amendment to
Agreement of Purchase and Sale have been satisfied with the exception
of Exception No. 64 which is to be satisfied by Seller prior to
Closing.
5. Except as amended herein, the Agreement shall remain in full force and
effect. In the event of any conflicts or inconsistencies between the
provisions of this Sixth Amendment and the provisions of the Agreement,
the provisions of this Sixth Amendment shall control.
6. This Sixth Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of such
counterparts shall constitute one agreement. To facilitate execution of
this Sixth Amendment, the parties may execute and exchange facsimile
counterparts of the signature pages, and facsimile counterparts shall
serve as originals.
IN WITNESS WHEREOF, the parties hereto have executed this Sixth
Amendment as of the date first above written.
JS - JAMES CENTER ASSOCIATES, L.P.,
a Washington limited partnership
By: JOHNSON CAPITAL CORP.,
its general partner
By: ________________________
Name:_______________________
Title:______________________
"Seller"
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<PAGE>
REGENCY CENTERS, L.P., a Delaware
limited partnership
By: REGENCY REALTY CORPORATION,
a Florida corporation, General Partner
By: _________________________
Name:_________________________
Title:________________________
"Purchaser"
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