PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"),
dated as of June 11, 2003, is by and between Regency Centers Corporation, a
Florida corporation ("Regency"), Security Capital Group Incorporated, a Maryland
corporation ("Security Capital Group") and Security Capital Shopping Mall
Business Trust, a Maryland real estate investment trust ("Sub," and together
with Security Capital Group, "Security Capital").
WHEREAS, Security Capital is the beneficial owner of
34,273,236 shares of Regency common stock, $0.01 par value per share (the
"Shares");
WHEREAS, Security Capital desires to dispose of a
portion of the Shares through an underwritten public offering (the "Secondary
Offering") pursuant to an underwriting agreement to be entered into among
Regency, Security Capital Group, Sub, Citigroup Global Markets Inc. and Merrill
Lynch & Co. and such other underwriters as provided therein (the "Underwriting
Agreement");
WHEREAS, Security Capital expects to enter into a series
of forward contracts (the "Forward Contracts") with certain underwriters
(the "Forward Contract Underwriters") covering a portion of the Shares;
WHEREAS, Security Capital may lend a portion of the
Shares to the Forward Contract Underwriters pursuant to stock loan agreements
(the "Stock Loan Agreements");
WHEREAS, the Forward Contract Underwriters intend to
sell the Shares borrowed under the Stock Loan Agreements in the Secondary
Offering;
WHEREAS, concurrent with the Secondary Offering, Citigroup
Global Markets Holdings Inc. ("Citigroup Holdings") intends to offer, through an
underwritten public offering, SynDECSSM linked to a portion of the Shares
subject to the Forward Contracts (the "SynDECSSM Offering");
WHEREAS, Citigroup Holdings intends to enter into equity
swap agreements with respect to a specified number of shares of common
stock of Regency providing for cash payments to Citigroup Holdings in an amount
equal to the value of the specified shares of Regency common stock on the swap
termination date (with such cash swap agreements being capable of settlement in
shares of Regency common stock if and to the extent that, after giving effect to
such settlement in shares, Citigroup Holdings would not be considered to own,
for purposes of the Section 856(d)(2)(B) of the Code, more than 9.8% of the
capital stock of Regency) (the "Cash Swap Agreements"); and
WHEREAS, Security Capital desires to sell to Regency and
Regency desires to purchase from Security Capital up to $150,000,000 of
the Shares, subject to the terms described herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, agreements and warranties herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Purchase and Sale.
(a) Subject to adjustment as set forth in Section
1(b) hereof and to the other terms and conditions herein set forth, Regency
agrees to purchase and Sub agrees to sell on the Closing Date (as hereinafter
defined) the number of whole Shares (the "Regency Shares"), free and clear of
all liens, encumbrances, claims and security interests, equal to (i)
$150,000,000 divided by (ii) the per share offering price to the public of the
Shares offered pursuant to the Underwriting Agreement (the "Public Offering
Price Per Share"), rounded up to the nearest whole number and as may be adjusted
pursuant to Section 1(b) hereof.
(b) If, upon the consummation of the Secondary
Offering and the execution by Security Capital of the Forward Contracts, the
Adjusted Stock Ownership Percentage (as defined below) is 9.8% or less, Regency
shall purchase from Sub a number of Regency Shares equal to (i) $150,000,000
divided by (ii) the Public Offering Price Per Share, as set forth in Section
1(a) above, without adjustment. If, upon the consummation of the Secondary
Offering and the execution by Security Capital of the Forward Contracts, the
Adjusted Stock Ownership Percentage is greater than 9.8%, then Regency shall
purchase from Sub at the Public Offering Price Per Share an aggregate value of
Regency Shares as set forth in the following table; provided, however, that if
the disposition of Shares by Sub pursuant to the Secondary Offering and this
Agreement would result in Security Capital's aggregate ownership of the Shares
being reduced by 20% or less (calculated in accordance with Section 302(b) of
the Internal Revenue Code), then Regency will not be obligated to purchase from
Sub and Sub will not be obligated to sell to Regency any of the Regency Shares;
Adjusted Stock Regency's
Ownership Percentage Participation
-------------------- -------------
< 9.8% $150MM
-
> 9.8% and < 11.0% $135MM
-
>11.0% and < 12.0% $120MM
-
>12.0% and < 13.0% $105MM
-
>13.0% and < 14.0% $90MM
-
>14.0% and < 15.0% $75MM
-
> 15.0% $0MM
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As used in this Section 1(b), the term "Adjusted Stock Ownership Percentage"
shall mean the percentage of the total outstanding shares of Regency common
stock (on a fully diluted basis assuming that Regency purchases $150,000,000 of
the Shares pursuant to this Agreement) owned by Security Capital after the
consummation of Secondary Offering and the execution of the Forward Contracts.
For purposes of this calculation, the Shares subject to the over-allotment
options granted by Security Capital to the underwriters in the Underwriting
Agreement and the Shares linked to the over-allotment option granted to the
underwriters of the SynDECSSM Offering (the "Greenshoe Shares") shall be deemed
not owned by Security Capital. For illustration purposes, the Adjusted Stock
Ownership Percentage equals (i) the Security Capital Owned Shares (as defined
below) divided by (ii) the Total Outstanding Shares (as defined below).
The term "Security Capital Owned Shares" shall mean (i)
34,273,236 minus (ii) the sum of (A) the number of Shares sold by Security
Capital in the Secondary Offering plus (B) the number of Shares subject to the
Forward Contracts plus (C) the Greenshoe Shares.
The term "Total Outstanding Shares" shall mean (i)
60,511,537 minus (ii) (A) $150,000,000 divided by (B) the Public Offering Price
Per Share.
2. Representations and Warranties of Regency. Regency
hereby represents and warrants to Security Capital as follows:
(a) Due Organization. Regency is duly organized,
validly existing and in good standing under the laws of the State of Florida.
(b) Authorization; Non-Contravention. Regency has
the requisite power and authority to enter into this Agreement and the
transactions and agreements contemplated hereby and to carry out its obligations
hereunder and thereunder. This Agreement has been duly authorized, executed and
delivered by Regency and constitutes a valid and binding agreement enforceable
against it in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors rights
generally or by general equitable principles and except as the enforcement of
the provisions of Section 9 hereof may be limited by public policy. Neither the
execution and delivery of this Agreement, the consummation of the transactions
and agreements contemplated hereby, nor compliance with the terms, conditions or
provisions of this Agreement, will be a violation of any of the terms,
conditions or provisions of Regency's Restated Articles of Incorporation, as
amended, or bylaws or of any material agreement or instrument to which it or one
of its
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subsidiaries is a party or by which it or one of its subsidiaries or its
or their material properties may be bound, or constitute a default or create
a right of termination or acceleration thereunder. A special committee of the
Board of Directors of Regency has determined that this Agreement and the
transactions contemplated hereby are advisable, fair to and in the best
interests of the shareholders of Regency.
(c) Regency Shares Outstanding. As of the date
hereof, Regency has outstanding 60,511,537 shares of common stock, $0.01 par
value per share.
(d) REIT Status. Regency further represents and
warrants that (i) it intends in its federal income tax return for the tax
years that will end on December 31, 2003 to be taxed as a real estate investment
trust (a "REIT") within the meaning of Section 856 of the Internal Revenue Code
of 1986, as amended (the "Code"), (ii) it has operated, and intends to continue
to operate, in such a manner as to qualify as a REIT for 2003, and (iii)
assuming the Forward Contracts, the Stock Loan Agreements and the Cash Swap
Agreements are in substantially the form attached hereto as Exhibit A, Exhibit B
and Exhibit C, respectively, the consummation of the transactions contemplated
by this Agreement, the Underwriting Agreement, the Forward Contracts, the Stock
Loan Agreements and the Cash Swap Agreements will not prevent or prohibit
Regency from continuing to qualify as a REIT for federal income tax purposes, or
result in the loss of Regency's status as a REIT for federal income tax
purposes.
3. Representations and Warranties of Security Capital.
Security Capital Group and Sub hereby jointly and severally represent and
warrant to Regency as follows:
(a) Due Organization. Security Capital Group and
Sub are each duly organized, validly existing and in good standing under the
laws of the State of Maryland.
(b) Authorization; Non-Contravention. Security
Capital Group and Sub each have the requisite power to enter into this Agreement
and the transactions and agreements contemplated hereby and to carry out its
obligations hereunder and thereunder. This Agreement has been duly authorized,
executed and delivered by each of Security Capital Group and Sub and constitutes
a valid and binding agreement of Security Capital Group and Sub enforceable
against it in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors rights
generally or by general equitable principles and except as the enforcement of
the provisions of Section 9 hereof may be limited by public policy. Neither the
execution and delivery of this Agreement, consummation of the transactions and
agreements contemplated hereby, nor compliance with the terms, conditions or
provisions of this Agreement, will be a violation of any of the
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terms, conditions or provisions of either Security Capital Group's or Sub's
charter or bylaws or of any material agreement or instrument to which Security
Capital Group or Sub is a party or constitute a default or create a right of
termination or acceleration thereunder.
(c) Title. Sub is the sole legal and record owner of
the Shares and owns the Regency Shares free and clear of all liens,
encumbrances, claims and security interests.
4. Public Announcements. The parties hereto will consult
with each other before issuing, and provide each other with the reasonable
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement, and
shall not issue any such press release or make any such public statement without
the reasonable consent of the other party, except as may be required by
applicable law, rule or regulation, by court process or by obligations pursuant
to any listing agreement with any national securities exchange or transaction
reporting system so long as the other party is notified promptly by the
disclosing party of such press release or public statement. For avoidance of
doubt, the parties acknowledge that Security Capital Group, Sub and certain of
their affiliates will be filing, with respect to these transactions, an
amendment to its report on Schedule 13D, and Regency will be filing, with
respect to these transactions, a Current Report on Form 8-K.
5. Closing. Subject to the satisfaction of the conditions
set forth in Sections 6 and 7 hereof, the purchase and sale of the Regency
Shares (the "Closing") shall occur concurrently with the later to occur of (i)
the initial closing of the Secondary Offering and (ii) the initial closing of
the SynDECSSM Offering (such date being the "Closing Date"). The Closing shall
take place at the offices of Hogan & Hartson, 555 Thirteenth Street, N.W.,
Washington, District of Columbia 20004, at which time the parties shall make
the deliveries described below. At the Closing, in addition to any other
documents required to be delivered under this Agreement, the parties hereto
shall deliver the documents described below:
(a) Deliveries by Regency. At the Closing, Regency
shall deliver or cause to be delivered the following to Security Capital:
(1) an amount of U.S. Dollars equal to the
product of the number of Regency Shares
to be purchased by Regency determined in
accordance with Section 1 of this
Agreement times the Public Offering
Price Per Share, to be delivered by wire
transfer of immediately available funds
to the account specified by Security
Capital;
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(2) a certificate, dated the Closing Date,
of an executive officer of Regency,
certifying that, as of such date, the
representations and warranties of
Regency contained herein are accurate,
true and correct with the same force and
effect as though made on and as of such
date;
(3) a certificate of Regency's secretary
certifying resolutions of the special
committee of the Board of Directors of
Regency approving this Agreement and the
transactions contemplated hereby
(together with an incumbency and
signature certificate regarding the
officer(s) signing on behalf of
Regency); and
(4) an opinion of Foley & Lardner (the "Tax
Opinion"), in form and substance
reasonably satisfactory to Security
Capital, to the effect that the
transactions contemplated by this
Agreement (i) will qualify as a
substantially disproportionate
redemption of stock under Section
302(b)(2) of the Code and (ii) taken
together with the other transactions
contemplated by this Agreement, the
Underwriting Agreement, the Forward
Contracts, the Stock Loan Agreements and
the Cash Swap Agreements (to the extent
such agreements are substantially in the
form attached hereto as Exhibit A,
Exhibit B and Exhibit C, respectively),
will not prevent or prohibit Regency
from continuing to elect to be taxed as
a REIT in its federal income tax
returns, or result in the loss of
Regency's status as a REIT for federal
income tax purposes.
(b) Deliveries by Security Capital. At the Closing,
Security Capital shall deliver or cause to be delivered the following to
Regency:
(1) the Regency Shares to be purchased by
Regency determined in accordance with
Section 1 of this Agreement, to be
delivered by DWAC to an account
specified by Regency;
(2) the resignation of Joseph E. Parsons
from Regency's Board of Directors and
all committees thereof;
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(3) a certificate, dated the Closing Date,
of an executive officer of Security
Capital Group, certifying that, as of
such date, the representations and
warranties of Security Capital Group
contained herein are accurate, true and
correct with the same force and effect
as though made on and as of such date;
(4) a certificate, dated the Closing Date,
of an executive officer of Sub,
certifying that, as of such date, the
representations and warranties of Sub
contained herein are accurate, true and
correct with the same force and effect
as though made on and as of such date;
(5) a certificate of Security Capital
Group's secretary certifying resolutions
of the Board of Directors of Security
Capital Group approving this Agreement
and the transactions contemplated hereby
(together with an incumbency and
signature certificate regarding the
officer(s) signing on behalf of Security
Capital Group) and certifying that
attached to such certificate are true,
accurate and complete executed copies of
the Forward Contracts, the Stock Loan
Agreements and the Cash Swap Agreements;
and
(6) a certificate of Sub's secretary
certifying resolutions of the Board of
Trustees of Sub approving this Agreement
and the transactions contemplated hereby
(together with an incumbency and
signature certificate regarding the
officer(s) signing on behalf of Sub).
6. Conditions to the Obligations of Regency. The
obligations of Regency under this Agreement are subject to the fulfillment of
each of the following conditions:
(a) Performance. Each of Security Capital and Sub
shall have performed and complied in all material respects with all agreements,
covenants, obligations and conditions required by this Agreement to be performed
or complied with by it.
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(b) Injunctions. No preliminary or permanent
injunction or other final order by any United States federal or state
court shall have been issued which prevents the consummation of the
transactions contemplated hereby.
(c) Underwriting Agreement. The initial closing of
the transactions contemplated by the Underwriting Agreement shall have occurred.
7. Conditions to the Obligations of Security Capital.
The obligations of Security Capital under this Agreement are subject to the
fulfillment of each of the following conditions:
(a) Performance. Regency shall have performed and
complied in all material respects with all agreements, covenants, obligations
and conditions required by this Agreement to be performed or complied with by
it.
(b) Injunctions. No preliminary or permanent
injunction or other final order by any United States federal or state court
shall have been issued which prevents the consummation of the transactions
contemplated hereby.
(c) Underwriting Agreement. The initial closing of
the transactions contemplated by the Underwriting Agreement shall have occurred.
(d) Tax Opinion. Receipt by Security Capital of the
Tax Opinion described in Section 5(a)(4).
8. Survival. The representations and warranties of the
parties shall survive until the third anniversary of the Closing Date.
9. Indemnification.
(a) Each party (the "Indemnifying Party") agrees to
indemnify the other party, and each of their affiliates and their respective
officers, directors, employees, agents and representatives (each, an
"Indemnified Party" and together the "Indemnified Parties") against, and agrees
to hold each of them harmless from, any and all liabilities, losses, costs,
claims, damages, penalties and expenses (including, without limitation,
reasonable attorneys' fees and expenses and costs of investigation and
litigation) ("Losses") incurred or suffered by them relating to or arising out
of or in connection with any breach of or any inaccuracy in any representation
or warranty made by the Indemnifying Party in this Agreement or any document
delivered by it at the Closing pursuant to Section 5 hereof. No person shall be
entitled to indemnification hereunder to the extent that the act or omission of
such person for which indemnification is claimed arises out of such person's
fraud, bad faith or willful misconduct.
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(b) As soon as is reasonably practicable after
becoming aware of a claim for indemnification under this Agreement the
Indemnified Party shall promptly give notice to the Indemnifying Party of such
claim and the amount the Indemnified Party will be entitled to receive hereunder
from the Indemnifying Party; provided that the failure of the Indemnified Party
to give notice shall not relieve the Indemnifying Party of its obligations
hereunder except to the extent (if any) that the Indemnifying Party shall have
been prejudiced thereby. If the Indemnifying Party agrees that it has an
indemnification obligation but objects that it is obligated to pay only a lesser
amount, the Indemnified Party shall nevertheless be entitled to recover promptly
from the Indemnifying Party the lesser amount, without prejudice to the
Indemnified Party's claim for the difference.
(c) After receiving a claim as set forth above, the
Indemnifying Party may, at its own expense, (i) participate in the defense of
any claim, suit, action or proceeding and (ii) upon notice to the Indemnified
Party and the Indemnifying Party's delivering to the Indemnified Party a written
agreement that the Indemnified Party is entitled to indemnification for all
Losses arising out of such claim, suit, action or proceeding, assume the defense
thereof; provided, however, that (x) the Indemnifying Party's counsel is
reasonably satisfactory to the Indemnified Party, and (y) the Indemnifying Party
shall thereafter consult with the Indemnified Party upon the Indemnified Party's
reasonable request for such consultation from time to time with respect to such
claim, suit, action or proceeding. If the Indemnifying Party assumes such
defense, the Indemnified Party shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Party. If, however, the
Indemnified Party reasonably determines in its judgment that representation by
the Indemnifying Party's counsel of both the Indemnifying Party and the
Indemnified Party would present such counsel with a conflict of interest, then
such Indemnified Party may employ separate counsel to represent or defend it in
any such claim, action, suit or proceeding and the Indemnifying Party shall pay
the reasonable fees and disbursements of such separate counsel. Whether or not
the Indemnifying Party chooses to defend or prosecute any such claim, suit,
action or proceeding, all of the parties hereto shall cooperate in the defense
or prosecution thereof.
(d) Notwithstanding anything in this Section 9 to
the contrary, neither the Indemnifying Party nor the Indemnified Party shall,
without the written consent of the other, settle or compromise any claim or
permit a default or consent to entry of any judgment unless the claimant and
such party provide to such other party an unqualified release from all liability
in respect of such claim. Notwithstanding the foregoing, if a settlement offer
solely for money damages is made by the applicable third party claimant, and
the Indemnifying Party notifies the Indemnified Party in writing of the
Indemnifying Party's willingness to accept the settlement offer and pay the
amount called for by such offer, and the
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Indemnified Party declines to accept such offer, the Indemnified Party may
continue to contest such claim, free of any participation by the Indemnifying
Party, and the amount of any ultimate liability with respect to such claim that
the Indemnifying Party has an obligation to pay hereunder shall be limited to
the lesser of (i) the amount of the settlement offer that the Indemnified Party
declined to accept or (ii) the aggregate Losses of the Indemnified Party with
respect to such claim. If the Indemnifying Party makes any payment on any claim,
the Indemnifying Party shall be subrogated, to the extent of such payment, to
all rights and remedies of the Indemnified Party to any insurance benefits or
other claims of the Indemnified Party with respect to such claim.
(e) In the event that the Indemnifying Party does
not elect to assume the defense of any claim, suit, action or proceeding, then
any failure of the Indemnified Party to defend or to participate in the defense
of any such claim, suit, action or proceeding or to cause the same to be done,
shall not relieve the Indemnifying Party of its obligations hereunder.
10. Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
heirs, personal representatives, successors, assigns and affiliates.
11. Notices. Any notice or other communication provided for
herein or given hereunder to a party hereto shall be in writing and shall be
given by delivery, by telex, telecopier or by mail (registered or certified
mail, postage prepaid, return receipt requested) to the respective parties
as follows:
If to Regency:
Regency Centers Corporation
121 West Forsyth Street, Suite 200
Jacksonville, Florida 32202
Attention: Martin E. Stein, Jr.
Facsimile: (904) 354-1832
with a copy to:
Foley & Lardner
200 Laura Street
Jacksonville, Florida 32202
Attention: Linda Y. Kelso, Esq.
Facsimile: (904) 359-8700
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If to Security Capital:
c/o GE Capital Real Estate
292 Long Ridge Road
Stamford, Connecticut 06927
Attention: Legal Department/Security Capital
Facsimile: (203) 357-6768
with a copy to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Attention: J. Warren Gorrell, Jr., Esq.
Facsimile: (202) 637-5910
or to such other address with respect to a party as such party shall notify the
other in writing.
12. Waiver. No party may waive any of the terms or
conditions of this Agreement, nor may this Agreement be amended or modified,
except by a duly signed writing referring to the specific provision to be
waived, amended or modified.
13. Entire Agreement. This Agreement constitutes the entire
agreement with respect to the subject matter hereof, and supersedes all other
prior agreements and understandings, both written and oral, among the parties
hereto and their affiliates.
14. Expenses. Except as otherwise expressly contemplated
herein to the contrary, regardless of whether the transactions contemplated
hereby are consummated, each party hereto shall pay its own expenses incident to
preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby. Notwithstanding the
foregoing, to the extent that any of the underwriters set forth in the
Underwriting Agreement is entitled to any fees, discounts or commissions with
respect to the Regency Shares purchased by Regency hereunder, Security Capital
agrees to pay any and all such fees, discounts and commissions and shall hold
Regency harmless from and against any liability in respect thereof.
15. Captions. The Section and Paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument.
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17. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Florida.
18. No Presumption Against Drafter. Each of the parties
hereto has jointly participated in the negotiation and drafting of this
Agreement. In the event of an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by each of the parties hereto and no presumptions or burdens of proof shall
arise favoring any party by virtue of the authorship of any of the provisions of
this Agreement.
19. Termination. If the closing of the transactions
contemplated hereby has not occurred on or prior to September 30, 2003, this
Agreement shall terminate and be of no further force or effect.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the day and year first
executed.
REGENCY CENTERS CORPORATION
By: /s/ Martin E. Stein, Jr.
-------------------------------------
Name: Martin E. Stein, Jr.
Title: Chairman
SECURITY CAPITAL GROUP INCORPORATED
By: /s/ Philip Mintz
-------------------------------------
Name: Philip Mintz
Title: Authorized Signatory
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SECURITY CAPITAL SHOPPING MALL BUSINESS
TRUST
By: /s/ Philip Mintz
-------------------------------------
Name: Philip Mintz
Title: Authorized Signatory
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