AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT
THIS AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT (the "Amendment"),
dated as of February 10, 1997, is made by and among Regency Realty Corporation,
a Florida corporation (the "Company"), Security Capital U.S. Realty, a
Luxembourg corporation, and Security Capital Holdings S.A., a Luxembourg
corporation (together with Security Capital U.S. Realty and others specified in
the Stockholders Agreement, "Investor"). Capitalized terms used and not defined
herein shall have the meanings ascribed to them in the Stockholders Agreement.
RECITALS:
WHEREAS, the parties hereto and The Regency Group, Inc. entered into
a Stockholders Agreement, dated as of July 10, 1996 (the "Stockholders
Agreement"); and
WHEREAS, simultaneously with the execution hereof, the Company has
entered into a Contribution Agreement and Plan of Reorganization (the
"Contribution Agreement"), of even date herewith, by and among Branch
Properties, L.P., Branch Realty, Inc. and the Company; and
WHEREAS, pursuant to Section 4.2 of the Stockholders Agreement, the
transactions contemplated by the Contribution Agreement would, if consummated,
trigger a participation right of Investor to purchase or subscribe for up to
2,743,545 shares of Company Common Stock with respect to the First Closing (as
such term is defined in the Contribution Agreement) and up to 156,876 shares of
Company Common Stock with respect to Class A Units (as such term is defined in
the Contribution Agreement) to be issued within six months of the First Closing,
in each case, at a purchase price of $22 1/8 per share; and
WHEREAS, the Company and Investor desire to modify Investor's
participation right which would be triggered by the transactions contemplated by
the Contribution Agreement in the manner set forth herein; and
WHEREAS, Section 5.1 of the Stockholders Agreement provides, subject
to certain limitations set forth therein, for the termination of the Standstill
Period upon, among other things, the acquisition by any person or Group other
than Investor, its Affiliates or any person or Group acting in concert with or
at the direction of Investor or its Affiliates of more than 9.8% of the voting
power of the outstanding shares of Voting Securities; and
WHEREAS, the transactions contemplated by the Contribution Agreement
provide for the issuance of up to approximately 2,027,848 Units (as such term is
defined in the Contribution Agreement) convertible into shares of Company Common
Stock on a one-for-one basis to Opportunity Capital Partners II Limited Partners
("OCP") (the "OCP Shares"), or approximately up to 10.91% of the voting power of
the outstanding shares of Voting Securities; and
WHEREAS, subject to the terms hereof, Investor agrees that OCP's
ownership of the OCP Shares shall not give rise to a termination of the
Standstill Period; and
WHEREAS, pursuant to, and in accordance with, Section 7.8 of the
Stockholders Agreement, the parties wish to amend the Stockholders Agreement on
the terms contained herein to reflect the foregoing and as otherwise set forth
below.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Amendment and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Special Purchase Right. (a) Investor hereby waives its
participation rights under Section 4.2 of the Stockholders Agreement with
respect to the initial issuance at or within six months of the First Closing (as
defined in the Contribution Agreement) by the Company of up to an aggregate of
3,771,622 shares of Company Common Stock, including securities exchangeable,
convertible or redeemable on a one-for-one basis into shares of Company Common
Stock (the latter being referred to herein as the "Convertible Securities"), and
in lieu thereof, Investor and the Company hereby agree that (i) Investor shall
have the right to purchase (the "Special Purchase Right"), and the Company shall
be obligated to offer Investor the right to purchase up to (x) the Initial
Number of Shares (as defined below) on or prior to August 31, 1997, and (y) the
Subsequent Number of Shares (as defined below), if such number is greater than
zero, after August 31, 1997, in each case at a purchase price of $22 1/8 per
share, and (ii) prior to such time as all of the Applicable Number of Shares (as
defined below) shall have been offered to Investor in accordance with the terms
hereof and Investor shall have either purchased or declined to purchase all of
such shares, the Company shall in no event issue or sell any capital stock other
than (A) to the Company or any of its Subsidiaries, (B) pursuant to options,
rights or warrants or other commitments or securities which were in effect or
outstanding on the date of the Stock Purchase Agreement or, in the case of the
Long-Term Omnibus Plan, the Dividend Reinvestment Plan, the Company's 401(k)
Plan and the Employee Stock Grant Plan, collectively, which are granted from
time to time in the ordinary course, (C) pursuant to the Contribution Agreement,
or (D) to the extent that an issuance of shares of capital stock solely to
Investor would cause the Company to cease being a "domestically-controlled" REIT
within the meaning of Section 897(h)(4)(B) of the Code
("domestically-controlled"), to persons other than Non-U.S. Persons (as such
term is defined in the Articles of Incorporation of the Company), provided that
such shares of capital stock issued or sold to such persons may only be issued
or sold simultaneously with an equal number of shares of capital stock issued or
sold to Investor. The "Initial Number of Shares" means the lesser of (x)
1,750,000 shares of Company Common Stock or (y) the maximum number of shares of
Company Common Stock, as reasonably determined by Investor, the purchase of
which by Investor will not result in the Company ceasing to be
domestically-controlled, but in no event less than 850,000 shares of Company
Common Stock, and the "Subsequent Number of Shares" means the excess, if any, of
1,050,000 shares of Company Common Stock over the Initial Number of Shares. The
"Applicable Number of Shares" shall be 1,750,000 on or prior to August 31, 1997
and 1,050,000 after August 31, 1997. Notwithstanding the above, nothing in this
Section 1 shall be deemed to alter, in any way, Investor's participation right
with respect to (x) the exchange, conversion or redemption of any Convertible
Securities, (y) any additional shares of Company Common Stock or other
securities issued pursuant to the Contribution Agreement, or (z) any other sale
or issuance of securities with respect to which Investor would otherwise have
participation rights. Notwithstanding the foregoing or any other contrary
agreement or understanding, the Company agrees that it will not issue any shares
of Company Common Stock or Convertible Securities to any partner of Roswell
Village, Ltd. (the partners of Roswell Village Ltd. being shown as having
approximately 103,400 shares of Common Stock or Convertible Securities on
Schedule 1 to that certain Waiver and Consent Agreement attached as Exhibit C to
the Partnership Agreement (as defined in the Contribution Agreement)) unless any
Company Common Stock to be issued to any such person (including upon the
redemption, conversion or exchange of Convertible Securities) will not (and by
the terms of any relevant Convertible Securities cannot) be issued until the
first anniversary of the First Closing (the "First Anniversary").
(b) The Special Purchase Right shall become exercisable from time to
time by Investor upon receipt by Investor of a written notice from the Company
(a "Special Purchase Notice"), which Special Purchase Notice shall set forth the
number of shares of Company Common Stock that the Company offers Investor at
such time, and the Company's intended use of the proceeds of such proposed
issuance; provided, however, that (i) the Company may only request Investor to
purchase shares of Company Common Stock in one or more installments of not less
than $15,000,000 per installment, (ii) the Company shall provide Investor a
Special Purchase Notice with respect to a sufficient number of shares such that
Investor maintains, by March 31, 1997 and at each quarter end thereafter,
ownership (within the meaning of Section 1296(c) of the Code) of at least 27.5%
by value of the stock of the Company, (iii) the Company shall provide Investor a
Special Purchase Notice with respect to all of the Initial Number of Shares on
or before August 31, 1997, and if and to the extent one or more Special Purchase
Notices shall not have been provided to Investor with respect to all of the
Initial Number of Shares prior to August 31, 1997, then a Special Purchase
Notice shall be deemed to have been provided on August 31, 1997 so that
Investor's Special Purchase Right shall have become exercisable on or before
such date with respect to all of the Initial Number of Shares, and (iv) the
Company shall provide Investor a Special Purchase Notice with respect to all of
the Subsequent Number of Shares, if any, on or before the First Anniversary, and
if and to the extent one or more Special Purchase Notices shall not have been
provided to Investor with respect to all of the Subsequent Number of Shares, if
any, prior to the First Anniversary, then a Special Purchase Notice shall be
deemed to have been provided on the day after the First Anniversary so that
Investor's Special Purchase Right shall have become exercisable on or before
such date with respect to all of the Subsequent Number of Shares, if any.
Subject to the Company's compliance with the immediately preceding sentence and
with clause (ii) of the first sentence of the foregoing paragraph (a), the
Company shall be under no obligation to provide Investor with any Special
Purchase Notice or to include any number of shares of Company Common Stock in
any Special Purchase Notice.
(c) At any time within 20 days after its receipt of a Special
Purchase Notice, Investor may, but shall have no obligation to, exercise the
Special Purchase Right with respect to up to the number of shares of Company
Common Stock offered by the Company in such Special Purchase Notice by informing
the Company in writing of such exercise (a "Special Exercise Notice"). Each
Special Exercise Notice shall state the number of shares of Company Common Stock
that Investor elects to purchase, which number shall be no greater than the
number of shares specified by the Company in the Special Purchase Notice, and
shall be irrevocable. The closing of the Special Purchase Right, or any part
thereof, shall be subject to the conditions set forth in Sections 7.2 and 7.3 of
the Stock Purchase Agreement. Investor may choose to exercise any Special
Purchase Right or any part thereof in its sole and absolute discretion.
2. Ownership by OCP and its Affiliates of greater than 9.8% of the
Voting Securities. Notwithstanding clause (ii) of Section 5.1(a), the Standstill
Period shall not terminate as a result of the acquisition of the OCP Shares by
OCP and for so long as the OCP Shares are held directly and beneficially by OCP
(it being understood and agreed that this waiver (x) shall cease to be effective
in the event of any direct or indirect transfer of any Beneficial Ownership of
any of the OCP Shares, if after giving effect to such transfer the Standstill
Period would otherwise have terminated other than as a result of the Beneficial
Ownership of the OCP Shares by OCP, and (y) shall not in any event apply to any
additional Voting Securities that might be Beneficially Owned by OCP or any
Affiliate or Group of which OCP is a member, other than 223,750 shares of Common
Stock held of record on the date hereof by the parties listed on a schedule
delivered to Security Capital by the Company on the date hereof entitled
"Holdings in Regency," dated 2/7/97, which 223,750 shares are beneficially owned
by ABKB/La Salle Securities Limited, including 32,300 shares of Common Stock
held of record by the Oregon Public Employees Retirement Fund ("OPERF"), the
limited partner of OCP (collectively, the "Existing Shares") and only for so
long as the Existing Shares are held continuously of record and beneficially by
such listed parties and ABKB/LaSalle Securities Limited, respectively, it being
further understood that in the event OCP or any such Affiliate or Group should
acquire Beneficial Ownership of any such additional Voting Securities (other
than Beneficial Ownership by LaSalle Advisors Limited Partnership of up to 4.9%
of Company Common Stock as a result of the conversion of Class B Common Stock
outstanding as of the date hereof (the "LaSalle Shares")), all Voting Securities
Beneficially Owned by OCP or any such Affiliate or Group (including the OCP
Shares, the Existing Shares and the LaSalle Shares) shall be considered
together, without regard to the provisions of this Amendment, for the purposes
of the Stockholders Agreement).
3. Other Branch-Related Matters. Regency hereby agrees to maintain,
at all times after the Shareholder Approval Date (as such term is defined in the
Partnership Agreement set forth on Exhibit A to the Contribution Agreement (the
"Partnership Agreement")), a general partnership interest equal and entitled to
at least 75% of the capital or profits interest in the Partnership (as defined
in the Contribution Agreement) and to manage the assets and employees of the
Partnership in accordance with the terms of the Partnership Agreement, as such
Partnership Agreement and Contribution Agreement exist, respectively, on the
date hereof. In addition, pursuant to Section 6.2 of the Stockholders Agreement,
the Company shall provide to Investor within 45 days after the close of each
fiscal quarter of the Company a quarterly report of the Company's and its
Subsidiaries' (including the Partnership) assets and income during the preceding
fiscal quarter sufficient in each case to enable Investor to monitor compliance
with the Corporate Action Covenants during such fiscal quarter.
4. Amendment of Partnership Agreement. Regency hereby agrees that it
will not agree to any amendment or modification to the Partnership Agreement,
and the Partnership Agreement shall not be amended, modified or supplemented, in
any such case, without the prior written consent of Security Capital.
5. No Effect on Consistent Terms. All terms of the Stockholders
Agreement not inconsistent with this Amendment shall remain in place and in full
force and effect and shall be unaffected by this Amendment, and shall continue
to apply to the Stockholders Agreement as amended hereby and to this amendment.
From and after the date hereof, each reference to the Stockholders Agreement in
any other instrument or document shall be deemed a reference to the Stockholders
Agreement as amended hereby, unless the context otherwise requires.
6. Headings. The headings contained in this Amendment are
inserted for convenience of reference only and shall not affect the
meaning or interpretation of this Amendment.
7. Counterparts. This Amendment may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have
been signed by each party hereto and delivered to the other party.
IN WITNESS WHEREOF, this Amendment has been signed by or on behalf
of each of the parties hereto as of the day first above written.
REGENCY REALTY CORPORATION
By:
Name: Martin E. Stein, Jr.
Title: President
SECURITY CAPITAL HOLDINGS S.A.
By:
Name: Paul E. Szurek
Title: Managing Director
SECURITY CAPITAL U.S. REALTY
By:
Name: Paul E. Szurek
Title: Managing Director