CONTRIBUTION AGREEMENT
AND
PLAN OF REORGANIZATION
CONTRIBUTION AGREEMENT AND
PLAN OF REORGANIZATION
THIS CONTRIBUTION AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made as of the 10th day of February, 1997, by and among BRANCH PROPERTIES,
L.P., a Georgia limited partnership ("Branch"), BRANCH REALTY, INC., a Georgia
corporation and the general partner of Branch ("Branch Realty"), and REGENCY
REALTY CORPORATION, a Florida corporation ("Regency"), under the following
circumstances:
1. Branch owns directly, or through its interest in the
Subpartnerships, Properties, Acquisition Contracts, Management Contracts and
other assets used in its Third Party Management Business, and certain other
Assets (as such terms are hereinafter defined).
A. Branch has caused the formation of a Delaware limited partnership (the
"Partnership"), and Branch and Regency wish to amend and restate the partnership
agreement in the form of Exhibit A (the "Partnership Agreement") to provide for
Branch to be the limited partner and a wholly-owned subsidiary of Regency
("Newco") to be the sole general partner. Regency will cause Newco to make
certain cash contributions to the Partnership in exchange for its general
partner interest, and Branch will contribute the Assets to the Partnership in
exchange for Units (as hereinafter defined), all as provided for herein and in
the Partnership Agreement.
B. Branch will distribute the Units it so receives to its respective
partners, including Branch Realty. Branch Realty and Regency desire that Branch
Realty transfer to Newco the Units distributed to Branch Realty by Branch, in
exchange for shares of Common Stock, $0.01 par value, of Regency to be
contributed by Regency to Newco, in a transaction intended to qualify as a
"reorganization" under Section 368(a)(1)(C) of the Code. Branch Realty will then
liquidate and distribute such shares of Regency Common Stock to its
shareholders.
C. Thereafter, the Partnership will contribute the Management Contracts
and other assets contributed by Branch to the Partnership relating to Branch's
Third Party Management Business and Regency's Affiliate, The Regency Group Inc.
("TRG"), will contribute all the voting common stock it owns in Regency Realty
Group, Inc., a Florida corporation ("Old Management Company"), to Regency Realty
Group II, Inc. ("New Management Company") in exchange for stock in New
Management Company in a transaction intended to qualify as a nontaxable
transaction under Section 351 of the Code.
D. By separate agreements, in the form attached as Exhibits B, C and D,
respectively, (i) certain parties hereto and certain shareholders, directors and
executive officers of Regency have agreed to vote in favor of the transactions
contemplated by this Agreement at a meeting of Regency's shareholders to be held
in 1997, (ii) Regency's major shareholder, Security Capital Holdings, S.A., and
its affiliate, Security Capital U.S. Realty, have agreed to consent to the
transactions contemplated by this Agreement, subject to the satisfaction of
certain conditions described in Exhibit C relating, among other things, to
Non-U.S. Persons (as defined in the Partnership Agreement) who may become
Regency shareholders as a result of the
transactions contemplated by this Agreement, and (iii) Opportunity Capital
Partners II Limited Partnership ("OCP"), the special limited partner of Branch,
has consented to the transactions contemplated by this Agreement.
E. Subject to the provisions of Section 8.6 of the Partnership Agreement,
the Units may be redeemed for Shares or cash, at the option of Newco, as
provided in the Partnership Agreement; provided, however, with respect to any
redemption having a "Specified Redemption Date" (as defined in the Partnership
Agreement) on or before the 420th day after the First Closing (as hereinafter
defined), the Partnership shall be required to transfer Shares in connection
with such redemption. Under rules of the New York Stock Exchange, the Shares
issuable pursuant to the transactions contemplated by this Agreement, including
the Shares redeemed for Units, may not be listed for trading on such exchange
unless Regency's shareholders have approved such issuance because such Shares
will constitute more than 20% of the Common Stock outstanding before the First
Closing. The parties wish to proceed with the First Closing and to present the
transactions contemplated by this Agreement for approval by Regency's
shareholders at a meeting to be held after the First Closing.
F. If Regency's shareholders do not approve the transactions at such
meeting, the validity of the Units and Shares issued at the First Closing will
not be affected, and the Shares issued at the First Closing and Shares issued
upon redemption of Units will be listed for trading on the New York Stock
Exchange only to the extent they do not exceed the 20% threshold. In the event
Shares have been issued, but cannot be listed for trading because the
shareholders do not approve, then the holder of such Shares shall have a put
right as described in the Registration Rights Agreement (as hereinafter
defined). If such shareholder approval is not obtained, then the Units may be
redeemed for a cash payment as provided in the Partnership Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1: DEFINITIONS
1.1 Definitions. In addition to the terms defined in this Agreement, the
following terms shall have the meanings set forth herein:
1.1.1 "Acquisition Contracts" means the Contracts to acquire certain
real property and leases, personal property and intangible property relating to
such real property, to which Branch or any Subpartnership is a party, all as
more particularly described on Schedule .
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1.1.2 "Additional Units" means the Units to be issued to the Branch
partners at the Subsequent Closings pursuant to (i) Section (Property Earn-Out),
(ii) Section 2.3.3 (Third Party Earn-Out) and (iii) Section (Distribution).
1.1.3 "Acquisition Properties" means the real property and other
assets that are the subject of the Acquisition Contracts.
1.1.4 "Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under common control with
such Person.
1.1.5 "Articles of Incorporation" means the Amended and Restated
Articles of Incorporation of Regency, as filed with the Florida Department of
State, as further amended or restated from time to time.
1.1.6 "Assets" means (i) the Branch Properties, (ii) Branch's
interests in the Subpartnerships, (iii) the Acquisition Contracts (and any
assets acquired by Branch thereunder prior to the First Closing), (iv) Branch's
interests in the Disposition Properties and (v) the Other Assets.
1.1.7 "Assumed Liabilities" means the matters set forth on Schedule.
1.1.8 "Branch" means Branch Properties, L.P., a Georgia limited
partnership.
1.1.9 "Branch Affiliates" means Branch and Branch Realty.
1.1.10 "Branch Financial Statements" means (i) the balance sheets of
Branch and its predecessors as of December 31, 1995 and 1994, and the related
statements of income and cash flows for the years ended December 31, 1995, 1994
and 1993 (including the notes and schedules contained therein or annexed
thereto), which financial statements have been reported on, and are accompanied
by, the signed, unqualified opinions of Price Waterhouse LLP, independent
auditors for Branch and its predecessors for such years, (ii) an unaudited
balance sheet of Branch as of September 30, 1996, and the related unaudited
statements of income and cash flows for the nine months then ended (including
the notes and schedules contained therein or annexed thereto) and (iii) the
corresponding statements of Roswell Village, Ltd. as of and for the nine months
ended September 30, 1996, which have not been audited.
1.1.11 "Branch Headquarters" means the principal offices occupied by
Branch at Xxxxx 0000, 000 Xxxxxx Xxxxxx, 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000.
1.1.12 "Branch Limited Partners" means those Persons other than OCP
named as limited partners on Schedule .
1.1.13 "Branch Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership by and among Branch Realty, as the general
partner, OCP,
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as the special limited partner, and the Branch Limited Partners dated December
19, 1995, as amended.
1.1.14 "Branch Principals" means X. Xxxxxxxxx Branch, III, Xxxxxx X.
Xxxx, Xxxxxxx X. Xxx, Xxxx X. Xxxxx, Xx., Xxxx X. Xxxxxxx, III and Xxxxxxx X.
Xxxxxx, each of whom is a shareholder of Branch Realty.
1.1.15 "Branch Properties" means those Properties that are owned by
Branch and not by a Subpartnership.
1.1.16 "Branch Realty" means Branch Realty, Inc., a Georgia
corporation.
1.1.17 "Business Day" means any day of the year other than Saturday,
Sunday or any other day on which banks located in New York, New York generally
are closed for business.
1.1.18 "Capital Expenditure Budget and Schedule" means,
collectively, the capital expenditure budget and schedule for each Property
(other than the Disposition Properties), copies of which are attached as
Schedule , which describes the capital expenditures that Branch and the
Subpartnerships have budgeted for each Property for the years ending December
31, 1996 and 1997, respectively.
1.1.19 "Claim" means all actions, causes of action, suits, debts,
dues, accounts, reckonings, bonds, bills, covenants, contracts, controversies,
promises, trespasses, damages, judgments, executions, penalties, fines, claims,
liabilities and demands whatsoever, in law or equity.
1.1.20 "Class B Units" means the units of partnership interests in
the Partnership to be held by the General Partner and certain other partners
(other than the Branch partners) as more fully described in the Partnership
Agreement.
1.1.21 "Closing" means generally the execution and delivery of those
documents, securities and/or funds necessary to effect the transactions
contemplated by this Agreement.
1.1.22 "Closing Date" means, (i) with respect to the First Closing,
three Business Days after the date on which the conditions set forth herein with
respect thereto shall be satisfied or duly waived, or if Branch and Regency
mutually agree on a different date, the date upon which they have mutually
agreed, and (ii) with respect to any Subsequent Closing, the date specified
therefor in Section .
1.1.23 "Code" means the Internal Revenue Code of 1986, as amended,
and any successor legislation thereto, including all of the rules and
regulations promulgated thereunder.
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1.1.24 "Common Stock" means the voting Common Stock, $0.01 par
value, of Regency.
1.1.25 "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq.
1.1.26 "Contracts" means the Acquisition Contracts, the Development
Contracts, the Management Contracts, the Repair Contracts, the Service
Contracts, the TI Contracts, purchase or sale agreements, leases and other
agreements which relate to the Disposition Properties and any other contract,
direct property management agreement, asset management agreement, development
agreement, partnership agreement, lease commitment, purchase order, or other
legally binding indenture, mortgage, note, license, deed of trust, commitment,
understanding, restriction or other agreement or instrument, other than the
Leases, to which Branch or any Subpartnership is a party or by which any of
their assets are bound.
1.1.27 "Contribution Value" has the meaning set forth in Section .
1.1.28 "CVS" means CVS Center, Inc.
1.1.29 "CVS Development Fees" means development fees from CVS
projects or any other compensation (such as profit on resale of a build-to-suit
project) for development services provided with respect to CVS projects.
1.1.30 "Development Budget and Schedule" has the meaning set forth
in Section
.
1.1.31 "Development Contracts" means all contracts listed on
Schedule for the development or redevelopment of the Development Properties.
1.1.32 "Development Properties" means the Properties listed on
Schedule each of which consists of Real Property which is in the process of
being developed or redeveloped; provided, however, upon the acquisition of any
Acquisition Property by Branch prior to the First Closing which is to be
renovated or redeveloped, such Acquisition Property also shall be deemed a
Development Property.
1.1.32A "Disposition Properties" means the properties listed on
Schedule which are under Contract for sale or are being held or developed for
resale; and the"Disposition Contracts" means the Contracts described on Schedule
relating to the disposition of certain Disposition Properties.
1.1.33 "Endorsements" means endorsements to the Title Insurance, to
the extent available under applicable law and at a reasonable cost, including,
without limitation, Comprehensive, Access, Survey, Separate Lot, Legal Lot,
Non-Imputation, Fairways, Contiguity, Zoning 3.1, and any other endorsement
owned by Branch or typically obtained by
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customary practice in the area of the respective Property for transactions of
the type contemplated by this Agreement.
1.1.34 "Environmental Claim" means any Claim, investigation or
notice (written or oral) by any Person alleging potential liability (including
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries
or fatalities, or penalties) arising out of, based on or resulting from (i) a
Hazardous Material Activity, or (ii) activities or conditions forming the basis
of any violation, or alleged violation of, or liability or alleged liability
under, any Environmental Law.
1.1.35 "Environmental Laws" means federal, state, local, provincial,
municipal and foreign laws, ordinances, principles of common law, rules,
by-laws, orders, governmental policies, statutes, regulations, agreements,
treaties, customary law, and international principles relating to the pollution
or protection of the environment or of flora or fauna or their habitat or of
human health and safety, or to the cleanup or restoration of the environment,
including, without limitation, any laws or regulations relating to (i)
generation, treatment, storage, disposal or transportation of Materials of
Environmental Concern, emissions or discharges or protection of the environment
from the same, (ii) exposure of Persons to, or Release or threat of Release of,
Materials of Environmental Concern, and (iii) noise.
1.1.36 "ERISA" mean the Employee Retirement Income Security Act of
1974, as amended, and any successor legislation thereto.
1.1.37 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.1.38 "Excluded Assets" means (i) the Management Contracts and
other assets relating to Branch's Third Party Management Business listed on
Schedule or described in the Xxxxxxx Letter Agreement, (ii) the art work and
other personal property listed on Schedule that is located at Branch
headquarters and belongs to X. Xxxxxxxxx Branch or other officers of Branch,
(iii) the "Branch" name, which is covered by a non-exclusive license as provided
in Section , and any associated goodwill and (iv) any assets acquired by Branch
or any Subpartnership in violation of Section .
1.1.39 "Existing Mortgage Debt" means collectively the loans of
Branch and each Subpartnership described on Schedule and the loans obtained with
Regency's consent or in compliance with Section in connection with the purchase
and/or development of the Acquisition Properties.
1.1.40 "Final Closing Balance Sheet" means the audited balance sheet
of Branch as of December 31, 1996, which shall be reported on, and accompanied
by, the signed opinion of Price Waterhouse, LLP.
1.1.41 "First Closing" means the Closing at which, among other
things, the Assets will be contributed to the Partnership.
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1.1.42 "Government Entity" means any court, arbitrator, department,
commission, board, bureau, agency, authority, instrumentality or other
governmental body, whether federal, state, municipal, foreign or other.
1.1.43 "Hazardous Material Activity" means any activity, event, or
occurrence at or prior to the First Closing involving any Materials of
Environmental Concern, including, without limitation, the manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Release, threatened Release, abatement, removal, remediation, handling
or corrective or response action to any Materials of Environmental Concern.
1.1.44 "Intangible Property" means all intangible property (except
as expressly excluded elsewhere herein) now or on the First Closing Date owned
by Branch or a Subpartnership and used in connection with the Real Property, the
Personal Property, Branch Headquarters or Branch's Third Party Management
Business, including, without limitation, all of their right, title and interest
in and to all: licenses; approvals; applications and permits issued or approved
by any Government Entity and relating to the use, operation, ownership,
occupancy and/or maintenance of the Real Property, the Personal Property, Branch
Headquarters or Branch's Third Party Management Business; the various Contracts
to be assigned to the Partnership hereunder, including, without limitation,
Management Contracts, Work Contracts and Service Contracts; utility
arrangements; claims against third parties; plans; drawings; specifications;
surveys; maps; engineering reports and other technical descriptions; books and
records; insurance proceeds and condemnation awards; the non-exclusive right to
use the Branch name in the United States for the period set forth in Section ,
but not any associated goodwill; and all other intangible rights used in
connection with or relating to the Real Property, the Personal Property, Branch
Headquarters or Branch's Third Party Management Business, including rights, if
any, to current and past names of the Real Property, but excluding intangible
rights used in connection with or relating to the Excluded Assets.
1.1.45 "IRS" means the Internal Revenue Service.
1.1.46 "Law" means any statute, law, ordinance, rule, regulation or
judicial decision of any Government Entity.
1.1.47 "Leases" means, as to each Property, all ground leases and
all leases within the Improvements (whether oral or written), including leases
which may be made by Branch or a Subpartnership after the date hereof and before
the First Closing as permitted by this Agreement.
1.1.48 "Liability" means any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or unfixed, known or unknown, asserted or
unasserted, liquidated or unliquidated, secured or unsecured.
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1.1.49 "Lien" means a lien (statutory or otherwise), security
interest, deed of trust, deed to secure debt, claim, charge, pledge, license,
equity, option, conditional sales contract, easement, assessment, levy,
covenant, condition, right of way, reservation, restriction, exception,
limitation, charge or encumbrance of any nature whatsoever.
1.1.50 "Litigation" means any action, suit, proceeding, arbitration,
investigation or inquiry, whether civil, criminal or investigative, by or before
any Government Entity.
1.1.51 "Loss and Expenses" means any and all damages, Claims, losses,
expenses, costs, interest, obligations, and Liabilities, including, without
limitation, all reasonable attorneys' fees and expenses in collecting a Claim
and enforcing rights in Collateral (as defined in Section 15.7.2(a)).
1.1.52 "Xxxxxxx Letter Agreement" means that letter agreement among
Branch, Regency, and Xxxx X. Xxxxxxx, III ("Xxxxxxx") executed on or before the
date hereof and relating to (i) the properties and management agreements that
Xxxxxxx will retain (which are part of the Excluded Assets), (ii) certain
employees of Branch to be hired by Xxxxxxx, and (iii) certain agreements of
Xxxxxxx regarding certain Management Contracts to be contributed to the
Partnership by Branch and other restrictions on Xxxxxxx.
1.1.53 "Management Contracts" means all property management
agreements, asset management agreements and leasing agreements listed on
Schedule pursuant to which Branch currently provides leasing and/or management
services with respect to a real property owned by one or more third parties.
1.1.54 "Material Adverse Effect" means (i) with respect to Branch, a
material adverse effect on the Assets or the financial condition, results of
operations, business or prospects of Branch taken as a whole, (ii) with respect
to a Property, a material adverse effect on the financial condition, results of
operations, business or prospects of such Property, (iii) with respect to a
Subpartnership, a material adverse effect on such Subpartnership's assets or the
financial condition, results of operations, business or prospects of such
Subpartnership taken as a whole, (iv) with respect to Regency, a material
adverse effect on Regency's assets or the financial condition, results of
operations, business or prospects of Regency taken as a whole (including its
subsidiaries), and (v) with respect to the transactions contemplated by this
Agreement, a material adverse effect on the consummation thereof.
1.1.55 "Materials of Environmental Concern" means all chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum or any fraction
thereof, petroleum products and hazardous substances (as defined in Section
101(14) of CERCLA), or solid or hazardous wastes as now defined and regulated
under any Environmental Laws.
1.1.56 "New Management Company" means Regency Realty Group II, Inc.,
a Florida corporation.
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1.1.57 "Old Management Company" means Regency Realty Group, Inc., a
Florida corporation.
1.1.58 "OCP" means Opportunity Capital Partners II Limited
Partnership, a Maryland limited partnership.
1.1.59 "Order" means any order, writ, injunction, judgment, plan or
decree of any Government Entity.
1.1.60 "Other Assets" means Branch's Third Party Management
Business, all utility deposits, all tenant deposits under the Leases, and all
other assets of Branch (whether owned or leased), including, without limitation,
all deposits under the Contracts which relate to the Acquisition or Disposition
Properties and accounts receivable, but excluding the Excluded Assets.
1.1.61 "Partnership" means Regency Retail Partnership, L.P., a
limited partnership formed under Delaware law.
1.1.62 "Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of the Partnership in the form attached as
Exhibit A.
1.1.63 "Permitted Exceptions" means:
(a) Liens (other than Liens imposed under ERISA or any
Environmental Law or in connection with any Environmental Claim) for Taxes or
other assessments or charges of Government Entities that are not yet delinquent;
(b) except as disclosed on the Rent Roll, rights of tenants,
as tenants only, under the Leases;
(c) those existing title matters affecting the Properties
and the Acquisition Properties described on Schedule ;
(d) those matters shown on the existing surveys of the
Properties (but not the surveys of the Acquisition Properties) described on
Schedule , and any changes since the date of such existing surveys reflected on
the updated Survey which are not objected to by Regency in accordance with
Section or for which Regency elects to close notwithstanding such matters in
accordance with Section ;
(e) easements, rights-of-way, covenants and restrictions which
are customary and typical for properties similar to the Properties and which do
not (i) interfere with the ordinary conduct of any Property or the business of
Branch or the Subpartnerships, as applicable, as a whole or (ii) detract from
the value or usefulness of the Properties to which they apply;
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(f) the Existing Mortgage Debt; and
(g) any other matters not objected to by Regency in accordance
with Section or for which Regency elects to close notwithstanding such matters
in accordance with Section .
1.1.64 "Person" means an individual or a corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, other form of business or legal entity or Government Entity.
1.1.65 "Personal Property" means all tangible property owned or
leased by Branch or a Subpartnership now or on the First Closing Date and used
in conjunction with the operation, maintenance, ownership and/or occupancy or
development of the Real Property, Branch Headquarters or Branch's Third Party
Management Business (unless it constitutes an Excluded Asset), including without
limitation: furniture; furnishings; art work; sculptures; paintings; office
equipment and supplies; landscaping; plants; lawn equipment; and whether stored
on or off the Real Property, tools and supplies, maintenance equipment,
materials and supplies, shelving and partitions, and any construction and finish
materials and supplies not incorporated into the Improvements and held for
repairs and replacements thereto or development thereof, wherever located.
1.1.66 [Intentionally deleted.]
1.1.67 "Property" means, for each property described on Schedule ,
each Disposition Property which has not been sold prior to the First Closing,
and any Acquisition Property acquired by Branch pursuant to Section or hereof
prior to the First Closing, the Real Property, Leases, Personal Property and
Intangible Property related to it, and the "Properties" means all of the
Properties.
1.1.68 "Property Earn-Out Closing" means one of three Subsequent
Closings at which Units or Shares will be issued contingent on satisfying
performance criteria described in Section .
1.1.69 "REIT" means a real estate investment trust within the
meaning of Section 856 of the Code.
1.1.70 "Real Property" means, as to each Property, the real property
described or referred to on Schedule , together with all rights, privileges,
hereditaments and interests appurtenant thereto including, without limitation:
any water and mineral rights, development rights, air rights, easements, and any
and all rights of Branch or a Subpartnership in and to any streets, alleys,
passages and other rights of way; and all buildings, structures and other
improvements located on or affixed to such real property and all replacements
and additions thereto (collectively, the "Improvements").
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1.1.71 "Recent Balance Sheet Date" means September 30, 1996.
1.1.72 "Redemption Rights" means the right to redeem Units for
Shares pursuant to the Partnership Agreement.
1.1.73 "Regency Exchange Act Reports" means the following documents
filed by Regency with the SEC since December 31, 1995 and prior to the First
Closing: (i) Regency's Form 10-K annual report, (ii) all quarterly reports on
Form 10-Q and periodic reports on Form 8-K, (iii) all definitive proxy
statements, (iv) all other reports required to be filed by Regency under the
Securities Exchange Act of 1934, and (v) all amendments or supplements to any of
the foregoing.
1.1.74 "Registration Rights Agreement" means the Registration Rights
Agreement in the form attached as Exhibit .
1.1.75 "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing into the indoor or outdoor environment, including, without limitation,
the abandonment or discarding of barrels, drums, containers, tanks, and other
receptacles containing or previously containing any Materials of Environmental
Concern at or prior to the First Closing Date.
1.1.76 "Rent Roll" means collectively the rent roll and summaries of
Leases (including all amendments to Leases) attached as Schedule , identifying
with particularity the space leased by each tenant, the term (including
extensions and termination rights), square footage and applicable rent, common
area maintenance, Tax and other reimbursements, security deposits, exclusivity
or expansion rights, and options to purchase or rights of first refusal.
1.1.77 "Reorganization" has the meaning set forth in Section .
1.1.78 "Reorganization Shares" means those Shares issued at any
Closing pursuant to the Reorganization.
1.1.79 "Repair Contracts" means all contracts listed on Schedule for
repairs, restoration, renovations or improvements (other than tenant
improvements) being performed on the Properties.
1.1.80 "SEC" means the Securities and Exchange Commission.
1.1.81 "Securities Act" means the Securities Act of 1933, as amended.
1.1.82 "Security Capital" means, collectively, Security Capital
Holdings, S.A., a Luxembourg corporation, and Security Capital U.S. Realty, a
Luxembourg corporation.
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1.1.83 "Service Contracts" means, as to each Property, all
management, service, maintenance, utility, supply, equipment rental, and other
contracts listed on Schedule related to the operation of each Real Property or
the related Personal Property.
1.1.84 "Shares" means shares of Common Stock.
1.1.85 "Subpartnerships" means Branch/HOP Associates, L.P., a
Georgia limited partnership, Equiport Associates, L.P., a Georgia limited
partnership, Roswell Village, Ltd., a Georgia limited partnership, Old Fort
Associates, L.P., a Georgia limited partnership, and Fieldstone Associates,
L.P., a Georgia limited partnership.
1.1.86 "Subsequent Closing" means any Closing after the First Closing.
1.1.87 "Survey" means, collectively, a map of a stake survey of each
Property which shall comply with Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys, jointly established and adopted by ALTA and ACSM
in 1992, and includes items 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 and 11 of Table "A"
thereof, which meets the accuracy standards (as adopted by ALTA and ACSM and in
effect on the date of the Survey) of an urban survey, which is dated not earlier
than 30 days prior to the First Closing, and which is certified to the
Partnership, Branch, Regency, lenders under the Existing Mortgage Debt and the
Title Company providing Title Insurance to the Partnership, and dated as of the
date the Survey was made. Notwithstanding the foregoing, the Survey shall, at a
minimum, show the following:
(a) the metes and bounds legal description of the Property;
(b) a certificate by the surveyor certifying to the
Partnership, Regency, Branch, lenders under the Existing Mortgage Debt and the
Title Company, in such form as may be reasonably acceptable to the Partnership,
dated as of a date not earlier than the date of execution of this Agreement (and
subsequently updated to within 90 days of the First Closing, if necessary);
(c) all physical matters on the ground, which may adversely
affect the Property or title thereof and the number of parking spaces located on
the Property;
(d) whether the Property is located in a "Special Flood Hazard
Area" as determined by review of a stated, identified, Flood Hazard Boundary Map
or Flood Hazard Rate Map published by the Federal Insurance Administration of
the United States Department of Housing and Urban Development;
(e) all easements of record affecting the Property with proper
notation of the book and page of each easement as recorded in the public
records;
(f) the lines of the public streets abutting the Property
and the widths and center lines of all such streets;
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(g) all encroachments and the extent thereof, if any, in
feet and inches on the Property or any portion thereof; and
(h) the number of square feet (to the nearest 1/100 of a
square foot) contained within the Property.
1.1.88 "Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not. The term "Tax" also
includes any amounts payable pursuant to any tax sharing agreement to which any
relevant entity is liable as a successor or pursuant to contract.
1.1.89 "Tenant Estoppels" has the meaning set forth in Section .
1.1.90 "Third Party Earn-Out Closing" means one of two Subsequent
Closings at which Units or Shares will be issued contingent on Third Party Fees.
1.1.91 "Third Party Fees" means all gross revenues accrued by the
Partnership, New Management Company, Old Management Company, Regency or any of
their Affiliates from fees, commissions and other compensation derived from (i)
the Third Party Management Business contributed to the Partnership hereunder,
(ii) Third Party Management Business procured by any Branch Principal or
Xxxxxxxx X. Xxxxxxx, (iii) Third Party Management Business with respect to any
of the third party properties (including any expansions) that are the subject of
the Management Contracts as of the date of the First Closing, and (iv) new Third
Party Management Business obtained after the First Closing that is not covered
above but (a) is with an existing party to a Management Contract or any of its
Affiliates, or (b) is with any of the Persons listed on Schedule or any of their
Affiliates, including without limitation those fees, commissions and other
compensation described on Schedule but excluding CVS Development Fees.
1.1.92 "Third Party Management Business" means Branch's business of
(i) managing and/or leasing properties owned by third parties, (ii) developing
properties for third parties, (iii) arranging for property acquisitions by third
parties, (iv) arranging financing for third parties, and (v) consulting and
business services performed for third parties, including without limitation,
money management, tax consulting and reporting, asset management, construction
management and other consulting services, all of Branch's build-to-suit work in
process for CVS, and the Management Contracts and the assets used by Branch in
its Third Party Management Business, but excluding any item that constitutes
part of the Excluded Assets.
13
1.1.93 "TI Budget and Schedule" means, collectively, the tenant
improvement budget and schedule for each Property (other than the Disposition
Properties and Merchant's Village), copies of which are attached as Schedule ,
which describes the tenant improvements that Branch and the Subpartnerships have
budgeted for the periods shown therein.
1.1.94 "TI Contracts" means all contracts listed on Schedule for
tenant improvements under the Leases.
1.1.95 "Title Company" means Chicago Title Insurance Company.
1.1.96 "Title Defect" means any exception in the Title Insurance
Commitment or any matter disclosed by the Survey, other than a Permitted
Exception.
1.1.97 "Title Insurance" means an ALTA Form B Owner's Policy of
Title Insurance (Revised 10-17-70 and 10-17-84), with extended coverage (i.e.,
with ALTA General Exceptions 1 through 5 deleted), for such amount as Regency
reasonably determines, insuring the Partnership as owner of good, marketable and
indefeasible fee simple title to the Properties, subject only to the Permitted
Exceptions, issued by the Title Company or another title insurer acceptable to
Regency.
1.1.98 "Title Insurance Commitment" means a binder whereby the Title
Company agrees to issue the Title Insurance to the Partnership.
1.1.99 "Transaction Documents" means the Partnership Agreement, the
Registration Rights Agreement and the various other agreements and documents
executed and delivered in connection with the transactions contemplated hereby.
1.1.100 "TRG" means The Regency Group, Inc., a Florida corporation.
1.1.101 "Units" means units of partnership interests (excluding
Class B Units) in the Partnership to be held by the Branch partners (excluding
Branch Realty) as more fully described in the Partnership Agreement.
1.1.102 "Value" has the meaning set forth in the Partnership
Agreement. Whenever the value is being determining for Units pledged pursuant to
Article , the Value of a Unit shall be determined by multiplying the Value of a
Share by the Unit Adjustment Factor (as defined in the Partnership Agreement).
1.1.103 "Work Contracts" means the TI Contracts, the Repair
Contracts and the Development Contracts.
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ARTICLE 2: FORMATION OF PARTNERSHIP
2.1 Contribution Values. The aggregate Contribution Value of all the
Assets is $78,092,181.
2.2 Capitalization of the Partnership.
(a) At the First Closing, in addition to the transactions described
in Section to be consummated at the First Closing with respect to amending and
restating the
Partnership Agreement and admitting Newco as the general partner of the
Partnership, (i) Regency shall cause Newco to contribute cash in return for
Class B Units representing Newco's general partner's interest as described in
Section hereof, which contribution shall be applied immediately following the
First Closing to prepay a portion of the Existing Mortgage Debt and to pay the
closing costs described in Section , and (ii) Branch shall contribute the Assets
to the Partnership, free and clear of all Liens, other than Permitted
Exceptions, in exchange for Units representing its limited partner's interest.
The number of Units to be issued to Branch in return for its contributions to
the Partnership is set forth on Schedule . Additionally, Branch shall be
entitled to Additional Units or Shares at Subsequent Closings, as provided in
Section and Section .
(b) At the First Closing, Branch shall distribute to its partners,
in the respective amounts set forth on Schedule , the Units that Branch receives
in exchange for its capital contributions to the Partnership. Branch also shall
distribute to its partners the right to receive their respective portions of the
Additional Units that Branch is entitled to receive at the Subsequent Closings,
in the amounts set forth on Schedule (the "Subsequent Closing Rights"). At the
First Closing, in lieu of issuing Units to Branch and then reissuing them to
Branch's partners pursuant to the steps outlined above, the Partnership shall
issue such Units directly to Branch's partners.
(c) Certain of Branch's partners receiving Units at the First
Closing may wish to exercise Redemption Rights (effective and with a Specified
Redemption Date no earlier than as of the First Redemption Date, as such terms
are defined in the Partnership Agreement) with respect to all or a portion of
their Units, including Additional Units issuable pursuant to Subsequent Closing
Rights. Any Original Limited Partner exercising Redemption Rights with respect
to any Units ("Initial Redemption Units") shall be deemed to have exercised
Redemption Rights with respect to that percentage of any Additional Units
issuable pursuant to such Person's Subsequent Closing Rights arrived at by
dividing (i) the number of Initial Redemption Units of such Person so redeemed
by (ii) the total number of Units issued to such Person at the First Closing
(the "Redemption Percentage"), and such Person shall receive from Regency the
Redemption Amount (as defined in the Partnership Agreement) in lieu of such
amount of Additional Units equal to the product of (x) the Redemption Percentage
multiplied by (y) the total number of Additional Units issuable to such Original
Limited Partner at any Subsequent Closing.
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(d) Pursuant to Section 4.2 of the Partnership Agreement, Newco
shall have the right to cause the Partnership to acquire the interests in
certain assets and issue additional Units in the Partnership in exchange
therefor.
2.3 Subsequent Closings.
2.3.1 Defined Terms. The following definitions shall apply for
purposes of this Section .
(a) "Acquisition Cost" means the purchase price paid to
acquire a New Acquisition Property.
(b) "Annualized NOI" means the projected annualized net
operating income for each Designated Property determined as of each Calculation
Date in accordance with the following: the excess of (i) for the calendar month
immediately prior to the Calculation Date or the Achievement Date (the
"Measurement Month"), all rents, charges, reimbursements, revenues, one-twelfth
of the projected annual percentage rent, and other amounts payable pursuant to
executed leases for completed space within such Designated Property over (ii)
one-twelfth of the operating expenses for such Designated Property (such as
taxes, insurance, and maintenance and repair costs) for the prior calendar year,
assuming a management fee of 21(cent) per square foot of leasable space within
such Designated Property, but excluding (A) capital replacements and
improvements (including tenant improvements), (B) leasing commissions, (C)
depreciation, and (D) debt service, times twelve. The Annualized NOI shall be
computed on an accrual basis pursuant to GAAP, except that revenues attributable
to any lease in effect for any part of the Measurement Month shall be projected
for the remainder of the Measurement Month as if the lease were in effect for
the entire Measurement Month and included in clause (i) above. If a Designated
Property ever achieves an occupancy level equal to or greater than 90% at or
after the First Closing (the "Achievement Date"), then the Annualized NOI for
such Designated Property as of any Calculation Date after said Achievement Date
shall equal the greater of (1) the Annualized NOI calculated as of the
Achievement Date or (2) the Annualized NOI calculated as of such Calculation
Date. In the event a Regency Entity does not own all of a Designated Property
and owns a partial interest in such Designated Property as a partner,
shareholder or otherwise, then the Annualized NOI and applicable Base NOI, Base
Value, Acquisition Cost, Development Cost and Sales Price of such Designated
Property, as the case may be, shall be proportionately adjusted to reflect such
partial interest owned by the Regency Entity in such Designated Property. In the
event a Designated Property suffers or experiences casualty damage or a taking
by condemnation or conveyance in lieu thereof, then the Annualized NOI for such
Designated Property to be utilized on any Earn-Out Closing Date thereafter shall
equal the greater of (x) the Annualized NOI for such Designated Property
calculated immediately prior to such casualty or notice of such taking, as the
case may be, or (y) where such taking is partial, the Annualized NOI calculated
on the applicable Calculation Date.
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(c) "Base NOI" means the base net operating income attributed
to each Existing Property and set forth on Schedule .
(d) "Base Value" means the base value attributed to each
Existing Property set forth on Schedule .
(e) "Calculation Date" means any one of February 15, 1998,
February 15, 1999, and February 15, 2000; collectively, the "Calculation Dates."
(f) "Designated Property" means any Existing Property, New
Acquisition Property, and New Development Property; collectively, the
"Designated Properties."
(g) "Development Cost" means the out of pocket costs and
expenses incurred after the First Closing in connection with the acquisition,
construction and development of a New Development Property or the redevelopment
of a New Acquisition Property.
(h) "Earn-Out Closing Date" means any one of the First
Earn-Out Closing Date, Second Earn-Out Closing Date, and Third Earn-Out Closing
Date; collectively, the "Earn-Out Closing Dates."
(i) "Existing Property" means any one of certain existing
properties contributed by Branch to the Partnership at the First Closing and
described on Schedule ; collectively, the "Existing Properties."
(j) "First Earn-Out Closing Date" means the fifteenth (15th)
day after the first anniversary of the First Closing, provided that such First
Earn-Out Closing Date shall not be held on or before February 15, 1998.
(k) "New Acquisition Property" means any Property described in
Schedule and any property acquired by a Regency Entity after the First Closing
within the Territory; collectively, the "New Acquisition Properties."
(l) "New Development Property" means any Property described in
Schedule and any property acquired and developed by a Regency Entity after the
First Closing within the Territory; collectively, the "New Development
Properties" but shall exclude any property developed pursuant to an agreement
for resale to a third party.
(m) "Regency Entity" means any one of the Partnership, the
General Partner, Regency Realty Corporation or any of their Affiliates excluding
Security Capital or any of its Affiliates other than Regency or any of its
subsidiaries.
(n) "Sales Price" means the actual gross sales price paid in
connection with the sale of a Designated Property.
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(o) "Second Earn-Out Closing Date" means the first anniversary
of the First Earn-Out Closing Date, provided that the Second Earn-Out Closing
Date shall not be held on or before February 15, 1999.
(p) "Territory" means Alabama, Georgia, Tennessee, North
Carolina, South Carolina, and Virginia.
(q) "Third Earn-Out Closing Date" means the second (2nd)
anniversary of the First Earn-Out Closing Date, provided that the Third Earn-Out
Closing Date shall not be held on or before February 15, 2000.
2.3.2 Property Earn-Out. The Branch partners shall have the right to
receive Additional Units or Shares (if a Branch partner has previously exercised
the Redemption Right with respect to Additional Units issuable pursuant to the
Subsequent Closing Right of such Branch partner) (rounded to the nearest whole
Additional Unit or Share for each Branch partner) and the Branch Principals
shall have the right to receive additional Reorganization Shares (rounded to the
nearest whole Share for each Branch Principal) in the event that the performance
criteria set forth below are satisfied. Any Shares to be issued (in lieu of
Additional Units) as provided below shall be adjusted by the Unit Adjustment
Factor described in the Partnership Agreement to properly adjust for stock
splits and similar actions.
(a) The Annualized NOI of each Existing Property shall be
determined as of each Calculation Date, and the product of (i) the excess, if
any, of (x) such Annualized NOI on such Calculation Date less (y) the Base NOI
for such Existing Property multiplied by (ii) 20.4, shall equal the "Increased
Value" for such Existing Property as of such Calculation Date.
(b) The Annualized NOI of each New Acquisition Property shall
be determined as of each Calculation Date, and the product of (i) such
Annualized NOI multiplied by (ii) 20.4 shall equal the "Designated Value" for
such New Acquisition Property as of such Calculation Date. The excess, if any,
of (x) the Designated Value of such New Acquisition Property less (y) the
Acquisition Cost and any Development Cost of such New Acquisition Property is
herein referred to as the "Increased Value" of such New Acquisition Property as
of such Calculation Date.
(c) The Annualized NOI of each New Development Property shall
be determined as of each Calculation Date, and the product of (i) such
Annualized NOI multiplied by (ii) 20.4 shall equal the "Designated Value" of
such New Development Property as of such Calculation Date. The excess, if any,
of (x) the Designated Value of such New Development Property less (y) the
Development Cost of such New Development Property is herein referred to as the
"Increased Value" of such New Development Property as of such Calculation Date.
(d) As of each Earn-Out Closing Date, the Increased Value
of each Designated Property shall be determined as of the immediately preceding
Calculation Date. For
18
each Designated Property, the "Highest Increased Value" of such Designated
Property as of a Calculation Date shall equal the greater of (i) the Increased
Value calculated as of such Calculation Date or (ii) the highest Increased Value
calculated as of any previous Calculation Date. The "Aggregate Increased Value"
of all Designated Properties as of any Earn-Out Closing Date shall equal the sum
of the Highest Increased Value of all Designated Properties determined as of the
previous Calculation Date. The Aggregate Increased Value shall not be decreased
by reason of any Designated Property not achieving an Increased Value, and no
Designated Property shall have an Increased Value that is less than zero.
(e) On the First Earn-Out Closing Date, Additional Units and
Shares shall be issued to the Branch partners, in the respective percentages set
forth on Schedule , equal to the quotient obtained by dividing (i) the Aggregate
Increased Value as of the previous Calculation Date by (ii) 22 1/8; provided,
however, the maximum Additional Units and Shares issued on the First Earn-Out
Closing Date shall not exceed 721,997 Additional Units and Shares ($15,974,188
divided by 22 1/8).
(f) On the Second Earn-Out Closing Date, Additional Units and
Shares shall be issued to the Branch partners, in the respective percentages set
forth on Schedule , equal to the excess, if any, of (x) the quotient obtained by
dividing (i) the Aggregate Increased Value as of the previous Calculation Date
by (ii) 22 1/8 less (y) the number of Additional Units and Shares issued on the
First Earn-Out Closing Date; provided, however, the maximum Additional Units and
Shares to be issued on all Earn-Out Closing Dates pursuant to this Section
shall not exceed 1,020,061 ($22,568,851 divided by 22 1/8).
(g) On the Third Earn-Out Closing Date, Additional Units and
Shares shall be issued to the Branch partners, in the respective percentages set
forth on Schedule , equal to the excess, if any of (x) the quotient obtained by
dividing (i) the Aggregate Increased Value as of the previous Calculation Date
by (ii) 22 1/8 less (y) the aggregate amount of Additional Units and Shares
issued on the First Earn-Out Closing Date and Second Earn-Out Closing Date;
provided, however, the maximum Additional Units and Shares to be issued on all
Earn-Out Closing Dates pursuant to this Section shall not exceed 1,020,061
($22,568,851 divided by 22 1/8).
(h) The following provisions shall control in the event of a
sale of a Designated Property. If an Existing Property is sold on or before a
Calculation Date, then the Increased Value, if any, of such Existing Property
shall equal, after such a sale, the greater of (i) the highest Increased Value
for such Existing Property as of any prior Calculation Date or the Achievement
Date, as the case may be, or (ii) the excess, if any, of (x) the Sales Price
less (y) the Base Value of such Existing Property. If a New Acquisition Property
is sold on or before a Calculation Date, then the Increased Value, if any, of
such New Acquisition Property shall equal, after such a sale, the greater of (i)
the highest Increased Value for such New Acquisition Property as of any prior
Calculation Date or the Achievement Date, as the case may be, or (ii) the
excess, if any, of (x) the Sales Price less (y) the Acquisition Cost and any
Development Cost of such New Acquisition Property. If a New Development Property
is sold
19
on or before a Calculation Date, then the Increased Value, if any, of such New
Development Property shall equal, after such a sale, the greater of (i) the
highest Increased Value for such New Development Property as of any prior
Calculation Date or the Achievement Date, as the case may be, or (ii) the
excess, if any, of (x) the Sales Price less (y) the Development Cost of such New
Development Property.
(i) If there is a change in control of the Partnership, the
General Partner or Regency as a result of a merger, consolidation, combination,
sale or other transaction so that the current officers and management of such
entities no longer operate such entities or there is a change in a majority of
the directors of any such entity within the twelve (12) months following any
such transaction, then the Branch partners' rights hereunder shall fully vest
and the Branch partners shall have the right to receive, prior to the closing of
such transaction causing such change of control, Additional Units and Shares
equal to the excess of (i) 1,020,061 ($22,568,851 divided by 22 1/8) less (ii)
the aggregate amount of Additional Units and Shares previously issued on all
prior Earn-Out Closing Dates pursuant to this Section (with such Additional
Units and Shares to be allocated in accordance with the respective percentages
set forth on Schedule ).
2.3.3 Third Party Earn-Out Amounts. A Third Party Earn-Out Closing
shall take place simultaneously with the Property Earn-Out Closings that take
place on the First Earn- Out Closing Date and the Second Earn-Out Closing Date,
at which time the Partnership shall issue Additional Shares to the Branch
Principals as part of the Reorganization, in the respective percentages set
forth on Schedule , in an amount at each of the two Third Party Earn-Out
Closings arrived at by dividing (i) $22-1/8 into (ii) an amount equal to 9.4
percent of the Third Party Fees accrued by the Partnership, New Management
Company, Old Management Company, Regency or any of their Affiliates during the
calendar year immediately preceding the date of the applicable Third Party
Earn-Out Closing, including in the case of the first Third Party Earn-Out
Closing, Third Party Fees accrued during 1997 and prior to the First Closing.
Any Shares to be issued (in lieu of Additional Units) pursuant to this Section
shall be adjusted by the Unit Adjustment Factor (as defined in the Partnership
Agreement) to properly adjust for stock splits and similar actions.
2.4 Assumption by Partnership of Liabilities. At the First Closing, the
Partnership shall assume the Assumed Liabilities. Except for the Assumed
Liabilities, the Partnership shall not assume or become subject at any Closing
to any Liabilities of Branch or any Subpartnership.
ARTICLE 3: REORGANIZATION
3.1 Reorganization. Regency and Branch Realty agree that at the First
Closing, immediately following the issuance of Units to Branch and the
distribution thereof to Branch's partners, Branch Realty shall transfer the
Units received by it pursuant to such distribution, which are itemized on
Schedule (the "Realty Units"), to Newco in exchange for the same number of
Shares, which Regency shall contribute to Newco for such purpose. Branch Realty
20
shall also transfer to Newco its rights to receive Additional Units under this
Agreement. Regency agrees to contribute such Reorganization Shares to Newco and
to cause Newco to transfer such Reorganization Shares to Branch Realty in
exchange for (i) the Realty Units and (ii) Branch Realty's right to receive
Additional Units at Subsequent Closings. Branch Realty will liquidate
immediately following the First Closing and distribute such Reorganization
Shares to the Branch Principals, together with the right to receive additional
Reorganization Shares at each Subsequent Closing (based on the number of
Additional Units that Branch Realty would receive at such Subsequent Closings
had it not liquidated, multiplied by the Unit Adjustment Factor), to be divided
among the Branch Principals in the respective percentages set forth on Schedule
(based on their respective interests in Branch Realty immediately prior to its
liquidation). The transactions between Branch Realty and Newco described in this
Section (the "Reorganization") are intended to qualify as a reorganization under
Section 368(a)(1)(C) of the Code.
ARTICLE 4: NEW MANAGEMENT COMPANY
4.1 New Management Company. Newco shall cause the Partnership to
contribute the Third Party Management Business received by it from Branch to New
Management Company in exchange for 100 shares of preferred stock of New
Management Company and 25 shares of voting common stock of New Management
Company, (ii) Newco may cause the Partnership to contribute to New Management
Company the Disposition Properties and certain Acquisition Contracts for
properties which may be sold, and in such event Newco shall have the right to
direct that the Transaction Documents convey such Disposition Properties and
Acquisition Contracts to the New Management Company (rather than to the
Partnership and then to the New Management Company) and (iii) TRG shall
contribute to New Management Company all shares of the voting common stock of
Old Management Company beneficially owned by TRG in exchange for 475 shares of
voting common stock of New Management Company. New Management Company's board of
directors shall be the same as Old Management Company's board of directors.
ARTICLE 5: COVENANTS
5.1 Implementing Agreement. Subject to the terms and conditions hereof,
each party hereto shall use its reasonable best efforts to take all action
required of it to fulfill its obligations under the terms of this Agreement, to
cause the conditions to Closing to be satisfied and to facilitate the
consummation of the transactions contemplated hereby and thereby.
Notwithstanding anything contained in this Agreement to the contrary, any action
to be taken hereunder by Branch with respect to a Subpartnership is subject to
Branch's fiduciary duty to its partners in such Subpartnership and the
restrictions, limitations or other provisions contained in the partnership
agreement or any other agreement relating to such Subpartnership.
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5.2 Preservation of Business. From the date of this Agreement until the
First Closing Date, Branch shall cause the Properties and its Third Party
Management Business to be operated only in the ordinary and usual course of
business and consistent with past practice, shall not sell or list for sale any
of the Properties (other than those Disposition Properties listed on Schedule )
or any of its interests in the Subpartnerships, shall use its reasonable best
efforts to preserve the good will and advantageous relationships of Branch and
the Subpartnerships with tenants, customers, suppliers, independent contractors,
employees and other Persons material to the operation of the Properties and
Branch's Third Party Management Business, shall perform its, and cause the
Subpartnerships to perform their, material obligations under the Leases and
other material agreements affecting the Properties, shall perform Branch's
material obligations under the Management Contracts and shall not take or permit
any action or omission which would cause any of its representations or
warranties contained herein to become inaccurate in any material respect or any
of the covenants made by it to be breached in any material respect. Without
limiting the foregoing, Branch will not cause or permit any default to occur
under the Existing Mortgage Debt or cause or permit any increase in the
outstanding aggregate principal balance thereof from the date hereof until the
First Closing, except to fund expenditures made in conformity with the
Development Budget and Schedule and the TI Budget and Schedule and except to
fund the closing of the Acquisition Properties in accordance with Section .
Branch shall continue to maintain all insurance policies referred to in Section
in full force and effect up to and including the First Closing Date. From the
date of this Agreement until the First Closing Date, Regency shall cause its
properties and the third party management business of the Old Management Company
to be operated only in the ordinary and usual course of business and consistent
with past practice, shall use its reasonable best efforts to preserve the good
will and advantageous relationships of Regency and its subsidiaries with
tenants, customers, suppliers, independent contractors, employees and other
Persons material to the operation of Regency's properties and the third party
management business of Old Management Company, shall perform its, and cause its
subsidiaries to perform their, material obligations under the leases and other
material agreements affecting their respective properties, shall cause Old
Management Company to perform its material obligations and shall not take or
permit any action or omission which would cause any of Regency's representations
or warranties contained herein to become inaccurate in any material respect or
any of the covenants made by it to be breached in any material respect.
5.3 Consents and Approvals. Each party shall use its reasonable best
efforts to obtain all consents, approvals, certificates and other documents
required in connection with the performance by it of this Agreement and the
consummation of the transactions contemplated hereby and thereby, including the
consents listed on Schedules and (b), and shall make all filings, applications,
statements and reports to all Government Entities and other Persons which are
required to be made prior to the First Closing Date by or on behalf of such
party or any of their Affiliates pursuant to any applicable Law or contract in
connection with this Agreement and the transactions contemplated hereby.
5.4 Meeting of Regency's Shareholders. Regency shall submit (a) the
transactions contemplated by this Agreement (including the issuance of Shares in
the Reorganization and the
22
issuance of Shares upon the exercise of Redemption Rights) (as required by Rule
312.03(c) of the New York Stock Exchange Listed Company Manual as a condition to
the listing on such exchange of all Shares issuable pursuant to the transactions
contemplated hereby) and (b) a proposed amendment to its Articles of
Incorporation in the form attached as Exhibit (relating to domestic ownership)
to a vote of Regency's shareholders at an annual or special meeting of
shareholders in 1997 regardless of whether or not the First Closing shall have
occurred by the date of the meeting, and Regency's Board of Directors shall
recommend that Regency's shareholders vote in favor of such matters. Regency
shall hold such meeting within 120 days after the date this Agreement is
executed, provided, however, that the parties agree to extend such time period
to accommodate any delays reasonably resulting from the SEC's review of the
proxy materials to be distributed in connection with such meeting. Regency shall
use reasonable best efforts to obtain signed Voting Agreements in the form of
Exhibit B from those executive officers, directors and shareholders listed
therein. If such Voting Agreements are obtained, there will be sufficient votes
under all Voting Agreements to obtain the required shareholder approvals
described in (a) and (b) above. Regency agrees not to issue any Shares prior to
the record date for the meeting of shareholders called to approve the
transactions contemplated by this Agreement to any Persons other than (i) a
party to a Voting Agreement (including Security Capital), (ii) a Person who
grants Regency an irrevocable proxy agreeing to voting in favor of the
transactions contemplated by this Agreement or otherwise enters into a binding
agreement to vote such Person's Shares in favor thereof, (iii) Persons who
acquire Shares pursuant to Regency's existing dividend reinvestment plan, 401(k)
and profit sharing plan, AIM Plan, Long-Term Omnibus Plan or anniversary stock
grant plan, or (iv) the sellers of the two Publix shopping centers referred to
on Schedule .
5.5 Purchase of Acquisition Properties. Branch shall use reasonable best
efforts to close on each Acquisition Property in accordance with the timetable
set forth on Schedule . Branch will make available copies of all material
correspondence or other documentation with respect to any Acquisition Property
promptly upon receipt by Branch, and will confer with Regency in all material
decisions with respect to the due diligence, documentation and closing of any
Acquisition Property. The parties have cooperated in forming the Partnership,
with Branch serving as the general partner and a Branch Affiliate serving as the
limited partner, and the Partnership shall take title to the Acquisition
Properties that are closed prior to the First Closing. At the First Closing,
Newco shall be admitted as general partner, the initial general partner shall
withdraw as general partner, the initial limited partner shall withdraw as
limited partner, the partnership agreement shall be amended and restated in the
form attached as Exhibit A and the Partnership shall assume the Acquisition
Contracts for Acquisition Properties that have not closed prior thereto.
5.6 Additional Acquisitions. From the date hereof until the First Closing,
except as provided in Section and subject to Branch's fiduciary duties and to
its obligations under the Branch Partnership Agreement and the partnership
agreement of each Subpartnership, Branch shall not, and shall not allow any
Subpartnership to, enter into a binding contract for the acquisition of, nor
acquire, any real property or a material amount of other assets, whether by
purchase of assets or stock, merger, consolidation or other business combination
without
23
Regency's prior written consent if such assets will be part of the Assets
transferred to the Partnership at the First Closing. If Branch identifies any
potential acquisitions, it shall consult with Regency prior to the end of the
applicable inspection period and Regency shall advise Branch promptly (and prior
to the end of the applicable inspection period) whether or not it believes that
such acquisition opportunity may be suitable for transfer to the Partnership
hereunder. The parties shall cooperate in pursuing any acquisition opportunities
agreed on by both parties and if Branch enters into a binding contract, with
Regency's consent, for an acquisition, the parties shall enter into mutually
agreed amendments to this Agreement and to the Partnership Agreement taking into
appropriate account the additional Assets to be so acquired by the Partnership
pursuant to this Agreement. If Regency does not so consent to such a contract
with a Subpartnership, prior to the First Closing, Branch shall cause any
Subpartnership that is a party to any such contract to transfer the contract to
a third party and obtain a full release of the Subpartnership from any
obligation thereunder, and Branch shall not transfer to Regency any such new
contract to which Branch is a party if Regency has not consented to such
contract.
5.7 Distributions. From the date of this Agreement, Branch shall not pay
any distributions to its partners other than the regularly scheduled quarterly
cash distribution from the operations of Branch for the fourth quarter of 1996
in the amount of $1,399,579 as described in Section hereof. Branch also agrees
not to cause any Subpartnership to make any distribution to its partners from
the date of this Agreement until the First Closing other than its normal
quarterly cash distributions consistent with past practice. Regency agrees not
to make the record date for its dividend payable in the second quarter of 1997
on or before the First Closing Date, provided that all of Branch's income and
expense items for the period beginning on January 1, 1997 inure to the benefit
of the Partnership, subject to the provisions of Section
hereof.
5.8 Continuation of Employees. The Branch Affiliates agree to use
reasonable best efforts to persuade those Branch employees designated by Regency
in writing to Branch to accept employment with the Partnership or New Management
Company immediately following the First Closing, and Regency agrees to cause the
Partnership or New Management Company to hire such employees immediately
following the First Closing provided that such employee does not engage in
malfeasance prior to the First Closing. Certain of such employees who accept
employment with the Partnership or New Management Company following the First
Closing may be hired on the understanding that their services will be required
only for a transition period, and Regency agrees that any severance compensation
for such employees shall be an expense of the Partnership or New Management
Company, as applicable. Regency shall cause Newco to make capital contributions
to the Partnership for the purpose of funding severance compensation to Branch
employees who accept employment with the Partnership and later are terminated,
all as further described in Schedule , and also shall cause the Partnership to
assume those accrued employee benefits such as accrued vacation time and the
bonus compensation listed in Schedule , but only to the extent specifically set
forth thereon. Branch shall be responsible for all severance compensation, if
any, for those Branch employees whose employment is terminated by Branch prior
to the First Closing, except as provided above and
24
in Schedule . Nothing herein is intended to make any employee hired by the
Partnership or New Management Company other than an employee at will.
5.9 Regency Disclosure Document. Branch and Regency agree to cooperate in
preparing and distributing to each partner of Branch as promptly as practicable
following the execution of this Agreement, a disclosure document prepared by
Regency and Branch for use by the Branch partners in determining (i) whether to
consent to the transactions contemplated by this Agreement, and (ii) for such
Persons receiving Units at the First Closing rather than Reorganization Shares,
whether to redeem their Units (and the right to receive Additional Units) for
Shares (and the right to receive additional Shares in lieu of Additional Units)
pursuant to the exercise of their Redemption Rights. Branch agrees to supply
information for the disclosure document concerning Branch, Branch Realty, the
Properties, the Subpartnerships, the solicitation of consents from the Branch
partners for the transactions contemplated by this Agreement and the allocation
among Branch's partners of the consideration to be received in exchange for the
Assets, and Regency agrees to supply information concerning Regency or the
securities being offered by Regency or the Partnership to the Branch partners
pursuant to the transactions contemplated by this Agreement. The information
provided by Branch for inclusion in the disclosure document is referred to
hereinafter as the "Branch Information" and the information provided by Regency
for inclusion in the disclosure document is referred to hereinafter as the
"Regency Information." Branch and Regency each shall advise the other if it
becomes aware of any additional information that should be included in the
Branch Information or the Regency Information, respectively, for inclusion in
the disclosure document or a supplement thereto. Branch covenants that the
Branch Information shall not, and Regency covenants that the Regency Information
shall not, contain any untrue statement of material fact or omit to state any
material fact required to be stated or necessary to make the Branch Information
or the Regency Information, respectively, that is included in the disclosure
document, in light of the circumstances under which it was made, not misleading.
Regency acknowledges that Branch is not offering securities as an issuer in
connection with the transactions contemplated by this Agreement, and nothing
herein is intended to make Branch liable as an issuer, and that Branch is not
making any representation or determination as to the adequacy of such disclosure
document with respect to the issuance of, or the legality of the issuance of,
any securities in connection with the transactions contemplated herein. Branch
acknowledges that nothing herein is intended to impose on Regency, or relieve
Branch Realty of, any liability with respect to Branch Realty's fiduciary duties
in connection with obtaining consents to or amending the Branch Partnership
Agreement in order to consummate the transactions contemplated by this
Agreement.
5.10 Exclusivity. Unless and until this Agreement is terminated pursuant
to its terms, Branch shall not, directly or indirectly, through any officer,
director, partner, agent or otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information or assistance), or take
any other action to facilitate knowingly, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or
25
endorse any Competing Transaction, or authorize or knowingly permit any of the
officers, directors, partners or employees of such party or any of its
Affiliates or any investment banker, financial advisor, attorney, accountant or
other representative retained by such party or any of such party's Affiliates to
take any such action, and Branch shall notify Regency orally (within one
business day) and in writing (as promptly as practicable) of all of the relevant
details relating to all inquiries and proposals which Branch or any such
officer, director, employee, partner, investment banker, financial advisor,
attorney, accountant or other representative may receive relating to any of such
matters. A "Competing Transaction" means the sale by Branch of any equity
interest in Branch (other than the sale of additional limited partnership
interests to OCP in connection with additional capital required to be
contributed by OCP to Branch pursuant to the Branch Partnership Agreement) or
the sale or other transfer by Branch of its assets or business, in whole or in
part, whether through direct sale, merger, consolidation, asset sale, exchange,
recapitalization, other business combination, liquidation, or other action out
of the ordinary course of business. Unless and until this Agreement is
terminated pursuant to its terms, Regency shall not, directly or indirectly,
through any officer, director, agent or otherwise, negotiate, undertake or
consummate a business combination, whether through a direct purchase, merger,
consolidation, asset purchase, exchange, recapitalization, other business
combination, or other action out of the ordinary course of business, which would
prevent or hinder Regency from consummating the transactions contemplated by
this Agreement or which have a material adverse effect on Regency.
5.11 New Contracts. Without Regency's prior written consent in each
instance (which shall not be unreasonably withheld), Branch will not, and will
not allow any Subpartnership to, enter into, or grant concessions regarding, any
Contract that will be an obligation affecting the Properties or binding on the
Partnership or any Subpartnership after the Closing except Contracts entered
into in the ordinary course of business that are terminable without cause or any
termination fee on 30 days' notice.
5.12 Leasing Arrangements. As to any Lease in excess of 5,000 square feet
of usable space in any Property, Branch will not, and will not allow any
Subpartnership to, amend, terminate, grant material concessions regarding, or
enter into any Lease unless Regency has given its written consent, which consent
shall not be unreasonably withheld or delayed. As to Leases for 5,000 square
feet or less of usable space, Branch will not, and will not allow any
Subpartnership to, amend, terminate, grant concessions regarding, or enter into
any new Lease without the prior written consent of Regency if such action would
require approval by OCP under the Branch Partnership Agreement. Branch shall
provide Regency with all material information related to each request for
consent, including without limitation, lease form, lease terms, leasing
commissions, tenant improvement obligations and other lease procurement costs,
description of tenant's business, and tenant's financial statements or a Xxxx &
Bradstreet credit report (to the extent available).
5.13 Obligation to Supplement Information. From time to time prior to the
First Closing, the Branch Affiliates, on the one hand, and Regency on the other
will promptly disclose in writing to the other party any matter hereafter
arising or discovered which, if existing,
26
occurring or known at the date of this Agreement would have been required to be
disclosed by any party or which would render inaccurate any representation or
warranty by any party. Additionally, the Branch Affiliates agree to provide
Regency with prompt written notice of any matter hereafter arising or discovered
with respect to a Property which could have a material adverse effect on the
condition, operations or prospects of such Property, and Regency agrees to
provide the Branch Affiliates with prompt written notice of any matter hereafter
arising or discovered which could have a material adverse effect on the
condition, operations or prospects of Regency. No information provided to a
party pursuant to this Section shall be deemed to cure any breach of any
representation, warranty or covenant made in this Agreement.
5.14 Access to Information; Environmental Audits. At all times before the
First Closing, Branch shall provide Regency and its Affiliates, their respective
agents, employees, consultants, and representatives, with continuing and
reasonable access to all files, books, records and other materials in Branch's
possession or control relating to the Properties, Branch's Third Party
Management Business and the business and operations of Branch and the right to
examine, inspect and make copies of such materials as appropriate (including for
the purpose of reviewing or preparing audited financial statements required to
be filed by Regency with the SEC). During such period, Branch shall also provide
for such parties to have reasonable physical access to the Properties for the
purpose of conducting surveys, architectural, engineering, geotechnical and
environmental inspections and tests (including sampling and invasive testing for
the presence of Materials of Environmental Concern performed in connection with
Phase I and Phase II environmental audits), feasibility studies and any other
inspections, studies or tests reasonably required by them, provided, however,
that Regency shall obtain Branch's prior approval (which shall not be
unreasonably withheld) for any invasive testing. With reasonable advance notice
to Branch, Regency may conduct a "walk-through" of tenant spaces upon
appropriate notice to tenants and subject to the rights of tenants. In the
course of its investigations, Regency may make inquiries to third parties,
including, without limitation, contractors, property managers, parties to Work
Contracts, lenders, tenants and Government Entities. Regency shall keep the
Properties free of any liens claimed by Regency's contractors or consultants in
connection with such entry and will indemnify, defend and hold Branch harmless
from all Claims and Liabilities caused by Regency, its contractors or
consultants that are asserted against or incurred by Branch as a result of such
entry and investigation. Any liability or loss related to a condition of any
Property discovered or disclosed by Regency or any consultant or contractor of
Regency in connection with such investigation is not a liability that is covered
by this indemnity. At all times before the First Closing, Regency shall provide
the Branch Affiliates and OCP, their respective agents, employees, consultants,
and representatives, with continuing and reasonable access to all files, books,
records and other materials in Regency's possession or control relating to the
business and operations of Regency and the right to examine, inspect and make
copies of such materials as appropriate. No investigation made by a party shall
limit, qualify or modify any representations, warranties, covenants or
indemnities made by another party hereunder, irrespective of the knowledge and
information obtained as a result of any such investigation, but if a party
discovers as a result of any investigation made by it prior to the First Closing
that any representation or warranty made
27
herein by the other party is materially inaccurate, it shall promptly notify and
advise the other party.
5.15 Monthly Updates of Rent Rolls and Operating Statements. Branch will
promptly provide Regency with monthly updates of the Rent Roll and operating
statements for the Properties.
5.16 Tenant Estoppels. Branch shall endeavor to secure and deliver to
Regency estoppel certificates in a form reasonably acceptable to Regency from
all tenants under all Leases (collectively, the "Tenant Estoppels"), dated no
earlier than 30 days before the First Closing Date. Regency and Branch will
consult and cooperate with each other as to the timing of solicitation of Tenant
Estoppels with the goal of obtaining the Tenant Estoppels at least three days
before the First Closing Date.
5.17 Service Contracts. The Partnership will assume the obligations
arising from and after the First Closing Date under those Service Contracts that
are not in material default as of the First Closing Date and which Branch and
Regency have agreed will not be terminated. Branch shall terminate at the First
Closing all Service Contracts that Branch has agreed will not be so assumed, but
Regency shall reimburse Branch for any termination fees imposed as a result of
such termination, excluding any fees or damages imposed solely as a result of a
Branch default other than by reason of such termination.
5.18 Work Contracts. Ten days before the First Closing, the Branch
Affiliates shall notify Regency in a written progress report as to those Work
Contracts that will not be completed by the First Closing.
5.19 Title Matters.
5.19.1 Title Insurance; Survey. Regency shall order the Title
Insurance Commitments from the Title Company and each Survey from a reputable
surveyor familiar with the Property (Branch agreeing to furnish to Regency
copies of any existing surveys and title information in its possession promptly
after execution of this Agreement) and shall use reasonable best efforts to
obtain such items as promptly as practicable following the execution of this
Agreement. Regency will have ten (10) days from receipt of the later to be
received of the Title Insurance Commitment (including legible copies of all
recorded exceptions noted therein) and Survey to notify Branch in writing of any
Title Defects, encroachments or other matters not acceptable to Regency which
are not Permitted Exceptions by this Agreement. Any Title Defect or other
objection disclosed by the Title Insurance Commitment or the Survey which is not
timely specified in Regency's written notice to Branch of Title Defects shall be
deemed a Permitted Exception. Branch shall notify Regency in writing within ten
(10) days of Regency's notice if Branch intends to cure any Title Defect or
other objection. If Branch elects to cure, Branch shall use diligent efforts to
cure the Title Defects and/or objections by the First Closing Date (as it may be
extended), which may include insuring over or bonding off such Title Defects
and/or objections at Branch's expense. If Branch elects not to cure or if such
Title
28
Defects and/or objections are not cured and if in either case they have a
Material Adverse Effect on the applicable Property, Regency shall have the sole
remedy, in lieu of any other remedies, to (i) refuse to purchase all of the
Properties and terminate this Agreement; or (ii) waive such Title Defects and/or
objections and close the purchase of the Properties and other transactions
hereunder subject to them.
5.19.2 Later Title Exceptions. In the event that Branch becomes
aware that an exception to title has been filed of record subsequent to the date
of the Title Commitment and prior to the First Closing Date (a "Later
Exception"), Branch shall send written notice of such Later Exception to
Regency. Regency shall have the right to postpone the First Closing Date for a
period up to thirty (30) days in order to give Branch sufficient time to
satisfy, release, cure or remove such lien or exception. Upon Branch's cure,
removal, insurance over or bonding off of any such Later Exception, at Branch's
expense, the First Closing Date shall be scheduled upon ten (10) days prior
written notice to Branch but in no event earlier than the First Closing Date
notwithstanding such Later Exception. If Branch is unable, within said
thirty-day period, or elects not to cure, remove, bond off or otherwise dispose
of any Later Exception that has a Material Adverse Effect on the applicable
Property, Regency may in its sole discretion and as its sole remedy in lieu of
any other remedies, either (a) refuse to purchase all of the Properties and
terminate this Agreement; or (b) waive such objection to the Later Exception and
proceed with the First Closing Date. At the First Closing, the Title Company
will issue the Title Insurance.
5.20 Damage. The Branch Affiliates shall promptly give Regency written
notice of any damage to the Properties, describing such damage whether such
damage is covered by insurance and the estimated cost of repairing such damage.
If such damage is not material (i) Branch shall, to the extent possible, begin
repairs prior to the First Closing, (ii) at the First Closing the Partnership
shall receive all insurance proceeds not applied to the repair of any such
Properties prior to the First Closing (including rent loss insurance applicable
to any period from and after the First Closing) due to Branch for the damage,
together with an assignment of any unsettled insurance claim, and (iii) the
Partnership shall assume the responsibility for the repair after the First
Closing. The Partnership shall be entitled to any excess of the proceeds of
Branch's insurance over and above the actual cost of repair and restoration. If
such damage is material, Regency may elect by notice to Branch given within 20
Business Days after Regency is notified of such damage (and the First Closing
shall be extended, if necessary, to give Regency such 20 Business Day period to
respond to such notice) to proceed in the same manner as in the case of damage
that is not material or to terminate this Agreement. Damage as to any one or
multiple occurrences is material if the aggregate cost to repair all such damage
(plus the cost of rent abatement after the First Closing resulting from the
damage to the extent not reimbursable by insurance) exceeds $5,000,000 or if the
damage entitles tenants whose Leases cover, in the aggregate, in excess of
100,000 rentable square feet of the Improvements to terminate their Leases.
5.21 Condemnation. Branch will give Regency prompt written notice of the
institution or threat of any exercise of the power of eminent domain on any of
the Properties. By notice
29
to Branch given within 20 Business Days after Regency receives notice of
proceedings in eminent domain that are contemplated, threatened or instituted by
any Government Entity having the power of eminent domain with respect to the
Properties and which would have a Material Adverse Effect on the Property in
question, Regency may terminate this Agreement or proceed under this Agreement.
If Regency elects to proceed under this Agreement, Branch shall assign to the
Partnership at the First Closing its entire right, title and interest in and to
any condemnation award, and the Partnership shall have the sole right during the
pendency of this Agreement to negotiate and otherwise deal with the condemning
authority in respect of such matter. If necessary, the First Closing shall be
extended to give Regency the full 20 Business Day period to make such election.
5.22 Peartree Agreement. Regency and Branch agree to enter into an
agreement in substantially the form set forth in Exhibit prior to the First
Closing and to use their reasonable best efforts to obtain the execution of the
Peartree investors thereto prior to the First Closing.
ARTICLE 6: REPRESENTATIONS, WARRANTIES AND FURTHER
COVENANTS OF BRANCH
Branch hereby represents, warrants and covenants to Regency and the
Partnership as of the date of this Agreement and the First Closing as follows.
All representations that are made "to Branch's knowledge" means to the actual
knowledge of the individuals listed on Schedule
attached hereto without any duty or obligation to inquire as to such matters.
Branch represents that such individuals are the appropriate individuals who, in
the course of their duties, would normally be aware of material issues and facts
affecting the Properties, the other Assets, the Subpartnerships and Branch. All
representations and warranties with respect to the Rent Roll are made as of
January 20, 1997.
6.1 As to Branch and the Subpartnerships.
6.1.1 Due Incorporation, etc. Branch and each Subpartnership are
duly organized, validly existing and in good standing under the Laws of their
respective jurisdiction of organization, with all requisite power and authority
to own, lease, operate and sell their assets and to carry on their businesses as
they are now being conducted. Branch and each Subpartnership are in good
standing as a foreign entity authorized to do business in each jurisdiction
where they engage in business, except to the extent such violation or failure
does not cause or is not reasonably expected to cause a Material Adverse Effect.
Neither Branch (except for its interests in the Subpartnerships) nor any
Subpartnership (except for the interest of Branch/HOP Associates, L.P. in
Roswell Village, Ltd.) holds any interest in any security issued by any other
Person. The states in which each Subpartnership is qualified to do business are
listed on Schedule . The parties understand that certain Subpartnerships may
terminate for tax purposes, pursuant to the applicable tax laws, upon the
transfer of Branch's interest therein to the Partnership at the First Closing.
30
6.1.2 Due Authorization; Consents; No Violations.
(a) Branch has full power and authority (subject to receipt of
the consents referred to in Section ) to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Branch of this Agreement have been, and the Transaction Documents
to be executed and delivered by it pursuant to this Agreement shall be, duly and
validly approved by Branch, and no other proceeding on the part of Branch is
necessary to authorize this Agreement and the transactions contemplated hereby,
other than obtaining the consents set forth on Schedule . This Agreement has
been duly and validly executed and delivered by Branch and, assuming due
authorization (including the receipt of the consents set forth on Schedule (b)),
execution and delivery of this Agreement by Regency, TRG and Branch Realty, this
Agreement constitutes, and the Transaction Documents to be executed and
delivered by Branch pursuant to this Agreement when executed will constitute,
valid and binding obligations of Branch enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization, or similar laws or court
decisions from time to time in effect that affect creditors' rights generally
and by legal and equitable limitations on the availability of specific remedies.
(b) Except for obtaining the consents set forth on Schedule ,
no consents, waivers, exemptions or approvals of, or filings or registrations by
Branch with, any Government Entity or any other Person not a party to this
Agreement are necessary in connection with the execution, delivery and
performance by Branch of this Agreement or the consummation of the transactions
contemplated hereby except to the extent the failure to obtain the same does not
cause or is not reasonably expected to cause a Material Adverse Effect on Branch
or the transactions contemplated by this Agreement.
(c) Upon obtaining those consents set forth on Schedule and
(assuming receipt of such consents) except to the extent same does not cause or
is not reasonably expected to cause a Material Adverse Effect, the execution,
delivery and performance by Branch of this Agreement and the Transaction
Documents to be executed, delivered and performed by Branch pursuant hereto, and
the consummation of the transactions contemplated hereby and thereby, do not and
will not (i) violate any Order applicable to or binding on Branch, any of the
Assets, or any Subpartnership or its assets; (ii) violate any Law; (iii) violate
or conflict with, result in a breach of, constitute a default (or an event which
with the passage of time or the giving of notice, or both, would constitute a
default) under, permit cancellation of, or result in the creation of any Lien
upon any of the Assets or any of the assets of any Subpartnership under, any
Contract to which Branch or any Subpartnership is a party or by which Branch,
any of the Assets, or any Subpartnership or its assets, are bound; (iv) permit
the acceleration of the maturity of any indebtedness of Branch or any
Subpartnership, or any indebtedness secured by the Assets or any
Subpartnership's assets; or (v) violate or conflict with any provision of the
Branch Partnership Agreement or any of the respective limited partnership
agreements of the Subpartnerships.
31
6.1.3 Branch Financial Statements.
(a) Schedule contains true, complete and accurate copies of
the Branch Financial Statements. The Branch Financial Statements have been
prepared in accordance with GAAP and on that basis present fairly the
consolidated financial position and assets and Liabilities of the entities
included therein (including the Subpartnerships) as going concerns, and the
results of the operations of such entities and changes in their financial
position for the periods covered thereby and as of the dates thereof. The Branch
Financial Statements are in accordance with the books and records of the
entities included therein (including the Subpartnerships), do not reflect any
transactions which are not bona fide transactions and do not contain any untrue
statements of a material fact or omit to state any material fact necessary to
make the statements contained therein, in light of the circumstances in which
they were made, not misleading. The Branch Financial Statements make full and
adequate disclosure of, and provision for all material Liabilities of the
entities included therein (including the Subpartnerships) as of the dates
thereof. Except as set forth in the balance sheets included in the Branch
Financial Statements, there are no Liabilities (including "off-balance sheet"
Liabilities, except for annuity lease commissions), whether due or to become
due, which have had or are reasonably likely to have a Material Adverse Effect
on Branch or any Subpartnership.
(b) Since the Recent Balance Sheet Date, neither Branch nor
any Subpartnership has made any distribution, dividend, or similar payment to
any of their partners or Affiliates other than normal distributions consistent
with past practice.
6.1.4 No Adverse Change. Except as listed on Schedule and except for
the Closing contemplated hereby, since the Recent Balance Sheet Date, there has
not been (i) any change in Branch or any Subpartnership which would cause or
reasonably be expected to result in a Material Adverse Effect on Branch or the
Subpartnership, (ii) any material loss, damage or destruction to any of the
Assets or any assets of any Subpartnership (whether or not covered by insurance)
or any other event or condition which has had or could have a Material Adverse
Effect on Branch or the Subpartnership, (iii) any one indebtedness in excess of
$10,000 or total indebtedness in excess of $50,000 incurred by Branch relating
to, or taking as security any interest whatsoever in the Assets, (iv) any one
indebtedness in excess of $10,000 or total indebtedness in excess of $50,000
incurred by any Subpartnership, (v) any Contract or other transaction entered
into by Branch or any Subpartnership relating to, or otherwise affecting in any
way, their respective businesses or the operation thereof, other than in the
ordinary course of business, (vi) any sale, lease or other transfer or
disposition of the Assets or of any assets of any Subpartnership, or any
cancellation of any debts or claim of Branch or any Subpartnership, except in
the ordinary course of business, and (vii) any changes in the accounting
systems, policies or practices of Branch or any Subpartnership. Since the Recent
Balance Sheet Date, Branch's and each Subpartnership's business has been
conducted in all material respects only in the ordinary course and consistent
with past practices.
32
6.1.5 Title to Assets. Branch has good and marketable title to all
of the Assets other than the Real Properties (title to which is as set forth in
Section ), free and clear of any Lien, other than the Permitted Exceptions and
the Assumed Liabilities. At the First Closing, Branch will convey (to the extent
not already acquired by the Partnership pursuant to Section ) the Assets to the
Partnership by deeds, bills of sale, certificates of title and instruments of
assignment and transfer effective to vest in the Partnership, and the
Partnership shall have good and marketable title, free and clear of all Liens,
except the Permitted Exceptions and the Assumed Liabilities.
6.1.6 Condition and Sufficiency of Assets. To Branch's knowledge,
all tangible assets constituting the Assets or the tangible assets owned by any
Subpartnership have been well maintained during the period of Branch's ownership
thereof (including ownership through a Subpartnership), and are in good
operating condition and repair (with the exception of normal wear and tear), and
are free from defects other than such minor defects as do not interfere with the
continued use thereof in the conduct of normal operations or materially
adversely affect the resale value thereof.
6.1.7 Leased Real Property. Schedule lists all leases pursuant to
which Branch or any Subpartnership holds any real property used in connection
with their respective businesses. Branch has delivered to Regency true and
complete copies of all such leases, together with copies of all reports of any
engineers, environmental consultants or other consultants which, to Branch's
knowledge, are in Branch's possession relating to any property subject to such a
lease, if any.
6.1.8 Leased Personal Property. Schedule lists all leases pursuant
to which Branch or any Subpartnership holds equipment, vehicles, furniture or
any other item of personal property used in connection with their respective
businesses. All of the personal property leased by Branch or any Subpartnership
under such leases is presently utilized by Branch or such Subpartnership in the
ordinary course of its business. Branch has made available to Regency true and
complete copies of all such leases.
6.1.9 Intellectual Property. Except for the "Branch" name, there are
no trade names, trademarks, service marks or copyrights (or any registrations
with any Government Entity of, or applications for registration pending with
respect to, any of the foregoing) owned or licensed by Branch or any
Subpartnership that are material to the conduct of Branch's or any
Subpartnership's business.
6.1.10 Existing Mortgage Debt. There are no defaults (and no Branch
Affiliate has received any notice of a default asserted by any lender that has
not been cured) under the Existing Mortgage Debt, or facts or circumstances
which with the passage of time or the giving of notice, or both, would result in
such a default, except to the extent such a default does not cause and is not
reasonably expected to cause a Material Adverse Effect on Branch or the
transactions contemplated by this Agreement. The aggregate principal balance
outstanding under the Existing Mortgage Debt as of December 31, 1996 is set
forth on Schedule .
33
6.1.11 Contracts. Except as set forth on Schedule , and except for the
Branch Partnership Agreement and the Leases described on the Rent Roll,
Schedules (Acquisition Contracts), (Development Contracts), (Existing Mortgage
Debt), (Management Contracts), (Repair Contracts), (Service Contracts), (TI
Contracts), (Disposition Contracts), (Leased Real Property), (Leased Personal
Property), (Insurance Policies), (Leasing Commissions) and (Subpartnership
Agreements) include all of the Contracts of the following types (i) to which
Branch is a party or is bound and which the Partnership is assuming, (ii) to
which any of the Assets are subject or are bound, (iii) to which any
Subpartnership is a party or is bound, or (iv) to which any of the assets of any
Subpartnership are subject or are bound:
(a) all property management agreements, asset management
agreements, and development agreements;
(b) all partnership agreements;
(c) any Contract of any kind with any partner of Branch or
of any Subpartnership or any Affiliate of such partner;
(d) any Contract with a dealer, broker, leasing agency,
advertising agency or other Person engaged in sales, or promotional activities;
(e) any Contract of any nature which involves an unperformed
commitment in excess of, or services having a value in excess of, $10,000;
(f) any Contract pursuant to which Branch or any
Subpartnership has made or will make loans or advances, or has or will have
incurred debts or become a guarantor, indemnitor or surety or pledged their
credit on or otherwise become contingently or secondarily liable with respect to
any undertaking or obligation of any other Person (except for the negotiation or
collection of negotiable instruments in transactions in the ordinary course of
business);
(g) any indentures, credit agreements, loan agreements, notes,
letters of credit, mortgages, security agreements, leases of real property or
personal property, deeds of trust or other agreements for financing;
(h) any Contract involving a partnership, joint venture or
other cooperative undertaking;
(i) any Contract involving any restrictions relating to Branch
or a Subpartnership with respect to the geographical area of operations or scope
or type of business of Branch or a Subpartnership;
34
(j) any power of attorney or agency agreement or arrangement
with any Person pursuant to which such Person is granted the authority to act
for or on behalf of Branch or any Subpartnership;
(k) any Contract under which the requirements for perfor-
xxxxx extend beyond 60 days from the date of this Agreement; and
(l) all other Contracts relating to Branch's or any
Subpartnership's business not made in the ordinary course of business which are
to be performed at or after the date of this Agreement.
Branch has made available to Regency true and complete copies of the Branch
Partnership Agreement and each Contract listed on Schedules (Acquisition
Contracts), (Development Contracts), (Existing Mortgage Debt), (Management
Contracts),
(Repair Contracts), (Service Contracts), (TI Contracts), (Disposition
Contracts), (Leased Real Property), (Leased Personal Property), (Insurance
Policies), (Leasing Commissions) and (Subpartnership Agreements) and a written
description of each oral arrangement so listed. All such Contracts are duly
authorized and enforceable in accordance with their terms by Branch or the
relevant Branch Affiliate, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization, similar laws or
court decisions from time to time in effect that affect creditors' rights
generally and by legal and equitable limitations on the availability of specific
remedies, and except to the extent such unenforceability does not cause or is
not reasonably expected to cause a Material Adverse Effect. Schedule sets forth
each Service Contract that imposes a termination fee on Branch or any
Subpartnership for the termination thereof prior to its stated term, together
with the amount of the required termination payment and the other party thereto,
and also lists any Service Contract for the provision of services to any
Property as to which Branch or any Subpartnership receives a xxxx-up or rebills
tenants in its own name.
6.1.12 Management Contracts. Except as disclosed on Schedule and as
described in the Xxxxxxx Letter Agreement, to Branch's knowledge, no other party
to a Management Contract has rights of set-off or counterclaim against Branch
under such Management Contract, and Branch is not in default thereunder nor is
Branch aware of any facts or circumstances which, with notice or passage of
time, or both, would constitute a default by Branch under any Management
Contract, except to the extent such default does not cause and is not reasonably
expected to cause a Material Adverse Effect on Branch. Except as set forth on
Schedule and as described in the Xxxxxxx Letter Agreement, Branch has not
received notice of termination of any Management Contract from any other party
thereto, nor is Branch aware that any other party presently intends to
terminate, or contemplates terminating a Management Contract.
6.1.13 Permits. Branch and each Subpartnership hold all of the
permits, certificates, franchises, rights, variances, interim permits,
approvals, authorizations or consents, whether federal, state, local or foreign,
currently necessary for the lawful operation of Branch's
35
or any Subpartnership's business, except for those the absence of which would
not cause and would not be reasonably expected to cause a Material Adverse
Effect on Branch or the Subpartnership.
6.1.14 Insurance Policies. Schedule is a list of all casualty,
liability, business interruption and other insurance policies insuring against
loss of the assets held by Branch and each Subpartnership. All such insurance
policies are in full force and effect.
6.1.15 Tax Matters.
(a) No Branch Tax is Payable by the Partnership. There are no
material unpaid Taxes arising from the operation of Branch's or any
Subpartnership's business (or as a result of Branch or any Subpartnership
succeeding to the Liabilities of any other Person by operation of law pursuant
to a purchase of assets or stock, merger, consolidation or similar transaction)
during any period prior to the First Closing Date for which the Partnership will
become liable or which will become a Lien against any of the Assets following
the First Closing other than Taxes which are not yet delinquent that are accrued
on the Branch Financial Statements.
(b) Tax Audits. Except as set forth on Schedule , neither
Branch nor any Subpartnership has received from the IRS or from the Tax
authorities of any state, county, local or other jurisdiction (i) any notice of
underpayment of Taxes or other deficiency which has not been paid, (ii) any
objection to any Tax return or report filed by Branch or any Subpartnership, nor
(iii) any notice of audit with respect to any Tax, nor is Branch or any
Subpartnership currently the subject of any such audit. There are no outstanding
agreements or waivers extending the statutory period of limitations applicable
to any Tax return or report filed by either Branch or any Subpartnership.
(c) Foreign Person. Branch is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code, and Branch will furnish to the
Partnership, if requested by the Partnership, an affidavit in form satisfactory
to the Partnership confirming the same.
(d) Leases. To Branch's knowledge, all of the services
provided by Branch (or any other Person acting as lessor or landlord for any of
the Assets) to the tenants of the Properties (including the real properties
owned by the Subpartnerships, the Development Properties and the Acquisition
Properties) under their respective Leases are customary in that geographic area
and are not primarily for the convenience of the tenant. To Branch's knowledge,
no formula for determining percentage rents under any lease with a tenant of a
Property (including any real property owned by the Subpartnerships, the
Development Properties and the Acquisition Properties) has the effect of basing
such rent on the income (as opposed to revenues) or profits of any Person. To
Branch's knowledge, any rent payable by tenants of the Properties (including the
real properties owned by the Subpartnerships, the Development Properties and the
Acquisition Properties) attributable to personal property does not exceed 15%
36
of the total rent under the relevant Lease attributable to both real and
personal property (determined in accordance with Section 856(d)(1)(C) of the
Code).
(e) Partnership Status. Each Subpartnership is qualified,
and since the date of its formation has been qualified, to be treated as a
partnership for federal income tax purposes.
(f) Other. Except as set forth on Schedule , since January 1,
1989, no Subpartnership has (i) applied for any Tax ruling, or (ii) entered into
a closing agreement with any Taxing authority.
6.1.16 Distribution and Payments. Assuming that OCP and a majority
in interest of the Branch Limited Partners consent in writing to the
transactions contemplated by this Agreement, the allocation of the consideration
to be received in exchange for the Assets among all of Branch's partners as
described in Article 2 of this Agreement (including Schedule 2.2) or set forth
elsewhere in the Transaction Documents will not violate (or when any such
Transaction Document is executed will not violate) the Branch Partnership
Agreement, and neither Regency nor the Partnership shall have any Liability as
to any such matters. Except as set forth on Schedule , no other Person holds any
options, warrants, securities or other rights entitling, or which if exercised
would entitle, them to receive Units.
6.1.17 Employee Benefit Plans.
(a) Disclosure. Schedule identifies each employee benefit
plan, fund, program, contract, policy or arrangement covering or benefitting
employees of Branch, including, but not limited to, all "employee benefit
plans," as defined in Section 3(3) of ERISA, and specifically including each
retirement, pension, profit sharing, stock bonus, savings, thrift, bonus,
medical, health, hospitalization, welfare, life insurance, disability, accident
insurance, group insurance, sick pay, holiday and vacation programs, executive
or deferred compensation plans or contracts, stock purchase, stock option or
stock appreciation rights plans or arrangements, employment and consulting
contracts, and severance agreements or plans (collectively, the "Employee
Benefit Plans"). With respect to each of the Employee Benefit Plans:
(1) No such plan has been terminated so as to subject,
directly or indirectly, the Partnership or the Assets to any Liability or the
imposition of any Lien;
(2) No condition or event currently exists or currently
is expected to occur that could subject, directly or indirectly, the Partnership
or the Assets to any Liability or the imposition of any Lien;
(3) If any such plan were terminated, neither the
Partnership nor the Assets would be subject, directly or indirectly, to any
Liability or the imposition of any Lien;
37
(4) No such plan is a "multiemployer plan" or "defined
benefit plan" (as defined in Section 4001 of ERISA), and neither Branch nor
any member of Branch's controlled group (as defined in Section 4001(a)(14)
of ERISA) has ever contributed nor been obligated to contribute to any such
plan; and
(5) There have been no "prohibited transactions" within the
meaning of Section 406 or 407 of ERISA or Section 4975 of the Code for which a
statutory or administrative exemption does not exist, and the consummation of
the transactions contemplated by this Agreement will not result in any
prohibited transaction.
(b) Successor Liability. No condition or event could subject,
directly or indirectly, the Assets to any Liability or the imposition of any
Lien under ERISA as a result of Branch succeeding to the Liabilities of any
other Person by operation of law pursuant to a purchase of assets or stock,
merger, consolidation or similar transaction prior to the First Closing Date.
6.1.18 Other Employee Matters. Branch has and currently is
conducting its business in full compliance with all Laws relating to employment
and employment practices, terms and conditions of employment, wages and hours
and nondiscrimination in employment, except to the extent failure to do so does
not cause or is not reasonably expected to cause a Material Adverse Effect. No
Subpartnership other than Roswell Village, Ltd., has ever employed any Person,
and to Branch's knowledge, Roswell Village, Ltd. has never employed any Person.
6.1.19 No Defaults or Violations. Except as disclosed on Schedule
and except to the extent any default or non-compliance does not cause or is not
reasonably expected to cause a Material Adverse Effect as to Branch or a
Subpartnership: (a) neither Branch nor any Subpartnership has materially
breached any provision of, nor are they in material default under the terms of,
any Contract to which they are a party or under which they have any rights or by
which they are bound or which relates to their respective businesses, the Assets
or the assets of any Subpartnership and, to Branch's knowledge, no other party
to any such Contract has breached such Contract or is in default thereunder (nor
has Branch or any Subpartnership waived any such default) in any material
respect, and no event has occurred and no condition or state of facts exists
which with the passage of time or the giving of notice, or both, would
constitute such a default or breach by Branch or any Subpartnership, or to
Branch's knowledge, by any such other party, or give right to an automatic
termination or the right of discretionary termination thereof; (b) Branch has
complied in all material respects with its obligations, and has not breached any
of its duties, under the respective limited partnership agreements of the
Subpartnerships; (c) to Branch's knowledge, each of the Assets and each
Subpartnership is in material compliance with, and no material violation exists
under, any Law or Order applicable in any way to Branch, any of the Assets or
any Subpartnership; and (d) no notice from any Government Entity has been
received by Branch or any Subpartnership claiming any violation of any Law
(including any building, zoning or other ordinance) or Order, or requiring any
work, construction or expenditure.
38
6.1.20 Litigation. Except for those matters described in Schedule
which, to Branch's knowledge, do not have a Material Adverse Effect on Branch, a
Subpartnership or the transactions contemplated by this Agreement, there is no
Litigation pending or, to Branch's knowledge, threatened against any of the
properties or businesses of Branch or any Subpartnership. Except as disclosed on
Schedule , neither Branch, any of the Assets, any Subpartnership nor any assets
of any Subpartnership are subject to any Order which has had or could have a
Material Adverse Effect on Branch, a Subpartnership or the transactions
contemplated by this Agreement.
6.1.21 Brokers. Neither Regency, the Partnership nor any Affiliate
of either has or shall have any Liability or otherwise suffer or incur any loss
as a result of or in connection with any brokerage or finder's fee or other
commission of any Person retained by Branch in connection with the transactions
contemplated by this Agreement or for any other transaction involving the
Properties, except for the leasing commissions described on Schedule .
6.1.22 Insolvency. There has not been filed by nor has Branch or any
Subpartnership received notice of a petition in bankruptcy or any other
insolvency proceeding, or for the reorganization or appointment of a receiver or
trustee, nor has Branch or any Subpartnership made an assignment for the benefit
of creditors, nor filed a petition for arrangement, nor entered into an
arrangement with creditors, nor admitted in writing its inability to pay debts
as they become due.
6.1.23 Branch Closing Agreements. Branch has not made any claim
against any Transferor Entity (as defined in the Branch Partnership Agreement)
for a breach by a Transferor Entity of a representation, warranty or covenant
made by it in any Closing Agreement (as defined in the Branch Partnership
Agreement) and to Branch's knowledge, there is no basis for any such claim.
6.1.24 As to the Subpartnerships Only. Schedule contains a true,
complete and accurate list of the respective limited partnership agreements
(including, without limitation, the execution date of each original agreement
and each amendment thereto) for the Subpartnerships. Branch has made available
to Regency true and complete copies of all such limited partnership agreements,
together with any and all amendments thereto. Each equity owner of the
respective Subpartnerships is set forth on Schedule , and, to Branch's
knowledge, no other Person holds, or has held (other than the interest of Noro
in Roswell Village, Ltd. acquired by Branch/HOP Associates, L.P., and the
interests acquired by Branch as part of its formation) any type of equity
interest, including, without limitation, options, warrants, and securities, or
other rights in the Subpartnerships. Except for the Properties described on
Schedule and for the properties described on Schedule , no Subpartnership has
ever owned, or is a party to an outstanding contract for the purchase of, real
property. Except as disclosed on Schedule , no Subpartnership has succeeded to
the Liabilities of any other Person by operation of Law pursuant to a purchase
of assets or stock, merger, consolidation or similar transaction.
39
6.2 As to the Properties.
6.2.1 Title. Except for the "Hastings Property" and a portion of
Briarcliff Village that are ground leasehold interests held by Branch as a
tenant, Branch or a Subpartnership owns all right, title, and interest to each
Property, in fee simple, free and clear of all Liens and encroachments, and free
and clear of all tenancies and adverse or other rights of possession, subject
only to the Permitted Exceptions. To Branch's knowledge, each Property
constitutes a separate and legally subdivided parcel and a separate tax parcel.
6.2.2 Purchase Agreement. No Branch Property or any Subpartnership's
interest in any Property is subject to any outstanding agreements of sale,
options or other rights of third parties to acquire any interest therein, except
for the Disposition Properties, the Permitted Exceptions and this Agreement.
Neither Branch, nor any Subpartnership has any outstanding options, contracts or
rights of first refusal to purchase any real or personal property except for the
Acquisition Contracts and except as described on Schedule .
6.2.3 Compliance with Laws; Zoning. To Branch's knowledge, each
Property, and all present uses and operations thereof, complies with all
applicable zoning (except for the proposed expansion of Xxxxx Springs Village,
which is subject to rezoning), land-use, building, fire, health, labor, safety,
subdivision and other Laws (including the Americans with Disabilities Act), all
Orders, and all deed or other title covenants and restrictions applicable
thereto, except to the extent the failure to do so does not cause and is not
reasonably expected to cause a Material Adverse Effect on such Property. Neither
Branch nor any Subpartnership has made any application or agreement with any
Government Entity or other Person with respect to any variance or exception from
zoning, building or other Laws that has not been disclosed to Regency in
writing. To Branch's knowledge, the use of each Property is consistent with any
land use designation for such Property under any comprehensive plan or plans
applicable thereto, and any concurrency requirements have been satisfied.
6.2.4 Accuracy of Documents and Information. Branch has delivered or
made available to Regency true and complete copies of all engineering reports,
inspection reports, maintenance plans and other documents relating to each
Property which, to Branch's knowledge, are in the possession or control of
Branch or any Subpartnership. The documents and information delivered to the
Partnership at the First Closing will be all of the documents and information
required or relevant, to Branch's knowledge, to the condition and operation of
each Property in any material respect, will be true and correct copies or
originals, and will be in full force and effect, without default by Branch or
any Subpartnership, as applicable, or, to Branch's knowledge, by any other party
thereto, and without any right of set-off, except as disclosed on Schedule and
except to the extent such default, set-off, or other fact or circumstance does
not cause and is not reasonably expected to cause a Material Adverse Effect on
the applicable Property.
6.2.5 Fees; Assessments; Condemnation. Except as disclosed on the
Development Budget and Schedule, there are no outstanding and unpaid impact fees
or other
40
charges in connection with any development of or otherwise related to any
Property or, any part thereof; there are not pending or, to Branch's knowledge,
threatened any special assessments or obligations for roads and other
improvements with respect to any Property or any part thereof; and, except for
road widenings described on Schedule which do not or are not expected to have a
Material Adverse Effect on such Property, there is not pending or to Branch's
knowledge, threatened any condemnation, expropriation, requisition (temporary or
permanent) or similar proceeding with respect to any Property or any part
thereof (including access thereto or any easement benefiting the Property).
6.2.6 Physical Condition. To Branch's knowledge, there are no
violations of any applicable Laws, Orders or insurance underwriting guidelines
relating to safety, structural, mechanical, or other physical systems or
portions of any Property, except to the extent such violation does not cause and
is not reasonably expected to cause a Material Adverse Effect on the applicable
Property. To Branch's knowledge, there are no soil or subsurface conditions
located on any Property which would materially impair the useability of any
Property for continuation of the current use or the contemplated redevelopment.
6.2.7 Utilities; Access. To Branch's knowledge, all water, sewer,
gas, electric, telephone, and storm water and drainage facilities and all other
utilities required by Law and in the normal operation of each Property are
available and (except as shown on the Survey or the Title Insurance Commitment)
are installed across public property or valid easements to the property lines of
such Property, are all connected with valid permits, and are adequate to service
such Property for their current use and to permit full compliance with all
requirements of Law, except to the extent such failure does not cause and is not
reasonably expected to cause a Material Adverse Effect on the applicable
Property. All permits and connection fees which are currently due and payable
are fully paid or accrued, and there are no such amounts which are deferred or
payable under future installments. To Branch's knowledge, all points of access,
both pedestrian and vehicular, to and from public roads currently used at each
Property are adequate for the current use and operation of such Property in
Branch's reasonable judgment and in accordance with all Laws, except to the
extent such failure does not cause and is not reasonably expected to cause a
Material Adverse Effect on such Property, and to Branch's knowledge, there is no
existing fact or condition which would currently result, or with the passage of
time or the giving of notice, or both, would result, in the termination of such
utility services or of such access.
6.2.8 Permits. Except with regard to environmental matters which are
addressed exclusively by Sections and below, to Branch's knowledge, all
licenses, building, and other permits, certificates of use and occupancy,
easements, and rights-of-way, including proof of dedication, have been obtained
as required by all Government Entities having jurisdiction over any Property in
connection with any construction, renovations, expansions, or other improvements
at such Property and in connection with the present use and operation of such
Property, except to the extent such failure does not cause and is not reasonably
expected to cause a Material Adverse Effect on the applicable Property.
41
6.2.9 No Default. Neither Branch nor any Subpartnership, if
applicable, is in default with respect to any of its Contracts or Liabilities
pertaining to any Property (including, without limitation, all Leases, Service
Contracts, the Existing Mortgage Debt or other instruments related thereto), nor
are there any facts or circumstances which with the passage of time or the
giving of notice, or both, would constitute or result in any such default,
except to the extent such default does not cause and is not reasonably expected
to cause a Material Adverse Effect on the applicable Property; and neither this
Agreement, nor anything provided to be done hereunder, including, without
limitation, the transfer, assignment, and sale of the Properties, violates or
shall violate any written or oral Contract to which Branch or such
Subpartnership is a party on the date hereof or which affects any Property or
any part thereof on the date hereof, except to the extent such violation does
not cause and is not reasonably expected to cause a Material Adverse Effect on
the applicable Property.
6.2.10 Use of Property. Branch has not misrepresented any fact which
would prevent the Partnership from operating each Property after the First
Closing in the manner in which such Property is currently being used and
operated in all material respects.
6.2.11 Contract Payments. At the time of the First Closing, any and
all improvements to each Property and any services provided by any Person and
related to such Property (the nonpayment of which could result in the imposition
of a Lien upon such Property) will have been fully paid for, except for the
Assumed Liabilities.
6.2.12 Environmental Matters-Properties. The Properties have been
the subject of Environmental Assessments by environmental consultants to Branch,
its predecessors or Regency, which consultants prepared reports concerning the
environmental condition of the Property. A list of such Environmental Assessment
Reports obtained by Branch or its predecessors is attached as Schedule (the
Environmental Assessment Reports described on Schedule and any reports, studies,
tests, and analysis obtained by Regency as of the date hereof are herein
collectively referred to as the "Environmental Assessments"), which disclose
that tenants and former occupants of some of the Properties have stored and used
Materials of Environmental Concern on the Property, and soil and groundwater
contamination has been discovered at some Properties. The parties acknowledge
that neither Branch nor any Subpartnership possesses any expertise with regard
to Materials of Environmental Concern, and accordingly, the following
representations and warranties are based exclusively on the Environmental
Reports.
(a) Except for those matters set forth in the Environmental
Assessments, to Branch's knowledge, neither Branch nor any Subpartnership or any
Property are presently in ongoing violation of any applicable Environmental Law
which could subject the owner or operator to any fine or require any remedial
action;
(b) Except for those matters set forth in the Environmental
Assessments, to Branch's knowledge, neither Branch nor any Subpartnership have
stored or used any Materials of Environmental Concern at any Property;
42
(c) To Branch's knowledge, neither Branch nor any
Subpartnership have received any notice, complaint, warning letter or notice of
violation from any Government Authority or any other person that Branch or any
Subpartnership is in violation of any Environmental Law or environmental permit
or that they are responsible (or potentially responsible) for the assessment or
remediation of any release of any Material of Environmental Concern at, on or
beneath any Property;
(d) To Branch's knowledge, neither Branch nor any
Subpartnership are the subject of any actual or threatened federal, state, local
or private litigation involving a claim of liability or a demand for damages
arising out of violation of any Environmental Law or from the release or
threatened release of any Material of Environmental Concern at or beneath any
Property;
(e) To Branch's knowledge, Branch and the Subpartnerships have
timely filed all reports required by any applicable Environmental Law and have
generated and maintained all data, documentation, and records required under any
Environmental Law;
(f) Except for those matters set forth in the Environmental
Assessments and on Schedule , Branch has no knowledge of any release or
threatened release of a Material of Environmental Concern, the presence of any
current or former drycleaning facility, the presence of any current or former
storage tanks, the presence of any asbestos containing material, or the presence
of any condition or circumstance which could subject the owner or operator of
any Property to liability or claims under the Environmental Laws or any private
cause of action arising out of an environmental condition;
(g) Branch has no knowledge of any existing or imminent
restriction on the ownership, occupancy, use, or transferability of any Property
arising out of any known environmental condition or violation of any
Environmental Law;
(h) Except as set forth in the Environmental Assessments and
on Schedule , to Branch's knowledge, there are no environmental conditions
present at any Property which pose a risk to the environment or the health or
safety of any Person;
6.2.13 Environmental Matters - Previously Owned Properties. With
respect to each property previously, but not currently, owned by any
Subpartnership ("Previously Owned Property"), Branch makes the representations
and warranties set forth in Section as if such representations and warranties
were made as of the last day that such Previously Owned Property was owned by
any Subpartnership (and in the case of Roswell Village, Ltd., such
representations and warranties cover only the period during which Branch/HOP
Associates, L.P. was the general partner thereof).
6.2.14 Structural Defects. Other than as disclosed in the physical
reports listed on Schedule and the Capital Expenditure Budget and Schedule, to
Branch's knowledge, no Property contains any defects in structural, mechanical,
or physical portions
43
(including roofs) at, on, or of such Property, except to the extent any such
defect does not cause and is not reasonably expected to cause a Material Adverse
Effect on the applicable Property.
6.2.15 No Obligations. There are no outstanding Contracts or
Liabilities incurred by Branch relating to any Property which will be assumed by
the Partnership or incurred by any Subpartnership, except for (i) the Leases,
(ii) the Permitted Exceptions, (iii) the Service Contracts, (iv) the Work
Contracts, (v) the Existing Mortgage Debt, (vi) the Acquisition Contracts, (vii)
the Assumed Liabilities, and (viii) this Agreement.
6.2.16 Rent Roll. The Rent Roll is true and correct in all material
respects.
6.2.17 Leases. Branch has made available to Regency true, correct
and complete copies of all Leases, including all modifications, renewals and
extensions, together with any guaranties and any other agreements relating to
the tenancy evidenced by any Lease. There are no inducements, concessions,
consideration or side agreements in favor of any tenant not expressly stated in
the Leases.
6.2.18 Non-Certificate Leases. With respect to the Leases for which
the Partnership has not received completed estoppel certificates by the First
Closing (the "Non-Certificate Leases"), except to the extent (i) described on
the Rent Roll, (ii) described on the respective form of estoppel certificate
sent to, but not received from, the tenants under the Non-Certificate Leases
(true and correct copies of such forms of estoppel certificates having been
delivered to Regency) and (iii) any failure to be true and correct does not
cause and is not reasonably expected to cause a Material Adverse Effect on the
applicable Property: (A) the tenants under the Non-Certificate Leases presently
occupy and are open for business in their premises; (B) there are no material
rents or other charges which have been prepaid for more than the current month,
no security deposits, no tenant rights to interest on security deposits, and no
additional free rent period under the Non-Certificate Leases; (C) the
Non-Certificate Leases do not include, and the tenants thereunder do not have,
exclusive use rights; (D) to Branch's knowledge, the tenants have no rights of
set-off or counterclaim against the landlord under the Non-Certificate Leases,
and neither Branch nor any Subpartnership, as applicable, has received any
notice of any claim with respect thereto; (E) the landlord is not in default
under the Non-Certificate Leases and is not aware of any facts or circumstances
which with the passage of time or the giving of notice, or both, would
constitute a default by the landlord under the Non-Certificate Leases; and (F)
except as set forth on Schedule , to Branch's knowledge, the tenants under the
Non-Certificate Leases are not in default thereunder and no facts or
circumstances exist which with the passage of time or the giving of notice, or
both, would constitute a default by the tenants under the Non-Certificate
Leases, and the landlord has not received any notice of any claim with respect
thereto.
6.2.19 Development Properties. Schedule contains the budget and
development or redevelopment schedule therefor prepared by or for Branch or the
Subpartnerships, as applicable, for each of the Development Properties
(collectively, the
44
"Development Budget and Schedule"). Except as set forth on Schedule , to
Branch's knowledge, each Development Property is zoned for the lawful
development and/or redevelopment thereon (except for the proposed expansion of
Xxxxx Springs Village, which is subject to rezoning), and Branch or the
Subpartnerships, as applicable, have obtained all permits, licenses, consents
and authorizations required for the current stage of development or
redevelopment thereon, the absence of which would have a Material Adverse Effect
on the applicable Property. Except as set forth on Schedule , to Branch's
knowledge, there are no material impediments to or constraints on the
development or redevelopment of any Development Property, in all material
respects within the time frame and for the cost set forth in the Development
Budget and Schedule applicable thereto. In the case of each Development
Property, the development or redevelopment of which has commenced, to Branch's
knowledge, the costs and expenses incurred in connection with such Development
Property and the progress thereof are consistent and in compliance in all
material respects with all aspects of the Development Budget and Schedule
applicable thereto. To Branch's knowledge, Branch has made available to Regency
all feasibility studies, soil tests, due diligence reports and other studies,
test or reports performed by or for Branch or the Subpartnerships, as
applicable, or otherwise in the possession of Branch, which relate to the
Development Properties.
6.2.20 Budgets and Projections. To Branch's knowledge, all budgets
and projections, including, without limitation, the Capital Expenditure Budget
and Schedule and the TI Budget and Schedule for each Property represent Branch's
best estimate of capital expenditures anticipated to be made in each year
covered by such budget.
6.2.21 Work Contracts. To Branch's knowledge, the Work Contracts are
in full force and effect, no party is in default thereunder or under any
construction loans applicable thereto, nor are there any facts or circumstances
which with the passage of time or the giving of notice, or both, would result in
any such default, the absence of which would not have a Material Adverse Effect
on the applicable Property. The progress and remaining expenditures under the
Work Contracts are consistent with the Development Budget and Schedule, the TI
Budget and Schedule and the other budgets and projections referred to in
Sections and , except to the extent such failure does not cause and is not
reasonably expected to cause a Material Adverse Effect on the applicable
Property. To Branch's knowledge, any remaining work under the Work Contracts to
be performed after the First Closing will not exceed the amounts budgeted
therefor on the foregoing schedules, except to the extent such failure does not
cause and is not reasonably expected to cause a Material Adverse Effect on the
applicable Property. To Branch's knowledge, the work remaining under the Work
Contracts will be sufficient to complete the respective projects to which they
relate, without change orders, so as to comply with existing development
obligations of Branch or any Subpartnership (including, without limitation,
obligations under any letters of intent to lease), obligations for tenant
improvements under Leases or for repairs or other necessary work, except to the
extent such failure does not cause and is not reasonably expected to cause a
Material Adverse Effect on the applicable Property.
45
6.2.22 Acquisition Properties. To Branch's knowledge, each
Acquisition Contract is enforceable by Branch and neither Branch, nor, to
Branch's knowledge, any other party thereto, is in default under any Acquisition
Contract, the absence of which would not have a Material Adverse Effect on the
applicable Property. Without limiting the foregoing, except for matters revealed
in the environmental reports, copies of which have been provided to Regency or
as otherwise disclosed to Regency in writing, Branch has no knowledge that the
contract seller is in breach of any representations and warranties made by it in
any Acquisition Contract. The Acquisition Contracts are assignable to the
Partnership regardless of whether the general partner of the Partnership at the
time of the assignment is an Affiliate of Branch or of Regency.
6.3 Accredited Investor Status. Except as set forth on Schedule , to
Branch's knowledge based upon investor questionnaires received at the time of
Branch's formation, all Branch's partners were at such time "accredited
investors" as defined by the SEC, and nothing has come to Branch's attention
since that time to indicate any of such Persons no longer is an "accredited
investor." The representation and warranty in this Section shall not survive the
First Closing.
6.4 Accuracy of Statements. To Branch's knowledge, neither this Agreement
nor any document, instrument, schedule, exhibit, statement, list, certificate or
other information furnished or to be furnished by or on behalf of Branch to
Regency or the Partnership in connection with this Agreement or any of the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
6.5 Limit on Representations. Except for the express representations and
warranties of Branch set forth in this Agreement, the Partnership and Regency
acknowledge and agree that the Assets are being contributed to the Partnership
"as is, where is, and with all faults" without any other representation or
warranty by Branch or any other individual or entity, and neither Branch nor any
other individual or entity has made any other express or implied representation
or warranty with respect to the Assets whatsoever, and except for the
representations and warranties expressly set forth in this Agreement, the
Partnership and Regency acknowledge that the Partnership accepts the Assets
without relying upon any other such representation or warranty whatsoever by
Branch or any other person or entity, and based solely upon the Partnership's
own inspections, investigations, and analysis of the Assets.
6.6 Limitation on Remedies. The representations and warranties set forth
in this Article shall be true and correct in all material respects on and as of
the date of the First Closing with the same force and effect as if made at that
time; provided, however, in the event that any of such representations and
warranties is proved to have been false on or before the First Closing as a
result of any change of circumstances or knowledge obtained by Branch and such
misrepresentation has a Material Adverse Effect and is disclosed to Regency in
writing, then Regency's sole and exclusive remedies hereunder shall be to (i)
terminate this Agreement
46
pursuant to Article (including Section , if applicable), or (ii) waive such
misrepresentation and close with no liability to Branch for such
misrepresentation.
ARTICLE 7: REPRESENTATIONS, WARRANTIES AND
FURTHER COVENANTS OF BRANCH REALTY
Branch Realty hereby represents, warrants and covenants to Regency and the
Partnership as of the date of this Agreement and the First Closing as follows.
7.1 Due Organization. Branch Realty is duly organized, validly existing
and in good standing under the Laws of the State of Georgia, with all requisite
power and authority to own, lease, operate and sell its assets and to carry on
its businesses as it is now being conducted. Branch Realty is in good standing
as a foreign entity authorized to do business in each jurisdiction where it
engages in business, except to the extent such violation or failure does not
cause or is not reasonably expected to have a material adverse effect on Branch
Realty's assets or the financial condition, results of operations, business or
prospects of Branch Realty taken as a whole.
7.2 Due Authorization; Consents; No Violations.
7.2.1 Branch Realty has full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by Branch Realty of this Agreement have been, and the
Transaction Documents to be executed and delivered by it pursuant to this
Agreement shall be, duly and validly approved by Branch Realty, and no other
proceeding on the part of Branch Realty is necessary to authorize this Agreement
and the transactions contemplated hereby, other than obtaining the consents set
forth on Schedule 6.1.2(b). This Agreement has been duly and validly executed
and delivered by Branch Realty and, assuming due authorization (including the
receipt of the consents set forth on Schedule 6.1.2(b) and Schedule 8.2(b)),
execution and delivery of this Agreement by Regency, TRG and Branch, this
Agreement constitutes, and the Transaction Documents to be executed and
delivered by Branch Realty pursuant to this Agreement when executed will
constitute, valid and binding obligations of Branch Realty enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization,
similar laws or court decisions from time to time in effect that affect
creditors' rights generally and by legal and equitable limitations on the
availability of specific remedies.
7.2.2 Except as set forth on Schedule , no consents, waivers,
exemptions or approvals of, or filings or registrations by Branch Realty with,
any Government Entity or any other Person not a party to this Agreement are
necessary in connection with the execution, delivery and performance by Branch
Realty of this Agreement or the consummation of the transactions contemplated
hereby, except to the extent the failure to obtain the same does not cause or is
not expected to cause a Material Adverse Effect on Branch or the transactions
contemplated by this Agreement.
47
7.2.3 Upon obtaining those consents set forth on Schedule , and
(assuming receipt of such consents) except to the extent same does not cause or
is nonreasonably expected to cause a Material Adverse Effect, the execution,
delivery and performance by Branch Realty of this Agreement and the Transaction
Documents to be executed, delivered and performed by Branch Realty pursuant
hereto, and the consummation of the transactions contemplated hereby and
thereby, do not and will not (i) violate any Order applicable to or binding on
Branch Realty or its assets; (ii) violate any Law; (iii) violate or conflict
with, result in a breach of, constitute a default (or an event which with the
passage of time or the giving of notice, or both, would constitute a default)
under, permit cancellation of, or result in the creation of any Lien upon any of
Branch Realty's assets under, any contract to which Branch Realty is a party or
by which Branch Realty or any of its assets are bound; (iv) permit the
acceleration of the maturity of any indebtedness of Branch Realty, or any
indebtedness secured by any of Branch Realty's assets; or (v) violate or
conflict with any provision of Branch Realty's articles of incorporation or
bylaws.
7.3 Shareholders. The Branch Principals are the only equity security
holders of Branch Realty, and no other Person holds any options, warrants,
securities or other rights to subscribe for or purchase equity in Branch Realty.
7.4 Tax Matters. Branch Realty is not the result of a merger, consolidation
or reorganization with any other entity. Branch Realty currently has no current
or accumulated "earnings and profits" as that term is defined under the Code.
7.5 Limitation on Remedies. The representations and warranties set forth
in this Article shall be true and correct in all material respects on and as of
the date of the First Closing with the same force and effect as if made at that
time; provided, however, in the event that any of such representations and
warranties is proved to be false on or before the First Closing as a result of
any change of circumstances or knowledge obtained by Branch Realty and such
misrepresentation has a Material Adverse Effect and is disclosed to Regency in
writing, then Regency's sole and exclusive remedies hereunder shall be to (i)
terminate this Agreement pursuant to Article (including Section , if
applicable), or (ii) waive such misrepresentation and close with no liability to
Branch Realty for such misrepresentation.
ARTICLE 8: REPRESENTATIONS, WARRANTIES AND
FURTHER COVENANTS OF REGENCY
Regency hereby represents, warrants and covenants to Branch as of the date
of this Agreement and the First Closing as follows. All representations that are
made "to Regency's knowledge" means to the actual knowledge of the individuals
listed on Schedule attached hereto without any duty or obligation to inquire as
to such matters. Regency represents that such individuals are the appropriate
individuals who, in the course of their duties, would normally be aware of
material issues and facts affecting Regency.
48
8.1 Due Incorporation, etc.
(a) Regency is duly organized, validly existing and in good
standing under the Laws of the State of Florida, with all requisite power and
authority to own, lease, operate and sell its assets and to carry on its
businesses as it is now being conducted. Regency is in good standing as a
foreign entity authorized to do business in each jurisdiction where it engages
in business, except to the extent such violation or failure does not cause or is
not reasonably expected to cause a Material Adverse Effect.
(b) Regency owns all of the outstanding capital stock of its
subsidiaries listed on Exhibit 21 of Regency's Form 10-K annual report filed
with the SEC for the fiscal year ended December 31, 1995, except that Regency
owns 100% of the outstanding preferred stock and 5% of the outstanding common
stock of Regency Realty Group, Inc. Except as set forth on Schedule (b) and
except for its interests in its subsidiaries, Regency does not hold any interest
in any security issued by any other Person.
8.2 Due Authorization; Consents; No Violations.
(a) Regency has full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by Regency of this Agreement have been, and the
Transaction Documents to be executed and delivered by it pursuant to this
Agreement shall be, duly and validly approved by Regency, and no other
proceeding on the part of Regency is necessary to authorize this Agreement and
the transactions contemplated hereby (other than (i) obtaining the approval of
Regency's shareholders referred to in Section , which is required under the
rules of the New York Stock Exchange in order for certain Shares issuable
pursuant to the transactions contemplated by this Agreement to be listed on such
exchange, (ii) amending Regency's Articles of Incorporation in the form attached
as Exhibit and (iii) obtaining the consents set forth on Schedule (b)). This
Agreement has been duly and validly executed and delivered by Regency and,
assuming due authorization (including the consummation of the matters described
in the foregoing sentence), execution and delivery of this Agreement by TRG,
Branch and Branch Realty, this Agreement constitutes, and the Transaction
Documents to be executed and delivered by Regency pursuant to this Agreement
when executed will constitute, valid and binding obligations of Regency
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, similar laws or court decisions from time to time in effect that
affect creditors' rights generally and by legal and equitable limitations on the
availability of specific remedies.
(b) Except as set forth on Schedule (b) and except for an
application to list the Shares issuable pursuant to the transactions
contemplated by this Agreement on the New York Stock Exchange (which such
exchange will not accept until the time of the meeting of the Regency
shareholders referred to in Section ), no consents, waivers, exemptions or
approvals of, or filings or registrations by Regency with, any Government Entity
or any other Person not a party to this Agreement are necessary in connection
with the execution, delivery
49
and performance by Regency of this Agreement or the consummation of the
transactions contemplated hereby, except to the extent the failure to obtain the
same does not cause or is not expected to cause a Material Adverse Effect on
Regency or the transactions contemplated by this Agreement.
(c) Upon obtaining those consents set forth on Schedule (b)
and (assuming receipt of such consents) except to the extent same does not cause
or is not reasonably expected to cause a Material Adverse Effect, the execution,
delivery and performance by Regency of this Agreement and the Transaction
Documents to be executed, delivered and performed by Regency pursuant hereto,
and the consummation of the transactions contemplated hereby and thereby, do not
and will not (i) violate any Order applicable to or binding on Regency or its
assets; (ii) violate any Law; (iii) violate or conflict with, result in a breach
of, constitute a default (or an event which with the passage of time or the
giving of notice, or both, would constitute a default) under, permit
cancellation of, accelerate the performance required by, or result in the
creation of any Lien upon any of Regency's assets under, any contract or other
arrangement of any kind or character to which Regency is a party or by which
Regency or any of its assets are bound; (iv) permit the acceleration of the
maturity of any indebtedness of Regency, or any indebtedness secured by any of
Regency's assets; or (v) violate or conflict with any provision of the Articles
of Incorporation or Regency's bylaws.
8.3 Capitalization.
8.3.1 The authorized capital stock of Regency consists of (i)
25,000,000 shares of Common Stock, (ii) 10,000,000 shares of Special Common
Stock, $0.01 par value, and (iii) 10,000,000 shares of preferred stock, $0.01
par value. As of December 31, 1996, there were 10,614,905 shares of Common Stock
issued and outstanding, and 2,500,000 shares of Class B Non-voting Common Stock,
par value $0.01 issued and outstanding.
8.3.2 No shares of Regency's stock are entitled to preemptive
rights. Except as disclosed in the Regency Exchange Act Reports, in the Articles
of Incorporation relating to the Class B Non-voting Common Stock, in this
Agreement, in the Partnership Agreement or on Schedule , there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of Regency or any of its
subsidiaries, or contracts or other arrangements by which Regency or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of Regency or any of its subsidiaries. Regency has furnished to Branch true and
correct copies of the Articles of Incorporation and Regency's Bylaws, as in
effect on the date hereof.
8.3.3 Except as set forth on Schedule , Regency has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
capital stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
50
8.3.4 Except for the form of agreements attached as Exhibit B or
listed on Schedule , Regency has no knowledge of any voting agreements, voting
trusts, stockholders' agreement, proxies or other agreements or understandings
that are currently in effect or that are currently contemplated with respect to
the voting of any capital stock of Regency.
8.3.5 All of the outstanding securities of the Company were issued
in compliance with all applicable federal and state securities laws.
8.4 Valid Issuance of Shares. The Reorganization Shares which are being
issued hereunder, when issued and delivered in accordance with the terms hereof
for the consideration expressed herein, will be duly and validly issued, fully
paid and nonassessable and, based upon the representations of Branch in this
Agreement, will be issued in compliance with all applicable federal and state
securities laws. The Shares issuable upon the exercise of the Redemption Rights
will be duly and validly reserved for such issuance and will be duly and validly
issued, fully paid and nonassessable, and will be issued in compliance with all
applicable federal and state securities laws, assuming that (i) the Amendment to
the Articles of Incorporation in the form attached as Exhibit 5.4 is adopted by
Regency's shareholders, (ii) Security Capital signs the Consent and Waiver
Agreement in the form constituting part of Exhibit C, (iii) the percentage
obtained by dividing (x) the number of Shares issued at the same time to Persons
who are Non-U.S. Persons (as defined in the Partnership Agreement) pursuant to
the exercise of Redemption Rights by (y) the number of Shares issued to all
Persons pursuant to the simultaneous exercise of Redemption Rights is equal to
or less than fifty percent (50%) and (iv) no more than an aggregate of 100,000
Shares/Units will be issued at the Third Party Earn-Out Closings and as
Adjustment Units (as defined in Section )
8.5 Regency Exchange Act Reports.
8.5.1 Since November 5, 1993, Regency has timely filed all Regency
Exchange Act Reports. As of their respective dates, (i) the Regency Exchange Act
Reports complied in all material respects with the requirements of the Exchange
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the Regency Exchange Act Reports, and (ii) no Regency Exchange Act Report
contained any untrue statement of material fact or omitted a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
8.5.2 The financial statements of Regency included in the Regency
Exchange Act Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and on that basis
present fairly in all material respects the consolidated financial position and
assets and Liabilities of the entities
51
included therein (including the Subsidiaries) as going concerns, and the results
of the operations of such entities and changes in their financial position for
the periods covered thereby and as of the dates thereof. Such financial
statements are in accordance with the books and records of the entities included
therein (including the Subsidiaries), do not reflect any transactions which are
not bona fide transactions and do not contain any untrue statements of a
material fact or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading. Such financial statements make full and adequate
disclosure of, and provision for all material Liabilities of the entities
included therein (including Regency's subsidiaries) as of the dates thereof.
Except as set forth in the balance sheets included in the Regency Exchange Act
Reports, there are no Liabilities (including "off-balance sheet" Liabilities),
whether due or to become due, which have had or are reasonably likely to have a
Material Adverse Effect.
8.6 Permits. Regency holds all licenses, certificates, permits,
franchises, rights, variances, interim permits, approvals, authorizations or
consents, whether federal, state, local or foreign, which are currently
necessary for the lawful operation of Regency's business, except for those the
absence of which would not cause and would not be reasonably expected to cause a
Material Adverse Effect on Regency.
8.7 No Adverse Change. Since the Recent Balance Sheet Date, there has not
been (i) any change in Regency which would cause or reasonably be expected to
result in a Material Adverse Effect on Regency, (ii) any material loss, damage
or destruction to any of Regency's assets (whether or not covered by insurance)
or any other event or condition which has had or could have a Material Adverse
Effect on Regency, (iii) any contract or other transaction entered into by
Regency relating to, or otherwise affecting in any way, its business or the
operation thereof, other than in the ordinary course of business, (iv) any sale,
lease or other transfer or disposition of any of Regency's assets, or any
cancellation of any debts or claim of Regency, except in the ordinary course of
business, and (v) any changes in the accounting systems, policies or practices
of Regency. Since the Recent Balance Sheet Date, Regency's business has been
conducted in all material respects only in the ordinary course and consistent
with past practices.
8.8 No Defaults or Violations. Except to the extent any default or
non-compliance does not cause or is not reasonably expected to cause a Material
Adverse Effect as to Regency: (a) Regency has not materially breached any
provision of, nor is it in material default under the terms of, any lease,
contract or commitment to which it is a party or under which it has any rights
or by which it is bound or which relates to its business or its assets and, to
Regency's knowledge, no other party to any such lease, contract, or other
commitment has breached such lease, contract or commitment or is in default
thereunder (nor has Regency waived any such default) in any material respect,
and no event has occurred and no condition or state of facts exists which with
the passage of time or the giving of notice, or both, would constitute such a
default or breach by Regency, or to Regency's knowledge, by any such other
party, or give right to an automatic termination or the right of discretionary
termination thereof; (b) Regency is in material compliance with, and no
Liability or material violation exists under, any Law or Order
52
applicable in any way to Regency; and (c) no notice from any Government Entity
has been received by Regency claiming any violation of any Law (including any
building, zone or other ordinance) or Order, or requiring any work, construction
or expenditure.
8.9 Litigation. Except for certain matters which, to Regency's knowledge,
do not have a Material Adverse Effect on Regency or the transactions
contemplated by this Agreement, there is no Litigation pending or, to Regency's
knowledge, threatened against any of the properties or businesses of Regency or
relating to its assets or the transactions contemplated by this Agreement.
Except as disclosed on Schedule , neither Regency nor any of its assets are
subject to any Order which has had or could have a Material Adverse Effect on
Regency.
8.10 Title to Properties; Leasehold Interests. Regency has good and
marketable title to each of the properties and assets owned by it. Certain real
and personal property used by Regency in the conduct of its business is held
under lease, and, to Regency's knowledge, there is no pending or threatened
Claim by any lessor of any such property to terminate any such lease. None of
the properties owned or leased by Regency is subject to any Liens which could
reasonably be expected to materially and adversely affect the assets,
properties, liabilities, business, affairs, results of operations, condition
(financial or otherwise) or prospects of Regency. Each lease or agreement to
which Regency is a party under which it is the lessee of any property, real or
personal, is a valid and subsisting agreement without any material default of
Regency thereunder and, to the best of Regency's knowledge, without any material
default thereunder of any other party thereto. No event has occurred and is
continuing which, with due notice or lapse of time or both, would constitute a
default or event of default by Regency under any such lease or agreement or, to
the best of Regency's knowledge, by any party thereto, except for such defaults
that would not individually or in the aggregate have a Material Adverse Effect
on Regency. Regency's possession of such property has not been disturbed and, to
the best of Regency's knowledge, no claim has been asserted against it adverse
to its rights in such leasehold interests.
8.11 Environmental Matters. For purposes of this Section , the term
"Regency" means Regency and its Affiliates, and the term "Regency Property"
means a property owned or leased by Regency or its Affiliates and any property
in which Regency or its Affiliates has an interest. The parties acknowledge that
Regency does not possess any expertise with regard to Materials of Environmental
Concern and, accordingly, the following representations and warranties are based
exclusively on reports prepared by environmental consultants to Regency.
(a) Except for those matters described in Schedule with respect to
Xxxxxx Plaza, Regency is and each Regency Property is not presently in violation
of any applicable Environmental Law;
(b) Regency has not stored or used any Materials of Environmental
Concern at any Regency Property;
53
(c) Regency has not received any notice, complaint, warning letter
or notice of violation from any Government Authority or any other person that
Regency is in violation of any Environmental Law or environmental permit or that
they are responsible (or potentially responsible) for the assessment or
remediation of any release of any Material of Environmental Concern at, on or
beneath any Property;
(d) Regency is not the subject of any actual or threatened federal,
state, local or private litigation involving a claim of liability or a demand
for damages arising out of violation of any Environmental Law or from the
release or threatened release of any Material of Environmental Concern;
(e) Except for those matters described in Schedule with respect to
Xxxxxx Plaza, Regency has timely filed all reports required by any applicable
Environmental Law and has generated and maintained all data, documentation, and
records required under any Environmental Law;
(f) Except for those matters described in Schedule , which, to
Regency's knowledge, do not have a Material Adverse Effect on Regency, Regency
is not aware of any release or threatened release of a Material of Environmental
Concern, the presence of any current or former drycleaning facility, the
presence of any current or former storage tanks, the presence of any asbestos
containing material, or the presence of any condition or circumstance which
could subject the owner or operator of any Regency Property to liability or
claims under the Environmental Laws or any private cause of action arising out
of an environmental condition;
(g) No Regency Property is subject to, and Regency has no knowledge
of any imminent restriction on the ownership, occupancy, use, or transferability
of any Regency Property; or
(h) To Regency's knowledge, there are no conditions or circumstances
at any Regency Property which pose a risk to the environment or the health or
safety of any Person.
8.12 Taxes. Regency has filed all federal, state, local and other Tax
returns and reports (except for foreign returns and reports the failure to file
which has not and is not reasonably expected to cause a Material Adverse
Effect), and any other material returns and reports with any Government Entity,
required to be filed by it. Regency has paid or caused to be paid all Taxes that
are due and payable, except those which are being contested by it in good faith
by appropriate proceedings and in respect of which adequate reserves are being
maintained on its books in accordance with GAAP consistently applied. Regency
does not have any material Liabilities for Taxes other than those incurred in
the ordinary course of business and in respect of which adequate reserves are
being maintained by it in accordance with GAAP consistently applied. Federal and
state income Tax returns for Regency have not been audited by the IRS or any
state authority. No deficiency assessment with respect to or proposed adjustment
of Regency's federal, state, local or other Tax returns is pending or, to the
best of
54
Regency's knowledge, threatened. There is no Tax Lien, whether imposed by any
federal, state, local or other tax authority outstanding against the assets,
properties or business of Regency. There are no applicable Taxes, fees or other
governmental charges payable by Regency in connection with the execution and
delivery of this Agreement.
8.13 REIT Status. Regency qualifies as a REIT under the Code and to
Regency's knowledge, is a "domestically-controlled" REIT within the meaning of
Code Section 897(h)(4)(B). Newco will be a "qualified REIT subsidiary" within
the meaning of Code Section 856(i).
8.14 Employees: ERISA. Regency has good relationships with its employees
and has not had and does not expect any substantial labor problems. Regency does
not have any knowledge as to any intentions of any key employee or any group of
employees to leave the employ of Regency. Other than as disclosed in the Regency
Exchange Act Reports and materials provided to Branch, Regency has not
established, sponsored, maintained, made any contributions to or been obligated
by law to establish, maintain, sponsor or make any contributions to any
"employee pension benefit plan" or "employee welfare benefit plan" (as such
terms are defined in ERISA), including, without limitation, any "multi-employer
plan." Regency has complied in all material respects with all applicable Laws
relating to the employment of labor, including provisions relating to wages,
hours, equal opportunity, collective bargaining and the payment of Social
Security and other Taxes, and with ERISA.
8.15 Accuracy of Statements. To Regency's knowledge, neither this
Agreement nor any document, instrument, schedule, exhibit, statement, list,
certificate or other information furnished or to be furnished by or on behalf of
Regency to Branch in connection with this Agreement or any of the transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they are made, not misleading.
8.16 Limitation on Remedies. The representations and warranties set forth
in this Article shall be true and correct in all material respects on and as of
the date of the First Closing with the same force and effect as if made at that
time; provided, however, in the event that any of such representations and
warranties is proved to be false on or before the First Closing as a result of
any change of circumstances or knowledge obtained by Regency and such
misrepresentation has a Material Adverse Effect and is disclosed to Branch in
writing, then Branch's sole and exclusive remedies hereunder shall be to (i)
terminate this Agreement pursuant to Article (including Section , if
applicable), or (ii) waive such misrepresentation and close with no liability to
Regency for such misrepresentation.
8.17 Continuity of Business Enterprise; Tax Treatment of Reorganization.
Regency and Newco have no plan or intention of disposing of the Units acquired
from Branch Realty by Newco. Regency agrees to treat the acquisition of the
assets of Branch Realty by Newco in
55
exchange for Shares and the right to receive additional Shares as a tax-free
reorganization under Code Section 368(a)(i)(C).
ARTICLE 9: REPRESENTATIONS AND WARRANTIES OF TRG
TRG hereby represents and warrants to Branch as of the date of this
Agreement as follows. From and after the First Closing, each such representation
and warranty shall also be deemed made as of the First Closing Date, unless
specifically waived in writing by Branch at the First Closing.
9.1 Due Incorporation, etc. TRG is duly organized, validly existing and in
good standing under the Laws of the State of Florida, with all requisite power
and authority to own, lease, operate and sell its assets and to carry on its
businesses as it is now being conducted. TRG is in good standing as a foreign
entity authorized to do business in each jurisdiction where it engages in
business, except to the extent such violation or failure does not cause or is
not reasonably expected to have a material adverse effect on TRG's assets or the
financial condition, results of operations, business or prospects of TRG taken
as a whole.
9.2 Due Authorization; Consents; No Violations.
(a) TRG has full power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance by TRG of this Agreement have been, and the Transaction
Documents to be executed and delivered by it pursuant to this Agreement shall
be, duly and validly approved by TRG, and no other proceeding on the part of TRG
is necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by TRG
and, assuming due authorization, execution and delivery of this Agreement by
Regency, Branch and Branch Realty, this Agreement constitutes, and the
Transaction Documents to be executed and delivered by TRG pursuant to this
Agreement when executed will constitute, valid and binding obligations of TRG
enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization, similar laws or court decisions from time to time in effect that
affect creditors' rights generally and by legal and equitable limitations on the
availability of specific remedies.
(b) No consents, waivers, exemptions or approvals of, or filings or
registrations by TRG with, any Government Entity or any other Person not a party
to this Agreement are necessary in connection with the execution, delivery and
performance by TRG of this Agreement or the consummation of the transactions
contemplated hereby, except to the extent the failure to obtain the same does
not cause or is not expected to cause a material adverse effect on TRG's assets
or the financial condition, results of operations, business or prospects of TRG
taken as a whole or on the transactions contemplated by this Agreement.
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(c) The execution, delivery and performance by TRG of this Agreement
and the Transaction Documents to be executed, delivered and performed by TRG
pursuant hereto, and the consummation of the transactions contemplated hereby
and thereby, do not and will not (i) violate any Order applicable to or binding
on TRG or its assets; (ii) violate any Law; (iii) violate or conflict with,
result in a breach of, constitute a default (or an event which with the passage
of time or the giving of notice, or both, would constitute a default) under,
permit cancellation of, accelerate the performance required by, or result in the
creation of any Lien upon any of TRG's assets under, any contract or other
arrangement of any kind or character to which TRG is a party or by which TRG or
any of its assets are bound; (iv) permit the acceleration of the maturity of any
indebtedness of TRG, or any indebtedness secured by any of TRG's assets; or (v)
violate or conflict with any provision of the TRG's articles of incorporation or
bylaws.
9.3 Limitation on Remedies. The representations and warranties set forth
in this Article shall be true and correct in all material respects on and as of
the date of the First Closing with the same force and effect as if made at that
time; provided, however, in the event that any of such representations and
warranties is proved to be false on or before the First Closing as a result of
any change of circumstances or knowledge obtained by TRG and such
misrepresentation has a Material Adverse Effect and is disclosed to TRG in
writing, then Branch's sole and exclusive remedies hereunder shall be to (i)
terminate this Agreement pursuant to Article (including Section , if
applicable), or (ii) waive such misrepresentation and close with no liability to
TRG for such misrepresentation.
ARTICLE 10: CONDITIONS PRECEDENT TO OBLIGATIONS OF REGENCY
10.1 Conditions for the First Closing. The obligation of Regency to
consummate the First Closing is subject to the fulfillment, at or prior to the
First Closing, of each of the following conditions precedent, and the failure to
satisfy any such condition precedent shall excuse and discharge all obligations
of Regency to carry out the provisions of this Agreement unless such failure is
waived in writing by Regency:
10.1.1 Representations and Warranties. The representations and
warranties made by Branch in Article and Branch Realty in Article , and the
statements and information contained in any certificate, instrument, schedule,
document or exhibit delivered by or on behalf of either Branch or Branch Realty
in connection with the First Closing pursuant to this Agreement, shall be true,
correct and complete in all material respects on and as of the date hereof, and
shall be true, correct and complete in all material respects on and as of the
First Closing Date with the same effect as though such representations and
warranties were made on and as of the First Closing Date, provided, however,
that if any representation and warranty is already qualified in any respect by
materiality or as to Material Adverse Effect, the materiality qualification
immediately before this proviso shall not apply. The Branch Affiliates shall
have delivered to Regency at the First Closing certificates in form and
substance reasonably satisfactory to Regency dated as of the First Closing Date
to such effect.
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10.1.2 Compliance with Covenants and Agreements. The covenants,
obligations and agreements of the Branch Affiliates to be performed and complied
with on or before the First Closing Date shall have been duly performed and
complied with in all respects.
10.1.3 No Material Adverse Change. Since the date of execution of
this Agreement, there shall not have been any change, circumstance or event in
the Assets, business or prospects of Branch which has had or would reasonably be
expected to have a Material Adverse Effect on Branch or on the transactions
contemplated by this Agreement (except such as may have arisen by reason of any
matter approved by Regency pursuant to Sections (Acquisition Properties),
(Additional Acquisitions), (New Contracts) or (Leasing Arrangements)).
10.1.4 No Injunction. There shall not be in effect any Order which enjoins
or prohibits consummation of the transactions contemplated hereby.
10.1.5 OCP Funding. OCP shall have made an aggregate of $40 million
in capital contributions to Branch since becoming the special limited partner
thereof, the portion of which made after the date of this Agreement shall have
been applied either (i) toward the purchase price of Acquisition Properties at
the closing(s) of Acquisition Contracts or (ii) to reduce the Existing Mortgage
Debt.
10.1.6 Acquisition Contracts. Each Acquisition Contract has closed
and good, marketable and indefeasible fee simple title to the Acquisition
Properties has been conveyed to the Partnership, subject only to the Permitted
Exceptions, or, with respect to any Acquisition Contract that has not so closed,
the seller is not in default thereunder and neither Branch nor Regency has
reason to believe that (i) any seller is in material breach of any
representations, warranties or covenants in an Acquisition Contract or (ii) may
default in its obligations thereunder.
10.1.7 Title. The Title Company shall have delivered to the
Partnership the Title Insurance Commitment marked down to constitute the
effective Title Insurance and the Endorsements (with such coinsurance or
reinsurance as Regency may reasonably require) as of the date and time of the
First Closing.
10.1.8 Lender Estoppels. Estoppel letters shall have been received
from each lender under the Existing Mortgage Debt (other than State Mutual) in
form and substance reasonably acceptable to Regency.
10.1.9 Tenant Estoppels. Tenant Estoppels shall have been received
from 90% of the tenants under the Leases for premises larger than 7,500 square
feet and 80% of all other tenants, without any material exceptions, covenants or
changes to the forms accepted by Regency pursuant to Section .
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10.1.10 Delivery of Documents. All of the documents and agreements
required to be delivered and performed pursuant to Section have been so
delivered and performed.
10.1.11 Regency Consents. Regency shall have obtained the consents set
forth on Schedule (b) and Branch and the Subpartnerships shall have obtained the
respective consents set forth on Schedule .
10.1.12 Xxxxxxxx Consulting Agreement. Xxxx Xxxxxxxx shall have
entered into a consulting agreement with the Partnership or New Management
Company in form and substance reasonably satisfactory to Regency.
ARTICLE 11: CONDITIONS PRECEDENT TO OBLIGATIONS
OF BRANCH AFFILIATES
11.1 Conditions for the First Closing. The obligation of the Branch
Affiliates to consummate the First Closing is subject to the fulfillment, at or
prior to the First Closing, of each of the following conditions precedent, and
the failure to satisfy any such condition precedent shall excuse and discharge
all obligations of the Branch Affiliates to carry out the provisions of this
Agreement unless such failure is waived in writing by the Branch Affiliates:
11.1.1 Representations and Warranties. The representations and
warranties made by Regency in Article and by TRG in Article and the statements
and information contained in any certificate, instrument, schedule, document or
exhibit delivered by or on behalf of Regency in connection with the First
Closing pursuant to this Agreement, shall be true, correct and complete in all
material respects on and as of the date hereof, and shall be true, correct and
complete in all material respects as of the First Closing Date with the same
effect as though such representations and warranties were made on and as of the
First Closing Date provided, however, that if any representation and warranty is
already qualified in any respect by materiality or as to Material Adverse
Effect, the materiality qualification immediately before this proviso shall not
apply. Regency shall have delivered to the Branch Affiliates at the First
Closing certificates in form and substance reasonably satisfactory to the Branch
Affiliates dated as of the First Closing Date to such effect.
11.1.2 Compliance with Covenants and Agreements. The covenants,
obligations and agreements of Regency to be performed and complied with on or
before the First Closing Date shall have been duly performed and complied with
in all respects.
11.1.3 No Material Adverse Change. Since the date of this Agreement,
there shall not have been any change, circumstance or event in the business or
prospects of Regency which would reasonably be expected to have a Material
Adverse Effect on Regency or a material adverse effect on the transactions
contemplated by this Agreement.
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11.1.4 No Injunction. There shall not be in effect any Order which enjoins
or prohibits consummation of the transactions contemplated hereby.
11.1.5 Delivery of Documents. All of the documents and agreements
required to be delivered and performed pursuant to Section have been so
delivered and performed.
11.1.6 Branch Consents. Branch and the Subpartnerships shall have
obtained the respective consents set forth on Schedule , and Regency shall have
obtained the consents set forth on Schedule (b); provided, however, (i) the
consent of any lender to Branch shall not be required if Regency causes the
Partnership to pay off the loan from such lender at the First Closing; and/or
(ii) if all of the consents described in Part B of Schedule
and all the consents of lenders to Branch are not obtained by the First Closing
and Regency closes the transactions hereunder, then Branch shall be required to
close the transactions hereunder and Regency and the Partnership shall indemnify
Branch against and hold Branch harmless from any Liability incurred or suffered
by Branch after the First Closing and resulting from the failure to obtain any
such consents.
11.1.7 Voting Agreements. Regency shall have obtained agreements
from the Persons (and/or from such other Persons as Regency may determine) whose
names appear in the signature blocks of the form of the Voting Agreements
attached as Exhibit B, whereby such Persons have agreed to vote in favor of the
transactions contemplated by this Agreement at the meeting of Regency's
shareholders described in Section , and Regency shall have provided Branch with
evidence reasonably satisfactory to Branch demonstrating that such agreements
represent a number of votes sufficient for the shareholders to approve and
authorize the transactions contemplated by this Agreement at such meeting (and
Regency shall represent in writing at the First Closing that such agreements
represent a number of votes sufficient for the shareholders to authorize and
approve such transactions).
ARTICLE 12: CLOSINGS
12.1 Closing. The Closing shall take place at a time and place mutually
agreed upon by the parties as soon as practicable following the satisfaction or
waiver of all conditions precedent to the First Closing, but the parties will
use all reasonable efforts to close on or before February 14, 1997. A
pre-closing conference shall commence at least three Business Days before the
First Closing Date, during which all deliveries (other than any delivery of
cash) shall be made into an escrow with the Title Company, or, at the option of
the parties, such deliveries may be made in such other manner as the parties may
determine. All deliveries made during the pre-closing period shall be deemed
deliveries made at the First Closing. Upon completion of the deliveries
hereunder and satisfaction of the other conditions to the First Closing herein
set forth, the parties shall direct the Title Company to make such deliveries
and disbursements according to the terms of this Agreement and under a joint
escrow instruction letter reasonably acceptable to Branch and Regency and their
respective counsel. Funds shall be delivered
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through the Title Company's closing escrow account at a bank satisfactory to
Regency and Branch. All Subsequent Closings shall take place on the dates
specified in Section , at such time and location as the parties mutually agree
to.
12.2 Contribution to the Partnership.
12.2.1 Deliveries by Branch. At the First Closing, in addition to
any other documents or agreements required under any other provision of this
Agreement, Branch shall make the following deliveries and performance in
connection with the formation of the Partnership:
(a) Certificates. The certificates required pursuant to Section .
(b) Partnership Agreement. The Partnership Agreement, executed by
or on behalf of Branch, OCP and the other Branch partners;
(c) Transfer Documents. The deeds, assignments and other transfer
documents which are listed on Schedule transferring title to the Assets free of
any claims, except for the Permitted Exceptions.
(d) Registration Rights Agreements. The Registration Rights
Agreement, executed by Branch for the benefit of the Branch partners;
(e) Non-Compete Agreements. A Non-Compete Agreement, in the
form attached as Exhibit -1, executed by X. Xxxxxxxxx Branch III, and in the
form attached as Exhibit -2, executed by Xxxxxx X. Xxxx, Xxxxxxx X. Xxx and
Xxxxxxxx X. Xxxxxxx;
(f) Legal Opinion. An opinion of King & Spalding as to due
organization, due authorization, consents, violations (to such firm's knowl-
edge), litigation (to such firm's knowledge), and such other matters as counsel
to Regency may reasonably request prior to the First Closing;
(g) Existing Mortgage Documents. The documents evidencing
the assumption of the Existing Mortgage Debt executed by Branch and all
deliveries of Branch required thereunder;
(h) Notice to Tenants. A notice of conveyance to each
tenant in form satisfactory to the parties hereto;
(i) State Law Disclosures. Such disclosures and reports as
are required by applicable state and local Law in connection with the conveyance
of real property;
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(j) FIRPTA. A Foreign Investment in Real Property Tax Act
affidavit executed by Branch. If Branch fails to provide the necessary affidavit
and/or documentation of exemption on the First Closing Date, Regency may proceed
in accordance with the withholding provisions as provided in such Act;
(k) Affidavits. Owner's affidavits to the extent reasonably
and customarily required by the Title Company to issue the Title Policy to the
Partnership and to close this transaction in accordance with the terms hereof,
and any other documents which are reasonably and customarily required by the
Title Company to provide the Endorsements and to issue the Title Policy subject
only to the Permitted Exceptions.
(l) Permits and Approvals. To the extent in Branch's
possession or control, the material licenses, permits, approvals, zoning
exceptions and approvals, consents and Orders of Government Entities relating to
the ownership, operation and use of the Properties, including, without
limitation, certificates of occupancy for the Properties, and assignments
thereof to the Partnership, to the extent they are assignable;
(m) Terminations. Terminations, effective no later than the
First Closing, of those Service Agreements which Regency and Branch have agreed
that the Partnership shall not assume;
(n) Lien Waivers. Affidavits or other evidence reasonably
satisfactory to Regency that no Person has a right now or in the future to file
any liens against the Properties for brokerage commissions or fees in connection
with the Leases or the transactions set forth herein except for such commissions
shown on Schedule ;
(o) Authority. Evidence of the existence, organization and
authority of Branch and Branch Realty and of the authority of the Persons
executing documents on behalf of Branch and Branch Realty reasonably satisfac-
tory to the Title Company and Regency;
(p) Possession. Possession of the Properties, subject only
to the applicable Permitted Exceptions;
(q) Books and Records. Delivery to the offices of the
Partnership of the original Leases and Contracts (or copies if the originals
cannot be located) and to the extent now or subsequently coming Branch's
possession or control: copies or originals (including information stored
electronically) 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 Properties or the Third Party
Management Business contributed to the Partnership; all advertising materials,
booklets, keys and other items, if any, used in the operation of the Properties
or the Third Party Management Business contributed to the Partnership; all books
and records of each Subpartnership (including Tax records); and, if in Branch's
possession or control, the original "as-built" plans and specifications and all
other available plans and specifications. The Branch Affiliates shall cooperate
with the Partnership
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after the First Closing to provide to the Partnership any such information
stored electronically and to answer questions of the Partnership from time to
time regarding pre-Closing matters (e.g., in connection with the preparation of
Tax returns or financial statements);
(r) Additional Documents. Any additional documents that
Regency may reasonably require for the proper consummation of the transactions
contemplated by this Agreement.
12.2.2 Deliveries by Regency. At the First Closing, Regency shall
make the following deliveries and performance:
(a) Certificates. The certificates required by Sections .
(b) Partnership Agreement. The Partnership Agreement,
executed by Regency and Newco, together with any filings with any Government
Entity required to be made by or on behalf of the Partnership;
(c) Partnership Ratification. The Partnership's written
ratification of this Agreement and agreement to perform the obligations of the
Partnership that are to be performed after the First Closing.
(d) Initial Capital Contribution. An initial cash capital
contribution to the Partnership sufficient to pay: (1) a portion (expected to be
approximately $20 million as of the date of this Agreement) of the Existing
Mortgage Debt specified by Regency; (2) the closing costs and adjustments
payable by the Partnership for the Properties at the First Closing; and (3)
other Partnership obligations related to the Closing (the sum of (1), (2) and
(3) being, the "Regency Capital Contribution" in exchange for a general partner
interest and Class B Units equal to the quotient obtained by dividing the amount
of the Regency Capital Contribution by $22-1/8. Regency shall not be obligated
to deposit the Regency Capital Contribution into the escrow until the closing
statements have been executed and all deliveries by or on behalf of Branch have
been made into escrow;
(e) Units. Issuance by the Partnership to the Branch partners
of that number of limited partner Units of the Partnership equal to the quotient
obtained by dividing the Contribution Value by $22-1/8.
(f) Application of Capital Contribution. Application by the
Partnership of the Regency Capital Contribution in accordance with this
Agreement;
(g) Assumption Agreements. Execution by the Partnership of
those transfer documents listed on Schedule that require execution by the
Partnership and any other documents as Branch may reasonably require to evidence
the Partnership's assumption of the Assumed Liabilities;
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(h) Registration Rights Agreement. The Registration Rights
Agreement, executed by Regency;
(i) Authority. Evidence of existence, organization and
authority of Regency, TRG and the Partnership and the authority of the Person
executing documents on behalf of each of Regency, TRG and the Partnership
reasonably satisfactory to Branch;
(j) Legal Opinion. An opinion of Xxxxx & Xxxxxxx, counsel for
Regency, as to due organization; due authorization (subject to (i) the approval
of Regency's shareholders referred to in Section , (ii) an amendment of
Regency's Articles of Incorporation in the form attached as Exhibit , and (iii)
receipt of the consents set forth on Schedule (b)); enforceability of Redemption
Rights (as described in the Partnership Agreement) and the valid issuance of
Shares upon redemption, subject to the assumptions in Section ; enforceability
of the Registration Rights Agreement; due organization and existence of the
Partnership; violations (to such firm's knowledge); litigation (to such firm's
knowledge), enforceability; the qualification of Regency as a REIT under the
Code; and such other matters as counsel to Branch may reasonably request prior
to the First Closing;
(k) Existing Mortgage Debt. The documents evidencing the
assumption of the Existing Mortgage Debt, executed by the Partnership, and all
deliveries of the Partnership required thereunder;
(l) State Law Disclosures. Such disclosures and reports as
are required by applicable state and local Law in connection with the conveyance
of real property;
(m) Election to Board. Certified Board resolutions creating an
additional seat on Regency's Board of Directors and electing X. Xxxxxxxxx Branch
III to fill the vacancy, effective immediately following the First Closing, and
an Indemnity Agreement executed by Regency, in the standard form entered into
between Regency and its directors;
(n) Voting Agreements. Any Voting Agreements in the form
attached as Exhibit B signed by any director, executive officer or shareholder
of Regency.
(o) Additional Documents. Any additional documents that the
Branch Affiliates or the holders of the Existing Mortgage Debt may reasonably
require for the proper consummation of the transactions contemplated by this
Agreement.
12.3 The Reorganization.
12.3.1 Deliveries by Branch Realty. At the First Closing,
immediately following the formation of the Partnership, Branch Realty shall make
the following deliveries and performance:
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(a) Distribution of Realty Units. Appropriate instruments of
assignment evidencing the distribution by Branch of the Realty Units to Branch
Realty;
(b) Assignment of Realty Units. Appropriate instruments of
assignment from Branch Realty transferring its Realty Units and its right to
receive additional Units at Subsequent Closings to Newco;
(c) Assignment of Reorganization Shares. Duly endorsed stock
powers and other appropriate conveyancing documents executed by Branch Realty
transferring the Reorganization Shares and Branch Realty's rights to receive
additional Shares hereunder received by it from Newco to the Branch Principals
that are its sole shareholders;
(d) Lock-Up Agreements. A Lock-Up Agreement executed by X.
Xxxxxxxxx Branch III in the form of Exhibit .
(e) Registration Rights Agreement. The Registration Rights
Agreement, executed by Branch and each Branch Principal;
(f) Additional Documents. Any additional documents that
Regency may reasonably require for the proper consummation of the transactions
contemplated by this Agreement.
12.3.2 Deliveries by Regency in Connection with the Reorganization.
At the First Closing, immediately following the formation of the Partnership,
Regency shall make the following deliveries and performance:
(a) Reorganization Shares. Certificates for the Reorganiza-
tion Shares, issued to each Branch Principal for the respective number of shares
set forth on Schedule ;
(b) Registration Rights Agreements. The Registration Rights
Agreement, executed by Regency;
(c) Additional Documents. Any additional documents that the
Branch Principals may reasonably require for the proper consummation of the
transactions contemplated by this Agreement.
12.4 Closing Statements/Escrow Fees. Branch and Regency shall deposit with
the Title Company executed closing statements consistent with this Agreement.
ARTICLE 13: PRORATIONS AND ADJUSTMENTS
13.1 Adjustments. Branch and Regency have agreed to make certain
financial adjustments as of December 31, 1996. It is the intent of the parties
that all items of income,
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loss, cash and economic benefits and detriments from the Assets transferred to
the Partnership at the First Closing shall inure to the Partnership from January
1, 1997 for purposes of this Article 13(provided that the income, loss, cash and
economic benefits and detriments from the Third Party Management Business shall
inure to the New Management Company from January 1, 1997 for purposes of this
Article 13), subject to consummation of the First Closing and except as
expressly otherwise provided herein. As provided in Section hereof, Branch has
continued to operate the Assets in the ordinary and usual course of business and
consistent with past practices. The funds in the operating account of Branch as
of the First Closing shall be applied, at the direction of Regency, to reduce
the Existing Mortgage Debt. Prior to the First Closing, Branch shall withdraw
from the operating account (or draw down the Wachovia Line as hereinafter
defined) to fund $1,399,579 representing the distribution payable to the Branch
partners with respect to the 1996 fourth quarter operations of Branch, and such
amount shall be deposited in a separate account of Branch to be retained by
Branch after the First Closing. Branch shall not make any withdrawals or
payments not in such ordinary and usual course of business. Branch and Regency
have also agreed to the financial adjustments set forth below in this Article .
13.2 Proration Credit. Schedule 13 reflects certain adjustments and
Designated Credits and Designated Liabilities as of December 31, 1996. The
amount by which (i) the Designated Credits exceed (ii) the Designated
Liabilities is herein called the "Proration Credit."
13.3 Line of Credit. Branch has a $3,000,000 line of credit with Wachovia
Bank of Georgia, N.A. to fund the operations of Branch (the "Wachovia Line").
The principal balance of the Wachovia Line as of December 31, 1996 was $741,000.
Regency has agreed to credit to Branch an amount (the "Wachovia Line Credit")
equal to the excess of (i) $3,000,000 less (ii) the sum of (x) $741,000 (the
balance of the Wachovia Line as of December 31, 1996) plus (y) the amount, if
any, drawn by Branch under the Wachovia Line to fund the fourth quarter 1996
distribution to the Branch partners. Regency shall assume the Wachovia Line at
the First Closing as part of the Assumed Liabilities, and there shall be no
further adjustment regardless of the balance of the Wachovia Line as of the
First Closing.
13.4 Assumed Obligations. Schedule describes certain assumed obligations
in the fixed, agreed amount of $1,060,103 (the "Assumed Obligations"), which
shall not be subject to audit pursuant to Section . Regency shall pay the
Assumed Obligations as they come due.
13.5 Pipeline Transactions. The Disposition Properties known as (i)
Crabapple CVS, which is being developed by Branch and is under contract to be
sold to Xxxxxxx Nil or an affiliate, (ii) Xxxxx Road CVS, which is being
developed by Branch and is under contract to be sold to Xxxxx Xxxxxxx or an
affiliate, and (iii) Oglethorpe Crossing, which is being developed by Branch and
is under contract to be sold to Hermann-Hinrich Reemtsma, and the Acquisition
Contracts and Other Contracts relating to (a) the purchase of the shopping
center known as Xxxxxxx Corner, which is being developed by another developer,
and the proposed subsequent placement and/or sale of Xxxxxxx Corner to an
investor group, and (b) the purchase of a shopping center known as North Point,
which is being developed by another developer, and the
66
proposed subsequent placement and/or sale of North Point to an investor group,
are herein collectively referred to as the "Pipeline Transactions". The
following provisions shall apply to the financial adjustment applicable to the
Pipeline Transactions.
13.5.1 The term "Pipeline Cost" means, with respect to a Pipeline
Transaction, the sum of (i) the out-of-pocket costs and expenses incurred
in connection with the acquisition, construction and development of a
Pipeline Transaction (but excluding any amounts paid to the General
Partner, New Management Company, Regency or any Affiliate) plus any
xxxxxxx money, loan or other deposits which are not refunded, reimbursed
or credited plus (ii) an amount equal to forty percent (40%) of any
taxable gain incurred by the Partnership (or New Management Company, if
New Management Company is the owner of such Pipeline Transaction) upon the
sale or other disposition of such Pipeline Transaction.
13.5.2 The term "Net Pipeline Proceeds" means, with respect to a
Pipeline Transaction, the proceeds realized by the Partnership (or New
Management Company, if New Management Company is the owner of such
Pipeline Transaction) upon the sale or other disposition of such Pipeline
Transaction, after deducting any out-of-pocket closing costs, brokerage
commissions and fees paid to third parties (but not to the General
Partner, New Management Company, Regency or any Affiliate).
13.5.3 The term "Pipeline Credit" means, with respect to any
Pipeline Transaction, the excess, if any, of (i) the Net Pipeline Proceeds
realized from such Pipeline Transaction less (ii) the Pipeline Cost of
such Pipeline Transaction. The Pipeline Credit for any Pipeline
Transaction shall not be less than zero except as set forth below with
respect to the Xxxxxxx Corner Deduction.
13.5.4 At the First Closing, the Partnership shall contribute and
assign to New Management Company the right to acquire the Assets relating
to the Pipeline Transactions, and the Transaction Documents shall convey,
assign and transfer the Pipeline Transactions to the New Management
Company. After the First Closing, Regency shall cause New Management
Company to diligently and in good faith pursue the acquisition,
development, leasing, and sale of the Pipeline Transactions (i) in
compliance with the requirements of the applicable Contracts relating
thereto, (ii) in a manner reasonably calculated to effect a sale or other
disposition of the Pipeline Transactions on or before the first
anniversary of the First Closing, and (iii) in a manner reasonably
calculated to maximize the Pipeline Credit relating thereto.
13.5.5 Upon the sale or other disposition of a Pipeline Transaction
on or before the first anniversary of the First Closing, the parties shall
calculate the Pipeline Credit, if any, applicable thereto, and if a
Pipeline Transaction is not sold or otherwise disposed of on or before the
first anniversary of the First Closing, then no Pipeline Credit shall be
attributable to such Pipeline Transaction. The aggregate Pipeline Credits
for all Pipeline Transactions which are sold or otherwise disposed of
prior to the first
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anniversary of the First Closing is herein referred to as the "Aggregate
Pipeline Credit"; provided, however, the Aggregate Pipeline Credit shall
not be less than zero. If a Pipeline Transaction incurs Pipeline Cost in
excess of Net Pipeline Proceeds, such Pipeline Transaction shall have a
Pipeline Credit equal to zero, and there shall be no reduction in the
computation of the Aggregate Pipeline Credit resulting therefrom. If (a)
Xxxxxxx Corner is not sold to or placed with an investment group, (b)
Xxxxxxx Corner is not acquired by the Partnership, New Management Company,
Regency or any Affiliate thereof, (c) all or any portion of the purchase
contract xxxxxxx money and/or the permanent loan deposit (in the aggregate
amount of $444,750) are forfeited and (d) the Partnership or New
Management Company refunds to Xxxxxxx Real Estate or its affiliate
$110,000 previously advanced to pay a portion of such xxxxxxx money and
loan deposits, then an amount equal to the lesser of (x) $554,750 or (y)
the actual amount of such xxxxxxx money and loan deposits forfeited and
advance refunded is herein referred to as the "Xxxxxxx Corner Deduction".
In the event the Xxxxxxx Corner Deduction exceeds the Aggregate Pipeline
Credit, then the "Aggregate Pipeline Deduction" shall equal the excess of
(1) the Xxxxxxx Corner Deduction less (2) the Aggregate Pipeline Credit.
If the Xxxxxxx Corner Deduction does not exceed the Aggregate Pipeline
Credit, then the Aggregate Pipeline Deduction shall be zero.
13.6 Final Adjustment Amount. At the First Closing, Branch and Regency
shall calculate the Proration Credit and the Wachovia Line Credit, and such
calculations shall be reviewed and, if necessary, adjusted after the First
Closing on the basis of the Final Closing Balance Sheet. Promptly after the
first anniversary of the First Closing, the parties shall calculate the
Aggregate Pipeline Deduction, if any. The sum of (i) the Proration Credit, plus
(ii) the Wachovia Line Credit, less (ii) the Assumed Obligations, less (iv) the
Aggregate Pipeline Deduction, if any, is herein referred to as the "Net Credit."
The difference obtained by subtracting (x) $3,843,269 from (y) the Net Credit is
herein referred to as the "Adjustment Amount". The Adjustment Amount may be a
positive or negative number.
13.7 Additional Adjustment Units. If the Adjustment Amount is a positive
number, on the First Earn-Out Closing Date Additional Units shall be issued to
the Branch partners (to be allocated in the manner described in Schedule ) equal
to the quotient obtained by dividing (i) the positive Adjustment Amount by (ii)
the Value of a Share as of the First Earn-Out Closing Date multiplied by the
Unit Adjustment Factor (the "Adjustment Units"). If a Branch partner has
previously exercised a Redemption Right in the Partnership Agreement with
respect to Units owned by such Branch partner, then the Redemption Right shall
apply to the Redemption Percentage of such Adjustment Units corresponding
thereto (as described in Section 8.6(d) of the Partnership Agreement), and
Regency shall issue to such Branch partner a number of Shares equal to (x) the
Adjustment Units issuable to such Branch partner multiplied by (y) the Unit
Adjustment Factor multiplied by (z) such aggregate Redemption Percentage for all
Redemption Rights previously exercised by such Branch partner. No Adjustment
Units shall be issued to the Branch Principals with respect to the
Reorganization, and Regency shall issue to the Branch Principals (to be divided
among the Branch Principals pro rata in proportion to the relative percentages
set forth on Schedule ) as part of the Reorganization, a number of additional
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Shares equal to the product of (x) the Adjustment Units otherwise allocable to
the Branch Principals for such Reorganization multiplied by (y) the Unit
Adjustment Factor.
13.8 Reduction in Units. If the Adjustment Amount is a negative number,
the number of Additional Units and Shares issuable to the Branch partners on the
First Earn-Out Closing Date pursuant to Section shall be reduced (with such
reduction to be allocated among the Original Limited Partners in the manner
described in Schedule as if such reduced number of Additional Units were so
issued) by an amount equal to the quotient obtained by dividing (i) the negative
Adjustment Amount by (ii) the Value of a Share as of the First Earn-Out Closing
Date multiplied by the Unit Adjustment Factor.
13.9 Exclusion Option. Notwithstanding anything contained in this
Agreement to the contrary, Regency shall have the right and option (the
"Option") to exclude from the Assets the "Option Properties" described below,
and to receive in lieu thereof as an additional Asset the proceeds from the sale
thereof by Branch to the New Branch Entity (as defined below), subject to the
following terms and conditions:
13.9.1 The term "Option Properties" means (i) the Disposition
Property known as Crabapple CVS, which is being developed by Branch and is
under contract to be sold to Xxxxxx Nil or an affiliate, (ii) the
Disposition Property known as Xxxxx Road CVS, which is being developed by
Branch and is under contract to be sold to Xxxxx Xxxxxxx or an affiliate,
(iii) the Disposition Property known as Oglethorpe Crossing, which is
being developed by Branch and is under contract to be sold to
Hermann-Hinrich Reemstma, (iv) the Acquisition Contract and other
Contracts relating to the purchase of the shopping center known as Xxxxxxx
Corner, which is being developed by another developer, and the proposed
subsequent placement and/or sale of Xxxxxxx Corner to an investor group,
(v) the Acquisition Contract and other Contracts relating to the purchase
of the shopping center known as North Point, which is being developed by
another developer, and the proposed subsequent placement and/or sale of
North Point to an investor group, and (vi) the Property known as Hastings
which is leased by Branch.
13.9.2 The Option must be exercised, if at all, by Regency
delivering notice to Branch on or before February 13, 1997, and in the
event Regency fails or elects not to deliver notice to Branch of the
exercise of the Option on or before February 13, 1997, then the Option
shall terminate, be void, and of no further force and effect.
13.9.3 The Option shall only be exercisable with respect to all of
the Option Properties, and Regency shall not have the right to exercise
the Option and exclude less than all of the Option Properties. In the
event Regency exercises the Option, appropriate revisions to this
Contribution Agreement and the Exhibits and Schedules attached hereto
shall be deemed made in order to exclude the Option Properties from the
Assets to be acquired by the Partnership and to include the Option
Properties as part of the Excluded Assets.
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13.9.4 In the event Regency exercises the Option, Branch shall cause
the Branch Principals and Xxxxxxxx X. Xxxxxxx to form a new entity (the
"New Branch Entity") which shall acquire the Option Properties from Branch
at the First Closing, and after the First Closing Branch shall have no
further right or interest in the Option Properties.
13.9.5 The aggregate Contribution Value of the Assets shall not
change or be reduced in the event Regency exercises the Option; provided,
however, at the First Closing the New Branch Entity shall pay to Branch
for payment to the Partnership (or at Regency's direction shall be applied
to reduce the Existing Mortgage Debt) an amount equal to the equity,
xxxxxxx money, loan deposits, and other amounts described on Schedule
hereof (the "Reimbursement Amount") and the New Branch Entity shall assume
the obligations described in Schedule . In lieu of paying to Branch for
payment to the Partnership the Reimbursement Amount at the First Closing,
the New Branch Entity shall have the right to borrow the money from
Regency and execute and deliver a promissory note payable to Regency for
the Reimbursement Amount (or any portion thereof), with such debt to (i)
bear interest at the rate of ten percent (10%) per year, (ii) be due and
payable in full on the first anniversary of the First Closing, and (iii)
be prepayable without penalty (the "Reimbursement Note"), and at the First
Closing the proceeds of the Reimbursement Note shall be paid to the
Partnership by Regency. The Reimbursement Note shall be jointly and
severally guaranteed by the Branch Principals and Xxxxxxxx X. Xxxxxxx and
shall be secured at the First Closing by the pledge of security interests
in Units and/or Shares having a Value as of the First Closing equal to
125% of the principal amount of the Reimbursement Note.
13.9.6 In the event Regency exercises the Option, the other
provisions of this Article 13 set forth above shall be revised to reflect
an Aggregate Pipeline Credit and Aggregate Pipeline Deduction equal to
zero.
13.9.7 Regency's right to exercise the Option and require the New
Branch Entity to acquire the Option Properties at the First Closing is
subject to and conditioned upon the receipt by the New Branch Entity of
all consents and approvals required to be obtained from any lenders
providing financing in connection with the Option Properties to the
conveyance and assignment of the Option Properties to the New Branch
Entities, and in the event such consents and approvals are not obtained
from such lenders, then the Option shall be void and of no further force
and effect and the Partnership shall acquire all of the Option Properties.
13.9.8 For purposes of this Section ,, the term Branch Principals
shall mean X. Xxxxxxxxx Branch III and any one or more of the remaining
Branch Principals, at their option.
ARTICLE 14: TERMINATION AND REMEDIES
14.1 Termination. This Agreement may be terminated:
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14.1.1 At any time prior to the First Closing Date, with the
written consent of Regency and Branch;
14.1.2 At any time prior to the First Closing Date, by Regency
(provided it is not in breach of any of its material obligations hereunder), if
there shall have been a material breach of any covenant, representation or
warranty of any Branch Affiliate hereunder, or failure of any condition to
Regency's obligation to close, and such breach or failure shall not have been
remedied within 10 Business Days after receipt by Branch of a notice in writing
from Regency specifying the breach or failure and requesting such be remedied
(and the First Closing Date shall be extended to provide for such cure period);
14.1.3 At any time prior to the First Closing Date, by Branch
(provided it is not in breach of any of its material obligations hereunder), if
there shall have been a material breach of any covenant, representation or
warranty of Regency hereunder, or any failure of any condition of Branch's
obligation to close, and such breach or failure shall not have been remedied
within 10 Business Days after receipt by Regency of a notice in writing from
Branch specifying the breach or failure and requesting such be remedied (and the
First Closing Date shall be extended to provide for such cure period); or
14.1.4 If the First Closing has not taken place by March 31, 1997,
at any time thereafter, by Branch or Regency, upon delivery of written notice of
termination to the other.
14.2 Effect of Termination. If this Agreement is terminated pursuant to
Section , all obligations of the parties hereunder shall terminate, except for
the obligations that expressly survive the termination of this Agreement. No
such termination shall relieve any party from liability pursuant to Section
below.
14.3 Remedies.
14.3.1 (i) The sole and exclusive remedy of Regency or Branch is to
terminate this Agreement in the event of a default in the other's obligation to
close the transactions contemplated by this Agreement at the First Closing which
default is not willful and intentional, and (ii) except as provided below in
this Section , the sole and exclusive remedy of Regency or Branch in the event
of a willful and intentional default in the other's obligation to close the
transactions contemplated by this Agreement at the First Closing is to terminate
this Agreement and receive liquidated damages in the amount of $3,000,000.
Regency shall have the right to elect specific performance (as an alternative
remedy in lieu of liquidated damages) only (a) in order to prevent Branch from
initiating, soliciting or pursuing a Competing Transaction in violation of
Section , (b) to enjoin such a pending or threatened Competing Transaction,
and/or (c) to require Branch to close the transactions contemplated by this
Agreement if (x) there is a willful and intentional default by Branch to close
the transactions contemplated by this Agreement at the First Closing and (y)
prior to the First Closing Branch initiated, solicited or pursued a Competing
Transaction in violation of Section . Branch shall have the right to elect
specific performance (as an alternative remedy in lieu of liquidated
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damages) to require Regency to close the transactions contemplated by this
Agreement only if there is a willful and intentional default by Regency to close
the transactions contemplated by this Agreement. The parties expressly waive any
right to elect specific performance (except as provided above in this Section )
and to damages in excess of such liquidated amount with respect to any such
breach. The parties agree that the amount of damages for a default by the other
would be difficult, if not impossible, to determine, and that such liquidated
damages are a reasonable estimate of damages in the event of such a default. In
the event that a party elects specific performance hereunder (the "Electing
Party") but the court determines that the Electing Party is not entitled to
specific performance, then the Electing Party may seek liquidated damages
hereunder in lieu of specific performance in the event of a willful and
intentional default in the other's obligations to close the transactions
contemplated hereby.
14.3.2 If (i) Branch receives prior to the First Closing an offer
for a Competing Transaction (as defined in Section ), and (ii) OCP, a majority
in interest of the Branch Limited Partners, or the partners of the
Subpartnerships other than Roswell Village, Ltd. fail to consent to the
transactions contemplated by this Agreement for any reason (other than as a
result of a breach by Regency of any of its material obligations hereunder) or
Branch fails to submit the transactions to such Persons for consent, and (iii)
Branch consummates a Competing Transaction on or before December 31, 1997
involving more than (a) a 25% interest in Branch or (b) 25% of the Assets of
Branch, and (iv) Branch has not paid to Regency the $3,000,000 liquidated damage
amount described in Section above, and (v) Regency is not in material breach of
any covenant, representation or warranty made by it in this Agreement and has
performed all material obligations required to be performed by it at or before
the First Closing, Branch shall immediately pay to Regency upon the closing of
such Competing Transaction(by wire transfer) a break-up fee in the amount of
$3,000,000, whereupon Branch shall have no further liability to Regency
whatsoever arising out of any Competing Transaction or under Section above.
ARTICLE 15: INDEMNIFICATION
15.1 By Branch. For a period of one year from the First Closing Date
(except for Claims related to any Tax, for which the survival period shall be
the applicable statute of limitation related to such Claim) and subject to the
terms and conditions of this Article , Branch hereby agrees to indemnify, defend
and hold harmless Regency and the Partnership, and their respective directors,
officers, employees and other Affiliates, from and against all Claims asserted
against, resulting to, imposed upon, or incurred, directly or indirectly, by any
such Person or the Assets transferred to the Partnership pursuant to this
Agreement by reason of, arising out of or resulting from (i) the inaccuracy or
breach of any representation or warranty of Branch contained in or made pursuant
to Article of this Agreement (regardless of whether such breach is deemed
"material") or (ii) any Claim against Branch or any Subpartnership accruing
prior to the First Closing Date not constituting an Assumed Liability. As used
in this Article , the term "Indemnified Claim" shall include all Loss and
Expenses.
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15.2 By Branch Realty. For a period of one year from the First Closing
Date (except for Claims related to any Tax, for which the survival period shall
be the applicable statute of limitation related to such Claim) and subject to
the terms and conditions of this Article , Branch Realty hereby agrees to
indemnify, defend and hold harmless Regency and the Partnership, and their
respective directors, officers, employees and other Affiliates, from and against
all Claims asserted against, resulting to, imposed upon, or incurred, directly
or indirectly, by any such Person or the Assets transferred to the Partnership
pursuant to this Agreement by reason of, arising out of or resulting from the
inaccuracy or breach of any representation or warranty of Branch Realty
contained in or made pursuant to Article of this Agreement (regardless of
whether such breach is deemed "material").
15.3 By the Partnership. Subject to the terms and conditions of this
Article , the Partnership hereby agrees to indemnify, defend and hold harmless
Branch, and its respective directors, officers, employees, partners and other
Affiliates from and against all Claims asserted against, resulting to, imposed
upon or incurred by any such Person, directly or indirectly, by reason of,
arising out of or resulting from all Claims against Branch constituting,
relating to or arising out of any Assumed Liabilities.
15.4 By Regency. For a period of one year from the First Closing Date and
subject to the terms and conditions of this Article , Regency hereby agrees to
indemnify, defend and hold harmless Branch, and its respective directors,
officers, employees, partners and other Affiliates from and against all Claims
asserted against, resulting to, imposed upon or incurred by any such Person,
directly or indirectly, by reason of, arising out of or resulting from the
inaccuracy or breach of any representation or warranty of Regency contained in
or made pursuant to Article of this Agreement (regardless of whether such breach
is deemed "material").
15.5 By TRG. For a period of one year from the First Closing Date and
subject to the terms and conditions of this Article , TRG hereby agrees to
indemnify, defend and hold harmless Branch, and its respective directors,
officers, employees, partners and other Affiliates from and against all Claims
asserted against, resulting to, imposed upon or incurred by any such Person,
directly or indirectly, by reason of, arising out of or resulting from the
inaccuracy or breach of any representation of TRG contained in or made pursuant
to Article of this Agreement (regardless of whether such breach is deemed
"material").
15.6 Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article with respect
to Claims relating to third parties shall be subject to the following terms and
conditions:
15.6.1 Notice and Defense. The party or parties to be indemnified
(whether one or more, the "Indemnified Party") shall give the party from whom
indemnification is sought (the "Indemnifying Party") written notice of any such
Claim prior to the expiration of the survival period to which the Claim relates,
and the Indemnifying Party will undertake the defense thereof by representatives
chosen by it. Failure to give such notice shall not affect the
73
Indemnifying Party's duty or obligations under this Article , except to the
extent the Indemnifying Party is prejudiced thereby. So long as the Indemnifying
Party is defending any such Claim actively and in good faith, the Indemnifying
Party shall have the right to settle such Claim in its sole discretion, provided
that the Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any Claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party of a release from all
Liability in respect of such Claim. The Indemnified Party shall make available
to the Indemnifying Party or its representatives all records and other materials
required by them and in the possession or under the control of the Indemnified
Party, for the use of the Indemnifying Party and its representatives in
defending any such Claim, and shall in other respects give reasonable
cooperation in such defense. An Indemnified Party includes any Branch partner
who has received Units or Shares pursuant to the transactions contemplated by
this Agreement, and any such Person shall be entitled to enforce a Claim for
indemnification hereunder in such Person's own right.
15.6.2 Failure to Defend. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such Claim
actively and in good faith, the Indemnified Party will (upon further notice and
the failure of the Indemnifying Party to commence the defense of such claim
within thirty (30) days after such further notice) have the right to undertake
the defense, compromise or settlement of such Claim or consent to the entry of a
judgment with respect to such Claim, on behalf of and for the account and risk
of the Indemnifying Party, and the Indemnifying Party shall thereafter have no
right to challenge the Indemnified Party's defense, compromise, settlement or
consent to judgment except if the amount of a Claim to be indemnified by Branch
does not exceed the Value (as defined in the Partnership Agreement) of the
Collateral on the date of the settlement, in which case Branch shall have the
right to consent to any such compromise, settlement or consent, which consent
shall not be unreasonably withheld.
15.7 Payment.
15.7.1 General. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article . Upon judgment,
determination, settlement or compromise of any Indemnified Claim pursuant to the
provisions hereof, the Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, and/or to the Indemnified Party in reimbursement of any
amount theretofore required to be paid by it, the amount so determined by
judgment, determination, settlement or compromise pursuant to the provisions
hereof, and all other Loss and Expenses of the Indemnified Party with respect
thereto, unless in the case of a judgment an appeal is made from the judgment.
If the Indemnifying Party desires to appeal from an adverse judgment, then the
Indemnifying Party shall post and pay the cost of the security or bond to stay
execution of the judgment pending appeal. Upon the payment in full by the
Indemnifying Party of such amounts, the Indemnifying Party shall succeed to the
rights of such Indemnified Party, to the extent not waived in settlement,
against the third party who made such Indemnified Claim.
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15.7.2 Security Interest.
(a) Grant. In the event that either Regency or the Partnership
notifies Branch of a Claim, pursuant to Section , on or before the first
anniversary of the First Closing Date, each Branch partner, as a condition to
receiving such partner's respective percentage (as set forth on Schedule ) of
the additional Units or Shares (including Reorganization Shares) to be issued at
the First Property Earn-Out Closing set forth in Section , shall, in addition to
agreeing to the other provisions set forth in this Section , secure such
partner's respective percentage (as set forth on Schedule ) of Branch's
liability, if any, to pay an Indemnified Claim ("Branch's Liability") by
pledging and granting to Regency and the Partnership under the Florida Uniform
Commercial Code a first priority security interest in such Units and/or Shares
(collectively, together with the Shares issued upon the exercise of Redemption
Rights with respect to such Units, the "Collateral") having a Value as of such
date equal to such Branch partner's respective percentage (as set forth on
Schedule ) of 125% of Branch's Liability; provided, however, no Branch partner
shall have to pledge or grant such security interest in Units or Shares with
respect to more than a maximum amount equal to the product of (i) 571,797
multiplied by (ii) such Branch partner's respective percentage set forth on
Schedule hereof. Certificates for the Collateral, together with related stock
powers or other powers or attorney with signature guaranties and otherwise
reasonably acceptable to Regency, shall be held by Regency until the release of
the security interests therein pursuant to this Article . In addition, each
Branch partner shall deliver to Regency and/or the Partnership, as the case may
be, such financing statements, continuation statements, and similar documents as
Regency and/or the Partnership shall deem appropriate to perfect and to continue
perfection of their respective security interests in the Collateral. The
security interests granted pursuant to this Section shall not impair a Branch
partner's Redemption Rights; provided, however, that any Shares issued upon the
exercise of such Redemption Rights must also be pledged hereunder and shall be
part of the Collateral.
(b) No Encumbrance, Sale, Etc. Until such time as Regency and
the Partnership release their respective security interests in the Collateral,
each Branch partner shall agree (i) to keep the Collateral free of all security
interests, voting trust agreements, shareholder agreements, or other interests
and encumbrances, except for the security interest granted herein, and (ii) not
to assign, deliver, sell, transfer, lease or otherwise dispose of (including
dispositions by operation of law) any portion of the Collateral or any interest
therein without the prior written consent of Regency and the Partnership except
to Persons other than lenders described in Section 11.3(a) of the Partnership
Agreement to whom a Limited Partner may transfer Units without the consent of
the General Partner (provided that the transferred Units remain subject to the
security interests granted in Section ).
(c) Disputed Claim. Notwithstanding anything herein to the
contrary, in the event that either Regency or the Partnership notifies Branch of
a Claim on or before the first anniversary of the First Closing Date, and Branch
disputes such Claim, the Collateral shall be pledged, subject to the adjustment
described in Section below, until the amount of such Claim has either (i) been
decided by a court of competent jurisdiction and such decision
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is not subject to appeal, or (ii) agreed to by the parties; provided, however,
that neither Regency nor the Partnership may exercise its rights with respect to
such security interests until the amount of such Claim has been decided or
agreed upon. Once the amount of such Claim has been decided or agreed upon, the
Collateral may be used to satisfy Branch's Liability, if any, to pay the
Indemnified Claim, based on its then Value. In the event Regency or the
Partnership uses the Collateral to satisfy Branch's Liability, if any, to pay
the Indemnified Claim, Regency and the Partnership, as the case may be, agree to
foreclose against the Units and/or Shares that comprise such Collateral, pro
rata in accordance with the respective percentages set forth on Schedule .
(d) Adjustment. If the number of Units and Shares to be
pledged hereunder times the then Value exceeds 125% of the amount of the pending
Indemnified Claims representing Branch's Liability (if agreed upon by the
parties), then Collateral shall be pledged pro rata in accordance with the
relative percentage interests set forth on Schedule , so that the amount of
Collateral times the then Value equals at least 125% of the amount of the
pending Indemnified Claims representing Branch's Liability. In the event that
the parties are not able to agree on the amount of the pending Indemnified
Claims representing Branch's Liability, the full Collateral shall be pledged
hereunder and Branch shall have the right to request binding arbitration of the
maximum possible amount of such Claims (but not the merits of such Claims), by
delivery of written notice to Regency and the Partnership. Arbitration
proceedings shall be administered by and conducted pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. The parties shall
flip a coin to determine where the arbitration proceedings will be held, with
the winning party entitled to select either Atlanta, Georgia, or Jacksonville,
Florida. Three independent arbitrators shall be selected: one shall be a
practicing attorney, one shall be a certified public accountant, and the third
shall be a real estate professional, each of whom shall be knowledgeable about
the subject matter giving rise to the Claims in dispute. The arbitration
proceedings shall be completed within 30 days after the selection of the
arbitrators, who shall render their decision in writing, by majority vote,
within 30 days after the conclusion of the proceeding, stating the factual basis
for their decision. The arbitrators shall have authority to include in their
decision an award in favor of a party of all or any portion of its attorneys'
fees and expenses incurred in connection with the arbitration, together with the
cost of the arbitration. Within two business days after the date of the
arbitration decision, if the amount of Collateral times the then Value equals at
least 125% of the amount determined by the arbitrators to be the maximum
possible exposure of the pending Indemnified Claims representing Branch's
Liability, Regency shall release the excess collateral, pro rata in accordance
with the relative percentages set forth on Schedule .
(e) Substitution of Collateral. Any Branch partner holding
Collateral may substitute a letter of credit issued by a responsible financial
institution located in the United States in favor of both Regency and the
Partnership, provided that the letter of credit (i) is for an amount equal to or
greater than the then Value of the Collateral which such letter of credit is
replacing as collateral for the security interest granted in Section and (ii) is
irrevocable until the security interest is released in the remaining Collateral,
subject to the provisions of Section above.
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(f) Remedies. In the event that either Regency or the
Partnership has the right to use the Collateral to satisfy Branch's Liability,
if any, to pay an Indemnified Claim, without waiving any other right under this
Agreement, Regency and the Partnership, as the case may be, shall have all
rights and remedies of a secured party under the Florida Uniform Commercial Code
in addition to the rights and remedies as may be available hereunder, subject to
the limitations on Regency's and the Partnership's rights to foreclose set forth
in Section (c).
(g) Distributions in Respect of Collateral. Until such time as
Regency and the Partnership release their respective security interests in the
Collateral, each Branch partner shall assign to and authorize Regency and the
Partnership to receive any and all non-cash dividends or distributions of
whatever nature now or hereafter made in respect of the Collateral, including
those made in connection with the dissolution, liquidation, sale of assets,
merger, consolidation or other reorganization of Regency or the Partnership, or
any stock dividend, stock split, recapitalization, reclassification or
otherwise, to surrender such Collateral or any part thereof in exchange
therefor, and to hold any such dividend or distribution as part of the
Collateral. Notwithstanding Regency's and the Partnership's respective security
interests in the Collateral, each Branch partner shall be entitled to receive
all cash dividends and distributions relating to such Collateral without any
security interest attaching thereto.
(h) Jurisdiction. Any suit, action or proceeding against any
Branch partner with respect to this Section may be brought in the courts of the
State of Georgia or in the U.S. District Court for the Northern District of
Georgia as Regency or the Partnership, as the case may be, in its sole
discretion may elect, and each Branch partner shall accept the nonexclusive
jurisdiction of those courts for the purpose of any suit, action or proceeding.
In addition, each Branch partner shall irrevocably waive, to the fullest extent
permitted by law, any objection which such partner may have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
Section or any judgment entered by any court in respect to any part thereof
brought in the State of Georgia and shall further irrevocably waive any claim
that any suit, action or proceeding brought in the State of Georgia has been
brought in an inconvenient forum.
15.8 Threshold and Cap. Notwithstanding anything herein to the contrary,
no party required to indemnify any other under this Article shall be responsible
for any Indemnified Claim under the terms of this Article until the cumulative
aggregate amount of such Indemnified Claims suffered by Branch or Branch Realty,
on the one hand, or the Partnership, Regency or TRG, on the other hand, as the
case may be, exceeds $250,000.00, in which case Branch or Branch Realty, on the
one hand, or the Partnership, Regency or TRG, on the other hand, as the case may
be, shall then be liable for all such Indemnified Claims, but in the case of a
breach of a representation, warranty or covenant by Branch or Branch Realty that
is not willful and intentional, only to the extent that the aggregate Loss and
Expenses for all such Indemnified Claims does not exceed the greater of
$12,651,008 or the combined Value of the Collateral, as determined on the date
that such Indemnified Claims are paid and Branch, Branch Realty, the Branch
partners, and their Affiliates shall have no Liability whatsoever for any
77
Indemnified Claim in excess of such amount unless resulting from a willful and
intentional breach of a representation, warranty or covenant. There shall be no
corresponding dollar limitation on Regency's or the Partnership's liability, if
any, for Loss and Expenses for Indemnified Claims.
15.9 No Waiver. Except to the extent waived by virtue of the provisions
set forth in Section , , or , the closing of the transactions contemplated by
this Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification otherwise has knowledge of the breach, violation or failure of
condition constituting the basis of the Claim at or before the First Closing,
and regardless of whether such breach, violation or failure is deemed to be
"material," subject to the provisions of Sections and (requiring notice to the
other party).
15.10 Designated Representatives. The Branch partners shall have the right
to designate (i) OCP and (ii) any one of the Branch Principals or Xxxxxxxx X.
Xxxxxxx (the "Branch Representative") to represent Branch in connection with any
consent, approval, agreement, settlement, or other action to be taken by Branch
after the First Closing under this Article 15, and the unanimous decision of OCP
and the Branch Representative shall be binding on Branch and the Branch partners
hereunder. It is acknowledged and agreed that the Branch partners shall share
any Branch Liability under this Article 15, subject to the limitations in
Section and the other provisions of this Article 15, in proportion to the
relative percentages set forth on Schedule , and in the event any Branch partner
suffers or pays a disproportionate share of a Branch Liability, then such Branch
partner shall have a right of contribution from any Branch partner suffering or
paying less than such Branch partner's proportionate share. Further, OCP and the
Branch Representative, acting together, shall have the right to engage attorneys
to represent the interest of Branch and the Branch partners and incur reasonable
costs and expenses in connection with any action to be taken or issues arising
under this Article 15, and the Branch partners shall fund such costs and
expenses (including reasonable compensation to OCP and the Branch
Representative) in accordance with the relative percentages set forth on
Schedule .
ARTICLE 16: POST-CLOSING COVENANTS
16.1 Completion of 1996 Audit. Branch agrees to cause, and to cooperate in
facilitating the completion as promptly as practicable after the First Closing
of, the preparation of audited financial statements for Branch as of and for the
year ended December 31, 1996, in accordance with GAAP and reported on by Price
Waterhouse LLP, or another Big 6 accounting firm, and complying in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder for filing by Regency with the SEC in a Form
8-K and in Regency's proxy statement for the meeting of shareholders referred to
in Section . Without limiting the foregoing, Branch agrees to cause its
independent public accountants to give Regency and Regency's independent
certified public accountants access to the work papers for the audits of
Branch's financial statements for the three years ended December 31, 1996.
Regency shall pay the cost of Branch's 1996 audit as described on
78
Schedule . The Final Closing Balance Sheet shall be prepared in accordance with
GAAP and on that basis will present fairly the consolidated financial position
and the Assets and Liabilities of the entities included therein (including the
Subpartnerships) as going concerns, shall be in accordance with the books and
records of such entities, shall not reflect any transactions that are not bona
fide transactions and shall not contain any untrue statements of a material fact
or omit to state any material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading.
16.2 Use of Branch Name. Each of the parties acknowledge and agree that
the name "Branch," together with the goodwill associated with such name, is the
property of X. Xxxxxxxxx Branch, III. For a period of one year following the
First Closing, Xx. Xxxxxx agrees that the Partnership and New Management Company
shall have, without the payment of any additional consideration, a nonexclusive
license to use the name "Branch Properties" (but not the name "Branch") in the
United States.
16.3 Access to Books and Records. For a period of seven years following
the First Closing, Regency shall cause the Partnership and New Management
Company to preserve and to give the Branch Affiliates access, upon reasonable
advance notice and during normal business hours, to all books and records
delivered by Branch and the Subpartnerships to the Partnership and the First
Closing to enable the Branch Affiliates to prepare Tax returns or respond to any
request of any Tax authority or Governmental Entity regarding matters prior to
the First Closing.
16.4 German REIT Representative. As promptly as practicable following the
First Closing, Regency shall appoint a tax representative in Germany as required
by Auslandsinvestmentgesetz, enacted July 28, 1969, as it may be amended from
time to time ("AuslinvestG"), and shall otherwise comply with the AuslinvestG,
including its reporting and filing requirements, so long as any Branch partner
residing in Germany continues to hold Units or Regency stock issued pursuant to
the exercise of Redemption Rights.
16.5 Operation of New Management Company. From and after the First Closing
and through December 31, 1999, Regency shall use its reasonable best efforts to
cause New Management Company (i) to be operated in the ordinary and usual course
of business, (ii) to preserve the good will and advantageous relationships it
has received as part of Branch's Third Party Management Business with tenants,
customers, suppliers, independent contractors, employees and other Persons
material to the operation of such Third Party Management Business, and (iii) to
perform New Management's material obligations under the Management Contracts.
Regency agrees to cause to be preserved and made available for inspection,
during normal business hours and upon reasonable prior notice, by a
representative appointed by the Branch Principals, all books and records
relating to amounts due at any Third Party Earn-Out Closing. The Branch
Principals, acting as a group, shall have the right to conduct up to two audits
of such books and records for the purpose of confirming the amount due at any
Third Party Earn-Out Closing, and if any such audit discloses that Third Party
Fees have been
79
understated for any calendar year preceding a Third Party Earn-Out Closing by at
least 5% (five percent), Regency shall reimburse the Branch Principals for the
cost of such audit.
16.6 Reports on Designated Properties. From the First Closing Date until
the Third Earn-Out Closing Date (as defined in Section ), Regency shall provide
the Branch Principals, Xxxxxxxx X. Xxxxxxx, and OCP with quarterly reports in a
form reasonably acceptable to such parties relating to the performance of the
Designated Properties (as defined in Section ). Regency agrees to cause to be
preserved and made available for inspection, during normal business hours and
upon reasonable prior notice, by a representative appointed by the Branch
Principals, Xxxxxxxx X. Xxxxxxx, and OCP, all books and records relating to
amounts due at any Property Earn-Out Closing. The Branch Principals, Xxxxxxxx X.
Xxxxxxx, and OCP, acting as a group, shall have the right to conduct up to three
audits of such books and records for the purpose of confirming the amount due at
any Property Earn-Out Closing, and if any such audit discloses that any
Annualized NOI (as defined in Section ) has been understated for any calendar
year preceding a Property Earn-Out Closing resulting in an understatement of the
Aggregate Increased Value by more than $1,000,000, Regency shall reimburse the
Branch Principals, Xxxxxxxx X. Xxxxxxx, and OCP, as applicable, for the cost of
such audit.
16.7 Review of Net Credit. From the First Closing Date until the First
Earn-Out Closing Date, Regency shall provide the Branch Principals, Xxxxxxxx X.
Xxxxxxx and OCP with status reports and such other information applicable to the
calculation of the Net Credit pursuant to Article 13 as may be reasonably
requested by such parties. Regency agrees to cause to be preserved and made
available for inspection, during normal business hours and upon reasonable prior
notice, by a representative appointed by the Branch Principals, Xxxxxxxx X.
Xxxxxxx, and OCP, all books and records relating to the calculation of the Net
Credit. The Branch Principals, Xxxxxxxx X. Xxxxxxx, and OCP, acting as a group,
shall have the right to conduct an audit of such books and records for the
purpose of confirming the Net Credit, the Adjustment Amount, and the amount of
any Adjustment Units or Shares due (or the reduction in the Additional Units
due) on the First Earn-Out Closing Date as described in Article hereof, and if
such audit discloses that the Net Credit has been understated by more than five
percent (5%), Regency shall reimburse the Branch Principals, Xxxxxxxx X.
Xxxxxxx, and OCP as applicable, for the cost of such audit.
16.8 Environmental Matters. Branch hereby waives any claim for contribution
against the Partnership for any damages to the extent they arise from any
pre-closing conditions related to:
16.8.1 any Release of, threatened Release of, or disposal of any
Materials of Environmental Concern at any Property;
16.8.2 the operation or violation of any Environmental Law at any
Property; or
80
16.8.3 any Environmental Claim pursuant to any Environmental Law in
connection with any Property.
ARTICLE 17: MISCELLANEOUS
17.1 Headings. The headings contained in this Agreement are for reference
purposes only and are in no way intended to described, interpret, define or
limit the scope, extent or intent of this Agreement or any provision hereof.
17.2 Pronouns and Plurals. Whenever required by the context, any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.
17.3 Time. Time is of the essence for this Agreement.
17.4 Survival. The provisions set forth in Article 1, Sections (c),
Section (d), Section , Section , Section , Section (with respect to the
indemnity set forth therein), Article 6 (subject to the limitations set forth
therein and in Article 15), Article 7 (subject to the limitations set forth
therein), Article 8 (subject to the limitations set forth therein), Article 9
(subject to the limitations set forth therein), Section , Article 13, Article
15, Article 16, and Article 17 shall survive the First Closing and shall not be
deemed to be merged into or waived by the instruments of such First Closing.
Except as provided in the foregoing sentence, no other provisions,
representations, warranties or other covenants or agreements contained in this
Agreement shall survive the First Closing.
17.5 Expenses. At each Closing, Regency shall cause Newco to make a
capital contribution to the Partnership to enable the Partnership to pay
expenses incident to this Agreement and the transactions contemplated hereunder,
including (i) environmental audits, Survey, UCC Searches, the Title Insurance
premium, state and local transfer Taxes, recording costs, assumption fees in
connection with the assumption by the Partnership of the Existing Mortgage Debt;
(ii) the cost of disseminating the disclosure document referred to in Section
and the travel and related expenses incurred in connection with meetings with
Branch partners; and (iii) the reasonable, itemized fees and expenses of
attorneys and accountants for Branch (and its partners) and attorneys and
accountants for OCP, as specifically described on Schedule . Except as otherwise
provided in Section , in the event that this Agreement is terminated before the
First Closing, 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.
17.6 Costs of Litigation. The parties agree that the prevailing party in
any action brought with respect to or to enforce any right or remedy under this
Agreement shall be entitled to recover from the other party or parties all
reasonable costs and expenses of any nature
81
whatsoever incurred by the prevailing party in connection with such action,
including, without limitation, attorneys' fees and prejudgment interest.
17.7 Additional Actions and Documents. Each party hereto hereby agrees to
take or cause to be taken such further actions, to execute, deliver and file or
cause to be executed, delivered and filed such further documents, and to obtain
such consents, as may be necessary or as may be reasonably requested on or after
the Closing Date in order to fully effectuate the purposes, terms and conditions
of this Agreement, including, without limitation, the transfer and assignment to
the Partnership of, and the vesting in the Partnership title to, the Assets.
17.8 Remedies Cumulative. Except as otherwise expressly provided in
Section and subject to the limitations set forth in Article , the remedies
provided in this Agreement shall be cumulative and shall not preclude the
assertion or exercise of any other rights or remedies available by Law, in
equity or otherwise.
17.9 Entire Agreement; Amendment and Modification. This Agreement,
including the schedules, exhibits and other documents referred to herein or
furnished pursuant hereto, together with the letter agreement regarding
confidentiality between Branch and Regency dated July 1, 1996 (the terms of
which are incorporated herein) constitutes the entire understanding and
agreement among the parties hereto with respect to the transactions contemplated
herein, and supersedes all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein. No amendment,
modification or discharge of, or supplement to, this Agreement shall be valid or
binding unless set forth in writing and duly executed and delivered by the party
against whom enforcement of the amendment, modification, or discharge is sought.
In addition, this Agreement may not be amended, modified or supplemented without
the prior written consent of Security Capital and OCP.
17.10 Notices. All notices, demands, requests, and other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified U.S. mail, return receipt requested and postage prepaid, or
transmitted by facsimile, telegram, telecopy or telex, addressed as follows:
(i) If to Branch: (ii) If to Regency:
Xxxxx 0000, 000 Xxxxxx Xxxxxx 000 X. Xxxxxxx Xx., Xxxxx 000
1201 Peachtree Street Jacksonville, Florida 32202
Xxxxxxx, Xxxxxxx 00000 Telephone: (000) 000-0000
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Attention: Xxxxxx X. Xxxxx, Xx.,
Attention: X. Xxxxxxxxx Branch III President
Xxxxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxx
82
copy to: copy to:
Xxxxxxx X. Xxxxx, Esq. Xxxxxxx X. Commander, Esq.
King & Spalding Xxxxx & Xxxxxxx
000 Xxxxxxxxx Xxxxxx, XX Green Leaf Building
Suite 4800 000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000 Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
and copy to OCP and its counsel
(at the addresses set forth below)
(iii) If to OCP:
c/o LaSalle Advisors Limited
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
copy to:
Xxxxxxxxx Xxxxx, Esq.
Piper & Marbury LLP
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If personally delivered, such communication shall be deemed delivered upon
actual receipt; if electronically transmitted pursuant to this Section , such
communication shall be deemed delivered the next business day after transmission
(and sender shall bear the burden of proof of delivery); if sent by overnight
courier pursuant to this Section , such communication shall be deemed delivered
upon receipt; and if sent by U.S. mail pursuant to this Section , such
communication shall be deemed delivered as of the date of delivery indicated on
the receipt issued by the relevant postal service, or, if the addressee fails or
refuses to accept delivery, as of the date of such failure or refusal. Any party
to this Agreement may change its address for the purposes of this Agreement by
giving notice thereof in accordance with this Section .
17.11 Waivers. No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
documents furnished in connection with or pursuant to this Agreement shall
impair any such right, power or privilege to be construed as a waiver of any
default or any acquiescence therein. No single or partial exercise of any such
right, power or privilege shall preclude the further exercise of such right,
83
power or privilege, or the exercise of any other right, power or privilege. No
waiver shall be valid against any party hereto unless made in writing and signed
by the party against whom enforcement of such waiver is sought and then only to
the extent expressly specified therein.
17.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17.13 Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claim or disputes relating thereto, shall be governed by
and construed and enforced in accordance with the Laws and judicial decisions of
the State of Florida, without regard to conflict of Law principles (excluding
the choice of Law rules thereof), except for actions affecting title to real
property, in which case the Laws of the State in which the real property is
located shall apply.
17.14 Assignment; Parties in Interest.
17.14.1 No party hereto shall assign its rights and/or obligations
under this Agreement, in whole or in part, whether by operation of Law or
otherwise, without the prior written consent of the other parties hereto.
17.14.2 Parties in Interest. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective administrators,
successors, legal representatives and permitted assigns of the parties hereto.
Nothing contained herein shall be deemed to confer upon any other Person any
right or remedy under or by reason of this Agreement.
17.15 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto, and no provision of this Agreement shall be
deemed to confer any third party benefit, provided that all representations,
warranties and covenants made by Regency in this Agreement shall run in favor of
Branch's partners upon the dissolution of Branch, who shall have the right to
enforce a Claim for indemnification pursuant to Article in their own right, and
further provided that the amendment provisions set forth in Section shall run in
favor of Security Capital and OCP.
17.16 Severability. Every provision of this Agreement is intended to be
severable. If any provision or term of this Agreement, or the application of a
provision or term to any Person or circumstance, shall be held invalid, illegal
or unenforceable, the validity, legality or enforceability of the other
provisions and terms hereof, or the application of such provision or term to
Persons or circumstances other than those to which it is held invalid, illegal
or enforceable, shall not be affected thereby, and there shall be deemed
substituted for the provision or term at issue a valid, legal and enforceable
provision as similar as possible to the provision or term at issue.
17.17 Limitation of Liability. Any obligation or liability whatsoever of
Regency which may arise at any time under this Agreement or any obligation or
liability which may be incurred by it pursuant to any other instrument,
transaction or undertaking contemplated hereby shall be satisfied, if at all,
out of Regency's assets only. No such obligation or liability shall be
84
personally binding upon, nor shall resort for the enforcement thereof be had to,
the property of any of its shareholders, trustees, officers, employees or
agents, regardless of whether such obligation or liability is in the nature of
contract, tort or otherwise.
17.18 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTION
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE PROVISIONS OF
THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT.
17.19 Tax Advice. Branch has relied on its accountants, attorneys and
other advisors for advice in connection with structuring the transactions
contemplated by this Agreement and is not relying on Regency or Regency's
accountants, attorneys or other advisors with regard to the structure of such
transactions.
IN WITNESS WHEREOF, the parties hereto have caused this Contribution
Agreement to be duly executed on their behalf as of the date first above
written.
BRANCH PROPERTIES, L.P.
By: Branch Realty, Inc.
Sole General Partner
By: /s/ Xxxxxxx X. Xxx
Its: Executive Vice President
and Secretary
BRANCH REALTY, INC.
By: /s/ Xxxxxxx X. Xxx
Its: Executive Vice President
and Secretary
REGENCY REALTY CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Title: Executive Vice President
THE REGENCY GROUP, INC., as to
Articles and only
By: /s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Title: Executive Vice President
/s/ X. Xxxxxxxxx Branch
X. XXXXXXXXX BRANCH, III, as
to Section only
85
SCHEDULE
Assumed Liabilities
A. The aggregate principal amount of Existing Mortgage Debt, plus current
interest through the First Closing Date, provided, however, that to the extent
any such indebtedness is nonrecourse, the Partnership shall assume such
nonrecourse Existing Mortgage Debt (subject to the nonrecourse provisions
relating thereto).
B. The Permitted Exceptions.
C. All obligations arising after January 1, 1997 under the following
Contracts:
1. Acquisition Contracts (Schedule )
2. Development Contracts (Schedule )
3. Management Contracts (Schedule )
4. Repair Contracts (Schedule )
5. Service Contracts (to the extent provided in Section )
6. TI Contracts (Schedule )
7. Real Property Leases (Schedule )
8. Personal Property Leases (Schedule )
9. Leasing Commission Contracts (Schedule )
10. The insurance policies listed on Schedule
11. The partnership agreements of the Subpartnerships (Schedule )
12. The other Contracts listed on Schedule
D. The permits, licenses, approvals, zoning exceptions and approvals,
consents and orders assigned to the Partnership pursuant to
Section .
E. The employee benefits for Continuing Employees and other obligations
with respect to Branch employees described in Section (Continuation
of Employees).
F. The Liabilities shown on the Final Balance Sheet.
X. Xxxxxxxx Consulting Agreement and Termination Agreement.
X. Xxxxxxx letter agreement.
X. Xxxxx Termination Agreement
X. Xxxxxxx Termination Agreement
K. The Assumed Obligations described in Section hereof.
1
2
SCHEDULE
Properties
1) Limited or Special Warranty Deed
2) Xxxx of Sale
3) Assignment of Leases, Contracts, Permits and Security Deposits
Acquisition Properties not closed
1) Assignment of Purchase and Sale Agreement and Deposits
2) Xxxx of Sale
3) Assignment of Leases, Contracts, Permits and Security Deposits
Subpartnership Interests
1) Assignment of Partnership Interest
Branch Headquarters and Other Assets
1) Assignment of Leases, Contracts, Permits and Security Deposits
(including Third Party Management Business)
2) Xxxx of Sale
3
TABLE OF CONTENTS
ARTICLE 1: DEFINITIONS......................................................2
1.1 Definitions......................................................2
ARTICLE 2: FORMATION OF PARTNERSHIP........................................14
2.1 Contribution Values.............................................14
-------------------
2.2 Capitalization of the Partnership...............................14
---------------------------------
2.3 Subsequent Closings.............................................15
-------------------
2.4 Assumption by Partnership of Liabilities........................20
----------------------------------------
ARTICLE 3: REORGANIZATION..................................................20
3.1 Reorganization..................................................20
ARTICLE 4: NEW MANAGEMENT COMPANY..........................................21
4.1 New Management Company..........................................21
ARTICLE 5: COVENANTS.......................................................21
5.1 Implementing Agreement..........................................21
----------------------
5.2 Preservation of Business........................................21
------------------------
5.3 Consents and Approvals..........................................22
----------------------
5.4 Meeting of Regency's Shareholders...............................22
---------------------------------
5.5 Purchase of Acquisition Properties..............................23
----------------------------------
5.6 Additional Acquisitions.........................................23
-----------------------
5.7 Distributions...................................................23
-------------
5.8 Continuation of Employees.......................................24
-------------------------
5.9 Regency Disclosure Document.....................................24
---------------------------
5.10 Exclusivity.....................................................25
-----------
5.11 New Contracts...................................................26
-------------
5.12 Leasing Arrangements............................................26
--------------------
5.13 Obligation to Supplement Information............................26
------------------------------------
5.14 Access to Information; Environmental Audits.....................26
-------------------------------------------
5.15 Monthly Updates of Rent Rolls and Operating Statements..........27
------------------------------------------------------
5.16 Tenant Estoppels................................................27
----------------
5.17 Service Contracts...............................................27
-----------------
5.18 Work Contracts..................................................28
--------------
5.19 Title Matters...................................................28
-------------
5.20 Damage..........................................................29
------
5.21 Condemnation....................................................29
------------
5.22 Peartree Agreement..............................................29
------------------
ARTICLE 6: REPRESENTATIONS, WARRANTIES AND FURTHERCOVENANTS OF
BRANCH................................................................29
i
6.1 As to Branch and the Subpartnerships............................30
------------------------------------
6.1.1 Due Incorporation, etc....................................30
-----------------------
6.1.2 Due Authorization; Consents; No Violations................30
------------------------------------------
6.1.3 Branch Financial Statements...............................31
---------------------------
6.1.4 No Adverse Change.........................................32
-----------------
6.1.5 Title to Assets...........................................32
---------------
6.1.6 Condition and Sufficiency of Assets.......................32
-----------------------------------
6.1.7 Leased Real Property......................................32
--------------------
6.1.8 Leased Personal Property..................................32
------------------------
6.1.9 Intellectual Property.....................................33
---------------------
6.1.10 Existing Mortgage Debt...................................33
----------------------
6.1.11 Contracts................................................33
---------
6.1.12 Management Contracts.....................................35
--------------------
6.1.13 Permits..................................................35
-------
6.1.14 Insurance Policies.......................................35
------------------
6.1.15 Tax Matters..............................................35
-----------
6.1.16 Distribution and Payments................................36
-------------------------
6.1.17 Employee Benefit Plans...................................36
----------------------
6.1.18 Other Employee Matters...................................37
----------------------
6.1.19 No Defaults or Violations................................37
-------------------------
6.1.20 Litigation...............................................38
----------
6.1.21 Brokers..................................................38
-------
6.1.22 Insolvency...............................................38
----------
6.1.23 Branch Closing Agreements................................38
-------------------------
6.1.24 As to the Subpartnerships Only...........................38
------------------------------
6.2 As to the Properties............................................39
--------------------
6.2.1 Title.....................................................39
-----
6.2.2 Purchase Agreement........................................39
------------------
6.2.3 Compliance with Laws; Zoning..............................39
----------------------------
6.2.4 Accuracy of Documents and Information.....................39
-------------------------------------
6.2.5 Fees; Assessments; Condemnation...........................40
-------------------------------
6.2.6 Physical Condition........................................40
------------------
6.2.7 Utilities; Access.........................................40
-----------------
6.2.8 Permits...................................................41
-------
6.2.9 No Default................................................41
----------
6.2.10 Use of Property..........................................41
---------------
6.2.11 Contract Payments........................................41
-----------------
6.2.12 Environmental Matters-Properties.........................41
--------------------------------
6.2.13 Environmental Matters - Previously Owned Properties......42
---------------------------------------------------
6.2.14 Structural Defects.......................................43
------------------
6.2.15 No Obligations...........................................43
--------------
6.2.16 Rent Roll................................................43
---------
6.2.17 Leases...................................................43
------
6.2.18 Non-Certificate Leases...................................43
----------------------
ii
6.2.19 Development Properties...................................44
6.2.20 Budgets and Projections..................................44
6.2.21 Work Contracts...........................................44
6.2.22 Acquisition Properties...................................45
6.3 Accredited Investor Status......................................45
--------------------------
6.4 Accuracy of Statements..........................................45
----------------------
6.5 Limit on Representations........................................45
------------------------
6.6 Limitation on Remedies..........................................45
----------------------
ARTICLE 7: REPRESENTATIONS, WARRANTIES AND FURTHER COVENANTS OF
BRANCH REALTY.........................................................46
7.1 Due Organization................................................46
7.2 Due Authorization; Consents; No Violations......................46
7.3 Shareholders....................................................47
7.4 Tax Matters.....................................................47
7.5 Limitation on Remedies..........................................47
ARTICLE 8: REPRESENTATIONS, WARRANTIES ANDFURTHER COVENANTS OF
REGENCY...............................................................47
8.1 Due Incorporation, etc..........................................48
8.2 Due Authorization; Consents; No Violations......................48
8.3 Capitalization..................................................49
8.4 Valid Issuance of Shares. .....................................50
8.5 Regency Exchange Act Reports....................................50
8.6 Permits.........................................................51
8.7 No Adverse Change...............................................51
8.8 No Defaults or Violations.......................................51
8.9 Litigation......................................................52
8.10 Title to Properties; Leasehold Interests........................52
8.11 Environmental Matters...........................................52
8.12 Taxes...........................................................53
8.13 REIT Status.....................................................54
8.14 Employees: ERISA................................................54
8.15 Accuracy of Statements..........................................54
8.16 Limitation on Remedies..........................................54
8.17 Continuity of Business Enterprise; Tax Treatment of Reorganization.54
ARTICLE 9: REPRESENTATIONS AND WARRANTIES OF TRG............................55
9.1 Due Incorporation, etc..........................................55
9.2 Due Authorization; Consents; No Violations......................55
9.3 Limitation on Remedies..........................................56
ARTICLE 10: CONDITIONS PRECEDENT TO OBLIGATIONS OF REGENCY.................56
10.1 Conditions for the First Closing................................56
iii
ARTICLE 11: CONDITIONS PRECEDENT TO OBLIGATIONSOF BRANCH
AFFILIATES............................................................58
11.1 Conditions for the First Closing................................58
ARTICLE 12: CLOSINGS.......................................................59
12.1 Closing.........................................................59
12.2 Contribution to the Partnership.................................60
12.3 The Reorganization..............................................63
12.4 Closing Statements/Escrow Fees..................................64
ARTICLE 13: PRORATIONS AND ADJUSTMENTS.....................................64
13.1 Adjustments.....................................................64
13.2 Proration Credit................................................65
13.3 Line of Credit..................................................65
13.4 Assumed Obligations.............................................65
13.5 Pipeline Transactions...........................................65
13.6 Final Adjustment Amount.........................................67
13.7 Additional Adjustment Units..................................67
13.8 Reduction in Units...........................................68
13.9 Exclusion Option..............................................68
ARTICLE 14: TERMINATION AND REMEDIES.......................................69
14.1 Termination.....................................................69
14.2 Effect of Termination...........................................70
14.3 Remedies........................................................70
ARTICLE 15: INDEMNIFICATION................................................71
15.1 By Branch.......................................................71
15.2 By Branch Realty................................................71
15.3 By the Partnership..............................................72
15.4 By Regency......................................................72
15.5 By TRG..........................................................72
15.6 Indemnification of Third-Party Claims...........................72
15.7 Payment.........................................................73
15.8 Threshold and Cap...............................................76
15.9 No Waiver.......................................................77
15.10 Designated Representatives......................................77
ARTICLE 16: POST-CLOSING COVENANTS.........................................77
16.1 Completion of 1996 Audit........................................77
16.2 Use of Branch Name..............................................78
16.3 Access to Books and Records.....................................78
16.4 German REIT Representative......................................78
16.5 Operation of New Management Company.............................78
iv
16.6 Reports on Designated Properties................................78
--------------------------------
16.7 Review of Net Credit.........................................79
--------------------
16.8 Environmental Matters...........................................79
---------------------
ARTICLE 17: MISCELLANEOUS..................................................79
17.1 Headings........................................................79
17.2 Pronouns and Plurals............................................80
17.3 Time............................................................80
17.4 Survival........................................................80
17.5 Expenses........................................................80
17.6 Costs of Litigation.............................................80
17.7 Additional Actions and Documents................................80
17.8 Remedies Cumulative.............................................81
17.9 Entire Agreement; Amendment and Modification....................81
17.10 Notices.........................................................81
17.11 Waivers.........................................................82
17.12 Counterparts....................................................82
17.13 Governing Law...................................................82
17.14 Assignment; Parties in Interest.................................83
17.15 No Third Party Beneficiaries....................................83
17.16 Severability....................................................83
17.17 Limitation of Liability.........................................83
17.18 Waiver of Jury Trial............................................83
17.19 Tax Advice......................................................83
v
LIST OF SCHEDULES TO CONTRIBUTION AGREEMENT
Schedule Acquisition Contracts (include closing timetables)
Schedule Assumed Liabilities
Schedule Capital Expenditure Budget and Schedule
Schedule Development Contracts
Schedule Excluded Assets
Schedule Existing Mortgage Debt
Schedule Management Contracts
Schedule Permitted Exceptions
Schedule Real Property
Schedule Rent Roll
Schedule Repair Contracts
Schedule Service Contracts
Schedule Third Party Fees and Clients
Schedule TI Budgets and Schedules
Schedule TI Contracts
Schedule Units to and Percentage Interests of Branch Partners
- Branch limited partners ()
- Units to Branch ( (a))
- Subsequent Closing rights ((b))
- Property Earn-Out Units ()
- Third Party Earn-Out Units ()
- Adjustment Units ()
- Pledge of Security Interests and Liability ()
- Number of Realty Units ()
Schedule Base NOI for Existing Properties
Schedule Base Value for Existing Properties
Schedule Existing Properties
Schedule New Acquisition Properties
Schedule New Development Properties
Schedule Percentage Interests of Branch Principals and
Reorganization Shares
Schedule Disposition Properties
Schedule Assumed Employee Benefits
Schedule Branch Employees with Knowledge of the Properties and
Branch
Schedule States in Which Subpartnerships Do Business
Schedule Branch Consents
Schedule Branch Financial Statements
Schedule Adverse Changes
Schedule Leased Real Property
Schedule Leased Personal Property
Schedule Other Contracts (including Service Contracts with Termination
Fees)
vi
Schedule Rights-of-Setoff, Counterclaims and Defaults under Management
Contracts
Schedule Insurance Policies (including Subpartnerships)
Schedule Tax Matters (including Subpartnerships)
Schedule Options, Warrants, Etc. Entitling Persons to Receive Units
Schedule Employee Benefit Plans
Schedule Defaults and Violations
Schedule Litigation
Schedule Leasing Commissions
Schedule Subpartnerships' Limited Partnership Agreements, Equity
Owners, and prior Properties (successor liabilities)
Schedule Material Property Defaults, Setoffs
Schedule Condemnation Proceedings/road widenings
Schedule Environmental Assessment Reports (Branch, predecessors,
Regency)
Schedule Structural Defects
Schedule Tenant Defaults
Schedule Development Budget and Schedule
Schedule Accredited Investor Status
Schedule Persons Whose Knowledge is Attributed to Regency
Schedule (b) Regency's Non-100% Interests
Schedule (b) Regency Consents
Schedule Commitments to Issue Stock by Regency
Schedule Obligation to Redeem by Regency
Schedule Other Regency Voting Agreements
Schedule Regency Litigation
Schedule Regency Environmental Matters
Schedule Branch's Consents Required by Regency for Closing
Schedule Branch's Consents Required by Branch for Closing
Schedule Transfer Documents
Schedule Prorations and Adjustments
Schedule Reimbursement Amount for Option Properties
Schedule Branch's Legal and Accounting Expenses
vii
LIST OF EXHIBITS TO CONTRIBUTION AGREEMENT
Exhibit A Form of Partnership Agreement
Exhibit B Form of Voting Agreements
Exhibit C Form of Security Capital's Waiver and Consent
Exhibit D Form of OCP Consent
Exhibit Form of Registration Rights Agreement
Exhibit Form of Proposed Amendments to Regency's Articles of
Incorporation
Exhibit Form of Agreement with Augstein and Schwaighofer
Exhibit -1 Form of A. Branch's Non Compete Agreement
Exhibit 12.2.1(e)-2 Form of X. Xxxx'x, X. Xxx'x, and X. Xxxxxxx'x Non Compete
Agreement
Exhibit Form of A. Branch's Lock-Up Agreement
viii
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
REGENCY RETAIL PARTNERSHIP, L.P.
TABLE OF CONTENTS
ARTICLE 1
DEFINED TERMS............................................1
"Act" ................................................1
"Additional Limited Partner".............................1
"Additional Unit"........................................1
"Adjusted Capital Account"...............................2
"Adjusted Capital Account Deficit".......................2
"Adjusted Property"......................................2
"Affiliate"..............................................2
"Agreed Value"...........................................2
"Agreement"..............................................2
"Articles of Incorporation"..............................2
"Assignee"...............................................2
"Available Cash".........................................2
"Book-Tax Disparities"...................................3
"Business Day"...........................................3
"Capital Account"........................................3
"Capital Contribution"...................................3
"Capital Transaction"....................................3
"Capital Transaction Proceeds"...........................3
"Carrying Value".........................................4
"Cash Amount"............................................4
"Certificate"............................................4
"Charter Amendment"......................................4
"Class A Units"..........................................4
"Class B Units"..........................................4
"Closing Date"...........................................4
"Code" ................................................4
"Common Stock"...........................................4
"Consent ................................................4
"Contributed Property"...................................5
"Contribution Agreement".................................5
"Cumulative Unpaid Priority Distribution Account"........5
"Debt" ................................................5
"Depreciation"...........................................5
"Event of Dissolution"...................................6
"First Closing"..........................................6
"First Redemption Date"..................................6
"General Partner"........................................6
"General Partnership Interest"...........................6
"Immediate Family".......................................6
"Incapacity".............................................6
"Indemnitee".............................................6
"IRS" ................................................7
"Limited Partner"........................................7
"Limited Partnership Interest"...........................7
"Liquidating Transaction"................................7
"Liquidator".............................................7
"Management Business"....................................7
"Net Income" and "Net Loss"..............................7
"Non-U.S. Person"........................................8
"Nonrecourse Deductions".................................8
"Nonrecourse Liability"..................................8
"Notice of Redemption"...................................8
"Option Date"............................................8
"Original Limited Partner"...............................8
"Original Limited Partnership Unit"......................8
"Partner"................................................8
"Partner Minimum Gain"...................................8
"Partner Nonrecourse Debt"...............................9
"Partner Nonrecourse Deductions".........................9
"Partnership"............................................9
"Partnership Interest"...................................9
"Partnership Minimum Gain"...............................9
"Partnership Record Date"................................9
"Partnership Unit" or "Unit".............................9
"Partnership Year".......................................9
"Percentage Interest"....................................9
"Person" ................................................9
"Pledged Units".........................................10
"Prime Rate"............................................10
"Priority Distribution Amount"..........................10
"Recapture Income"......................................10
"Recourse Liabilities"..................................10
"Redeeming Partner".....................................10
"Redemption Amount".....................................10
"Redemption Right"......................................10
"Regency"...............................................10
"Regulations"...........................................10
"REIT" ...............................................10
"Securities Act"........................................10
"704(c) Value"..........................................10
"Share Amount"..........................................11
"Shares" ...............................................11
"Specified Redemption Date".............................11
"Subsequent Closing"....................................11
"Subsidiary"............................................11
"Substituted Limited Partner"...........................11
"Transaction"...........................................11
"Unit Adjustment Factor"................................11
"Unrealized Gain".......................................11
"Unrealized Loss".......................................12
"Valuation Date".....................................12
"Value" ............................................12
ARTICLE 2
ORGANIZATIONAL MATTERS.............................................12
Section 2.1 Organization; Application of Act................12
Section 2.2 Name............................................12
Section 2.3 Registered Office and Agent; Principal Office...13
Section 2.4 Term............................................13
ARTICLE 3
PURPOSE.............................................................13
Section 3.1 Purpose and Business.............................13
Section 3.2 Powers...........................................13
ARTICLE 4
CAPITAL CONTRIBUTIONS; ISSUANCE OF UNITS;
CAPITAL ACCOUNTS...................................................14
Section 4.1 Capital Contributions of the Partners...........14
Section 4.2 Issuances of Additional Partnership Interests...15
Section 4.3 No Preemptive Rights............................15
Section 4.4 Capital Accounts of the Partners................15
ARTICLE 5
DISTRIBUTIONS........................................................17
Section 5.1 Requirement and Characterization of Distributions.17
Section 5.2 Amounts Withheld.............................. ...18
Section 5.3 Withholding.......................................18
Section 5.4 Distributions Upon Liquidation....................19
ARTICLE 6
ALLOCATIONS.........................................................19
Section 6.1 Allocations of Net Income and Net Loss...........19
Section 6.2 Special Allocation Rules.........................21
Section 6.3 Allocations for Tax Purposes.....................22
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS...............................24
Section 7.1 Management.......................................24
Section 7.2 Certificate of Limited Partnership...............28
Section 7.3 Restriction on General Partner's Authority.......29
Section 7.4 Responsibility for Expenses......................29
Section 7.5 Outside Activities of the General Partner........29
Section 7.6 Contracts with Affiliates........................30
Section 7.7 Indemnification..................................30
Section 7.8 Liability of the General Partner.................31
Section 7.9 Other Matters Concerning the General Partner.....32
Section 7.10 Title to Partnership Assets......................33
---------------------------
Section 7.11 Reliance by Third Parties........................34
-------------------------
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.......................34
Section 8.1 Limitation of Liability........................34
Section 8.2 Management of Business.........................34
Section 8.3 Outside Activities of Limited Partners.........34
Section 8.4 Priority Among Partners........................35
Section 8.5 Rights of Limited Partners Relating to the
Partnership.......................35
Section 8.6 Redemption of Units...........................36
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS...........................40
Section 9.1 Records and Accounting........................40
Section 9.2 Fiscal Year...................................40
Section 9.3 Reports.......................................40
ARTICLE 10
TAX MATTERS.........................................................41
Section 10.1 Preparation of Tax Returns.......................41
Section 10.2 Tax Elections....................................41
Section 10.3 Tax Matters Partner..............................41
Section 10.4 Organizational Expenses..........................42
ARTICLE 11
TRANSFERS AND WITHDRAWALS.........................................43
Section 11.1 Transfer.......................................43
Section 11.2 Transfer of General Partner's Partnership
Interests..........................43
Section 11.3 Limited Partners' Rights to Transfer...........44
Section 11.4 Substituted Limited Partners...................46
Section 11.5 Assignees......................................46
Section 11.6 General Provisions.............................46
ARTICLE 12
ADMISSION OF PARTNERS...............................................47
Section 12.1 Admission of Successor General Partner...........47
Section 12.2 Admission of Additional Limited Partners.........47
Section 12.3 Amendment of Agreement and Certificate...........48
ARTICLE 13
DISSOLUTION AND LIQUIDATION......................................48
Section 13.1 Dissolution...................................48
Section 13.2 Winding Up....................................48
Section 13.3 Compliance with Timing Requirements of Regulations;
Allowance for Contingent or Unforeseen
Liabilities or Obligations............51
-------------------------------------
Section 13.5 Deemed Distribution and Recontribution........52
--------------------------------------
Section 13.6 Rights of Limited Partners......................52
--------------------------
Section 13.7 Notice of Dissolution...........................52
---------------------
Section 13.8 Cancellation of Certificate of Limited
Partnership...........................53
------------------------------------------
Section 13.9 Reasonable Time for Winding-Up................53
------------------------------
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS.....................53
Section 14.1 Amendments....................................53
Section 14.2 Meetings of Limited Partners..................54
ARTICLE 15
GENERAL PROVISIONS..................................................55
Section 15.1 Addresses and Notice.............................55
Section 15.2 Titles and Captions..............................55
Section 15.3 Pronouns and Plurals.............................56
Section 15.4 Further Action...................................56
Section 15.5 Binding Effect...................................56
Section 15.6 Waiver of Partition..............................56
Section 15.7 Entire Agreement.................................56
Section 15.8 Remedies Not Exclusive...........................56
Section 15.9 Time.............................................56
Section 15.10 Creditors........................................56
Section 15.11 Waiver...........................................56
Section 15.12 Execution Counterparts...........................56
Section 15.13 Applicable Law...................................56
Section 15.14 Invalidity of Provisions.........................57
ARTICLE 16
POWER OF ATTORNEY...................................................57
Section 16.1 Power of Attorney................................57
SCHEDULES
Schedule 7.8(b) Regency's PFIC Obligations
Schedule 8.6(a) Transfer Restrictions in Regency's Articles of
Incorporation
Schedule 8.6(c)(i) Maximum Aggregate Shares issuable to the Original
Limited Partners prior to the Shareholder Approval
Date
Schedule 13.4(a) Electing Partners with Deficit Capital Account
Make-up Requirement
EXHIBITS
Exhibit A Partners, Contributions and Partnership Interests
(addresses)
Exhibit B Notice of Redemption
Exhibit C Security Capital Waiver and Consent Agreement
