CONTRIBUTION AGREEMENT
TABLE OF CONTENTS
ARTICLE 1: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2: CONTRIBUTION TO PARTNERSHIP . . . . . . . . . . . . . . . 21
2.1 Contribution Values. . . . . . . . . . . . . . . . . . . . 21
2.2 Capitalization of the Partnership. . . . . . . . . . . . . 23
2.3 OSTRS Consideration. . . . . . . . . . . . . . . . . . . . 25
2.4 Assumptions. . . . . . . . . . . . . . . . . . . . . . . . 26
2.4.1 Assumption of Liabilities . . . . . . . . . . . . . 26
2.4.2 Substitution of NewSubs in Joint Ventures . . . . . 26
2.5 Subsequent Closings. . . . . . . . . . . . . . . . . . . . 27
2.5.1 In-Process Earn-Out . . . . . . . . . . . . . . . . 27
2.5.2 In-Place Earn-Out . . . . . . . . . . . . . . . . . 28
2.5.3 Midland Group Earn-Out . . . . . . . . . . . . . . . 29
2.5.4 Worthington Outparcel Earn-Out . . . . . . . . . . . 32
2.5.5 Xxxxx Crossing Land Earn-Out . . . . . . . . . . . . 32
2.6 Subsequent Closings for OSTRS Eastern Option Properties. . 33
ARTICLE 3: FORMATION OF SUBPARTNERSHIPS . . . . . . . . . . . . . . 33
3.1 R&M Western Partnership. . . . . . . . . . . . . . . . . . 33
3.1.1 Partnership Agreement of R&M Western Partnership . . 34
3.2 OTR Joint Ventures . . . . . . . . . . . . . . . . . . . . 34
3.2.1 Mechanics of Contribution . . . . . . . . . . . . . 34
ARTICLE 4: ADDITIONAL CLOSING AND POST-CLOSING TRANSACTIONS . . . . 34
4.1 Purchase Option. . . . . . . . . . . . . . . . . . . . . . 34
4.2 Right of First Refusal . . . . . . . . . . . . . . . . . . 35
4.3 Transfer of Options. . . . . . . . . . . . . . . . . . . . 35
4.4 Additional Outparcels. . . . . . . . . . . . . . . . . . . 36
4.5 Management Contracts . . . . . . . . . . . . . . . . . . . 36
ARTICLE 5: COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 36
5.1 Implementing Agreement . . . . . . . . . . . . . . . . . . 36
5.2 Preservation of Business . . . . . . . . . . . . . . . . . 37
5.3 Consents and Approvals . . . . . . . . . . . . . . . . . . 37
5.4 Additional Acquisitions. . . . . . . . . . . . . . . . . . 37
5.5 Continuation of Employees. . . . . . . . . . . . . . . . . 38
5.6 Disclosur. . . . . . . . . . . . . . . . . . . . . . . . . 38
5.7 Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . 39
5.8 New Contracts. . . . . . . . . . . . . . . . . . . . . . . 40
5.9 Leasing Arrangements . . . . . . . . . . . . . . . . . . . 40
5.10 Obligation to Supplement Information . . . . . . . . . . . 41
5.11 Access to Information; Environmental Audits . . . . . . . 41
5.12 Monthly Updates of Rent Rolls and Operating
Statements . . . . . . . . . . . . . . . . . . . . . . . . 42
5.13 Tenant Estoppels . . . . . . . . . . . . . . . . . . . . . 42
5.14 Service Contracts . . . . . . . . . . . . . . . . . . . . 42
5.15 Work Contracts . . . . . . . . . . . . . . . . . . . . . . 43
5.16 Title Insurance; Survey . . . . . . . . . . . . . . . . . 43
5.17 Later Title Exceptions . . . . . . . . . . . . . . . . . . 43
5.18 Damage . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.19 Condemnation . . . . . . . . . . . . . . . . . . . . . . . 45
5.20 Xxxxxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . 45
5.21 Future Joint Venture Agreements . . . . . . . . . . . . . 46
ARTICLE 6: REPRESENTATIONS, WARRANTIES AND FURTHER
COVENANTS OF MIDLAND . . . . . . . . . . . . . . . . . . . 46
6.1 As to Property Entities, Joint Ventures, Midland Affiliates
and Midland Principals . . . . . . . . . . . . . . . . . . 46
6.1.1 Due Organization, etc. . . . . . . . . . . . . . . 46
6.1.2 Due Authorization; Consents; No Violations. . . . . 47
6.1.3 Existing Mortgage Debt. . . . . . . . . . . . . . . 48
6.1.4 Financial Statements. . . . . . . . . . . . . . . . 48
6.1.5 No Adverse Change . . . . . . . . . . . . . . . . . 49
6.1.6 No Litigation . . . . . . . . . . . . . . . . . . . 49
6.1.7 Leased Real Property. . . . . . . . . . . . . . . . 49
6.1.8 Leased Personal Property. . . . . . . . . . . . . . 50
6.1.9 Intellectual Property . . . . . . . . . . . . . . . 50
6.1.10 Contracts . . . . . . . . . . . . . . . . . . . . . 50
6.1.11 Insurance . . . . . . . . . . . . . . . . . . . . . 51
6.1.12 Tax Matters . . . . . . . . . . . . . . . . . . . . 52
6.2 Representations of Midland Principals, the Property
Entities and the Midland Affiliates. . . . . . . . . . . . 53
6.2.1 Retained Properties . . . . . . . . . . . . . . . . 53
6.2.2 Securities. . . . . . . . . . . . . . . . . . . . . 53
6.2.3 Distributions and Payments. . . . . . . . . . . . . 54
6.2.4 Tax Advice. . . . . . . . . . . . . . . . . . . . . 54
6.2.5 Foreign Person. . . . . . . . . . . . . . . . . . . 55
6.2.6 No Employees. . . . . . . . . . . . . . . . . . . . 55
6.2.7 Brokers . . . . . . . . . . . . . . . . . . . . . . 55
6.2.8 Insolvency. . . . . . . . . . . . . . . . . . . . . 55
6.3 Additional Matters Relating to Joint Ventures. . . . . . . 55
6.3.1 Tax Matters . . . . . . . . . . . . . . . . . . . . 55
6.3.2 No Defaults . . . . . . . . . . . . . . . . . . . . 55
6.3.3 Other . . . . . . . . . . . . . . . . . . . . . . . 56
6.4 Additional Representations of Midland Development. . . . . 56
6.4.1 No Defaults . . . . . . . . . . . . . . . . . . . . 56
6.4.2 Management Contracts. . . . . . . . . . . . . . . . 56
6.4.3 Permits . . . . . . . . . . . . . . . . . . . . . . 56
6.4.4 Title To and Condition of Assets. . . . . . . . . . 57
6.4.5 Employee Benefit Plans. . . . . . . . . . . . . . . 57
6.4.6 Other Employee Matters. . . . . . . . . . . . . . . 58
6.5 As to the Properties . . . . . . . . . . . . . . . . . . . 58
6.5.1 Title; Purchase Commitments . . . . . . . . . . . . 58
6.5.2 Physical Condition. . . . . . . . . . . . . . . . . 58
6.5.3 Rentable Area and Parking Spaces. . . . . . . . . . 58
6.5.4 Compliance with Laws. . . . . . . . . . . . . . . . 59
6.5.5 Insurability. . . . . . . . . . . . . . . . . . . . 59
6.5.6 Utilities; Permits. . . . . . . . . . . . . . . . . 59
6.5.7 Contract Payments . . . . . . . . . . . . . . . . . 59
6.5.8 Assessments . . . . . . . . . . . . . . . . . . . . 60
6.5.9 Accuracy of Documents . . . . . . . . . . . . . . . 60
6.5.10 Rent Roll and Leases . . . . . . . . . . . . . . . 60
6.5.11 Permits . . . . . . . . . . . . . . . . . . . . . . 61
6.5.12 Service Contracts . . . . . . . . . . . . . . . . . 61
6.5.13 Security Deposits . . . . . . . . . . . . . . . . . 61
6.5.14 Condemnation . . . . . . . . . . . . . . . . . . . 62
6.5.15 Environmental Matters . . . . . . . . . . . . . . . 62
6.5.16 Flood Hazard . . . . . . . . . . . . . . . . . . . 64
6.5.17 Zoning . . . . . . . . . . . . . . . . . . . . . . 65
6.5.18 Access . . . . . . . . . . . . . . . . . . . . . . 65
6.5.19 No Defects . . . . . . . . . . . . . . . . . . . . 65
6.5.20 Use of Property . . . . . . . . . . . . . . . . . . 65
6.5.21 No Default . . . . . . . . . . . . . . . . . . . . 65
6.5.22 Development Properties . . . . . . . . . . . . . . 65
6.5.23 Acquisition Properties . . . . . . . . . . . . . . 66
6.5.24 Work Contracts . . . . . . . . . . . . . . . . . . 66
6.5.25 Budgets and Projections . . . . . . . . . . . . . . 66
6.6 Limit on Representations . . . . . . . . . . . . . . . . . 67
ARTICLE 7: REPRESENTATIONS, WARRANTIES AND
FURTHER COVENANTS OF REGENCY. . . . . . . . . . . . . . . 67
7.1 Due Incorporation, etc. . . . . . . . . . . . . . . . . . 67
7.2 Due Authorization; Consents; No Violations . . . . . . . . 67
7.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . 68
7.4 Valid Issuance of Shares . . . . . . . . . . . . . . . . . 69
7.5 Regency Exchange Act Reports . . . . . . . . . . . . . . . 69
7.6 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.7 No Adverse Change. . . . . . . . . . . . . . . . . . . . . 70
7.8 No Defaults or Violations. . . . . . . . . . . . . . . . . 70
7.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 71
7.10 Title to Properties; Leasehold Interests . . . . . . . . . 71
7.11 Environmental Matters . . . . . . . . . . . . . . . . . . 71
7.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.13 REIT Status . . . . . . . . . . . . . . . . . . . . . . . 73
7.14 Employees: ERISA . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE 8: CONDITIONS PRECEDENT TO OBLIGATIONS OF REGENCY . . . . . 73
8.1. Conditions for the First Closing as to the
Transaction. . . . . . . . . . . . . . . . . . . . . . . . 73
8.1.1 Aggregate Assets . . . . . . . . . . . . . . . . . . 73
8.1.2 Representations and Warranties . . . . . . . . . . . 73
8.1.3 Compliance with Covenants and Agreements . . . . . . 74
8.1.4 No Material Adverse Change . . . . . . . . . . . . . 74
8.1.5 No Injunction . . . . . . . . . . . . . . . . . . . 74
8.1.6 Delivery of Documents . . . . . . . . . . . . . . . 74
8.1.7 Consents . . . . . . . . . . . . . . . . . . . . . . 74
8.1.8 No Notice of Material Claims . . . . . . . . . . . . 74
8.1.9 Additional Indemnity . . . . . . . . . . . . . . . . 74
8.2 Conditions for the First Closing as to a Property. . . . . 74
8.2.1 Representations and Warranties. . . . . . . . . . . 75
8.2.2 Compliance with Covenants and Agreements. . . . . . 75
8.2.3 No Material Adverse Change. . . . . . . . . . . . . 76
8.2.4 No Injunction . . . . . . . . . . . . . . . . . . . 76
8.2.5 Title . . . . . . . . . . . . . . . . . . . . . . . 76
8.2.6 Lender Estoppels. . . . . . . . . . . . . . . . . . 76
8.2.7 Tenant Estoppels. . . . . . . . . . . . . . . . . . 76
8.2.8 Work Contract Estoppels . . . . . . . . . . . . . . 76
8.2.9 Delivery of Documents . . . . . . . . . . . . . . . 76
8.2.10 Consents . . . . . . . . . . . . . . . . . . . . . 76
8.2.11 Xxxxxxxxx and Xxxxxx Properties . . . . . . . . . . 76
8.2.12 Waiver of Rights of First Refusal . . . . . . . . . 77
8.2.13 Lake Pine Road Construction . . . . . . . . . . . . 77
ARTICLE 9: CONDITIONS PRECEDENT TO OBLIGATIONS
OF CONTRIBUTORS . . . . . . . . . . . . . . . . . . . . . 77
9.1 Conditions for the First Closing . . . . . . . . . . . . . 77
9.1.1 Representations and Warranties. . . . . . . . . . . 77
9.1.2 Compliance with Covenants and Agreements. . . . . . 77
9.1.3 No Material Adverse Change. . . . . . . . . . . . . 78
9.1.4 No Injunction . . . . . . . . . . . . . . . . . . . 78
9.1.5 Delivery of Documents . . . . . . . . . . . . . . . 78
9.1.6 Midland Consents. . . . . . . . . . . . . . . . . . 78
9.1.7 No Notice of Material Claims. . . . . . . . . . . . 78
9.1.8 Minimum Asset Contribution. . . . . . . . . . . . . 78
9.1.9 Regency Reorganization. . . . . . . . . . . . . . . 78
9.1.10 Partnership Agreement . . . . . . . . . . . . . . . 78
9.1.11 Joint Venture Debt . . . . . . . . . . . . . . . . 78
ARTICLE 10: CLOSINGS . . . . . . . . . . . . . . . . . . . . . . . . 79
10.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . 79
10.1.1 Time and Place . . . . . . . . . . . . . . . . . 79
10.1.2 Representations, Warranties and Covenants as to
Deferred Property Closings . . . . . . . . . . . 79
10.2 Contribution to the Partnership . . . . . . . . . . . . . 79
10.2.1 Deliveries by Midland. . . . . . . . . . . . . . 79
10.2.2 Deliveries by Regency. . . . . . . . . . . . . . 82
10.3 Closing Statements/Escrow Fees . . . . . . . . . . . . . . 84
ARTICLE 11: PRORATIONS AND ADJUSTMENTS . . . . . . . . . . . . . . . 84
11.1 Prorations . . . . . . . . . . . . . . . . . . . . . . . . 84
11.1.1 Taxes and Assessments. . . . . . . . . . . . . . 84
11.1.2 Collected Rent . . . . . . . . . . . . . . . . . 85
11.1.3 Percentage Rents . . . . . . . . . . . . . . . . 85
11.1.4 Operating Expense Pass-Throughs. . . . . . . . . 85
11.1.5 Service Contracts. . . . . . . . . . . . . . . . 86
11.1.6 Utilities. . . . . . . . . . . . . . . . . . . . 86
11.2 Work Contracts . . . . . . . . . . . . . . . . . . . . . . 86
11.3 Tenant Deposits . . . . . . . . . . . . . . . . . . . . . 86
11.4 Deposits . . . . . . . . . . . . . . . . . . . . . . . . 86
11.5 Wages . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.5.1 Determination of Midland Development Value
Adjustment . . . . . . . . . . . . . . . . . . . 87
11.5.2 Midland Development Value Adjustment . . . . . . 89
11.5.3 Payment of Midland Development Value Adjustment. 89
11.6 Due Diligence Costs . . . . . . . . . . . . . . . . . . . 89
ARTICLE 12: TERMINATION AND REMEDIES . . . . . . . . . . . . . . . . 90
12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 90
12.2 Effect of Termination . . . . . . . . . . . . . . . . . . 90
12.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE 13: INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 91
13.1 By Midland Principals . . . . . . . . . . . . . . . . . . 91
13.2 By Contributors . . . . . . . . . . . . . . . . . . . . . 92
13.3 By the Partnership and Other Transferees . . . . . . . . . 92
13.4 By Regency . . . . . . . . . . . . . . . . . . . . . . . . 93
13.5 Remedies Upon Fraud . . . . . . . . . . . . . . . . . . . 93
13.6 Indemnification of Third-Party Claims . . . . . . . . . . 93
13.7 Payment . . . . . . . . . . . . . . . . . . . . . . . . . 94
13.7.1 General. . . . . . . . . . . . . . . . . . . . . 94
13.7.2 Security Interest. . . . . . . . . . . . . . . . 95
13.8 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . 96
13.9 Threshold and Cap . . . . . . . . . . . . . . . . . . . . 97
13.10 No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . 97
13.11 Designated Representatives . . . . . . . . . . . . . . . . 97
ARTICLE 14: POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . 98
14.1 Completion of 1997 Audit . . . . . . . . . . . . . . . . . 98
14.2 Access to Books and Records . . . . . . . . . . . . . . . 98
14.3 Environmental Matters . . . . . . . . . . . . . . . . . . 98
14.4 Reports on Earn-Out Performance . . . . . . . . . . . . . 98
14.5 Midland Development 401(k) Plan . . . . . . . . . . . . . 99
ARTICLE 15: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 99
15.1 Headings and Interpretation . . . . . . . . . . . . . . . 99
15.2 Pronouns and Plurals . . . . . . . . . . . . . . . . . . . 99
15.3 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
15.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 99
15.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 99
15.6 Costs of Litigation . . . . . . . . . . . . . . . . . . . 100
15.7 Mediation . . . . . . . . . . . . . . . . . . . . . . . . 100
15.8 Additional Actions and Documents . . . . . . . . . . . . . 101
15.9 Remedies Cumulative . . . . . . . . . . . . . . . . . . . 101
15.10 Entire Agreement; Amendment and Modification . . . . . . . 101
15.11 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 101
15.12 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 102
15.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 102
15.14 Governing Law . . . . . . . . . . . . . . . . . . . . . . 102
15.15 Assignment; Parties in Interest . . . . . . . . . . . . . 103
15.15.1 Assignment. . . . . . . . . . . . . . . . . . . . 103
15.15.2 Parties in Interest . . . . . . . . . . . . . . . 103
15.16 No Third Party Beneficiaries . . . . . . . . . . . . . . . 103
15.17 Severability . . . . . . . . . . . . . . . . . . . . . . . 103
15.18 Limitation of Liability . . . . . . . . . . . . . . . . . 103
15.19 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . 103
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "Agreement") is made as of the
day of January, 1998, by and among MIDLAND DEVELOPMENT GROUP, INC., a
Missouri corporation ("Midland Development"), the Property Entities (as
hereinafter defined) party hereto, the Midland Principals (as hereinafter
defined), the Midland Affiliates (as hereinafter defined), and REGENCY
REALTY CORPORATION, a Florida corporation ("Regency"), under the following
circumstances:
A. Regency is in the business of investing in shopping centers.
B. Midland Development and its Affiliates are in the business of
developing and investing in shopping centers. The Midland Affiliates and
Property Entities own directly or indirectly Properties, Acquisition
Contracts, Management Contracts and certain other Assets (as such terms
are hereinafter defined). The Midland Affiliates and Property Entities
collectively wish to contribute the Properties that are the subject of
this Agreement to a transferee that will acquire all such Properties and
are not willing to permit the transferee to pick and choose which of their
Properties it wishes to acquire.
C. Regency has caused the prior formation of a Delaware limited
partnership (the "Partnership"), and Regency wishes to amend and restate
the partnership agreement in substantially the form of Exhibit 1.1.104
(the "Partnership Agreement"). Regency Atlanta, Inc., the current sole
general partner of the Partnership and a wholly-owned subsidiary of
Regency, will merge into Regency, and Regency will be the sole general
partner of the Partnership.
D. Regency will make certain cash contributions to the Partnership,
the Property Entities will contribute their respective Assets to the
Partnership (in some cases for contribution in turn to other Transferees
(as hereinafter defined)) in exchange for Units (as hereinafter defined)
and, in some cases earn-out rights, and each Midland Affiliate owning an
interest in a Joint Venture (as hereinafter defined) will assign its
interest in such Joint Venture to the Partnership (in some cases for
contribution in turn to another Transferee), in exchange for earn-out
rights, all as provided for herein and in the Partnership Agreement.
E. Each entity contributing Assets to the Partnership will
distribute the Units it so receives to its respective equity owners.
F. Subject to the provisions of a redemption agreement in the form
of Exhibit 1.1.118 (the "Redemption Agreement") and the OTR Redemption
Agreement (as hereinafter defined), the Units may be redeemed for Shares
(as hereinafter defined) or cash.
G. OTR, as nominee for OSTRS (as hereinafter defined), is a party
with a Midland Affiliate to a joint venture known as OTR/Midland Realty
Holdings, Ltd. ("OTR/Midland Ltd."), which joint venture is a Property
Entity that owns 11 Properties to be contributed to the Partnership
hereunder in exchange for Units. OTR/Midland Ltd. has the right and
obligation, directly or through a sub-partnership, to acquire two
additional Development Properties (as hereinafter defined) located in Ohio
and North Carolina and two additional Development Properties located in
Texas. OTR/Midland Ltd. also has the right to acquire certain properties
being developed by Midland Affiliates through Joint Ventures, or to be
developed in the future (subject to OSTRS Option Rights) by Affiliates of
Midland Development through joint ventures, with Affiliates of The Kroger
Company.
H. OTR will release its rights to participate, through OTR/Midland
Ltd., in the acquisition and ownership of the OSTRS Committed Eastern
Properties being developed by Joint Ventures and the OSTRS Eastern Option
Properties (as those terms are hereinafter defined), which rights will be
released in exchange for Units.
I. OTR wishes to continue participating (on the same terms that it
has invested in Properties through OTR/Midland Ltd.) in investments in the
Properties referred to elsewhere herein as the OSTRS Committed Western
Properties. OTR also wishes to have the right to participate in
investments in (all of which are subject to OSTRS Option Rights (as
hereinafter defined)): (i) the Properties being developed by Joint
Ventures and referred to elsewhere herein as the OSTRS Western Option
Properties and (ii) certain properties that may be developed directly or
indirectly by the Partnership during a specified time period through joint
ventures with Affiliates of The Kroger Company. Accordingly, the
Partnership will cause the formation of joint ventures (the "OTR Joint
Ventures") between OTR and a new partnership, R&M Western Partnership (as
defined below), for the purpose of making such investments, the governing
documents of which will be identical in substance to those of OTR/Midland
Ltd..
J. In consideration of, among other things, the interests in the
OSTRS Committed Western Properties and the Joint Ventures for OSTRS
Western Option Properties being contributed by certain Midland Affiliates
to the Partnership, such Midland Affiliates (through an entity to be
formed by them) will be admitted to a limited partnership ("R&M Western
Partnership") to be formed by or on behalf of the Partnership to serve as
the joint venture partner of OSTRS in the OTR Joint Ventures. Through R&M
Western Partnership, such Midland Affiliates will participate in the
Partnership's indirect investment (through the OTR Joint Ventures) in the
OSTRS Committed Western Properties and the OSTRS Western Option Properties
identified as such at the First Closing Date, but not in any other
investments of the OTR Joint Ventures. R&M Western Partnership also will
serve as the vehicle for (i) certain Midland Affiliates developing two
Development Properties in Colorado to continue to participate in the
ownership of such Properties after they contribute their existing
ownership interests therein to the Partnership and (ii) continued
participation by Midland Affiliates in the ownership of any OSTRS Western
Option Properties they are developing as of the First Closing Date as to
which OSTRS elects not to exercise OSTRS Option Rights.
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 "Abated Rent" means base rent for which tenants have
received abatement credit, but only to the extent that such abatement
credit is consistent with the criteria set forth on Schedule 1.1.1.
1.1.2 "Acquisition Contracts" means the Contracts to acquire
certain real property and, if applicable, leases, personal property and
intangible property relating to such real property, to which certain
Property Entities are a party, all as more particularly described on
Schedule 1.1.2 (as it may be amended at the First Closing pursuant to
Section 5.4), including the rights of OTR/Midland Ltd. and OTR/Midland
Texas Limited Partnership to acquire (i) certain Development Properties
pursuant to the OTR/Midland Transfer and Contribution Agreement and (ii)
additional OSTRS Option Properties which shall be subject to the OSTRS
Option Rights in the future.
1.1.3 "Acquisition Properties" means the real property and
other assets that are the subject of the Acquisition Contracts.
1.1.4 [Intentionally omitted]
1.1.5 "Additional Units" means the Units to be issued at any
Subsequent Closings pursuant to Section 2.5 or 2.6.
1.1.6 "Affiliate" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under common
control with such Person, with control meaning the possession, direct or
indirect, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
1.1.7 "Allocation Chart" means the description of the
allocation of Units and Additional Units attached hereto as Schedule
1.1.7, which sets forth (a) the name of each Unit Recipient; and (b) shows
separately as to each Property Entity, the respective percentage
allocation of Units issuable to each Unit Recipient and the respective
percentage allocation of Additional Units, if any, to be issued to certain
Unit Recipients at a Subsequent Closing with respect to the various earn-
outs described in Section 2.5 and the Property Closings described in
Section 2.6.
1.1.8 "Annualized NOI" means the projected annualized net
operating income of a property determined as of the applicable Calculation
Date on an accrual basis by calculating the excess of:
(a) for executed leases for occupied space in effect as of
the end of the calendar month (the "Measurement
Month") ending on the Calculation Date that meet the
Leasing Criteria (including any leases that expire
during the following twelve months), the sum of each
of the following accrued during the Measurement Month,
times twelve (as if all such leases were in effect at
the beginning of the month): all rents (including
Abated Rent, but excluding other free or reduced rent
that does not meet the criteria set forth on Schedule
1.1.1) at the rates in effect on the last day of the
Measurement Month, charges, reimbursements, revenues,
percentage rent, expense recoveries and common area
maintenance, and all other amounts payable in each
case pursuant to such leases, assuming a vacancy rate
for GLA leased to Non-Credit Tenants equal to the
greater of the actual vacancy rate of all such space
or 7.5%, over
(b) the following accrued during the Measurement Month,
times twelve: the operating expenses for such
property (such as ad valorem Taxes, insurance, and
maintenance and repair costs), assuming a management
fee equal to $1,000 per month for each tenant which is
Kroger or King Soopers and equal to 4% of monthly base
rentals for all other tenants, but excluding (A)
capital replacements and improvements (including
tenant improvements), (B) leasing commissions, (C)
depreciation, and (D) debt service; and
(c) subtracting a structural reserve of $0.15 per square
foot of GLA except as set forth on Schedule 1.1.8.
1.1.9 "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.
1.1.10 "Assets" means (i) the Properties, (ii) the
Acquisition Contracts (and any assets acquired by the Property Entities or
the Joint Ventures thereunder prior to the First Closing), (iii) the
Development Contracts, (iv) the interests of any Midland Affiliate in the
Kroger Joint Ventures and the Xxxxxx Joint Ventures and (v) the Other
Assets, but excludes the Excluded Assets.
1.1.11 "Assumed Liabilities" means the matters set forth on
Schedule 1.1.11.
1.1.12 "Assumed Obligations" means the matters set forth on
Schedule 1.1.12.
1.1.13 "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.
1.1.14 "Calculation Date" means any one of the First
Calculation Date, the Second Calculation Date or the Third Calculation
Date.
1.1.15 "Capital Expenditure Budget and Schedule" means,
collectively, the capital expenditure budget and schedule for each
Property, copies of which are attached as Schedule 1.1.15 (as it may be
amended pursuant to Section 5.10), which describes the capital
expenditures that the respective Property Entities have budgeted for each
Property for the year ending December 31, 1998.
1.1.16 "Capitalized Annualized NOI" means the quotient of (a)
Annualized NOI divided by (b) 9.95% (9.25% in the case of the Property
known as Xxxxxx).
1.1.17 "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.
1.1.18 "Closing" means generally the execution and delivery
of those documents, securities and/or funds necessary to effect the
transactions contemplated by this Agreement.
1.1.19 "Closing Date" means, (i) with respect to the First
Closing, five Business Days after the date on which the conditions set
forth herein with respect thereto shall be satisfied or duly waived, or if
the Midland Representatives 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 2.5 or
Section 2.6 or elsewhere in this Agreement.
1.1.20 "Code" means the Internal Revenue Code of 1986, as
amended, and any successor legislation thereto, including all of the rules
and regulations promulgated thereunder.
1.1.21 "Common Stock" means the voting Common Stock, $0.01
par value, of Regency.
1.1.22 "Collateral" means the collateral pledged pursuant to
Section 13.7.2.
1.1.23 "Contracts" means the Acquisition Contracts, the
Development Contracts, the Management Contracts, the Repair Contracts, the
Service Contracts, the TI Contracts 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 any Property Entity is a party or by which
any of its assets are bound.
1.1.24 "Contribution Value" has the meaning set forth in
Section 2.1.
1.1.25 "Contributors" means the Property Entities, each
Midland Affiliate that owns an interest in a Joint Venture and each Joint
Venture that transfers, directly or indirectly, a Property, Development
Property or Acquisition Contract to a Transferee at the First Closing.
1.1.26 "Development Budget and Schedule" has the meaning set
forth in Section 6.5.22.
1.1.27 "Development Contracts" means all contracts listed on
Schedule 1.1.27 for the development or redevelopment of the Development
Properties or the Acquisition Properties.
1.1.28 "Development Cost" means the costs and expenses
incurred in acquiring, constructing and developing or redeveloping a
property, including any Contribution Value assigned to the property or
amounts reimbursed to a Property Entity at the First Closing for such
costs, all out-of-pocket hard and soft costs, any development fee paid or
credited to a Regency Entity, and all allocable personnel and overhead
costs (but not to exceed $1.50 per square foot for space leased by Kroger
and $4.00 per square foot for other leased space in combination with any
development fees and leasing commissions) capitalized as part of the
acquisition, construction or development cost thereof, less the Net
Proceeds from the sale of outparcels and expansion land that originally
were part of or adjacent to the property and included as part of its
acquisition cost. Development Cost for Phase 2 of Creekside shall be
reduced by the fair market value of the expansion land and outparcels for
Phase 3 of Creekside as of the applicable Earn-Out Calculation Date.
1.1.29 "Development Earn-Out" has the meaning set forth in
Section 2.5.3.2.
1.1.30 "Development Properties" means the Properties listed
on Schedule 1.1.30 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 any Property Entity prior to
the First Closing which is to be developed, renovated or redeveloped, as
further described on Schedule 1.1.30, such Acquisition Property also shall
be deemed a Development Property.
1.1.31 "Xxxxxx" means Xxxxxx Real Estate Co., Inc., a Kansas
corporation.
1.1.32 "Earn-Out Closing Date" means any one of the First
Earn-Out Closing Date, Second Earn-Out Closing Date or Third Earn-Out
Closing Date (collectively, the "Earn-Out Closing Dates").
1.1.33 "Eligibility Criteria" means each of the following,
determined as of the date of the First Closing, except as otherwise
provided below:
(a) the property is the site of a development which has
been approved by the Kroger/Xxxxxx capital committee
(or such other group or individuals authorized to
provide a similar function with respect to the
determination of store locations for Kroger or Xxxxxx)
or, if the property is not the site of a Kroger or
King Soopers Joint Venture development, then the
property must be subject to a fully executed anchor
lease consistent with a first class neighborhood
shopping center;
(b) in the case of an Acquisition Property, the property
must be subject to a binding purchase contract; and
(c) zoning and all land use approvals, construction
permits and any other consents or approvals of any
Government Entity required under any Law relating to
the property and the development plans related thereto
have been obtained as of the 120th day after the date
of the First Closing;
provided, however, that in the case of the Frisco and Woodman & Rangewood
Properties, the Eligibility Criteria means that the Property is owned as
of the First Closing Date by joint venture between Affiliates of Midland
Development and Affiliates of Kroger, notwithstanding anything to the
contrary provided above.
1.1.34 "Eligible Property" means any Development Property or
Acquisition Property described in Schedule 1.1.34 (or on any amendment to
Schedule 1.1.34 which may be delivered at the First Closing or promptly
after the 120th day after the First Closing) which satisfies the
Eligibility Criteria (collectively, the "Eligible Properties"). Schedule
1.1.34 also lists those Properties that the parties presently expect will
qualify as Eligible Properties; however, a Property must satisfy the
Eligibility Criteria in order to actually qualify as an Eligible Property.
1.1.35 "Endorsements" means endorsements to the Title
Insurance, to the extent available under applicable law, including,
without limitation, Comprehensive, Access, Survey, Separate Lot, Legal
Lot, Non-Imputation, Fairways, Contiguity, Zoning 3.1, and any other
endorsement owned by a Property Entity or typically obtained by customary
practice in the area of the respective Property for transactions of the
type contemplated by this Agreement.
1.1.36 "ERISA" mean the Employee Retirement Income Security
Act of 1974, as amended, and any successor legislation thereto.
1.1.37 "Estimated Closing Balance Sheet" has the meaning set
forth in Section 11.5.1(a).
1.1.38 "Exchange Act" means the Securities Exchange Act of
1934, as amended.
1.1.39 "Excluded Assets" means the assets listed on Schedule
1.1.39.
1.1.40 "Existing Mortgage Debt" means collectively the loans
of each Property Entity described on Schedule 1.1.40 and the loans
obtained with Regency's consent or in compliance with Section 5.2 in
connection with the purchase and/or development of the Acquisition
Properties or the development of the Development Properties.
1.1.41 "Final Closing Balance Sheet" has the meaning set
forth in Section 11.5.1(b).
1.1.42 "First Calculation Date" means the month end
immediately following the first anniversary date of the First Closing
Date.
1.1.43 "First Closing" means the Closing at which, among
other things, the Assets will be contributed to the Partnership.
1.1.44 "First Closing Date" means the date on which the First
Closing is effective.
1.1.45 "First Earn-Out Closing Date" means the first Business
Day thirty (30) days after the First Calculation Date.
1.1.46 "First Midland NOI Cap" means $1,600,000 if, during
the twelve calendar months immediately preceding the First Calculation
Date, any Regency Entity commences development or redevelopment of and/or
acquires shopping center developments in the Territory which are approved
by Regency's investment committee and have budgeted Development Costs (as
of the First Calculation Date) and/or purchase price (including the
principal amount of any mortgage debt assumed) in the aggregate equal to
or greater than $10,000,000. If such Development Costs and/or purchase
price in the aggregate are less than $10,000,000, then the First Midland
NOI Cap shall be an amount equal to (i) $1,600,000, multiplied by (ii) the
quotient of such aggregate Development Costs and/or purchase price divided
by $10,000,000.
1.1.47 "First Midland NOI Threshold" has the meaning set
forth in Schedule 1.1.47.
1.1.48 "Franklin Earn-Out Deficiency" has the meaning set
forth in Section 2.5.3(a).
1.1.49 "GAAP" means generally accepted accounting principles.
1.1.50 "GLA" means gross leasable area.
1.1.51 "Government Entity" means any court, arbitrator,
department, commission, board, bureau, agency, authority, instrumentality
or other governmental body, whether federal, state, municipal, foreign or
other.
1.1.52 "Gross Asset Value" with respect to an Asset means the
sum of its aggregate Contribution Value as of the applicable calculation
date plus the aggregate principal amount of debt encumbering such Asset as
of such date.
1.1.53 "Hold Period" means the period necessary in order for
the sale of a Property or Option Property eligible for capital gains
treatment for Federal income tax purposes to be eligible for treatment at
the long-term rate of 20%.
1.1.54 "In-Place Earn-Out" has the meaning set forth in
Section 2.5.2.
1.1.55 "In-Process Earn-Out Value" has the meaning set forth
in Section 2.5.1(a).
1.1.56 "Intangible Property" means all intangible property
now or on the First Closing Date owned by any Property Entity or Joint
Venture and used in connection with the Real Property, the Personal
Property, Midland Headquarters or the 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, Midland Headquarters or the Third Party Management Business; the
various Contracts to be assigned to the Transferees 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; and all other intangible rights used in connection
with or relating to the Real Property, the Personal Property, Midland
Headquarters or the Third Party Management Business, including rights, if
any, to current and past names of the Real Property.
1.1.57 "IRS" means the Internal Revenue Service.
1.1.58 "Joint Venture" means a Kroger Joint Venture or a King
Soopers Joint Venture (collectively, the "Joint Ventures").
1.1.59 "King Soopers" means a King Soopers Supermarket owned
by Xxxxxx or any of its Affiliates.
1.1.60 "King Soopers Joint Venture" means each of the
entities set forth on Schedule 1.1.60, which owns the Development Property
or the Acquisition Contracts set forth opposite the name of such King
Soopers Joint Venture on Schedule 1.1.60 and the joint ventures to be
formed to assume the Acquisition Contracts held by Midland Acquisitions,
Inc., as described on Schedule 1.1.60 (collectively, the "King Soopers
Joint Ventures").
1.1.61 "Kroger" means a Kroger supermarket owned by The
Kroger Co. or any of its Affiliates.
1.1.62 "Kroger Joint Venture" means (i) each of the entities
set forth on Schedule 1.1.62, which own the Development Property set forth
opposite the name of such Kroger Joint Venture on Schedule 1.1.62, (ii)
the entity shown on Schedule 1.1.62 that owns the Xxxxx Crossing Outparcel
(as defined in Section 2.5.5) and (iii) the joint ventures to be formed to
assume the Acquisition Contracts held by Midland Acquisitions, Inc., as
described on Schedule 1.1.62 (collectively, the "Kroger Joint Ventures").
1.1.63 "Law" means any statute, law, ordinance, rule,
regulation or judicial decision of any Government Entity.
1.1.64 "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 a Property Entity or Joint Venture
after the date hereof and before the First Closing as permitted by this
Agreement.
1.1.65 "Leasing Criteria" means the criteria listed on
Schedule 1.1.65.
1.1.66 "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.
1.1.67 "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.
1.1.68 "Litigation" means any action, suit, proceeding,
arbitration, investigation or inquiry, whether civil, criminal or
investigative, by or before any Government Entity.
1.1.69 "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, enforcing a right to indemnification hereunder and
enforcing rights in Collateral (as defined in Section 13.7.2(a)).
1.1.70 "Management Contracts" means all property management
agreements, asset management agreements and leasing agreements listed on
Schedule 1.1.70 pursuant to which Midland Development currently provides
leasing and/or management services with respect to a real property owned
by one or more third parties.
1.1.71 "Material Adverse Effect" means (i) with respect to
any Property Entity or Joint Venture, a material adverse effect on the
Assets or the financial condition, results of operations, business or
prospects of such entity taken as a whole, (ii) with respect to a Property
or Option Property, a material adverse effect on the financial condition,
results of operations, business or prospects of such Property or Option
Property, and (iii) 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).
1.1.72 "Midland Affiliates" means the managing general
partner or managing member of each Property Entity or, in the case of
Kroger Joint Ventures or King Soopers Joint Ventures, the administrative
member of such Joint Venture, as described on Schedule 1.1.72.
1.1.73 "Midland Development" means Midland Development Group,
Inc., a Missouri corporation.
1.1.74 "Midland Development Value Adjustment" means either a
Positive Midland Development Value Adjustment or a Negative Midland
Development Value Adjustment.
1.1.75 "Midland Financial Statements" means (i) the unaudited
balance sheets of each Property Entity and Joint Venture (to the extent
then in existence) as of December 31, 1995 and 1996, and the related
statements of income and cash flows for the years ended December 31, 1994,
1995 and 1996 (including the notes and schedules contained therein or
annexed thereto), and (ii) the unaudited statements of income and cash
flows of each Property Entity and Joint Venture as of the ten months ended
October 31, 1997 (including the notes and schedules contained therein or
annexed thereto), all as previously delivered to Regency.
1.1.76 "Midland Group Earn-Out" has the meaning set forth in
Section 2.5.3.
1.1.77 "Midland Headquarters" means the principal offices
occupied by Midland Development, Westpark I, Suite 200, 00000 Xxxxx
Xxxxxxxxx, Xx. Xxxxx, Xxxxxxxx 00000.
1.1.78 "Midland NOI" means the sum of (i) the Annualized NOI
of the Properties contributed to the Partnership by the Property Entities,
excluding the Western Properties, as of the applicable Calculation Date,
and (ii) the Annualized NOI as of the applicable Calculation Date of
shopping centers (including but not limited to the Acquisition Properties)
developed, redeveloped or acquired by any Regency Entity, with the
approval of Regency's investment committee, in the Territory and following
the First Closing; provided, however, that, in either case, (x) if any
such properties are held on the applicable Calculation Date by an entity
(other than the Partnership) in which Regency and its Affiliates do not
own collectively 100% of the interests, the Annualized NOI attributable to
such property shall be included in the calculation of Midland NOI only to
the extent of such interests in such entity, and (y) there shall be
excluded the Annualized NOI from any development property until it has
attained the Minimum Leasing Criteria.
1.1.79 "Midland Principals" means Xxx X. Xxxxxxxxx, Xxxxxxx
X. Xxxxxxxxx, Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxx and Xxx X. Xxxxxxxx.
1.1.80 "Midland Representatives" has the meaning set forth in
Section 13.11.
1.1.81 "Midland Western Partnership" has the meaning set
forth in Section 3.1.
1.1.82 "Minimum Leasing Criteria" has the meaning set forth
in the OTR/Midland Transfer and Contribution Agreement.
1.1.83 "Negative Midland Development Value Adjustment" has
the meaning set forth in Section 11.5.2.
1.1.84 "Net Proceeds" means the net proceeds from the sale of
a property (including the aggregate principal balance of any debt to which
the property is subject when it is transferred), after the payment of all
closing and other transaction costs relating to the disposition thereof
(but before repaying any indebtedness encumbering the property), including
brokerage commissions, title insurance costs, environmental reports, loan
assumption fees, loan prepayment penalties, transfer taxes and deed
stamps.
1.1.85 "NewSub" means any new subsidiary (including R&M
Western Partnership or any other partnership) organized by or on behalf of
the Partnership to become a substitute member or partner of any Joint
Venture at the First Closing in place of the existing Midland Affiliate
that is a member or partner thereof.
1.1.86 "Non-Credit Tenant" means any tenant other than a
tenant (i) whose senior unsecured debt is rated "BBB-" or better by
Standard & Poors Corporation and "Baa(3)" or better by Xxxxx'x Investor
Service (where a Xxxxx'x rating is available) or (ii) in respect of
tenants where Standard & Poors and Moody's ratings are not available,
tenants having a National Association of Insurance Commissioners
designation of "NAIC-2" or better.
1.1.87 "Option Property" means each real property described
or referred on Schedule 4.1, 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 the optionor 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 "Option
Properties"). Any outparcel sold prior to the First Closing pursuant to
Section 5.2 (Preservation of Business) or Section 5.7 (Exclusivity) shall
be excluded from the definition of an Option Property.
1.1.88 "Order" means any order, writ, injunction, judgment,
plan or decree of any Government Entity.
1.1.89 "OSTRS" means the State Teachers Retirement System of
Ohio.
1.1.90 "OSTRS Committed Eastern Properties" means the
Properties and Development Properties listed on Schedule 1.1.90, which
have been transferred to OTR/Midland Ltd. or are subject to the
OTR/Midland Transfer and Contribution Agreement.
1.1.91 "OSTRS Committed Western Properties" means the
Properties and Development Properties listed on Schedule 1.1.91, which are
subject to the OTR/Midland Transfer and Contribution Agreement.
1.1.92 "OSTRS Eastern Option Properties" means the Properties
and Development Properties listed on Schedule 1.1.92, which are subject to
OSTRS Option Rights, and those additional properties that are not located
west of the state of Missouri which subsequently become subject to OSTRS
Option Rights.
1.1.93 "OSTRS Option Properties" means all properties
currently identified and to be identified in the future which are subject
to OSTRS Option Rights.
1.1.94 "OSTRS Option Rights" means the rights of OTR/Midland
Ltd. pursuant to the Option and Right of First Offer Agreement dated May
14, 1997 to acquire, on the terms and conditions set forth in the
OTR/Midland Transfer and Contribution Agreement, certain properties
acquired or developed prior to May 14, 1999 by Affiliates of Topvalco and
Midland Development, including the OSTRS Eastern Option Properties and,
through the OTR/Midland Texas Limited Partnership, the OSTRS Western
Option Properties located in Texas.
1.1.95 "OSTRS Western Option Properties" means the Properties
and Acquisition Properties listed on Schedule 1.1.95, which are subject to
OSTRS Option Rights, and those additional properties located west of the
state of Missouri which subsequently become subject to OSTRS Option
Rights.
1.1.96 "Other Assets" means the Third Party Management Assets
currently operated by Midland Development, all utility deposits (to the
extent transferable), all tenant deposits under the Leases, and all other
assets of any Property Entity or Joint Venture (whether owned or leased),
including, without limitation, ground leases, under which a Property
Entity or Joint Venture is lessee, and all deposits under the Contracts
which relate to the Acquisition Properties, but excluding the Excluded
Assets.
1.1.97 "OTR" means OTR, an Ohio general partnership acting as
nominee for OSTRS.
1.1.98 "OTR Joint Ventures" means the limited partnerships
referred to in Section 3.2.
1.1.99 "OTR/Midland Ltd." means OTR/Midland Realty Holdings,
Ltd., a Property Entity that has the right to acquire the OSTRS Committed
Eastern Properties, the OSTRS Eastern Option Properties and other OSTRS
Option Properties located in states other than Texas.
1.1.100 "OTR/Midland Texas Limited Partnership" means
OTR/Midland Realty Holdings, L.P., an Ohio limited partnership which has
the right to acquire the OSTRS Western Option Properties located in Texas
and other OSTRS Option Properties located in Texas.
1.1.101 "OTR/Midland Transfer and Contribution Agreement" means
the Transfer and Contribution Agreement dated as of May 14, 1997 to which
Topvalco and OTR, among others, are parties.
1.1.102 "OTR Redemption Agreement" means the Redemption
Agreement applicable to OSTRS in substantially the form attached hereto as
Exhibit 1.1.102.
1.1.103 "Partnership" means Regency Retail Partnership, L.P.
(to be renamed Regency Centers, L.P. prior to the First Closing), a
limited partnership formed under Delaware law.
1.1.104 "Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of the Partnership in substantially the
form attached as Exhibit 1.1.104.
1.1.105 "Permitted Exceptions" means:
(a) Liens for Taxes or other assessments or charges of
Government Entities (other than Liens imposed under ERISA or any
environmental Law or in connection with any environmental Claim) that are
not yet delinquent;
(b) as disclosed on the Rent Roll, rights of tenants, as
tenants only, under the Leases;
(c) those existing title matters affecting the Properties,
Option Properties and the Acquisition Properties (i) disclosed in the
Title Insurance Commitments and not timely specified in Regency's written
objection to the applicable Property Entity or Joint Venture pursuant to
Section 5.16 (Title Insurance; Survey) or (ii) otherwise described on
Schedule 1.1.105(c);
(d) those matters shown on the existing surveys of the
Properties and Option Properties (but not the surveys of the Acquisition
Properties) and any changes since the date of such existing surveys
reflected on the updated Survey which in either case are not objected to
by Regency in accordance with Section 5.16 or for which Regency elects to
close notwithstanding such matters in accordance with Section 5.16;
(e) easements, rights-of-way, covenants and restrictions
which are customary and typical for properties similar to the Properties
or Option Properties and which do not (i) interfere with the ordinary
conduct of any Property or Option Property or the business of any Property
Entity or Joint Venture as a whole or (ii) detract from the value or
usefulness of the Properties or Option Properties to which they apply;
(f) liens, mortgages, deeds of trust and other
encumbrances securing the Existing Mortgage Debt; and
(g) any other matters not objected to by Regency in
accordance with Section 5.16 or for which Regency elects to close
notwithstanding such matters in accordance with Section 5.16.
1.1.106 "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.
1.1.107 "Personal Property" means all tangible property owned
or leased by any Property Entity or Joint Venture 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, Midland
Headquarters or the Third Party Management Business, 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.
1.1.108 "Positive Midland Development Value Adjustment" has the
meaning set forth in Section 11.5.2.
1.1.109 "Property" means, for each property described on
Schedule 1.1.115, and any Acquisition Property acquired by a Property
Entity or a Joint Venture pursuant to Section 5.4 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.
1.1.110 "Property Entity" means Midland Development and each
entity as set forth on Schedule 1.1.110, which own the Real Property or
Acquisition Contracts set forth opposite the name of such entity on
Schedule 1.1.110 (collectively, the "Property Entities").
1.1.111 "Property Owners" means the Property Entities (except
that Midland Development shall be excluded for purposes of Section 6.5)
and the Joint Ventures.
1.1.112 "Proration Items" has the meaning assigned thereto in
Section 2.1.
1.1.113 "Qualified Development" means development or
redevelopment of a property that is not included in the calculation of the
In-Process Earn-Out (as defined in Section 2.5.1) and for which
construction has commenced by any Regency Entity, or by a joint venture
between a Regency Entity and any Affiliate of Xxxxxx or Topvalco, in the
twelve calendar months immediately preceding the applicable Calculation
Date for a shopping center which has been approved by Regency's investment
committee.
1.1.114 "REIT" means a real estate investment trust within the
meaning of Section 856 of the Code.
1.1.115 "Real Property" means, as to each Property, the real
property described or referred to on Schedule 1.1.115, 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 any Property
Entity or Joint Venture 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").
1.1.116 "Recent Balance Sheet Date" means October 31, 1997.
1.1.117 "Record Date Adjustment Amount" means, with respect to
the Units or Additional Units issuable to a Contributor (but for the
Record Date Adjustment Amount), the quotient arrived at by (i) dividing
the Unit Value (or the then Value in the case of Additional Units that
this Agreement requires to be issued based on the then Value) into (ii)
the total number of such Units or Additional Units multiplied times an
amount equal to that portion of the per Share quarterly dividend on the
Common Stock (assuming a quarterly dividend per Share equal to the most
recent quarterly dividend declared by Regency at the time of the Closing)
which is attributable (assuming that quarterly dividends are prorated
evenly by day) to the period prior to the Closing but will be paid after
the Closing (the amount in this clause (ii) is referred to as the
"Windfall Distribution Amount"). In the event that Units or Additional
Units are issued on a record date for the payment by Regency of a cash
dividend on the Common Stock, the Windfall Distribution Amount shall be
based on the entire per Share quarterly dividend payable with respect to
such record date. The Record Date Adjustment Amount shall be zero in the
event that Units or Additional Units are issued on a date that is the
first day following a record date for the payment by Regency of a cash
dividend on the Common Stock.
1.1.118 "Redemption Agreement" means the Redemption Agreement
in substantially the form attached as Exhibit 1.1.118.
1.1.119 "Redemption Rights" means the right to redeem Units for
Shares pursuant to the Redemption Agreement.
1.1.120 "Regency Entity" means any one of the Partnership,
Regency, R&M Western Partnership or any of their Affiliates but excludes
(i) Security Capital or any of its Affiliates other than Regency or any of
its subsidiaries and (ii) Midland Western Partnership.
1.1.121 "Regency Exchange Act Reports" means the following
documents filed by Regency with the SEC since December 31, 1996 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.
1.1.122 "R&M Western Partnership" means a limited partnership
formed under Delaware law pursuant to Section 3.1.
1.1.123 "Registration Rights Agreement" means the Registration
Rights Agreement in substantially the form attached as Exhibit 1.1.123.
1.1.124 "Rent Roll" means collectively the rent roll and
summaries of Leases (including all amendments to Leases) attached as
Schedule 1.1.124, 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.
1.1.125 "Repair Contracts" means all contracts listed on
Schedule 1.1.125 for repairs, restoration, renovations or improvements
(other than tenant improvements) being performed on the Properties but
does not include any such contracts that are terminable without penalty on
thirty (30) days or less notice or requiring less than $10,000 in
aggregate payments under the remaining term of the contract.
1.1.126 "Return on Regency Equity" means the amount by which a
10% per annum return on equity invested directly or indirectly (e.g.,
through R&M Western Partnership) by Regency in a property, while so
invested, would exceed actual cash distributions allocable to Regency from
the property. Such equity shall include equity attributable to any
Contribution Value of a property except that such equity shall be deemed
to be zero while a property is held by a joint venture with Xxxxxx or
Topvalco and thereafter shall be deemed not to exceed 70% of the
Development Cost of the Property even if actual equity of Regency in the
Property exceeds such amount. For purposes of computing the Return on
Regency Equity, cash distributions to Regency that exceed a 10% per annum
return on such equity shall be deemed to reduce Regency's equity.
1.1.127 "SEC" means the Securities and Exchange Commission.
1.1.128 "Second Calculation Date" means the month end
immediately following the second anniversary date of the First Closing
Date.
1.1.129 "Second Earn-Out Closing Date" means the first Business
Day thirty (30) days after the Second Calculation Date.
1.1.130 "Second Midland NOI Cap" means $3,200,000 if, from the
First Closing Date to the Second Calculation Date, any Regency Entity
commences development or redevelopment of and/or acquires shopping center
developments in the Territory which are approved by Regency's investment
committee and have budgeted Development Costs and/or purchase price
(including the principal amount of any mortgage debt assumed) in the
aggregate equal to or greater than $20,000,000. If such Development Costs
and/or purchase price in the aggregate are less than $20,000,000, then the
Second Midland NOI Cap shall be an amount equal to (i) $3,200,000,
multiplied by (ii) the quotient of such aggregate Development Costs and/or
purchase price divided by $20,000,000. In the event that the Second
Midland NOI Cap was less than $3,200,000 on the Second Calculation Date,
the Second Midland NOI Cap for purposes of the Third Calculation Date
shall be equal to (i) $3,200,000 multiplied by (ii) the lesser of (x) one
(1) or (y) the quotient of such aggregate Development Costs and/or
purchase price from the First Closing Date to the Third Closing Date
divided by $20,000,000.
1.1.131 "Second Midland NOI Threshold" has the meaning set
forth in Schedule 1.1.131.
1.1.132 "Securities Act" means the Securities Act of 1933, as
amended.
1.1.133 "Security Capital" means, collectively, Security
Capital Holdings, S.A., a Luxembourg corporation, and Security Capital
U.S. Realty, a Luxembourg corporation.
1.1.134 "Service Contracts" means, as to each Property, all
management, service, maintenance, utility, supply, equipment rental, and
other contracts listed on Schedule 1.1.134 related to the operation of
each Real Property or the related Personal Property, but does not include
any such contracts which are terminable without penalty on thirty (30)
days or less notice or requiring less than $10,000 in aggregate payments
over the remaining term of the contract.
1.1.135 "Shares" means shares of Common Stock.
1.1.136 "Subsequent Closing" means any Closing after the First
Closing.
1.1.137 "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 90 days prior to the
First Closing, and which is certified to the Partnership and any other
applicable Transferee, the Property Entity or Joint Venture owning such
Property, Regency, lenders under the Existing Mortgage Debt and the Title
Company providing the Title Insurance, 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, the Property Entity or Joint Venture owning such
Property, 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;
(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.
1.1.138 "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.
1.1.139 "Tenant Estoppels" has the meaning set forth in Section
5.13.
1.1.140 "Territory" means the states of Colorado, Illinois,
Indiana, Michigan, Missouri, North Carolina, Ohio, Tennessee, Texas,
Virginia and Wyoming.
1.1.141 "Third Calculation Date" means the month end
immediately following the third anniversary of the First Closing Date.
1.1.142 "Third Earn-Out Closing Date" means the first Business
Day thirty (30) days after the Third Calculation Date.
1.1.143 "Third Party Management Assets" means the furniture,
fixtures and equipment of Midland Development (an itemized list of which
shall be provided to Regency prior to the First Closing) and the other
assets, including all cash, deposits (to the extent assignable),
receivables and the Management Contracts, used by Midland Development in
its business of (i) managing and/or leasing properties owned by third
parties, (ii) developing properties for third parties, (iii) acting as
real estate broker for third parties, and (iv) consulting and business
services performed for third parties, including without limitation, tenant
representation, asset management, construction management and other
consulting services. Notwithstanding the foregoing, Third Party
Management Assets shall not include rights relating to pending
transactions which have been substantially agreed to and are in the
process of being documented and which are set forth on Schedule 1.1.143
(or on any amendment to Schedule 1.1.143 which may be delivered at or
prior to the First Closing).
1.1.144 "Third Party Management Company" means Regency Realty
Group, Inc., a Florida corporation, or, at the election of Regency,
Regency Realty Group II, Inc., a Florida corporation.
1.1.145 "TI Budget and Schedule" means, collectively, the
tenant improvement budget and schedule for each Property or Acquisition
Property, copies of which are attached as Schedule 1.1.145 (as it may be
amended pursuant to Section 5.10), which describes the tenant improvements
that each Property Entity or Joint Venture respectively budgeted therefor
the periods shown therein.
1.1.146 "TI Contracts" means all contracts listed on Schedule
1.1.146 (as it may be amended pursuant to Section 5.10) for tenant
improvements under the Leases.
1.1.147 "Title Company" means Lawyers Title Insurance
Corporation.
1.1.148 "Title Defect" means any exception in the Title
Insurance Commitment or any matter disclosed by the Survey, other than a
Permitted Exception.
1.1.149 "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 applicable Transferee 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.
1.1.150 "Title Insurance Commitment" means a binder whereby the
Title Company agrees to issue the Title Insurance to the applicable
Transferee.
1.1.151 "Topvalco" means Topvalco, Inc., an Ohio corporation
and a wholly owned subsidiary of The Kroger Co.
1.1.152 "Transaction Documents" means the Partnership
Agreement, the Redemption Agreement, the OTR Redemption Agreement, the
Registration Rights Agreement and the various other agreements and
documents executed and delivered in connection with the transactions
contemplated hereby.
1.1.153 "Transferee" means the Partnership, R&M Western
Partnership, any OTR Joint Venture or any NewSub (collectively,
"Transferees").
1.1.154 "Unit Recipient" means each equity owner of a
Contributor who receives Units at the First Closing, as set forth on the
Allocation Chart (collectively, the "Unit Recipients").
1.1.155 "Unit Value" means a value per Unit of $26.5813.
1.1.156 "Units" means units of partnership interests in the
Partnership to be held by the Unit Recipients as more fully described in
the Partnership Agreement.
1.1.157 "Value" has the meaning set forth in the Redemption
Agreement. Whenever the value is being determining for Units pledged
pursuant to Article 13, the Value of a Unit shall be determined by
multiplying the Value of a Share by the Unit Adjustment Factor (as defined
in the Redemption Agreement).
1.1.158 "Western Properties" means the OSTRS Committed Western
Properties, the OSTRS Western Option Properties, the Development
Properties known as Cheyenne and Xxxxx Xxxx, and any properties located in
Colorado, Texas or Wyoming which become subject to this Agreement prior to
the First Closing pursuant to Section 5.4.
1.1.159 "Windfall Distribution Amount" has the meaning set
forth in Section 1.1.117.
1.1.160 "Work Contracts" means the TI Contracts, the Repair
Contracts and the Development Contracts.
ARTICLE 2: CONTRIBUTION TO PARTNERSHIP
2.1 Contribution Values. The aggregate Contribution Value (after
giving effect to the reserves for capital expenditures set forth on
Schedule 2.1) of all the Assets (and the individual Contribution Value of
each Property or other Asset) to be contributed hereunder by the Property
Entities, and the aggregate and individual Gross Asset Value of each such
Asset as of November 30, 1997, is as set forth on Schedule 2.1.
(a) The Contribution Value of each Property being contributed
at the First Closing shall be adjusted (i) based upon the Annualized NOI
of such Property as of the end of the month immediately preceding the
First Closing, calculated in the same manner and utilizing the same
capitalization percentage rates as described on Schedule 2.1 for such
Property and (ii) based upon the Existing Mortgage Debt for such Property
as of the First Closing. Any closing prorations and adjustments credited
to the Transferees (but excluding any cash reimbursements of items such as
xxxxxxx money deposits) or charged against Property Entities pursuant to
Sections 5.16 (Title Insurance; Survey), 5.18 (Damage), or 5.19
(Condemnation) or Article 11 (Prorations and Adjustments) (collectively,
the "Proration Items") shall increase or reduce the Contribution Value of
the applicable Property, and the amount of out-of-pocket acquisition and
development costs funded after the date hereof and prior to the First
Closing in accordance with Section 5.2 (Preservation of Business) (other
than costs funded through the incurrence of debt or costs reimbursed in
cash at the First Closing) shall increase the Contribution Value of the
applicable Asset. In the event that a Closing of a Property is deferred
until after the First Closing (a "Deferred Property") and the Deferred
Property is expected to have a negative Contribution Value, an appropriate
reserve shall be deducted from the Contribution Value of the other Assets
contributed at the First Closing by the Contributor(s) who own the
Deferred Properties so that, after taking such reserve into account, the
Partnership will not reasonably be expected to have issued too many Units
taking into consideration the Contribution Value of (i) the Assets
contributed by such Contributors at the First Closing and (ii) all the
Deferred Properties.
(b) The Contribution Value of the Third Party Management
Assets and the Other Assets being contributed by Midland Development
(i) shall be increased as of the First Closing by the estimated amount by
which Midland Development's Assets constituting current assets (cash,
deposits and accounts receivable) exceed the sum of Midland Development's
current liabilities and the outstanding balance under its line of credit
(to the extent included in the Assumed Liabilities), or (ii) shall be
decreased by the estimated amount by which such current liabilities and
outstanding line of credit balance (to the extent included in the Assumed
Liabilities) exceed such current assets, as applicable, in either case, on
the First Closing Date, as reflected on the Estimated Closing Balance
Sheet).
(c) Any Additional Units issued to a Unit Recipient at a
Subsequent Closing shall increase the Contribution Value of the applicable
Assets to which the Additional Units relate by an amount equal to the Unit
Value (or the then Value in the case of Additional Units that this
Agreement requires to be issued based on the then Value) times the number
of such Additional Units, less the Record Date Adjustment Amount
attributable to such Units, and such increase in Contribution Value shall
be allocated among such Assets as provided in the Partnership Agreement.
2.2 Capitalization of the Partnership.
(a) At the First Closing, (i) Regency shall contribute cash in
return for an additional interest as general partner, in accordance with
the Partnership Agreement, in the amount described in Section 10.2.2(h)
hereof, which contribution shall be applied immediately following the
First Closing to pay that portion of the Existing Mortgage Debt set forth
on Schedule 2.2(a) and to pay the closing costs described in Section 15.5,
and (ii) each Contributor shall contribute its Assets to the Partnership,
subject to the Assumed Liabilities and Assumed Obligations, free and clear
of all Liens, other than Permitted Exceptions, in exchange for Units
representing its respective limited partner's interest. The number of
Units to which a Contributor is entitled (i) shall be determined by
dividing (x) the Contribution Value of the Assets as of the First Closing
contributed by such Contributor by (y) the Unit Value, and subtracting the
Record Date Adjustment Amount and (ii) shall be rounded to the nearest
whole Unit. At Regency's election, OTR/Midland Ltd. shall contribute its
Properties and other Assets to the Partnership by merging into the
Partnership at the First Closing, with the Partnership being the surviving
entity in the merger.
(b) At the First Closing, each Contributor shall distribute to
its respective Unit Recipients, in the respective percentages set forth on
the Allocation Chart (which are included at the Contributor's
instructions), the Units that such entity receives in exchange for its
capital contributions to the Partnership, with fractional Units paid in
cash by the Partnership based on the Unit Value. At the First Closing, in
lieu of issuing Units to each Contributor and then reissuing them to such
entity's Unit Recipients pursuant to the steps outlined above, at the
direction of each respective Contributor, the Partnership shall issue such
consideration directly to such Unit Recipients pro rata in accordance with
their respective percentages shown on the Allocation Chart.
(c) At the First Closing, prior to the exercise of any
Redemption Right by the Unit Recipients, the Partnership shall sell the
Third Party Management Assets, at a price equal to their Contribution
Value, to Regency Realty Group, Inc., pursuant to a separate purchase and
sale agreement.
(d) Pursuant to the Redemption Agreement, in addition to the
other redemption rights granted thereunder, each Unit Recipient shall be
entitled to elect to immediately cause Regency to redeem all or any
portion of the Units issued to such Unit Recipient for cash in an amount
equal to the Unit Value, payable at the First Closing; provided, however,
that in the event the closing price per Share on the New York Stock
Exchange is less than $24 per Share on the Business Day immediately
preceding the First Closing, then notwithstanding the failure to elect to
immediately redeem Units for cash, each Unit Recipient may so elect at the
First Closing, and the redemption price shall be payable following the
First Closing, all as provided in the Redemption Agreement. Any Unit
Recipient who does not elect to retain his Units or does not execute any
election form or investment representation form submitted with the
Disclosure Documents referred to in Section 5.6 shall be deemed to have
elected to redeem all of the Units issued to such Unit Recipient for cash.
Notwithstanding the foregoing, the Midland Principals may only immediately
redeem their Units for cash to the extent that the Midland Principals
collectively hold at least 67% of the aggregate consideration which they
receive at the First Closing (other than the amounts placed in escrow
pursuant to Section 2.2(e)) in the form of Units which are not so redeemed
(the "Minimum Unit Requirement"). In the event that the elections of the
Midland Principals to immediately redeem Units for cash at the First
Closing do not in the aggregate satisfy the Minimum Unit Requirement, each
Midland Principal will be deemed to elect to retain a pro rata number of
Units based on the percentage allocations set forth on Schedule 2.2(c)
sufficient in the aggregate to satisfy the Minimum Unit Requirement. OTR
shall be entitled to certain additional redemption and other rights
pursuant to the OTR Redemption Agreement.
(e) Notwithstanding the above provisions of this Section 2.2,
Units representing $400,000 of the Contribution Value with respect to the
St. Xxx Property and Units representing $400,000 of the Contribution Value
(which shall be allocable only to the Midland Affiliate owning an interest
in such Property (the "Xxxxxxxx Escrow Entity")) with respect to the
Xxxxxxxx Xxxxxxx Property shall be redeemed by Regency for cash and the
cash redemption price shall be placed in separate escrow accounts (each,
an "Escrow") with Xxxxx & Lardner pursuant to escrow agreements to be
executed at the First Closing, providing for interest to be distributed
annually (i) to the Property Entity that contributes the St. Xxx Property
and (ii) to the Xxxxxxxx Escrow Entity, respectively (collectively, the
"Escrow Entities"). Upon the election of either Regency or the Midland
Representatives, Regency shall use reasonable commercial efforts to
dispose of such Properties and shall use reasonable commercial efforts to
effect such dispositions as "like-kind" tax deferred exchanges pursuant to
Section 1031 of the Code provided that such Properties are eligible for
such treatment thereunder. With respect to each of the St. Xxx Property
and the Xxxxxxxx Xxxxxxx Property:
(i) In the event that the Net Proceeds from the sale of
such Property are greater than its Gross Asset Value
as of the First Closing (determined after any
Proration Items), Units with a value equal to 50% of
the amount of such excess together with the funds held
in the respective Escrow for such Property will be
distributed to the applicable Escrow Entity.
(ii) In the event that the Net Proceeds from the sale
of such Property are less than its respective
Gross Asset Value as of the First Closing
(determined after any Proration Items), funds
equal to 50% of the excess of such Gross Asset
Value over the Net Proceeds will be distributed
from the respective Escrow for such Property to
the Partnership, and any funds thereafter
remaining in such Escrow shall be distributed to
the applicable Escrow Entity.
(iii) In no event shall an Escrow Entity be responsible
or liable for any deficiency in the Net Proceeds
for its respective Property beyond the amount
held in the respective Escrow for such Property.
For purposes of this Section 2.2(e), there shall
not be deducted from Net Proceeds any brokerage
commissions payable to any Affiliate of Regency
in connection with the sale of the Property.
(iv) The number of any new Units issuable under this
Section 2.2(e) shall be (x) based on the Unit
Value and (y) reduced by the Record Date
Adjustment Amount.
(f) Any Unit Recipient who does not elect to exercise a
Redemption Right at the First Closing may affirmatively elect, on forms
provided as part of the Disclosure Documents referred to in Section 5.6,
to purchase Units from the Partnership, at a price per Unit equal to the
Unit Value, to be issued simultaneously with the other Units issued to
such Unit Recipient at the First Closing (the "Asset Units"), in an amount
(the "Adjustment Units") equal to the Record Date Adjustment Amount
applicable to the Asset Units. The purchase price for such Adjustment
Units shall be equal to the Windfall Distribution Amount applicable to the
Asset Units and shall be payable in cash to the Partnership on the tenth
Business Day after the payment date for the first cash dividend paid by
Regency on the Common Stock after the First Closing Date. The Partnership
shall hold a first priority security interest in the Adjustment Units to
secure the payment of the purchase price thereof. Certificates for the
Adjustment Units, together with related stock powers or other powers of
attorney otherwise reasonably acceptable to the Partnership, shall be held
by the Partnership until the release of the security interest therein
pursuant to this Section 2.2(f). Until such time as the full purchase
price is paid, the Unit Recipient pledging the Adjustment Units shall (i)
keep such Units 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 assign, deliver, sell,
transfer, lease or otherwise dispose of (including dispositions by
operation of law) any portion of the Adjustment Units or any interest
therein without the prior written consent of the Partnership. The
Partnership shall have the right to cancel the Adjustment Units in the
event that the Partnership does not receive the full purchase price of
such Units by the fifteenth Business Day after the due date thereof, and
in addition, shall have all rights and remedies of a secured party under
the Uniform Commercial Code. A Unit Recipient who purchases Adjustment
Units hereunder shall also be deemed to have elected to purchase
Adjustment Units on the same terms and conditions with respect to any
Additional Units issued to such Unit Recipient at a Subsequent Closing
except Units representing the Xxxxx Crossing Land Earn-Out.
2.3 OSTRS Consideration. Notwithstanding the provisions of Section
2.2 hereof, the consideration to be received by the equity owners of
OTR/Midland Ltd. at the First Closing with respect to the OSTRS Committed
Eastern Properties transferred by OTR/Midland Ltd. to the Partnership at
the First Closing shall be governed by this Section 2.3. Upon the
transfer of such Properties to the Partnership at the First Closing as
provided hereunder, OTR/Midland Ltd. shall be entitled to receive, for
distribution to its equity owners, in accordance with the respective
percentages set forth on the Allocation Chart (which are included at
OTR/Midland Ltd.'s instructions), the Units which OTR/Midland Ltd. would
receive pursuant to Section 2.2, plus an additional amount of Units with a
Unit Value equal to the OSTRS Capitalization Premium. As used herein, the
"OSTRS Capitalization Premium" (which shall be allocated 100% to OSTRS)
means 65% of the difference between (i) the Contribution Value of the
Properties owned by OTR/Midland Ltd. determined in accordance with Section
2.1(a), but using the respective capitalization rates set forth on the
Allocation Chart (which is a weighted average capitalization rate of
9.486%) and (ii) the Contribution Value of such Properties determined in
accordance with Section 2.1(a).
2.4 Assumptions.
2.4.1 Assumption of Liabilities. At the First Closing, each
Transferee shall assume the applicable Assumed Liabilities and Assumed
Obligations (but in the case of Assumed Liabilities that are non-recourse,
only to the extent of the carve-outs from the non-recourse provisions)
that relate to the Assets transferred to it, and the applicable Property
Entity shall assign such Assumed Liabilities and Assumed Obligations to
the applicable Transferee. The amount of such Assumed Liabilities that
encumber Option Properties, as further described on Schedule 2.4.1, shall
be deducted from the Contribution Value as of the First Closing for the
adjacent Property described on Schedule 2.4.1. Except for the Assumed
Liabilities and Assumed Obligations, the Transferees shall not assume or
become subject at any Closing to any Liabilities of any Property Entity or
Midland Affiliate unless to the extent a Transferee expressly accepts the
benefits of a Contract that a Contributor neglected to transfer to the
Transferee, in which case such Transferee shall be deemed to have assumed
the Contributor's obligations thereunder.
2.4.2 Substitution of NewSubs in Joint Ventures.
(a) At the First Closing, each Midland Affiliate that is a
member or a partner in a Joint Venture shall transfer and assign its
interest in such Joint Venture to the Partnership (which may contribute
all or a portion thereof in turn to one or more NewSubs), such
Transferee(s) shall become the substitute members or partners of such
Joint Venture and, at Regency's election, Third Party Management Company
may be admitted as a one percent (1%) member or partner so long as the
aggregate interests of the Regency Entities therein do not exceed fifty
percent (50%).
(b) The ultimate Transferee of the Partnership shall have
the right to direct that the Transaction Documents convey the interests in
the Joint Ventures directly to such ultimate Transferee rather than to the
Partnership and then to the ultimate Transferee.
(c) Each Joint Venture will be obligated to transfer its
Development Property to either the Partnership, R&M Western Partnership or
an OTR Joint Venture (pursuant to obligations under the OTR/Midland
Transfer and Contribution Agreement and the OSTRS Option Rights
transferred to the Partnership and then transferred, with certain
exceptions, to such other Transferees), when such Property attains the
Minimum Leasing Criteria. Notwithstanding the foregoing, at Regency's
election, (i) the Joint Ventures that are developing the Properties known
as Cheyenne and Xxxxx Xxxx, and (ii) any Joint Ventures developing
Properties in Colorado, Texas or Wyoming as to which OSTRS does not
exercise OSTRS Option Rights, may retain their Properties in the event
that Midland Western Partnership (as defined in Section 3.1) is admitted
to such Joint Ventures.
2.5 Subsequent Closings. As described in this Section 2.5,
Additional Units may be issued at Subsequent Closings to Contributors that
have contributed their Assets to the Partnership at the First Closing,
provided that certain performance criteria are satisfied. The number of
any Additional Units issuable to a Contributor pursuant to this Section
2.5 shall be based on the Unit Value, shall be reduced by the Record Date
Adjustment Amount and shall be rounded to the nearest whole Unit. At the
direction of the Contributor, in lieu of issuing such Additional Units to
the Contributor for distribution by the Contributor to its equity owners,
the Partnership shall issue the Additional Units directly to such equity
owners, in accordance with the Contributor's instructions, which are
included as part of the Allocation Chart. Any fractional Unit resulting
from such instructions shall be paid in cash, based on the Unit Value.
2.5.1 In-Process Earn-Out. Contributors who contribute
Eligible Properties shall have the right to receive Additional Units in
the event that the performance criteria set forth below are satisfied (the
"In-Process Earn-Out"). Such Additional Units issued on account of the
In-Process Earn-Out shall be allocated to the Contributors who contributed
the Eligible Properties and, in accordance with their instructions, shall
be allocated among their Unit Recipients in the respective percentages set
forth on the Allocation Chart.
(a) "In-Process Earn-Out Value" means as of the applicable
Calculation Date, the excess of (x) the aggregate Capitalized Annualized
NOI as of the Calculation Date for the Eligible Properties that have first
attained the Minimum Leasing Criteria during the twelve months ending on
such Calculation Date over (y) the sum of (A) the aggregate Development
Costs for such Eligible Properties, plus (B) an amount equal to the Return
on Regency Equity with respect to such Eligible Properties as of the
applicable Calculation Date, plus (C) all rent concessions, including
aggregate Abated Rent, for such Eligible Properties for the period after
the applicable Calculation Date, plus (D) Regency's reasonable estimate of
aggregate unrealized losses based on the value (computed using Capitalized
Annualized NOI less Development Costs) of Eligible Properties deferred by
the Midland Representatives pursuant to paragraph (c) below ("Loss
Estimation"). If Topvalco or Xxxxxx retains an interest in an Eligible
Property on the Calculation Date, the In-Process Earn-Out Value shall be
reduced to the extent of such interest. Notwithstanding the above, the
In-Process Earn-Out Value with respect to the Xxxxxx Property shall be
determined at anytime after the First Closing and prior to the First or
Second Calculation Date, as may be designated by the Midland
Representatives (referred to herein as the "Xxxxxx Calculation Date"). In
the event that no such designation is made by the Midland Representatives,
the In-Process Earn-Out for Xxxxxx will be determined on the applicable
Calculation Date.
(b) If the In-Process Earn-Out Value is a positive number
on the First Calculation Date (or on the Xxxxxx Calculation Date with
respect to the Xxxxxx Property, if applicable), on the First Earn-Out
Closing Date (or on the 30th day following the Xxxxxx Calculation Date, if
applicable), Additional Units shall be issued in an aggregate amount equal
to the quotient obtained by dividing (i) the In-Process Earn-Out Value as
of the First Calculation Date (or in the In-Process Earn-Out Value of the
Xxxxxx Property as of the Xxxxxx Calculation Date) by (ii) the Unit Value,
and then subtracting the Record Date Adjustment Amount.
(c) Notwithstanding the foregoing, the Midland
Representatives shall have the right to defer the calculation of the In-
Process Earn-Out Value with respect to an Eligible Property ("Deferred
Eligible Properties") until the Second Calculation Date. If Regency makes
a Loss Estimation with respect to a Deferred Eligible Property on the
First Calculation Date, and as of the Second Calculation Date (i) such
Eligible Property has Capitalized Annualized NOI that does not result in
an unrealized loss in value or (ii) the amount of such Capitalized
Annualized NOI results in an unrealized loss in value which is less than
the Loss Estimation, an amount equal to such Loss Estimation or the amount
by which the Loss Estimation exceeded the actual unrealized loss in value
(which amount in either case shall be a positive amount) shall be credited
to the aggregate Capitalized Annualized NOI of the Deferred Eligible
Properties on the Second Calculation Date. If the In-Process Earn-Out
Value with respect to the Deferred Eligible Properties as of the Second
Calculation Date is a positive number, on the Second Earn-Out Closing
Date, Additional Units shall be issued in an aggregate amount equal to the
quotient obtained by dividing (i) such In-Process Earn-Out Value as of the
Second Calculation Date by (ii) the Unit Value, and then subtracting the
Record Date Adjustment Amount. For purposes of computing the In-Process
Earn-Out as of the Second Calculation Date, all base rent shall be
computed using the initial base rent in effect as of the end of the
calendar month immediately prior to the First Calculation Date or, with
respect to leases which are not in effect on that date, as of the
beginning of the lease term.
2.5.2 In-Place Earn-Out. The Contributors who contribute
the Properties known as Maxtown, Cherry Grove and Franklin Square shall
respectively have the right to receive Additional Units as provided herein
in the event that the performance criteria set forth below are satisfied
(the "In-Place Earn-Out").
(a) "The In-Place Earn-Out Base" shall mean the extent, if
any, to which (A) the Gross Asset Value of such Property calculated as of
the First Calculation Date determined on the same basis as contained in
Schedule 2.1 and based on the Annualized NOI calculated as of the First
Calculation Date exceeds (B) 103% of the Gross Asset Value of such
Property determined as of the First Closing (after any Proration Items)
pursuant to Section 2.1.
(b) If the In-Place Earn-Out Base is a positive number
with respect to the Property known as Maxtown, the "In-Place Earn-Out
Value" shall be equal to that percentage of the In-Place Earn-Out Base
with respect to such Property that equals the aggregate percentage of
ownership held by Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxxx and their Affiliates in
the Contributor of such Property, who shall be entitled to 100% of such
In-Place Earn-Out Value, pro rata in accordance with their relative
individual percentage interests in such Contributor.
(c) If the In-Place Earn-Out Base is a positive number
with respect to the Property known as Cherry Grove, the "In-Place Earn-Out
Value" shall be equal to that percentage of the In-Place Earn-Out Base
with respect to such Property that equals the aggregate percentage of
ownership held by Xxxxxxxx Real Estate Limited Partnership Fund VI in the
Contributor of such Property, which shall be entitled to 100% of such In-
Place Earn-Out Value.
(d) If the In-Place Earn-Out Base is a positive number
with respect to the Property known as Franklin Square, "In-Place Earn-Out
Value" shall be equal to 100% of the In-Place Earn-Out Base with respect
to such Property.
(e) If a Property named in this Section 2.5.2 produces In-
Place Earn-Out Value, on the First Earn-Out Closing Date, Additional Units
shall be issued to the Property Entity contributing such Property to the
Partnership at the First Closing, in the amount equal to the In-Place
Earn-Out Value divided by the Unit Value, less the Record Date Adjustment
Amount. At the direction of the Contributor, such Additional Units shall
be issued directly to the Unit Recipients entitled thereto, who are
identified on Schedule 2.5.2, in accordance with the allocation procedures
set forth therein (which are included at the Contributor's instructions).
2.5.3 Midland Group Earn-Out. Midland Development shall
have the right to receive Additional Units in the event that the
performance criteria set forth below are satisfied (the "Midland Group
Earn-Out"). The Midland Group Earn-Out shall consist of two components:
the Midland NOI Earn-Out and the Midland Development Earn-Out.
2.5.3.1 The Midland NOI Earn-Out.
(a) The Midland NOI shall be determined as of the First
Calculation Date. An amount equal to 100% of the excess, if any, of the
Midland NOI as of the First Calculation Date over the First Midland NOI
Threshold shall be the "First Midland NOI Earn-Out Value"; provided,
however, the First Midland NOI Earn-Out Value (including any Property Sale
Participation, as defined below) shall not exceed (a) the First Midland
NOI Cap, plus (b) the amount by which the In-Place Earn-Out with respect
to Franklin Square, as determined pursuant to Section 2.5.2(d), is less
than $1,310,000 (the "Franklin Earn-Out Deficiency") (the sum of clauses
(a) and (b) is referred to as the "Maximum First Midland NOI Earn-Out").
If the First Midland NOI Earn-Out Value is a positive number, on the First
Earn-Out Closing Date, Additional Units shall be issued to Midland
Development in an amount equal to the quotient obtained by dividing (i)
the First Midland NOI Earn-Out Value by (ii) the Unit Value, and then
subtracting the Record Date Adjustment Amount.
(b) The Midland NOI shall be determined as of the Second
Calculation Date. An amount equal to 100% of the excess, if any, of the
Midland NOI as of the Second Calculation Date over the Second Midland NOI
Threshold shall be the "Second Midland NOI Earn-Out Value"; provided,
however, that the sum of the First Midland NOI Earn-Out Value plus the
Second Midland NOI Earn-Out Value (including in either case any Property
Sale Participation) shall not exceed (a) the Second Midland NOI Cap, plus
(b) an amount equal to the Franklin Earn-Out Deficiency (the sum of
clauses (a) and (b) is referred to as the "Maximum Possible Midland NOI
Earn-Out"). If the Second Midland NOI Earn-Out Value is a positive
number, on the Second Earn-Out Closing Date, Additional Units shall be
issued to Midland Development equal to the quotient obtained by dividing
(i) the Second Midland NOI Earn-Out Value by (ii) the Unit Value, and then
subtracting the Record Date Adjustment Amount.
(c) In the event that the Maximum Possible Midland NOI
Earn-Out would not otherwise be paid on the Second Earn-Out Closing Date,
and on the First Calculation Date there was Midland NOI remaining after
reaching the Maximum First Midland Group Earn-Out, (i) the amount of such
excess shall be carried forward to the Second Calculation Date, (ii) the
Second Midland NOI Earn-Out Value shall be recomputed on that basis and
(iii) Additional Units, at the Unit Value, less the Record Date Adjustment
Amount, shall be issued to Midland Development for the amount by which the
Second Midland NOI Earn-Out Value computed in accordance with this Section
2.5.3.1(c) exceeds the Second Midland NOI Earn-Out Value computed without
regard to this Section 2.5.3.1(c), provided, however, that the sum of the
First Midland NOI Earn-Out Value plus the Second Midland NOI Earn-Out
Value as so recomputed (including in either case any Property Sale
Participation) shall not exceed the Maximum Possible Midland NOI Earn-Out.
(d) In the event that the sum of the First Midland NOI
Earn-Out Value and the Second Midland NOI Earn-Out Value is less than the
Maximum Possible Midland NOI Earn-Out, the Midland NOI shall be determined
as of the Third Calculation Date. An amount equal to 100% of the excess,
if any, of the Midland NOI as of the Third Calculation Date over the
Second Midland NOI Threshold shall be the "Third Midland Group Earn-Out
Value"; provided, however, that the sum of the First Midland NOI Earn-Out
Value plus the Second Midland NOI Earn-Out Value plus the Third Midland
Group Earn-Out Value (including in each case any Property Sale
Participation) shall not exceed the Maximum Possible Midland NOI Earn-Out.
If the Third Midland Group Earn-Out Value is a positive number, on the
Third Earn-Out Closing Date, Additional Units shall be issued to Midland
Development equal to the quotient obtained by dividing (i) the Third
Midland Group Earn-Out Value by (ii) the Unit Value, and then subtracting
the Record Date Adjustment Amount.
(e) If the maximum possible Midland NOI Earn-Out Value
(without regard to the Property Participation) would not be paid on the
related Earn-Out Closing Date, the deficiency may be made up in the event
that a Property contributed by a Property Entity to the Partnership
pursuant to Article 2 hereof (other than the Western Properties) is sold
by the Partnership in the twelve calendar months immediately preceding the
applicable Calculation Date. The amount of such deficiency is referred to
herein as the "Earn-Out Gap." "Property Sale Participation" means an
amount, but not more than the Earn-Out Gap, equal to 75% of the Net
Proceeds (with no deduction for any commissions payable to a Regency
Entity) from the sale of the applicable Property after deducting (A) the
Gross Asset Value of the Property at the time of its acquisition by the
Partnership, or (B) in the case of a Property that was a Development
Property at or after the First Closing, if greater, the Development Costs
thereof, plus, in either case, an amount equal to the Return on Regency
Equity. On the applicable Earn-Out Closing Date, Additional Units shall
be issued to Midland Development equal to the quotient obtained by
dividing (i) the Property Sale Participation by (ii) the Unit Value, and
then subtracting the Record Date Adjustment Amount.
2.5.3.2 Development Earn-Out. Midland Development shall
have the right to receive Additional Units in the event that the
performance criteria set forth below are satisfied (the "Development Earn-
Out").
(a) The Development Earn-Out shall be determined as of the
First and Second Calculation Dates, respectively. If the budgeted
Development Cost of Qualified Development is equal to at least $25,000,000
as of either Calculation Date, then the Development Earn-Out for such
Calculation Date shall be equal to $3,000,000. If the budgeted
Development Cost of Qualified Development as of such Calculation Date is
less than $25,000,000, then the Development Earn-Out as to such
Calculation Date shall be arrived at by multiplying (i) $3,000,000 times
(ii) the quotient of such Development Cost of Qualified Development
divided by $25,000,000. A Development Cost must be approved by Regency's
investment committee (and Regency agrees that the decisions of such
investment committee, and the timing of such decisions, shall be made on a
reasonable basis and in good faith and not for the purpose of defeating or
minimizing the Development Earn-Out) as part of the applicable development
budget in order to qualify as a budgeted Development Cost. If any Person
other than the Partnership is expected to own an interest in a Qualified
Development following its completion and attainment of the Minimum Leasing
Criteria, the budgeted Development Cost with respect to such Qualified
Development shall be included in the calculation of the Development Earn-
Out only to the extent of the interest of Regency and its Affiliates in
the Qualified Development. Without limiting the foregoing, if a Qualified
Development is subject to OSTRS Option Rights, the Budgeted Development
Cost for such Qualified Development shall be included in the calculation
of the Development Earn-Out only to the extent of the then percentage
interest of R&M Western Partnership in "Net Sale Proceeds" of the OTR
Joint Venture (as defined in its partnership agreement) that has the right
to acquire such Qualified Development. If the budgeted Development Cost
of Qualified Development as of either Calculation Date exceeds $25,000,000
(the "Excess Qualified Development"), then Midland Development shall be
entitled to reallocate the Excess Qualified Development to the other
applicable Calculation Date and may calculate the Development Earn-Out as
of such prior or subsequent Calculation Date, as applicable, including
such Excess Qualified Development; provided, however, that (a) the sum of
the Development Earn-Out for the First and Second Earn-Out Closing Dates
shall not exceed $6,000,000 and (b) Midland Development shall not be
entitled to any Development Earn-Out as of a Calculation Date to the
extent that the budgeted Development Cost of Qualified Development for the
immediately preceding twelve calendar months does not exceed $10,000,000,
excluding any reallocation of Excess Qualified Development.
(b) If applicable, on the First Earn-Out Closing Date,
Additional Units shall be issued to Midland Development equal to the
quotient obtained by dividing (i) the Development Earn-Out as of the First
Calculation Date by (ii) the Unit Value, and then subtracting the Record
Date Adjustment Amount.
(c) If applicable, on the Second Earn-Out Closing Date,
Additional Units shall be issued to Midland Development equal to the
quotient obtained by dividing (i) the Development Earn-Out as of the
Second Calculation Date by (ii) the Unit Value, and then subtracting the
Record Date Adjustment Amount.
(d) In the event that (i) a Qualified Development is
transferred to an OTR Joint Venture and is sold at any time prior to the
Third Earn-Out Calculation Date, (ii) the maximum possible cumulative
Development Earn-Out has not been paid as of the date of the next Earn-Out
Calculation Date, and (iii) as a result of such sale the interest of R&M
Partnership in "Net Sales Proceeds" of the OTR Joint Venture (as defined
in its partnership agreement) increases because OSTRS has received the
preferential return to which it is entitled, the Development Earn-Out
shall be recalculated based on the increased percentage interest of R&M
Western Partnership in the Qualified Development, and Additional Units
shall be issued at the Unit Value, less the Record Date Adjustment Amount,
on the next Calculation Date, for the amount by which the Development
Earn-Out computed in accordance with this Section 2.5.3.2 exceeds the
Development Earn-Out computed without regard to this Section 2.5.3.2, but
only to the extent that the maximum possible cumulative Development Earn-
Out has not previously been paid.
2.5.4 Worthington Outparcel Earn-Out. Subject to the
satisfaction of the conditions precedent set forth in Section 8.2.11 with
respect to the Property known as Worthington Park Centre, the Unit
Recipients having an equity interest in the outparcel Properties
identified on Schedule 2.5.4 (the "Worthington Outparcels") shall have the
right to receive Additional Units in the event the conditions set forth
below are satisfied (the "Worthington Outparcel Earn-Out").
(a) "Worthington Outparcel Earn-Out Value" means the
excess of (x) the Annualized NOI of a Worthington Outparcel calculated as
of the month end of the month in which such Worthington Outparcel has
attained the Minimum Leasing Criteria (the "Stabilization Date"), divided
by a capitalization rate of 11.0%, over (y) the Development Cost of such
Worthington Outparcel, plus the Return on Regency Equity invested in
developing such Worthington Outparcel through the date of issuance of the
Additional Units plus rent concessions and Abated Rent for the period
after the Stabilization Date.
(b) In the event that the Partnership develops a
Worthington Outparcel, the Outparcel Earn-Out Value shall be calculated as
to such Worthington Outparcel as of the Stabilization Date. If the
Worthington Outparcel Earn-Out Value is a positive number, the Unit
Recipients owning an equity interest in such Worthington Outparcel shall
be entitled to receive their respective percentage allocations, as shown
on the Allocation Chart, of that number of Additional Units arrived at by
dividing (i) the Worthington Outparcel Earn-Out Value by (ii) the Unit
Value, after subtracting the Record Date Adjustment Amount.
2.5.5 Xxxxx Crossing Land Earn-Out. The Midland Affiliate
contributing its equity interest in the Joint Venture owning the outparcel
Property identified on Schedule 2.5.5 (the "Xxxxx Crossing Outparcel")
shall have the right to receive Additional Units in the event the
conditions set forth below are satisfied (the "Xxxxx Crossing Land Earn-
Out"). The Partnership shall have the right to deliver such Additional
Units to an agent named by such Midland Affiliate, for delivery in turn to
the Person(s) entitled to receive the same, in the event that such Midland
Affiliate dissolves, and if the Midland Affiliate fails to name such an
agent, the Partnership shall have no responsibility for locating such
Person(s).
(a) "Xxxxx Crossing Land Earn-Out Value" means the excess
of (x) the Annualized NOI of the Xxxxx Crossing Outparcel calculated as of
the month end of the month in which the Xxxxx Crossing Outparcel has
attained the Minimum Leasing Criteria (the "Stabilization Date"), divided
by a capitalization rate of 11.0%, over (y) the sum of the Development
Cost of the Xxxxx Crossing Outparcel, plus the Return on Regency Equity
invested in the Xxxxx Crossing Outparcel through the date of issuance of
the Additional Units plus all rent concessions and Abated Rent for the
Xxxxx Crossing Outparcel for the period after the Stabilization Date.
(b) In the event that the Partnership develops the Xxxxx
Crossing Outparcel prior to the later of (i) the R&M Redemption Date or
(ii) the tenth anniversary of the First Closing Date, the Xxxxx Crossing
Land Earn-Out Value shall be calculated as of the Stabilization Date.
"R&M Redemption Date" means the date on which Midland Western Partnership
no longer holds any interest in R&M Western Partnership. If the Xxxxx
Crossing Land Earn-Out Value is a positive number, the Midland Affiliate
owning an equity interest in such Xxxxx Crossing Outparcel shall be
entitled to receive that number of Additional Units arrived at by dividing
(i) 50% of the Xxxxx Crossing Land Earn-Out Value, by (ii) the Unit Value,
and then subtracting the Record Date Adjustment Amount.
2.6 Subsequent Closings for OSTRS Eastern Option Properties. At
Subsequent Closings to take place within 105 days after OSTRS receives
notice that the OSTRS Option Rights with respect to an OSTRS Eastern
Option Property have become exercisable, OSTRS shall be entitled to
receive additional consideration as provided herein for the release of its
investment rights with respect to such Property hereunder (the "OSTRS
Release Price"). The OSTRS Release Price shall be equal to 65% of the
excess of (a) OSTRS Capitalized Annual NOI over (b) Capitalized NOI for
such Property, assuming a Calculation Date as of forty-five (45) days
after such Property achieves Minimum Leasing Criteria. "OSTRS Capitalized
Annual NOI" means the quotient of (a) Annualized NOI divided by (b)
9.486%. At a Closing for the payment of the OSTRS Release Price,
Additional Units, rounded to the nearest whole Additional Unit, shall be
issued to OSTRS equal to the quotient obtained by (i) dividing the amount
of the OSTRS Release Price by the Unit Value and (ii) then subtracting the
Record Date Adjustment Amount.
ARTICLE 3: FORMATION OF SUBPARTNERSHIPS
3.1 R&M Western Partnership. No later than the First Closing,
Regency shall cause the formation of R&M Western Partnership, the general
partner of which shall be Third Party Management Company. At the First
Closing, an entity to be formed by the Midland Affiliates owning interests
in the Joint Ventures for the applicable Western Properties ("Midland
Western Partnership") and the Partnership shall be admitted as limited
partners in R&M Western Partnership. At the First Closing, OTR/Midland
Ltd. shall assign to the Partnership, for contribution in turn to R&M
Western Partnership, for contribution in turn to the applicable OTR Joint
Ventures formed pursuant to Section 3.2, OTR/Midland Ltd.'s rights to
acquire properties, including the OSTRS Western Option Properties,
pursuant to (i) the OSTRS Option Rights and (ii) the OTR/Midland Transfer
and Contribution Agreement. R&M Western Partnership shall retain the
rights to acquire the Properties in Texas and Colorado as to which OSTRS
does not exercise OSTRS Option Rights and those Properties which are not
subject to OSTRS Option Rights. At the First Closing, the Partnership
also shall contribute the Creekside and Village Center Properties
(immediately following their contribution to the Partnership) to R&M
Western Partnership, for contribution in turn to the applicable OTR Joint
Venture.
3.1.1 Partnership Agreement of R&M Western Partnership. The
Partnership Agreement of R&M Western Partnership shall contain the
provisions regarding such entity's purpose, the disposition of its assets
and the allocation of distributions in substantially the form attached
hereto as Exhibit 3.1.1.
3.2 OTR Joint Ventures. No later than the First Closing, Regency
shall cause the formation of the OTR Joint Ventures, the general partner
of which shall be R&M Western Partnership. A separate OTR Joint Venture
shall be formed for the properties in Texas as to which OSTRS exercises
OSTRS Option Rights, and a separate OTR Joint Venture shall be formed to
acquire all the properties in states other than Texas as to which OSTRS
exercises OSTRS Option Rights. The limited partnership agreement of each
OTR Joint Venture shall be identical in substance to the operating
agreement of OTR/Midland Ltd., except that it shall exclude the OSTRS
Committed Eastern Properties and the OSTRS Eastern Option Properties. At
the First Closing, OTR shall be admitted to the OTR Joint Ventures. At
Regency's election, in lieu of creating a new limited partnership to serve
as an OTR Joint Venture, Regency may cause OTR/Midland Texas Limited
Partnership to be reorganized to serve as an OTR Joint Venture in Texas,
with R&M Western Partnership as general partner and OTR as limited
partner.
3.2.1 Mechanics of Contribution. The ultimate Transferee of
Assets to be transferred pursuant to this Article 3 shall have the right
to direct that the Transaction Documents convey such Assets directly to
such ultimate Transferee rather than to the Partnership and then to any
intervening Transferee and then to the ultimate Transferee.
ARTICLE 4: ADDITIONAL CLOSING AND POST-CLOSING TRANSACTIONS
4.1 Purchase Option. Each Property Entity owning an Option
Property, as set forth on Schedule 4.1, shall grant, and the Midland
Principals shall use reasonable commercial efforts to cause each joint
venture owning an Option Property to grant, to the Partnership at the
First Closing an option to purchase the Option Property for cash (the
"Purchase Option"), which shall be exercisable separately for each Option
Property. The Purchase Option as to each Option Property shall have a
term ending at the later of: (a) one year from the date of the First
Closing or (b) the end of the Hold Period applicable to such Option
Property (the "Option Expiration Date") and shall have an exercise price
as set forth on Schedule 4.1 plus reimbursement of the actual cost of any
capital expenditures and ad valorem Taxes and special assessments paid by
the optionor after the First Closing Date and prior to the date of the
closing of the exercise of the Purchase Option. Each Purchase Option
shall be evidenced by a written agreement in substantially the form
attached hereto as Exhibit 4.1, subject to revisions required by the Law
of the jurisdiction in which the Option Property is located ("Option
Agreement") and by a Memorandum of Option in the form attached hereto as
part of Exhibit 4.1 (the "Memorandum of Option"). The Memorandum of
Option shall be recorded in the appropriate public records for the
jurisdiction in which the Option Property is located, together with
restrictive covenants regarding the use and operation of the Option
Property to supplement existing restrictive covenants to the extent that
such existing restrictive covenants do not cover all the types of
restrictions that Regency customarily requires, all as further described
on Schedule 4.1. The closing of the exercise of the Purchase Option shall
take place no later than sixty (60) days following the notice of exercise.
4.2 Right of First Refusal. At the First Closing, the Property
Entity owning an Option Property shall grant, and the Midland Principals
shall use reasonable commercial efforts to cause each joint venture owning
an Option Property to grant, to the Partnership a right of first refusal
to purchase the Option Property for cash, to the extent such Option
Property is not purchased pursuant to a Purchase Option (the "Right of
First Refusal"). The Right of First Refusal as to each Option Property
shall have a term of four years beginning on the Option Expiration Date.
The Partnership shall have the right to purchase an Option Property
pursuant to a Right of First Refusal upon any notice from the optionor
that it intends to accept a bona fide written offer to purchase such
Option Property (a "Third Party Offer"). The Right of First Refusal may
be exercised at a purchase price equal to 90% of the purchase price
pursuant to the Third Party Offer. The Partnership shall have 15 days
from the date of the optionor's notice to elect to exercise its Right of
First Refusal, by executing a form of purchase agreement containing the
same terms as the Third Party Offer. Each Right of First Refusal shall be
evidenced by the Memorandum of Option relating to the applicable Option
Property. In the event the Partnership does not exercise its Right of
First Refusal, the optionor shall have 180 days after the deadline for the
Partnership's notice of exercise of its Right of First Refusal in which to
sell the Option Property on substantially the same terms as set forth in
the Third Party Offer, and if such Property Entity does not do so within
such period, the Option Property shall again be subject to the Right of
First Refusal as if such Third Party Offer had never occurred.
4.3 Transfer of Options. In the event that a Purchase Option or
Right of First Refusal is for an outparcel or expansion land for a
Property or Acquisition Property (a "Related Property") that is
transferred to a Transferee hereunder other than the Partnership, the
Partnership may transfer the Purchase Option and Right of First Refusal
for such Option Property to the Transferee that takes title to the Related
Property, and such Transferee may transfer the Purchase Option and Right
of First Refusal to any Person to which such Transferee may transfer the
Related Property. However, except as provided in the preceding sentence,
the Purchase Options and Rights of First Refusal are not transferable.
4.4 Additional Outparcels. In the event that after the date hereof
any Midland Principal becomes aware that he owns a 20% or greater equity
interest in any outparcel, expansion land or other property to be
developed which is contiguous or adjacent to Properties but which is not
an Asset or Option Property under this Agreement or properties set forth
on Schedule 4.4, such Midland Principal shall give Regency written notice
within 30 days of becoming aware of such property and shall use reasonable
commercial efforts to cause the Person owning such property to execute a
Memorandum of Option granting an Option and Right of First Refusal with
respect thereto within 90 days after delivering such notice to Regency.
4.5 Management Contracts. With respect to each real property
constituting an Excluded Asset and each real property identified on
Schedule 6.2.1, including real property subject to Acquisition Rights and
Development Rights (as those terms are defined in Section 6.2.1), which
are grocery-anchored shopping centers which are or will be subject to
contracts for property leasing and/or management services, each Midland
Principal directly or indirectly owning an interest in such real property
shall use reasonable commercial efforts to cause the record owner of such
real property to enter into agreements for such services with Third Party
Management Company or its Affiliates based on customary fees and terms.
ARTICLE 5: COVENANTS
Each Property Entity, as to itself, each Midland Affiliate, as to
itself and as to any Property Entity or Joint Venture in which it owns an
interest, and each Midland Principal, as to himself, hereby covenants as
provided in this Article 5, as applicable. A covenant herein of a Joint
Venture or Property Entity that is not a party to this Agreement shall be
the covenant of the Midland Affiliate and each Midland Principal owning an
equity interest therein to use reasonable commercial efforts to cause such
Joint Venture or Property Entity to fulfill such covenant. For purposes
of this Article 5, each Property Entity and Joint Venture is referred to
as a "Property Owner." In all events that Regency's approval is requested
under this Article 5, if Regency does not grant approval or give notice
that it has withheld its consent within 10 Business Days after such
request is made, such consent shall be deemed to have been granted.
5.1 Implementing Agreement. Subject to the terms and conditions
hereof, each party hereto shall use reasonable commercial 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. Without limiting the foregoing, each Midland Principal shall use
reasonable commercial efforts to cause each Contributor and Joint Venture
in which such Person owns an equity interest to fulfill its obligations
hereunder.
5.2 Preservation of Business. From the date of this Agreement to
the First Closing, each Property Owner shall cause its Properties or Third
Party Management Assets, as applicable, 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 its Properties (other than Excluded
Assets) or (except as provided below) Option Properties until such time as
the Purchase Options granted in Section 4.1 have expired, shall use its
reasonable commercial efforts to preserve its good will and advantageous
relationships with tenants, customers, suppliers, independent contractors,
employees and other Persons material to the operation of its Properties or
Third Party Management Assets, as applicable, shall perform its material
obligations under the Leases and other material agreements affecting its
Properties and Option Properties, shall perform its material obligations
under the Management Contracts, as applicable, shall use reasonable
commercial efforts to develop its Development Properties substantially in
accordance with their respective Development Budget and Schedules, 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, no Property Owner
will 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 substantial conformity with the Development
Budget and Schedule, Capital Expenditure Budget and Schedule and the TI
Budget and Schedule. The Property Owners shall not agree to any material
change orders or additions to tenant improvements or changes in the scope
of work or specifications with respect to any Work Contract without
Regency's prior written approval, which shall not be unreasonably withheld
or delayed. Each Property Owner shall continue to maintain all insurance
policies referred to in Section 6.1.11 in full force and effect up to and
including the First Closing Date. Notwithstanding the foregoing, the
Property Owners shall be entitled to sell the outparcels constituting
Option Properties listed on Schedule 5.2 provided that the Net Proceeds
from any such sale are applied to pay down the Existing Mortgage Debt
encumbering the Property to which such outparcel relates.
5.3 Consents and Approvals. Each party shall use its reasonable
commercial 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 6.1.2(b) and 7.2(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 Additional Acquisitions. The parties shall cooperate in
pursuing any acquisition opportunities in the ordinary course of business
agreed on by both parties, and if prior to the First Closing a Property
Owner enters into a binding contract for an acquisition, with Regency's
consent, which shall not be unreasonably withheld or delayed, the parties
shall enter into mutually agreed amendments to this Agreement (including
applicable Schedules) and to the applicable Transaction Documents taking
into appropriate account the additional Assets to be so acquired pursuant
to this Agreement.
5.5 Continuation of Employees. Midland Development agrees to use
reasonable commercial efforts to persuade those of its employees
designated by Regency in writing to Midland Development to accept
employment with the Partnership immediately following the First Closing,
and Regency agrees to cause the Partnership to hire such employees
immediately following the First Closing provided that any such employee
does not engage in malfeasance prior to the First Closing. Regency agrees
that any "stay bonuses" for such employees shall be an expense of the
Partnership. Regency shall pay severance compensation for employees whose
employment is terminated by Midland Development prior to the First Closing
or by the Partnership after the First Closing, in either case because
their services will not be required by the Partnership following the First
Closing; provided, however, that all such severance compensation shall not
exceed $50,000. Midland Development shall be responsible for any
severance compensation that exceeds such amount, and if any such excess
severance compensation is paid by the Partnership after the First Closing,
the Partnership shall be entitled to deduct such excess amount from the
Midland Group Earn-Out at the First Earn-Out Closing. Regency shall make
capital contributions to the Partnership for the purpose of funding
severance compensation or stay bonuses expressly assumed by Regency
hereunder. Nothing herein is intended to make any employee hired by the
Partnership other than an employee at will, and nothing herein is intended
to obligate Regency with respect to independent contractor brokers who
perform services for Midland Development.
5.6 Disclosure.
5.6.1 The parties hereto agree to cooperate in preparing and
distributing as promptly as practicable following the execution of this
Agreement, (i) a disclosure document for use by the Unit Recipients whose
consent is required under Section 6.1.2(b) in determining whether to
consent to the transactions contemplated by this Agreement, and (ii) a
disclosure document delivered to each other Unit Recipient notifying them
of this Agreement and the transactions contemplated hereby including (a)
the contribution of the Assets to the Partnership, (b) the distribution of
the proceeds therefrom to the Unit Recipients, (c) provisions in this
Agreement and the other Transaction Documents regarding other transactions
between the Regency Entities and Midland Development and the Midland
Principals, and (d) provisions in this Agreement and the other Transaction
Documents regarding other transactions involving OSTRS (collectively, the
"Disclosure Documents"). In either case, the Disclosure Documents shall
provide information to each Unit Recipient with respect to (i) Regency and
the Partnership, (ii) the Units to be issued at the First Closing and any
Subsequent Closing, (iii) the right of Unit Recipients to elect to redeem
Units for cash immediately following the First Closing and certain
consequences thereof, and (iv) the Redemption Rights applicable to Unit
Recipients in the event that such an election is not made, including in
certain circumstances the right to receive Shares pursuant to such
Redemption Rights. In addition to the applicable Disclosure Document,
each Unit Recipient shall receive a form of election relating to the right
to elect to redeem Units for cash immediately following the First Closing,
and, in the event such election is not made with respect to all Units
distributable to such Unit Recipient, (i) an investor questionnaire and
agreement between such Unit Recipient and the Partnership, (ii) a
Redemption Rights Agreement between such Unit Recipient and the
Partnership and (iii) a Registration Rights Agreement between such Unit
Recipient and the Partnership.
5.6.2 The Midland Principals, the Midland Affiliates and
each Property Owner agree to supply information for the Disclosure
Documents concerning such Property Owner, the Assets owned by it, the
solicitation of any required consents for the transactions contemplated by
this Agreement and the allocation among the equity owners of each
Contributor of the consideration to be received in exchange for the Assets
contributed by it.
5.6.3 Regency agrees to supply information concerning
Regency and the securities being offered by Regency or the Partnership to
the Unit Recipients pursuant to the transactions contemplated by this
Agreement.
5.6.4 The information provided by the Midland Principals,
Midland Affiliates and Property Owners for inclusion in the Disclosure
Documents is referred to hereinafter as the "Midland Information" and the
information provided by Regency for inclusion in the Disclosure Documents
is referred to hereinafter as the "Regency Information; provided, however,
that information concerning any Property Owner as adjusted in the pro
forma combined financial information relating to Regency or the
Partnership or which relates to the expected operation of the Assets as
part of Regency or the Partnership shall be deemed "Regency Information."
5.6.5 The Midland Principals and Regency each shall advise
the other if such party becomes aware of any additional information that
should be included in the Midland Information or the Regency Information,
respectively, for inclusion in the Disclosure Documents or a supplement
thereto.
5.6.6 Each Property Owner and Midland Affiliate covenants
that its Midland Information and each Midland Principal covenants that all
the Midland 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 therein or necessary
to make such Midland Information or the Regency Information, respectively,
that is included in the Disclosure Documents, in light of the
circumstances under which it was made, not misleading.
5.6.7 The Midland Principals, Property Owners and Midland
Affiliates acknowledge that nothing herein is intended to impose on
Regency, or relieve any Midland Principal, Property Owner or Midland
Affiliate of, the fiduciary duties such Person may have in connection with
consummating the transactions contemplated by this Agreement.
5.7 Exclusivity. Unless and until this Agreement is terminated
pursuant to its terms, no Midland Principal, Midland Affiliate or Property
Owner shall, directly or indirectly, through any Affiliate, 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 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 any Midland
Principal, Midland Affiliate, Property Owner or Affiliate of such Property
Owner 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 a Midland Principal, Midland Affiliate,
Property Owner or Affiliate of such Property Owner 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, whether in a single
transaction or a series of transactions, the sale by any Midland Principal
or Midland Affiliate of any equity interest in a Midland Affiliate or
Property Owner, or the sale or other transfer by any Contributor or Joint
Venture of its assets or business other than an Excluded Asset, 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 but shall exclude
(a) any transaction that results from the exercise by any equity owner of
a Property Owner (other than a Midland Principal or Midland Affiliate) of
a right of first refusal, option or buy-sell right the exercise of which
is triggered by the transactions contemplated by this Agreement, (b) any
sale of excess land or outparcels which do not constitute Option
Properties, or (c) any transfer of an equity interest in a Midland
Affiliate so long as the Midland Principals collectively own at least a
majority of the voting securities of each Midland Affiliate. 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.
5.8 New Contracts. Without Regency's prior written consent in each
instance (which shall not be unreasonably withheld or delayed), no
Property Owner will enter into, or grant concessions regarding, any
Contract that will be an obligation affecting the Properties or Option
Properties or binding on any Transferee or Joint Venture after the Closing
except Contracts entered into in the ordinary course of business that
either involve payments which total less than $10,000 in the aggregate or
are terminable without cause or any termination fee on 30 days' or less
notice, and each Property Owner agrees to terminate such Contracts by the
First Closing if Regency gives such Property Owner notice at least 60 days
prior to the First Closing.
5.9 Leasing Arrangements. As to any Lease in excess of 5,000 square
feet of usable space in any Property or Option Property, no Property Owner
will amend, terminate, grant 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, no Property Owner will amend, terminate,
grant concessions regarding, or enter into any new Lease without the prior
written consent of Regency (which will not be unreasonably withheld or
delayed) if such action would require approval by any owner of the
Property Owner, Topvalco, Xxxxxx or OSTRS. A new Lease shall be deemed
reasonable if in compliance (i) with the financial criteria contained in
the 1998 budget and/or (if applicable) the Development Budget and Schedule
as to such Property and (ii) with the Leasing Criteria. The respective
Property Owner 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). The respective Property Owner shall provide such information
concerning all other new Leases promptly after the execution of each new
Lease.
5.10 Obligation to Supplement Information. From time to time prior
to the First Closing, the Midland Principals, the Property Owners and
Midland Affiliates, on the one hand, and Regency, on the other hand, will
promptly disclose in writing to the other party any matter hereafter
arising or discovered which, if existing, 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 Midland Principals, Property Owners and Midland
Affiliates agree to provide Regency with prompt written notice of any
matter hereafter arising or discovered with respect to a Property or
Option Property which could have a Material Adverse Effect on the
condition, operations or prospects of such Property or Option Property.
No information provided to a party pursuant to this Section 5.10 shall be
deemed to cure any breach of any representation, warranty or covenant made
in this Agreement. Notwithstanding the foregoing, the parties contemplate
that certain Schedules to this Agreement will be updated periodically and
any such update shall not be deemed a breach of any representation,
warranty or covenant made with respect to the Schedule being updated if
the additional information contained in such update is not likely to cause
any damage or loss to the parties or parties who are the beneficiaries of
a corresponding representation, warranty or covenant or such update is
made in conformity with the following requirements. The Capital
Expenditure Budget and Schedule, the Development Budget and Schedule, the
TI Budget and Schedule and the list of TI Contracts (Schedule 1.1.146) may
be updated by the Contributors from time to time in the ordinary course of
business, with the prior written consent of Regency (which will not be
unreasonably withheld or delayed). A proposed change to a Development
Budget and Schedule shall be deemed reasonable if it would not reasonably
be expected to cause the Development Property to be developed at a loss.
5.11 Access to Information; Environmental Audits. At all times
before the First Closing, during customary business hours and other
mutually convenient times, the Property Owners and Midland Affiliates
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
their possession or control relating to their respective Properties and
Assets, the Third Party Management Assets and the business and operations
of the Property Owners 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, Regency and its Affiliates shall have
reasonable physical access to the Properties, which may be in the presence
of Midland Development personnel, for the purpose of conducting surveys,
architectural, engineering, geotechnical and environmental inspections and
tests (including sampling and invasive testing performed in connection
with Phase I and Phase II environmental audits), feasibility studies and
any other inspections, studies or tests reasonably required by them. With
reasonable advance notice to the respective Property Owners, Regency may
conduct a "walk-through" of tenant spaces upon appropriate notice to
tenants and subject to the rights of tenants, which "walk-throughs" shall,
at the option of Midland Development, be in the presence of and
accompanied by Midland Development personnel. 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, shall indemnify, defend and
hold the respective Property Owners harmless from all Claims and
Liabilities caused by Regency, its contractors or consultants that are
asserted against or incurred by the respective Property Owners as a result
of such entry and investigation and shall maintain insurance customary in
the industry with respect to such Claims and Liabilities. 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 Property
Owners and 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 herein by the other party is materially
inaccurate, it shall promptly notify and advise the other party.
5.12 Monthly Updates of Rent Rolls and Operating Statements. Each
Property Owner will promptly provide Regency with monthly updates of the
Rent Roll and operating statements for its Properties.
5.13 Tenant Estoppels. Each Property Owner shall endeavor to secure
and deliver to Regency estoppel certificates in the form of Exhibit 5.13
from all tenants under all Leases (collectively, the "Tenant Estoppels"),
dated no earlier than 30 days before the First Closing Date. Regency and
the Property Owners 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.
5.14 Service Contracts. The applicable Transferee will assume the
obligations arising from and after the First Closing Date under those
Service Contracts that are not in default as of the First Closing Date and
which the applicable Property Owner and Regency have agreed will not be
terminated and which are not terminable as a result of such assumption
under its terms. Each Property Owner shall terminate at the First Closing
all Service Contracts that such Property Owner has agreed will not be so
assumed to the extent such Service Contracts are terminable upon notice
and at no cost to the terminating entity.
5.15 Work Contracts. Ten days before the First Closing, each
Property Owner shall notify Regency in a written progress report as to
those Work Contracts that will not be completed by the First Closing.
5.16 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 (the Property Owners
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 commercial efforts to obtain such items as
promptly as practicable following the execution of this Agreement.
Regency will have the later of (i) ten (10) days from (x) the date of this
Agreement or (y) 30 days prior to the applicable Subsequent Closing with
respect to any Property to be conveyed by a Property Owner in which
Regency does not then own an equity interest, or (ii) twenty (20) 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 the Property Owner owning such Property 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 the
respective Property Owner owning the Property in question shall be deemed
a Permitted Exception. The respective Property Owner shall notify Regency
in writing within ten (10) days of Regency's notice if such Property Owner
intends to cure any Title Defect or other objection. If such Property
Entity elects to cure, it 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 such Property Owner's expense. If such
Property Owner elects not to cure or if such Title Defects and/or
objections are not cured and if such Title Defects and/or objections are
likely to have a Material Adverse Effect upon the Property ("Material
Uncured Title Defect"), Regency shall have the right, in its sole
discretion, subject to the satisfaction or waiver by Regency of the
condition to the First Closing set forth in Section 8.1.1 (aggregate
assets), to either (i) extend the time for the date of the Closing with
respect to such Property thirty (30) days to afford additional time for
the respective Property Owner to cure (after which Regency may proceed
under (ii) or (iii) if not cured); (ii) waive such Title Defects and/or
objections and close the purchase of the Property hereunder, subject to
Regency receiving a credit for the amount necessary to pay or bond off
such Title Defects; or (iii) elect not to acquire any or all Property
subject to such Material Uncured Title Defects and receive a credit for
the Contribution Value of such Property as set forth in Schedule 2.1
against the consideration required to be delivered by Regency at the First
Closing. In the case of a Title Defect that is not a Material Uncured
Title Defect, Regency's remedy shall be limited to receiving a credit
pursuant to clause (ii) in the preceding sentence. Any Property which
Regency elects not to acquire pursuant to clause (iii) above shall be an
Excluded Asset and shall no longer be subject to this Agreement.
5.17 Later Title Exceptions. In the event that a Property Owner
becomes aware that an exception to title has been filed of record
subsequent to the date of the Title Commitment and prior to the Closing (a
"Later Exception"), such Property Owner shall send written notice of such
Later Exception to Regency. Regency shall have the right to postpone the
Closing for a period up to thirty (30) days in order to give the
respective Property Owner owning the Property in question sufficient time
to satisfy, release, cure or remove such lien or exception. Upon such
Property Owner's cure, removal, insurance over or bonding off of any such
Later Exception, at such Property Owner's expense, the Closing shall be
scheduled upon ten (10) days prior written notice to the respective
Property Owner as to the Property in question but in no event earlier than
the First Closing Date notwithstanding such Later Exception. If such
Property Owner is unable, within said thirty-day period, or elects not to
cure, remove, bond off or otherwise dispose of any Later Exception, and if
such Later Exception is likely to have a Material Adverse Effect upon the
Property ("Material Later Exception"), Regency may in its sole discretion,
subject to the satisfaction or waiver by Regency of the condition to the
First Closing set forth in Section 8.1.1 (aggregate assets), either (i)
waive such objection to the Later Exception and proceed with the Closing,
receiving a credit for the amount necessary to pay or bond off such Later
Exception; (ii) postpone the date of the Closing with respect to such
Property for a reasonable time to allow the respective Property Owner
additional time to remedy said Later Exception, and if thereafter such
Property Owner is unable to remedy said Later Exception, at that time
Regency may elect either (i) or (iii); or (iii) elect not to acquire any
or all Property subject to such Later Exception and receive a credit for
the Contribution Value of such Property as set forth in Schedule 2.1
against the consideration required to be delivered by Regency at the
Closing. In the case of a Later Exception that is not a Material Later
Exception, Regency's remedy shall be limited to receiving a credit
pursuant to clause (i) in the preceding sentence. At the First Closing,
the Title Company will issue the Title Insurance. Any Property which
Regency elects not to acquire (pursuant to clause (iii) above) shall be an
Excluded Asset and shall no longer be subject to this Agreement.
5.18 Damage. The Property Owners shall promptly give Regency written
notice of any damage to their respective Properties, describing such
damage whether such damage is covered by insurance and the estimated cost
of repairing such damage. If such damage would not have a Material
Adverse Effect on the damaged Property, (i) the respective Property Owner
owning the Property in question 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 cure the
damage with respect to such Property prior to the First Closing (including
rent loss insurance applicable to any period from and after the First
Closing) due to a Property Entity for the damage, together with an
assignment of any unsettled insurance claim, and in the case of a Property
owned by a Joint Venture, such Joint Venture shall not assign, transfer or
encumber any such unapplied proceeds and unsettled insurance claim, (iii)
any uninsured damage, coinsurance or deductible and any rent abatement not
covered by rent loss insurance proceeds delivered to a Property Owner, as
reasonably estimated by Regency, shall be credited to the Partnership at
the First Closing, and (iv) and, in the case of a Property owned by a
Property Entity, 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 the respective Property Entity's insurance over
and above the actual cost of repair and restoration. If such damage is
likely to have a Material Adverse Effect on the damaged Property which
cannot be substantially remedied by applying insurance proceeds to cure
the Material Adverse Effect ("Unremedied Material Damage"), Regency may
elect, subject to the satisfaction or waiver by Regency of the condition
to the First Closing set forth in Section 8.1.1 (aggregate assets), by
notice to the respective Property Owner as to the Property in question
given within 20 Business Days after Regency is notified of such damage
(and the Closing as to such Property shall be extended, if necessary, to
give Regency such 20 Business Day period to respond to such notice) to
(i) proceed in the same manner as in the case of damage that is not
material, receiving a credit at the Closing equal to the amount by which
the Contribution Value of such Property as set forth on Schedule 2.1 is
reduced by such damage, or (ii) elect not to acquire the Property in
question and receive a credit for the Contribution Value of such Property
as set forth in Schedule 2.1 against consideration required to be
delivered by Regency at the Closing. In the case of damage that does not
constitute an Unremedied Material Damage, Regency's remedy shall be
limited to receiving a credit pursuant to clause (i) in the preceding
sentence. Any Property which Regency so elects not to acquire pursuant to
clause (ii) above shall be an Excluded Asset and shall no longer be
subject to this Agreement.
5.19 Condemnation. Each Property Owner 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. If the proceedings in eminent
domain would have a Material Adverse Effect on the Property subject to
such proceedings ("Material Eminent Domain Proceedings"), by notice to the
respective Property Owner as to the Property in question 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,
Regency may, subject to the satisfaction or waiver by Regency of the
condition to the First Closing set forth in Section 8.1.1 (aggregate
assets), (i) elect not to purchase the Property subject to such
proceedings and receive a credit for the Contribution Value of such
Property as set forth in Schedule 2.1 against the consideration required
to be delivered by Regency at the Closing, or (ii) proceed under this
Agreement. If Regency elects to proceed under this Agreement, the
respective Property Entity owning the Property in question shall assign to
the Partnership at the Closing its entire right, title and interest in and
to any condemnation award or, if the Property in question is owned by a
Joint Venture, such Joint Venture shall not assign any right, title or
interest in such 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 Closing as to such Property shall be extended to give
Regency the full 20 Business Day period to make such election. Any
Property which Regency elects not to acquire shall be an Excluded Asset
and shall no longer be subject to this Agreement.
5.20 Xxxxxxxxxx. Regency, the Midland Principals, OTR/Midland Ltd.
and the Midland Affiliates that own equity interests in OTR/Midland Ltd.
agree to use reasonable commercial efforts to enter into an agreement
together with Topvalco and the Property Entity that owns the Property
known as Xxxxxxxxxx substantially in the form attached hereto as Exhibit
5.20. In the event that the parties are unable to reach an agreement with
respect to such matters, Xxxxxxxxxx shall be deeded to the Partnership at
a Deferred Closing (as defined in Section 10.1.2) after it has been
platted; provided, however, that such Deferred Closing shall not be
required to take place within thirty (30) days of the First Closing.
5.21 Future Joint Venture Agreements. The Midland Principals shall
promptly provide to Regency true and complete copies of the governing
documents of each of the Kroger Joint Ventures and King Soopers Joint
Ventures to be formed with respect to the Acquisition Properties upon
formation of such Joint Ventures. Such governing documents shall be
substantially similar to the governing documents of each other Kroger
Joint Venture and King Soopers Joint Venture, respectively.
ARTICLE 6: REPRESENTATIONS, WARRANTIES AND FURTHER
COVENANTS OF MIDLAND
The representations and warranties contained in this Article 6 are
made as of the date of this Agreement. Except as specifically provided,
all representations and warranties contained in this Article 6 are several
and not joint and several; provided, however, that the representations of
Midland Development shall also be made jointly and severally by the
Midland Principals. The survival of and liability for the representations
and warranties contained in this Article 6 after the First Closing Date
shall be governed solely by Article 13 (Indemnification) hereof and the
remedies set forth in Article 13 shall be the sole remedies after the
First Closing Date for any breach of such representations and warranties.
All representations that are made "to the knowledge of the Midland
Principals" means to the actual knowledge of such individuals after
reasonable inquiry. All representations that are made "to the knowledge
of Midland Development" means to the actual knowledge of the individuals
listed on Schedule 6 after reasonable inquiry. All representations that
are made "to the knowledge of the Property Entity" means to the actual
knowledge of individuals for such Property Entity listed in Schedule 6
after reasonable inquiry. All representations that are made "to knowledge
of the Midland Affiliate" means to the knowledge of the individuals for
such Midland Affiliate listed on Schedule 6 after reasonable inquiry. All
representations that are made "to the knowledge of the Property Owner"
means to the actual knowledge of the individuals for such Property Owners
listed on Schedule 6 after reasonable inquiry. The Midland Principals,
each Midland Affiliate (as to the individuals shown on Schedule 6 with
respect to such Midland Affiliate) and each Property Entity (as to the
individuals shown on Schedule 6 with respect to such Property Entity)
represent 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 Option Properties, the Midland
Affiliates, the Property Entities and the Joint Ventures and that such
individuals have made reasonable inquiry to have a reasonable basis for
the matters represented.
6.1 As to Property Entities, Joint Ventures, Midland Affiliates and
Midland Principals. Each Property Entity (including Midland Development),
as to itself, and each Midland Affiliate, as to itself and as to any
Property Entity or Joint Venture in which it owns an interest, and each
Midland Principal, as to himself, represents and warrants as follows:
6.1.1 Due Organization, etc. Such Property Entity, Joint
Venture and Midland Affiliate is duly organized, validly existing and in
good standing under the Laws of its respective jurisdiction of
organization, with all requisite power and authority to own, lease,
operate and sell its assets and to carry on its businesses as they are now
being conducted. Such Property Entity, Joint Venture and Midland
Affiliate is in good standing as a foreign entity authorized to do
business in each jurisdiction where it engages in business.
6.1.2 Due Authorization; Consents; No Violations.
(a) Such Property Entity, Joint Venture and Midland
Affiliate has made available to Regency true and complete copies of its
respective partnership agreement or other governing document, as
applicable, including each amendment thereto, of which a complete list is
set forth on Schedule 6.1.2(a). Such Property Entity and Midland
Affiliate has full power and authority to enter into this Agreement and
the Transaction Documents, and to consummate the transactions contemplated
hereby and thereby, and the Persons executing this Agreement and
applicable Transaction Documents on behalf of such Property Entity or
Midland Affiliate have been duly authorized to do so on behalf of such
Property Entity or Midland Affiliate. Subject to the last sentence of
this paragraph, the execution, delivery and performance by such Property
Entity or Midland Affiliate 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 such Property Entity or
Midland Affiliate and by all necessary partnership, corporate or other
applicable action, and no other action or proceeding on the part of any
Midland Principal, Property Entity or Midland Affiliate or any other
Person is necessary to authorize this Agreement and the Transaction
Documents to be executed and delivered by such Midland Principal, Property
Entity or Midland Affiliate pursuant hereto and the transactions
contemplated hereby and thereby, other than obtaining the consents set
forth on Schedule 6.1.2(b). Subject to the last sentence of this
paragraph, this Agreement has been duly and validly executed and delivered
by such Midland Principal, Property Entity and Midland Affiliate and,
assuming due authorization, execution and delivery of this Agreement by
the other parties hereto, this Agreement constitutes, and the Transaction
Documents to be executed and delivered by such Midland Principal, Property
Entity or Midland Affiliate pursuant to this Agreement when executed will
constitute, valid and binding obligations of each such Midland Principal,
Property Entity or Midland Affiliate 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. The representations and warranties
contained in this paragraph are subject to obtaining the required consents
under the applicable partnership agreement or operating agreement or other
governing document with respect to such Property Entity or Midland
Affiliate, which consents are listed in Schedule 6.1.2(b).
(b) Except for obtaining the consents set forth on
Schedule 6.1.2(b), no consents, waivers, exemptions or approvals of,
notices to, or filings or registrations by such Midland Principal,
Property Entity, Joint Venture or Midland Affiliate 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 such Midland
Principal, Property Entity or Midland Affiliate of this Agreement or the
Transaction Documents to which he or it is a party or to be delivered by
Midland Principals, Property Entities and Midland Affiliates pursuant to
this Agreement or the consummation of the transactions contemplated hereby
and thereby which involve responsibilities by such Property Entity or
Midland Affiliate, including but not limited to notices to any employees
thereof.
(c) Upon obtaining those consents set forth on Schedule
6.1.2(b) (and assuming receipt of such consents), the execution, delivery
and performance by such Midland Principal, Property Entity and Midland
Affiliate of this Agreement and the Transaction Documents to be executed,
delivered and performed by such Midland Principal, Property Entity and
Midland Affiliate pursuant hereto, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i)
violate any Law or Order; (ii) 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,
or will result in the termination of, or accelerate the performance
require by, or permit cancellation of, or result in the creation of any
Lien upon any of his or its Assets under any Contract to which such
Midland Principal, Property Entity, Joint Venture or Midland Affiliate is
a party or by which such Midland Principal, Property Entity, Joint Venture
or Midland Affiliate or any of his or its Assets are bound or by which
such Midland Principal, Property Entity, Joint Venture or Midland
Affiliate or any of his or its Assets may be affected; (iv) permit the
acceleration of the maturity of any indebtedness of such Midland
Principal, Property Entity, Joint Venture or Midland Affiliate or any
indebtedness secured by his or its Assets; or (v) violate or conflict with
any provision of the partnership agreement or governing document of such
Property Entity, Joint Venture or Midland Affiliate.
(d) Except as set forth in the Allocation Chart, no Person
holds any options, warrants, securities or other rights with respect to
such Property Entity, Joint Venture or Midland Affiliate entitling, or
which if exercised would entitle, them to receive Units or Additional
Units to be delivered pursuant to this Agreement.
6.1.3 Existing Mortgage Debt. Except as set forth on
Schedule 6.1.3, there are no defaults (and no Property Entity, Joint
Venture or Midland Affiliate has received any notice of a default asserted
by any lender) under the Existing Mortgage Debt of such Property Entity,
Joint Venture or Midland Affiliate, or facts or circumstances which
through the passage of time or the giving of notice, or both, would result
in such a default, nor will such Property Entity or Midland Affiliate
cause or permit any default to occur thereunder 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
substantially in conformity with the Development Budget and Schedule and
the TI Budget and Schedule. The documents described on Schedule 1.1.40
are all of the loan documents executed in connection with such Existing
Mortgage Debt of such Property Entity, Joint Venture or Midland Affiliate,
and such documents have not been modified or amended except as noted
thereon. The aggregate principal balance outstanding to each lender under
such Existing Mortgage Debt as of the Recent Balance Sheet Date is set
forth on Schedule 1.1.40.
6.1.4 Financial Statements. To the knowledge of such
Property Entity or Midland Affiliate, the financial statements of such
Property Entity or Joint Venture reflected in the Midland Financial
Statements fairly present the financial condition, results of operations
and cash flows of such Property Owner for the periods indicated therein,
do not reflect any transactions which are not bona fide transactions of
such entity, have been prepared in accordance with the books and records
of such entity and make full and adequate disclosure of, and provision
for, all Liabilities of such entity required to be reflected in accordance
with GAAP as of the dates thereof. Regency and its independent certified
accountants shall be given access to the books of such entity at any time
prior to the First Closing upon reasonable advance notice in order that
they may prepare audited financial statements described in Section 14.1.
6.1.5 No Adverse Change. To the knowledge of such Midland
Affiliate or Property Entity, since the Recent Balance Sheet Date, there
has not been (i) any event, circumstance or change in such Property
Entity, Joint Venture or Midland Affiliate, its respective business or
prospects which would cause or reasonably be expected to result in a
Material Adverse Effect on any such entity or its Assets, or (ii) any
material loss, damage or destruction to any of its Assets (whether or not
covered by insurance) or any other event or condition which has had or is
likely to have a Material Adverse Effect on such entity or its Assets.
Since the Recent Balance Sheet Date, there has not been any sale, lease or
other transfer or disposition of the Assets of such Property Entity, Joint
Venture or Midland Affiliate, or any cancellation of any debts or claim of
any such entity, except in the ordinary course of its business. Since the
Recent Balance Sheet Date, such Property Entity's, Joint Venture's or
Midland Affiliate's business has been conducted in all material respects
only in the ordinary course and with respect to any of its Properties,
consistent with its contemplated use.
6.1.6 No Litigation. Except as set forth on Schedule 6.1.6,
there is no Litigation pending or, to the knowledge of such Midland
Principal, Midland Affiliate or Property Entity, threatened (a) against
such Property Entity, Joint Venture, Midland Affiliate or the Assets of
such Property Entity, Joint Venture or Midland Affiliate, the Option
Properties of such Property Entity or Joint Venture or its respective
business or directors or officers or Persons performing comparable
functions (in such capacity), or (b) which challenges or impairs such
Midland Principal's, Property Entity's or Midland Affiliate's ability to
execute, delivery or perform its obligations under this Agreement and the
Transaction Documents to be executed and delivered by such Midland
Principal, Property Entity or Midland Affiliate pursuant to this
Agreement, nor does such Midland Principal, Property Entity or Midland
Affiliate know of any facts which are reasonably likely to be the basis
for any such Litigation. Except as set forth on Schedule 6.1.6, neither
such Midland Principal, Property Entity or Midland Affiliate nor any of
the Assets or Option Properties of such Midland Principal, Property
Entity, Joint Venture or Midland Affiliate is subject to any Order.
6.1.7 Leased Real Property. Schedule 6.1.7 lists all leases
pursuant to which such Property Entity, Joint Venture or Midland Affiliate
holds any real property used in connection with its respective business.
True and complete copies of all such leases have been delivered to
Regency, together with copies of all reports of any engineers,
environmental consultants or other consultants which relate to any
property subject to such a lease, if any.
6.1.8 Leased Personal Property. Schedule 6.1.8 lists all leases
pursuant to which such Property Entity or Joint Venture holds equipment,
vehicles, furniture or any other item of personal property used in
connection with its respective business, other than leases terminable
without penalty on less than thirty (30) days or less notice or requiring
less than $10,000 in aggregate payments over the remaining term of the
lease. All of the personal property leased by such Property Entity or
Joint Venture under such leases is presently utilized by such Property
Entity or Joint Venture in the ordinary course of its business. True and
complete copies of all such leases have been made available to Regency.
6.1.9 Intellectual Property. Except for the "Midland" name and
the name of each individual Property, 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 such Midland
Principal, Property Entity or Joint Venture that are material to the
conduct of the business of such Property Entity or Joint Venture.
6.1.10 Contracts. Except as set forth on Schedule 6.1.10,
and except for the partnership agreements, operating agreements or other
governing documents of the Joint Ventures listed on Schedule 6.1.2(a), and
those other contracts disclosed elsewhere in the Schedules to this
Agreement, including but not limited to the Leases described on the Rent
Roll, Schedules 1.1.2 (Acquisition Contracts), 1.1.27 (Development
Contracts), 1.1.40 (Existing Mortgage Debt), 1.1.70 (Management
Contracts), 1.1.125 (Repair Contracts), 1.1.134 (Service Contracts),
1.1.146 (TI Contracts), 6.1.7 (Leased Real Property), 6.1.8 (Leased
Personal Property), 6.1.11 (Insurance Policies) and 6.2.7 (Brokers),
include all of the Contracts of the following types (i) to which such
Joint Venture is a party or is bound, (ii) to which such Property Entity
is a party or is bound and which its respective Transferee is assuming, or
(iii) to which any of the Assets or Option Properties of such Property
Entity or Joint Venture are subject or are bound:
(a) all property management agreements, asset management
agreements, and development agreements;
(b) all partnership agreements or other governing
documents;
(c) any Contract of any kind with any equity owner of the
Property Entity or Joint Venture or any Affiliate of such equity owner;
(d) any Contract with a dealer, broker, leasing agency,
advertising agency or other Person engaged in sales, or promotional
activities (other than Contracts terminable without penalty on thirty (30)
days or less notice or requiring less than $10,000 in aggregate payments
under the remaining term of the contract);
(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 the Property Entity or
Joint Venture has made or will make loans or advances, or has or will have
incurred debts or become a guarantor, indemnitor or surety or pledged its
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
the Property Entity or Joint Venture with respect to the geographical area
of operations or scope or type of business of the Property Entity or Joint
Venture;
(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 the Midland Principal, Property
Entity, Joint Venture or Midland Affiliate;
(k) any Contract under which the requirements for
performance extend beyond thirty (30) days from the date of this Agreement
(other than Contracts requiring less than $10,000 in aggregate payments
over the term of the contract); and
(l) all other Contracts relating to the business of the
Property Entity or Joint Venture not made in the ordinary course of
business which are to be performed at or after the date of this Agreement
(other than Contracts terminable without penalty on thirty (30) days or
less notice or requiring less than $10,000 in aggregate payments over the
term of the contract).
Such Property Entity, Joint Venture or Midland Affiliate has made
available to Regency each Contract listed on Schedules 1.1.2 (Acquisition
Contracts), 1.1.27 (Development Contracts), 1.1.40 (Existing Mortgage
Debt), 1.1.70 (Management Contracts), 1.1.125 (Repair Contracts), 1.1.134
(Service Contracts), 1.1.146 (TI Contracts), 6.1.7 (Leased Real Property),
6.1.8 (Leased Personal Property), 6.1.11 (Insurance Policies) and 6.2.7
(Brokers) with respect to its business or Assets, and a written
description of each oral arrangement so listed. All such Contracts are
duly authorized and enforceable in accordance with their terms by such
Property Entity or Joint Venture, 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.
6.1.11 Insurance. The Property Entity or Joint Venture has
in full force and effect policies of insurance of the types and amounts
customarily maintained by organizations similarly situated sufficient to
insure it against loss of its respective Assets and Option Properties and
will continue to maintain all such insurance in full force and effect up
to and including the First Closing Date. Schedule 6.1.11 is a list of all
casualty, liability, business interruption and other insurance policies
insuring against loss of its Assets and Option Properties. True and
complete copies of such policies shall be delivered to Regency as promptly
as practicable following the date of this Agreement. The parties shall
use reasonable commercial efforts to (i) determine whether there will be
any gaps in insurance for the Property Entities and Joint Ventures, on the
one hand, and the Transferees, on the other hand, in their respective
insurance coverages before and after the First Closing, and (ii) name each
other, where appropriate, at no additional cost as additional named
insureds on each other's policies.
6.1.12 Tax Matters.
(a) No Midland Tax is Payable by Transferees. Except as
provided on Schedule 6.1.12, and except to the extent reflected in the
Proration Items, there are no unpaid Taxes arising from the operation of
the business of the Property Entity or Joint Venture (or as a result of
the Property Entity or Joint Venture 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 Joint Venture or any
Transferee will become liable or which will become a Lien against any of
the Assets or Option Properties of such Property Entity or Joint Venture
following the First Closing, including but not limited to payroll,
withholding and social security Taxes for any employee or person deemed to
be an employee of such entity.
(b) Tax Audits. Except as provided on Schedule 6.1.12,
such Property Entity or Joint Venture has not 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 such
Property Entity or Joint Venture, nor (iii) any notice of audit with
respect to any Tax, nor is such Property Entity or Joint Venture 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 such Property Entity or Joint Venture.
(c) Leases. All of the services provided by the Property
Entity or Joint Venture (or any other Person acting as lessor or landlord
for any of its Assets or Option Properties) to the tenants of its
Properties (including the Development Properties) or Acquisition
Properties under its respective leases are customary in that geographic
area for first class shopping centers and are primarily for the
convenience of the tenant as described in Section 856(d) of the Code. No
formula for determining percentage rents under any lease with a tenant of
the Property Entity or Joint Venture (including the Development
Properties) or any of its Acquisition Properties has the effect of basing
such rent on the income (as opposed to revenues) or profits of any
Persons. Any rent payable by tenants of its Properties (including the
Development Properties) or its Acquisition Properties attributable to
personal property does not exceed 15% 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). Schedule 1.1.134 lists
any Service Contract (including those which are terminable without penalty
on thirty (30) days or less notice or requiring less than $10,000 in
aggregate payments over the remaining term of the contract) for the
provision of services to any Property as to which the Property Entity or
Joint Venture receives a xxxx-up.
6.2 Representations of Midland Principals, the Property
Entities and the Midland Affiliates. The following representations are
made jointly and severally by the Midland Principals as to each matter set
forth herein (except as to Section 6.2.1 and 6.2.2 for which each Midland
Principal represents severally as to himself and in the case of Section
6.2.2, jointly and severally as to each entity named therein in which such
Midland Principal owns an equity interest), by each Property Entity, as to
itself, and by each Midland Affiliate, as to itself, and as to each
Property Entity in which it owns an equity interest:
6.2.1 Retained Properties. Other than the real property
constituting Excluded Assets and the real property identified on Schedule
6.2.1, such Midland Principal does not, directly or indirectly, (a) own
more than a 20% interest in real property which is either presently or is
contemplated to be a grocery store anchored shopping center ("Grocery
Related Real Estate") and which is not an Asset or an Option Property
hereunder, (b) possess the right to acquire any interest in Grocery
Related Real Estate ("Acquisition Rights") which is not an Acquisition
Contract, or (c) possess the right, directly or indirectly, to develop or
redevelop Grocery Related Real Estate ("Development Rights") other than
the Development Contracts. For purposes of this Section 6.2.1, a Midland
Principal's passive investment in securities of a publicly traded
enterprise which, together with any of such Midland Principal's
Affiliates, does not exceed 5% of the outstanding shares of the publicly-
traded stock of such enterprise shall not constitute the foregoing
indirect ownership or possession.
6.2.2 Securities.
(a) Such Property Entity will acquire the Units for its
own account and not with a view to or for sale in connection with any
public distribution thereof within the meaning of the Securities Act,
except that the Units may be distributed to the Unit Recipients pursuant
to the transactions contemplated by this Agreement, and such Midland
Principal receiving Units in such distribution will acquire such Units for
his own account and not with a view to or for sale in connection with any
public distribution.
(b) Such Midland Principal, Property Entity and Midland
Affiliate has sufficient knowledge and experience in financial and
business matters to enable him or it to evaluate the merits and risks of
investment in the Units and the Common Stock issuable upon exercise of the
Redemption Rights (collectively, the "Regency Securities"), and has the
ability to bear the economic risk of acquiring the Regency Securities.
(c) Such Midland Principal, Property Entity and Midland
Affiliate has been furnished with a copy of the Regency Exchange Act
Reports and all other materials which he or it has requested from Regency,
and such Midland Principal, Property Entity and Midland Affiliate has had
a full opportunity to ask questions of and receive answers from Regency or
Persons acting on behalf of Regency concerning Regency and the terms and
conditions of the acquisition of the Regency Securities.
(d) Such Midland Principal, Property Entity and Midland
Affiliate hereby acknowledges that the Regency Securities are not
registered under the Securities Act or any state securities Laws and
cannot be resold without registration thereunder or exemption therefrom.
Such Midland Principal, Property Entity and Midland Affiliate agrees that
he or it will not transfer all or any portion of the Regency Securities
except as contemplated hereby unless such transfer has been registered or
is exempt from registration under the Securities Act and any applicable
state securities Laws, and he or it shall require the Unit Recipients to
be bound by the same agreement as a condition of the distribution to them
of the Units. The Regency Securities shall, unless otherwise registered,
contain a prominent legend with respect to the restrictions on transfer
under the Securities Act and other applicable state securities Laws.
(e) To the knowledge of the Midland Principals, no more
than 35 Unit Recipients do not qualify as an "accredited investor," as
such term is defined in Regulation D promulgated under the Securities Act.
Each such Midland Principal is such an "accredited investor."
(f) Schedule 6.2.2(f) lists the jurisdiction of residence
of each Unit Recipient.
6.2.3 Distributions and Payments. Upon obtaining the consents
set forth in Schedule 6.1.2(b) applicable to such Property Entity and upon
the execution of the other documents contemplated by this Agreement,
Midland Affiliate or Joint Venture, the allocation of the consideration,
including Units and Additional Units, to be received in exchange for the
Assets among all of the equity owners of the respective Contributor as
described in Article 2 of this Agreement (including the Allocation Chart)
or set forth elsewhere in the Transaction Documents will not violate (or
when such Transaction Document is executed will not violate) any of the
partnership agreements or other governing documents applicable to such
Property Entity, Joint Venture or Midland Affiliate, and neither the
Partnership nor Regency shall have any Liability as to any such matters.
The Midland Principals represent and warrant that such allocation among
all the Contributors of the consideration, including Units and Additional
Units, to be received in exchange for the Assets will not violate any
governing documents, agreements or duties applicable to any Property
Entity, Joint Venture or Midland Affiliate, and neither the Partnership
nor Regency shall have any Liability as to any such matters.
6.2.4 Tax Advice. The Midland Principals, Property Entities,
Joint Ventures and Midland Affiliates have relied on their accountants,
attorneys and other advisors for advice in connection with structuring the
transactions contemplated by this Agreement and are not relying on Regency
or Regency's accountants, attorneys or other advisors with regard to the
structure of such transactions.
6.2.5 Foreign Person. No Unit Recipient, Property Entity or
Midland Affiliate is a "foreign person" within the meaning of Section
1445(f)(3) of the Code, and each Unit Recipient, Property Entity and
Midland Affiliate will furnish to the Partnership, if requested by the
Partnership, an affidavit in form satisfactory to the Partnership
confirming the same.
6.2.6 No Employees. Except as set forth on Schedule 6.2.6, no
Property Entity or Joint Venture has ever had any employees.
6.2.7 Brokers. Except as disclosed on Schedule 6.2.7, 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 any Midland Principal, Property Entity, Joint Venture
or Midland Affiliate in connection with the transactions contemplated by
this Agreement.
6.2.8 Insolvency. There is not pending (nor to the knowledge of
such Property Entity or such Midland Affiliate threatened) against any
Property Entity, Joint Venture or Midland Affiliate a petition in
bankruptcy or any other insolvency proceeding, whether voluntary or
otherwise, any petition seeking reorganization or arrangement or
appointment of a receiver or trustee, or any other action brought under
the bankruptcy laws of the United States or any state, nor has any
Property Entity, Joint Venture or Midland Affiliate made an assignment for
the benefit of creditors, nor entered into an arrangement with creditors,
nor admitted in writing its inability to pay debts as they become due.
6.3 Additional Matters Relating to Joint Ventures. Each
Midland Affiliate that owns an interest in a Joint Venture and each
Midland Principal owning an interest in such Midland Affiliate hereby
represents and warrants as follows with respect to such Joint Venture:
6.3.1 Tax Matters. The Joint Venture is qualified, and since the
date of its formation has been qualified to be treated as a partnership
for federal income tax purposes. The Joint Venture has never applied for
any Tax ruling or entered into a closing agreement with any Taxing
authority.
6.3.2 No Defaults. Except to the extent any default or non-
compliance is not likely to cause a Material Adverse Effect as to such
Joint Venture, the Joint Venture has not: (a) breached any provision of,
nor is it in default under the terms of, any Contract to which it is a
party or under which it has any rights or by which it is bound or which
relates to its businesses, Assets or Option Properties and to the
knowledge of the Midland Affiliate, no other party to any such Contract
has breached such Contract or is in default thereunder (nor has the Joint
Venture waived any such default), and to the knowledge of the Midland
Affiliate, 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 the Joint Venture or by any such
other party, or give right to an automatic termination or the right of
discretionary termination thereof; (b) each of the Joint Venture and the
Midland Affiliate owning an interest therein has complied with its
obligations, and has not breached any of its duties, under the respective
partnership agreement or other documents governing such entity; (c) each
of its Assets and Option Properties is in compliance with, and no
violation exists under, any Law or Order applicable in any way to the
Joint Venture, any of its Assets or Option Properties; and (d) no notice
from any Government Entity has been received by or on behalf of the Joint
Venture claiming any violation of any Law (including any building, zoning
or other ordinance) or Order, or requiring any work, construction or
expenditure.
6.3.3 Other. Except as disclosed on Schedule 6.3.3, the Joint
Venture has not succeeded to the Liabilities of any other Person by
operation of Law pursuant to a purchase of stock, merger, consolidation or
similar transaction.
6.4 Additional Representations of Midland Development. The
following representations are made by Midland Development and by each
Midland Principal, jointly and severally:
6.4.1 No Defaults. Except to the extent any default or non-
compliance is not likely to cause a Material Adverse Effect as to Midland
Development or the Third Party Management Assets, Midland Development has
not: (a) breached any provision of, nor is it in default under the terms
of, any Contract 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 and Assets and to
the knowledge of the Midland Principals, no other party to any such
Contract has breached such Contract or is in default thereunder (nor has
Midland Development waived any such default), 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 Midland Development or by any such other party, or give right to
an automatic termination or the right of discretionary termination
thereof; (b) Midland Development has complied with its obligations, and
has not breached any of its duties, under the documents governing such
entity; (c) its Assets are in compliance with, and no violation exists
under, any Law or Order applicable in any way to Midland Development or
its Assets; and (d) no notice from any Government Entity has been received
by or on behalf of Midland Development claiming any violation of any Law
(including any building, zoning or other ordinance) or Order, or requiring
any work, construction or expenditure.
6.4.2 Management Contracts. Except as disclosed on Schedule
6.4.2 and except as would not be likely to cause a Material Adverse Effect
as to Midland Development or the Third Party Management Assets, no other
party to a Management Contract has rights of set-off or counterclaim
against Midland Development under such Management Contract. Except as set
forth on Schedule 6.4.2, neither Midland Development nor any Midland
Principal has received notice of termination of any Management Contract
from any other party thereto, nor is Midland Development or any Midland
Principal aware that any other party presently intends to terminate, or
contemplates terminating a Management Contract.
6.4.3 Permits. To the knowledge of Midland Development and each
Midland Principal, except as provided on Schedule 6.4.3, the Third Party
Management Business possesses 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 such business, the absence of which would have
a Material Adverse Effect.
6.4.4 Title To and Condition of Assets. Midland Development has
good and marketable title to its Assets, free and clear of all Liens other
than the Permitted Exceptions. To the knowledge of the Midland Principals
and Midland Development, the tangible assets constituting the Assets owned
by Midland Development are free from defects that would have a Material
Adverse Effect on Midland Development or the Third Party Management
Business.
6.4.5 Employee Benefit Plans.
(a) Disclosure. Schedule 6.4.5 identifies each employee
benefit plan, fund, program, contract, policy or arrangement covering or
benefitting employees of Midland Development, 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 Transferees, the Assets, or the
Option Properties to any Liability or the imposition of any Lien;
(2) If any such plan were terminated, neither the
Transferees, the Assets nor the Option Properties would be subject,
directly or indirectly, to any Liability or the imposition of any Lien;
(3) No condition or event has occurred, currently
exists or currently is expected to occur, including violations of any
Laws, that could subject, directly or indirectly, the Transferees, the
Assets or the Option Properties to any Liability or the imposition of any
Lien;
(4) No such plan is a "multiemployer plan" or
"defined benefit plan" (as defined in Section 4001 of ERISA), and neither
Midland Development nor any member of its controlled group (as defined in
Section 4001(a)(14) of ERISA) has ever contributed or 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 Transferees, the Assets or the Option
Properties to any Liability or the imposition of any Lien under ERISA as a
result of Midland Development having 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 prior to the First
Closing Date.
6.4.6 Other Employee Matters. Midland Development 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, the
violation of which would have a Material Adverse Effect on any Property
Entity, Joint Venture, the Third Party Management Assets or the
transactions contemplated by this Agreement.
6.5 As to the Properties. Each Property Entity (other than
Midland Development), as to itself, each Midland Affiliate, as to itself
and as to any Property Entity or Joint Venture in which it owns an
interest, and each Midland Principal, as to himself and to each of the
foregoing in which he owns an equity interest, makes the representations
and warranties set forth in this Section 6.5. For purposes of this
Section 6.5, each Property Entity (other than Midland Development) and
Joint Venture is referred to as a "Property Owner."
6.5.1 Title; Purchase Commitments. Except for that portion of
the Worthington Shopping Center which is a ground leasehold interest held
by the Property Owner as a tenant, the Property Owner is the sole owner
of, and has had good and indefeasible title to an undivided fee simple
interest in its Properties and Option Properties, subject only to the
Permitted Exceptions. The Property Owner shall cause the encumbrances
listed on Schedule 6.5.1 to be fully paid and discharged of record on or
prior to the First Closing Date. The Property Owner has not entered into
any agreement to lease, sell, mortgage or otherwise encumber or dispose of
its interest in its Properties and Option Properties or any part thereof,
except with respect to the Existing Mortgage Debt, the Permitted
Exceptions, and this Agreement.
6.5.2 Physical Condition. All buildings and improvements on the
Properties of the Property Owner and all Personal Property constituting a
part thereof, including, without limitation, all heating and air
conditioning equipment, plumbing and electrical systems and paving are in
as good condition and repair as was the case on the date of Regency's (or
its representatives') on-site inspection of such Properties (as set forth
in Schedule 6.5.2), except items calling for repair due to normal wear and
tear. Without limiting the generality of the foregoing, except for the
Properties set forth on Schedule 6.5.2 or as disclosed in the Capital
Expenditure Budget and Schedule, to the knowledge of such Property Owner,
Midland Affiliate and Midland Principal, the roofs, walls and foundations
of the buildings are free from leaks and seepage of moisture except as
disclosed in the engineering reports prepared on behalf of Regency or the
applicable Transferee in respect of such Properties or in Schedule 6.5.2.
6.5.3 Rentable Area and Parking Spaces. With the exception of
the Development Properties and Acquisition Properties, each Property of
the Property Owner, on the First Closing Date, will contain the number of
square feet of rentable area and number of parking spaces specified in
Schedule 6.5.3. Each Development Property and Acquisition Property is
projected to contain the number of square feet of rentable area and number
of parking spaces specified in Schedule 6.5.3.
6.5.4 Compliance with Laws. To the knowledge of such Property
Owner, Midland Affiliate and Midland Principal (without inquiry of any
tenants of the Properties or Option Properties), other than non-compliance
or violations which are not likely to have a Material Adverse Effect, each
Property or Option Property of such Property Owner and the operation
thereof conform with all applicable Laws of all applicable public
authorities and private restrictions except for non-conformity or
violations which are disclosed on Schedule 6.5.4, and each such Property
(or in the case of Development Properties and Acquisition Properties, upon
completion) may be operated in its present manner as a shopping center and
with all accessory uses which now exist for such Property without
violating any federal, state, local or other governmental building,
zoning, health, safety (including, without limitation, fire and life
safety), disability-related, platting or subdivision Laws, or any
applicable private restrictions, and no such use is a preexisting,
nonconforming use. Except as contained in Schedule 6.5.4, no notices or
citations of any applicable private restriction or of the violation of any
zoning regulation or directive of any governmental authority or
authorities having jurisdiction relating to any such Property or Option
Property or any parts thereof have been received by the Property Owner,
Midland Affiliate or Midland Principal other than restrictions or
violations not likely to have a Material Adverse Effect.
6.5.5 Insurability. Neither the Property Owner, the Midland
Affiliate nor the Midland Principal, nor to the knowledge of such Property
Owner, Midland Affiliate or Midland Principal, any tenant of any Property
or Option Property of such Property Owner, has received any notices from
any insurance company of any defects or inadequacies in such Property or
Option Property or any part thereof which would affect adversely the
insurability of such Property or Option Property, and, to the knowledge of
the Property Owner, Midland Affiliate or Midland Principal, each such
Property or Option Property complies with the requirements of all
insurance carriers providing insurance therefor.
6.5.6 Utilities; Permits. Except for the Properties set forth on
Schedule 6.5.6, all water, sewer, gas (if any) , electric, telephone and
drainage facilities and any other utilities required by law for the normal
operation of each Property of the Property Owner are installed to the
property line thereof and are connected with valid permits, and are
sufficient to permit full compliance with all requirements of Law and of
the Leases applicable thereto. Except for the Properties set forth on
Schedule 6.5.6, all permits and connection fees with respect to such
Properties are fully paid and any action necessary on the part of the
Property Entity to transfer such permits will be accomplished as of the
First Closing.
6.5.7 Contract Payments. Except for the Development Properties,
the applicable Property Owner will have paid for all work, labor and
material furnished to each Property on or prior to the First Closing Date
except as disclosed on Schedule 6.5.7 in respect of the punch list items
for which there is retainage, and there will be no Liens or the
possibility thereof in connection therewith relating to any work or labor
done or materials furnished prior to the First Closing Date, except as
disclosed on Schedule 6.5.7.
6.5.8 Assessments. Each Property of the Property Owner is
assessed for full value as a completed unit for real estate tax purposes,
except as set forth on Schedule 6.5.8. Except as set forth on Schedule
6.5.8, neither the Property Owner, the Midland Affiliate nor the Midland
Principal has received any notice or order from any governmental authority
in respect of any proposed change in the valuation of such Property or
Option Property for personal property or real estate tax purposes from
that assessed for the current assessment period, nor do such Property
Owner, Midland Affiliate or Midland Principal know of any action or
proceeding designed to levy any special assessments against such Property
or Option Property. Neither the Property Owner, the Midland Affiliate nor
the Midland Principal have been notified of possible future improvements
by any public authority, any part of the cost of which would or might be
assessed against such Property or Option Property or of any contemplated
future assessments of any kind, except as set forth on Schedule 6.5.8.
6.5.9 Accuracy of Documents. The Contracts, Leases and other
documents pertaining to each Property or Option Property of the Property
Owner which have been or will be delivered by the Property Owner to the
applicable Transferee hereunder will be true, accurate and complete and
constitute all Leases and Contracts with respect to such Property or
Option Property as of the First Closing Date.
6.5.10 Rent Roll and Leases. The Rent Rolls attached hereto
as Schedule 1.1.124 are complete and accurate as to each Property and
Option Property of the Property Owner; each Lease with respect to such
Property or Option Property is in full force and effect; no tenant or any
other person has any option to renew or extend its Lease except to the
extent indicated on Schedule 6.5.10 and no tenant or any other person has
any other right to possess or acquire any interest in any part of such
Property or Option Property; to the knowledge of the Property Owner, the
Midland Affiliate or the Midland Principal, no tenant under the Leases
with respect to such Property or Option Property is in default thereunder
except to the extent indicated on Schedule 6.5.10; the landlord under each
of such Leases has neither committed nor suffered any act or omission
which with the giving of notice or the lapse of time, or both, would
constitute a default on its part, or would entitle the respective tenants
thereunder to damages under the terms of any of such Leases or a right of
set-off or a right to terminate the Lease; none of the tenants has
notified any Property Owner, Midland Affiliate or Midland Principal in
respect of any materially defective condition of such Property or Option
Property or of any material alleged default on the part of any such
Property Owner, Midland Affiliate or Midland Principal except to the
extent indicated on Schedule 6.5.10; no tenant under any of such Leases
has paid any rental more than thirty (30) days in advance (other than as
required by its Lease) or is in arrears in rent payments for more than
thirty (30) days, except to the extent listed on Schedule 6.5.10; except
as provided in Schedule 6.5.10 as of the date hereof in respect of such
Property or Option Property, all tenants have accepted and are occupying
the leased premises; except as set forth in such Leases or in Schedule
6.5.10, no tenant is entitled to receive any concession, rental or
otherwise, or other similar compensation in connection with renting the
space it occupies or by reason of any reduction in service; except as
provided in Schedule 6.5.10, the Property Owner has eliminated or
satisfied all of the landlord's obligations under such Leases which are
conditions to the obligations of the respective tenants thereunder to pay
rent. Neither the Property Owner, the Midland Affiliate or the Midland
Principal have any obligation continuing after the First Closing Date to
do any maintenance or make any improvements in respect of any leased
premises except as set forth in Schedule 6.5.10 and no commissions to any
broker or leasing agent are due or will become due on account of any of
such Leases or upon extension or renewal of the term thereof or upon the
leasing of additional space in such Property or Option Property, whether
or not pursuant to an option or other right contained in any such Lease,
except as set forth in Schedule 6.5.10 or except to the extent reflected
in the "Proration Items."
6.5.11 Permits. To the knowledge of such Property Owner,
Midland Affiliate and Midland Principal, the copies of the licenses and
permits delivered by the Property Owner to the applicable Transferee prior
to the First Closing Date constitute all licenses and permits (and with
the exception of the Development Properties, including, without
limitation, occupancy permits) which are required from all governmental
authorities having jurisdiction over each Property or Option Property of
such Property Owner which are necessary for the operation thereof in the
manner operated by the Property Owner at the time of the First Closing or
to insure vehicular and pedestrian ingress to and egress from such
Property or Option Property and neither the Property Owner, the Midland
Affiliate or the Midland Principal have received any notice regarding, nor
do such Property Owner, Midland Affiliate or Midland Principal have any
knowledge of, any default or violation under any of such licenses or
permits or any other licenses or permits applicable to such Property or
Option Property.
6.5.12 Service Contracts. No Property Owner, Midland
Affiliate or Midland Principal has any written or, to the knowledge of
such Property Owner, Midland Affiliate or Midland Principal, oral contract
for services, equipment, supplies or the like relating to the ownership,
operation or management of any Property or Option Property of such
Property Owner, including, but not limited to, management, rubbish
removal, equipment leasing, furnishing of supplies, cleaning or employment
contracts other than those listed on Schedule 1.1.134 and other than those
which are terminable without penalty on thirty (30) days or less notice or
requiring less than $10,000 in aggregate payments over the remaining terms
of the contract. Each of such Contracts is in full force and effect, no
default or any event which with notice or lapse of time or both would
constitute a default exists under any such Contract and all payments are
current thereunder.
6.5.13 Security Deposits. All security deposits to be paid
by tenants pursuant to the Leases on the Property or Option Property of
such Property Owner which require security deposits have been paid and the
amount of security deposits (and interest thereon, if required to be paid
by law) that will be transferred to the applicable Transferee (as set
forth in Schedule 6.5.13) will be equal to the total amount of the
security deposits made by tenants (plus interest thereon to the extent
applicable) pursuant to such Leases that are in effect on the First
Closing Date.
6.5.14 Condemnation. Except as set forth on Schedule 6.5.14,
there are no condemnation, environmental, zoning or other land use
regulations or proceedings pending of which the Property Owner has
received written notice or, to the knowledge of the Property Owner,
Midland Affiliate or Midland Principal, contemplated which would affect
all or any part of any Property or Option Property of such Property Owner.
No portion of any such Property or Option Property has been affected by
fire or other casualty, except for such portions which have been fully
repaired or restored to their condition prior to such fire or other
casualty.
6.5.15 Environmental Matters. For purposes of this
subparagraph 6.5.15, the following definitions apply:
(a) "Environmental Conditions" means circumstances in
respect of soil, surface waters, groundwaters, stream sediment, air
and similar environmental media, both on-site and off-site a Property
or Option Property, that could require remedial action and/or that
may result in claims and/or demands by and/or liabilities to third
parties, including, but not limited to governmental entities.
Environmental Conditions shall include those discovered after the
First Closing Date that do not directly result from the applicable
Transferee's (or their assignees') operation of the Properties or
Option Properties after the applicable Closing Date.
(b) "Environmental Assessment Reports" means all
environmental studies, reports, surveys and assessments made by
environmental consultants on behalf of any of the Property Owner,
Midland Affiliate or Midland Principal or Regency or the applicable
Transferee.
(c) "Existing Environmental Compliance Liability" means
any or all claims and/or demands by and/or liabilities to third
parties including, but not limited to, governmental entities arising
from any and all Laws applicable to any Property or Option Property
as of or prior to the First Closing Date for such Property or Option
Property, including, without limitation, compliance with all Permits.
(d) "Hazardous Materials" means any petroleum, petroleum
products, fuel oil, explosives, reactive materials, ignitable
materials, corrosive materials, hazardous chemicals, hazardous
wastes, hazardous substances, extremely hazardous substances, toxic
substances, toxic chemicals, radioactive materials, infectious
materials and any other element, compound, mixture, solution or
substance which may pose a present or potential hazard to human
health or the environment.
(e) "Laws" shall mean all applicable laws, ordinances or
regulations existing on or before the Closing Date for such Property
or Option Property relating to the environment, including, without
limitation, those pertaining to air and water quality, solid waste,
Hazardous Materials, worker and community right-to-know hazardous
materials communication, toxic substance control, radioactive
material management and waste disposal.
(f) "Notice" shall mean any written communication in
respect of such Property or Option Property from the United States
Environmental Protection Agency ("USEPA"), Department of
Environmental Protection of the state where each Property or Option
Property is located, or any other federal, state or local agency or
authority, or any other entity or any individual, concerning any
intentional or unintentional act or omission which has resulted in or
which may result in the Release of any Hazardous Material into the
environment including, the surface water, groundwater, soil, air or
other environmental media, or other violation or alleged violation of
environmental laws and shall expressly include the imposition of any
lien pursuant to any Laws.
(g) "Permits" shall mean permits, consents, licenses,
certificates, approvals, registrations or authorizations in
connection with environmental matters as required by the Laws.
(h) "Release" means releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, ejecting, escaping,
leaching, disposing, seeping, infiltrating, draining or dumping in
violation of any Laws. This term shall be interpreted to include
both the present and past tense, as appropriate.
Except as disclosed in the Environmental Assessment Reports described in
Schedule 6.5.15:
To the knowledge of such Property Owner, Midland Affiliate or Midland
Principal, there are no Permits which are required by the Laws. To
the knowledge of such Property Owner, Midland Affiliate or Midland
Principal, each of the Property Owner, Midland Affiliate and Midland
Principal has been and is in compliance with and has no liability or
obligation arising under applicable Laws in respect of the Properties
or Option Properties of such Property Owner. Neither the Property
Owner, Midland Affiliate nor Midland Principal has received any
Notice from any applicable governmental agency seeking any
information or alleging any violation of such Laws in connection with
such Properties or Option Properties. Neither the Property Owner,
Midland Affiliate nor Midland Principal has caused or permitted any
such Property or Option Property to be used to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer, produce
or process any Hazardous Materials or solid waste, except in
compliance with all applicable laws and has not caused or permitted
and the Property Owner, Midland Affiliate and Midland Principal have
no knowledge of the Release of any such Hazardous Materials on-site
of such Properties or Option Properties. To the knowledge of such
Property Owner, Midland Affiliate or Midland Principal, no buildings
or other improvements on any such Property or Option Property
contains any asbestos or other Hazardous Materials, and no such
materials are located on, in or under any such Property or Option
Property, except to the extent they comply with applicable Laws.
There is not located at any such Property or Option Property any
underground or above-ground tanks; to the knowledge of such Property
Owner, Midland Affiliate or Midland Principal, the removal of any
tank previously removed from such Properties or Option Properties has
been carried out in compliance with all applicable Laws. To the
knowledge of such Property Owner, Midland Affiliate or Midland
Principal, no condition, circumstance or set of facts exists in
respect of such Properties or Option Properties that constitutes a
significant hazard to health, safety, property or the environment for
which any of the Property Owner, Midland Affiliate and Midland
Principal is or may be liable under the Laws. No representation,
warranty or statement of such Property Owner, Midland Affiliate or
Midland Principal contained in this Agreement or contained in any
exhibit, certificate, schedule or other document furnished by the
Property Owner, Midland Affiliate and Midland Principal to Regency or
the applicable Transferee, pursuant to this Section 6.5.15 or in
connection with a transaction contemplated in this Section 6.5.15,
contains any untrue statement of a material fact or omits disclosing
a material fact with regard to environmental matters. The applicable
Transferee and such Property Owner, Midland Affiliate or Midland
Principal recognize that present, past or future Environmental
Conditions may exist which could require remedial action and/or may
result in claims and/or demands by and/or liabilities to third
parties, including, but not limited to, governmental entities.
Subject to the limitations set forth in Schedule 6.5.15, it is the
obligation of the Property Owner, Midland Affiliate and Midland
Principal to comply or ensure compliance with all matters arising out
of all Laws, agreements with governmental entities, and court and
administrative orders in respect of on-site and off-site
Environmental Conditions which may exist at each such Property on the
First Closing Date, or Option Property on the applicable closing
date, and which do not become Environmental Conditions as a result of
a change in the Laws after the First Closing Date or applicable
closing date. Such obligation, and any liability that such Property
Owner, Midland Affiliate or Midland Principal may have for any breach
thereof, shall survive the First Closing for the period of time set
forth in Section 13.1, below (the "Survival Period") and shall
include Environmental Conditions discovered after the First Closing
Date but within the Survival Period. In the event that the
applicable Transferee is notified by a third party or governmental
entity or discovers the existence of any Environmental Condition
prior to the expiration of the Survival Period, the result of which
may require remedial action or form the basis for the assertion of a
claim by any third party, including claims of governmental entities,
such Transferee shall notify such Property Owner, Midland Affiliate
and Midland Principal prior to the expiration of the Survival Period
thereof, and subject to the limitations set forth in Article 13
below, the Property Owner, Midland Affiliate and Midland Principal
shall proceed with due diligence to take the appropriate action and
respond thereto. In the event that the Property Owner, Midland
Affiliate and Midland Principal fail to proceed with due diligence,
such Transferee, at its option, may proceed to take the appropriate
action and shall continue to have all rights to indemnity as set
forth in this Agreement.
6.5.16 Flood Hazard. To the knowledge of such Property
Owner, Midland Affiliate or Midland Principal, no buildings now existing
or to be constructed prior to the First Closing Date on any Property or
Option Property of the Property Owner are or will be located in an area
designated by any governmental entity as a flood hazard zone, except as
disclosed on the Surveys performed in respect of such Property or Option
Property.
6.5.17 Zoning. Each Property or Option Property of the
Property Owner is zoned to permit the continued existence on the Real
Property comprising a portion of such Property or Option Property of the
buildings and other improvements now located thereon without relying on
any variance or other waiver of the requirements of the applicable zoning
laws except as disclosed on Schedule 6.5.17; no application for variance
or change in zoning is pending; and each such Property or Option Property
comprises a real estate tax lot or lots taxed separately from any other
property, except as disclosed on Schedule 6.5.17.
6.5.18 Access. Except for those Properties or Option
Properties set forth on Schedule 6.5.18, each Property or Option Property
of the Property Owner has direct access to all streets and roadways
abutting such Property or Option Property, as shown on the Survey
performed in respect of such Property or Option Property, and all such
streets and roadways are dedicated streets and roadways which have been
accepted by the appropriate governmental authority.
6.5.19 No Defects. Neither the Property Owner, Midland
Affiliate nor Midland Principal has any knowledge of any defective
condition (latent or otherwise) in respect of the Properties or Option
Properties of such Property Owner or any condition which is likely to have
a Material Adverse Effect on the ownership, operation or maintenance of
any such Property or Option Property.
6.5.20 Use of Property. Neither such Property Owner, Midland
Affiliate nor Midland Principal knows of any facts or has misrepresented
or failed to disclose any material fact which would prevent the applicable
Transferee from using and operating any Property or Option Property of
such Property Owner after the First Closing Date as a shopping center
except as set forth on Schedule 6.5.20.
6.5.21 No Default. The execution, delivery or performance of
this Agreement will not constitute a default under any agreement, Lease,
Contract, Permitted Exception, indenture, order or other instrument or
document by which the Property Owner or any Property or Option Property of
such Property Owner may be bound, subject to any consents required to be
obtained by the Property Owner (which consents are identified on Schedule
6.1.2(b)) or which are a condition for Closing pursuant to Section 8.2 of
this Agreement. Such Property Owner, Midland Affiliate and Midland
Principal agree to use their best efforts to obtain all such consents
prior to the First Closing Date.
6.5.22 Development Properties. A true and correct copy has
previously been furnished to Regency of the budget and development or
redevelopment schedule therefor prepared by or for the Property Owner as
applicable, for each of the Development Properties of such Property Owner
and to the extent they have been prepared for any Acquisition Property of
such Property Owner, each dated as of the date set forth on Schedule
6.5.22 (collectively, as they may be amended pursuant to Section 5.10, the
"Development Budget and Schedule"). Except as set forth on Schedule
6.5.22, each such Development Property is zoned for the lawful development
and/or redevelopment thereon, and the Property Owner has obtained all
permits, licenses, consents and authorizations required for the current
stage of development or redevelopment thereon. To the knowledge of the
Property Owner, Midland Affiliate and Midland Principal, except as set
forth on Schedule 6.5.22, there are no material impediments to or
constraints on the development or redevelopment of any such Development
Property, substantially within the time frame and not substantially in
excess of the cost set forth in the Development Budget and Schedule
applicable thereto. To the knowledge of the Property Owner, Midland
Affiliate and Midland Principal, in the case of each such Development
Property, the development or redevelopment of which has commenced, the
costs and expenses incurred in connection with such Development Property
and the progress thereof are consistent and substantially in compliance
with all aspects of the Development Budget and Schedule applicable
thereto, except as disclosed in Schedule 6.5.22. The Property Owner,
Midland Affiliate and Midland Principal have made available to Regency all
feasibility studies, soil tests, due diligence reports and other studies,
tests or reports performed by or for the Property Owner, Midland Affiliate
and Midland Principal, or otherwise in their possession, which relate to
the Development Properties.
6.5.23 Acquisition Properties. Each Acquisition Contract of
the Property Owner is enforceable by such Property Owner and neither such
Property Owner, nor to such Property Owner's knowledge, any other party
thereto, is in default under any such Acquisition Contract. Without
limiting the foregoing, the contract seller is not in breach of any
representations and warranties made by it in any such Acquisition
Contract.
6.5.24 Work Contracts. The Work Contracts relating to
Properties of the Property Owner are in full force and effect, no party is
in material 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
material default, except as disclosed in Schedule 6.5.24. To the
knowledge of such Property Owner, Midland Affiliate or Midland Principal,
except as disclosed in Schedule 6.5.24, the progress and remaining
expenditures under such Work Contracts are substantially consistent with
the Development Budget and Schedule, the TI Budget and Schedule and the
Capital Expenditures Budget and Schedule. To the knowledge of such
Property Owner, Midland Affiliate or Midland Principal, except as
disclosed in Schedule 6.5.24, any remaining work under such Work Contracts
to be performed after the First Closing will not exceed substantially the
amounts budgeted therefor on the foregoing schedules. To the knowledge of
such Property Owner, Midland Affiliate or Midland Principal, except as
disclosed in Schedule 6.5.24, the work remaining under such Work Contracts
will be sufficient to complete the respective projects to which they
relate, without material change orders, so as to comply with existing
development obligations of such Property Owner (including, without
limitation, obligations under any letters of intent to lease), obligations
for tenant improvements under Leases with respect to such Properties or
for repairs or other necessary work.
6.5.25 Budgets and Projections. To the knowledge of such
Property Owner, except as set forth on Schedule 6.5.25, all budgets and
projections, including without limitation, the Capital Expenditure Budget
and Schedule and the TI Budget and Schedule for each Property and
Acquisition Property of such Property Owner represent such Property
Owner's best estimate of capital expenditures anticipated to be made in
each year covered by such budget.
6.6 Limit on Representations. Except for the express
representations and warranties 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 the Midland Principals,
Property Entities, Joint Ventures, Midland Affiliates or any other
individual or entity, and no such Person 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 such other representation or warranty whatsoever by such
Persons or any other Person or entity, and based solely upon the
Partnership's own inspections, investigations and analysis of the Assets.
ARTICLE 7: REPRESENTATIONS, WARRANTIES AND
FURTHER COVENANTS OF REGENCY
Regency hereby represents, warrants and covenants to the Property
Entities as of the date of this Agreement as follows. All representations
that are made "to Regency's knowledge" means to the actual knowledge of
the individuals listed on Schedule 7 attached hereto after reasonable
inquiry. 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.
7.1 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 business 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, 1996, except
that Regency owns 100% of the outstanding preferred stock and 5% of the
outstanding common stock of Regency Realty Group, Inc. and of Regency
Realty Group II, Inc. Except as set forth on Schedule 7.1(b) and except
for its interests in its subsidiaries, Regency does not hold any interest
in any security issued by any other Person.
7.2 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
obtaining the consents set forth on Schedule 7.2(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 the other
parties hereto, 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 7.2(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, no
consents, waivers, exemptions or approvals of, notices to 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 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
7.2(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.
7.3 Capitalization.
7.3.1 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 16, 1997, there were 23,991,277
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.
7.3.2 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 7.3.2,
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 the Property Entities true and correct copies of
the Articles of Incorporation and Regency's bylaws, as in effect on the
date hereof.
7.3.3 Except as set forth on Schedule 7.3.3, 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.
7.3.4 Except for the agreements listed on Schedule 7.3.4, 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.
7.3.5 All of the outstanding securities of the Company were
issued in compliance with all applicable federal and state securities
laws.
7.4 Valid Issuance of Shares. 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, assuming that such exercise will not result in the value of
Regency's outstanding equity securities being owned directly or indirectly
by Persons who are Non-U.S. Persons (as defined in the Articles of
Incorporation).
7.5 Regency Exchange Act Reports.
7.5.1 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, and no documents
subsequently filed by Regency with the SEC pursuant to the Exchange Act
will contain, 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.
7.5.2 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 included therein 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, 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.
7.6 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.
7.7 No Adverse Change. Since the Recent Balance Sheet Date,
there has not been (i) any event or circumstance or change in Regency, its
business or prospects 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
reasonably be expected to 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.
7.8 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 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.
7.9 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 7.9, neither Regency nor any of its assets are subject to any
Order which has had or could have a Material Adverse Effect on Regency.
7.10 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.
7.11 Environmental Matters. For purposes of this Section 7.11,
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) 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 Environ-
mental Concern at any Regency Property;
(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 it is 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, to Regency's
knowledge, 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 7.11,
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 7.11, 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.
7.12 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 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.
7.13 REIT Status. Regency qualifies as a REIT under the Code.
Regency Atlanta, Inc. is a "qualified REIT subsidiary" within the meaning
of Code Section 856(i).
7.14 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 the Midland Principals, Property Entities and Midland
Affiliates, 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.
ARTICLE 8: CONDITIONS PRECEDENT TO OBLIGATIONS OF REGENCY
8.1. Conditions for the First Closing as to the Transaction.
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, as described herein, the failure to
satisfy any such condition precedent, after written notice of such failure
followed by a thirty (30) day period in which to cure such failure, 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.
8.1.1 Aggregate Assets. The exclusion of Assets from the
transactions contemplated by this Agreement by Regency pursuant to the
provisions of Section 8.2, together with the exclusion of Assets from the
transactions contemplated by this Agreement on account of any Material
Uncured Title Defect or other objection pursuant to Section 5.16, any
Material Later Exception pursuant to Section 5.17, any Unremedied Material
Damage as described in Section 5.18 and any Material Eminent Domain
Proceedings pursuant to Section 5.19, shall not result in the Assets to be
contributed to the Partnership hereunder having a Gross Asset Value as of
the date of the First Closing of less than 80% of the aggregate Gross
Asset Value as shown on Schedule 2.1 of all the Assets.
8.1.2 Representations and Warranties. The representations and
warranties made in Article 6 other than those described in Section 8.2.1,
and the statements and information contained in any certificate,
instrument, schedule, document or exhibit delivered by or on behalf of any
Property Entity, Joint Venture, Midland Affiliate or Midland Principal in
connection with the First Closing pursuant to this Agreement, shall be
true, correct and complete on and as of the date hereof, and shall be
true, correct and complete 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, other than a breach of a representation or
warranty which is not likely to have a Material Adverse Effect on the
transactions contemplated by this Agreement taken as a whole; 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.
Each Midland Principal, Midland Affiliate and Property Entity 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.
8.1.3 Compliance with Covenants and Agreements. The covenants,
obligations and agreements of the Property Entity, Joint Venture, Midland
Affiliate or Midland Principals other than those described in Section
8.2.2 to be performed and complied with on or before the First Closing
Date shall have been duly performed and complied with other than non-
performance or non-compliance which is not likely to have a Material
Adverse Effect on the transactions contemplated by this Agreement taken as
a whole.
8.1.4 No Material Adverse Change. Since the date of execution of
this Agreement, there shall not have been any change, circumstance or
event which has had or would reasonably be expected to have a Material
Adverse Effect on the transactions contemplated by this Agreement taken as
a whole.
8.1.5 No Injunction. There shall not be in effect any Order
which enjoins or prohibits consummation of the transactions contemplated
hereby.
8.1.6 Delivery of Documents. All of the documents and agreements
required to be delivered and performed pursuant to Section 10.2.1 which do
not relate to a specific Asset have been so delivered and performed.
8.1.7 Consents. Regency shall have obtained the consents set
forth on Schedule 7.2(b) and Midland Development and the Midland
Affiliates shall have obtained the consents set forth on Schedule 8.1.7.
8.1.8 No Notice of Material Claims. Regency shall not have
received notice of a failure to satisfy Section 9.1.1 which failure could
result in a claim or liability having a Material Adverse Affect on
Regency.
8.1.9 Additional Indemnity. Regency and the Transferees shall
have obtained indemnification (a) from OSTRS with respect to the
Properties in which it owns an equity interest and (b) from such other
Unit Recipients with respect to Properties in which OSTRS does not own an
equity interest in substantially the form attached as Exhibit 8.1.9.
8.2 Conditions for the First Closing as to a Property. The
obligation of Regency to consummate the First Closing as to a Property or
the Third Party Management Assets is subject to the fulfillment, at or
prior to the First Closing, of each of the following conditions precedent,
and, as described herein, the failure to satisfy any such condition
precedent, after written notice of such failure followed by a thirty (30)
day period in which to cure such failure, shall excuse and discharge all
obligations of Regency to carry out the provisions of this Agreement as to
such Property or the Third Party Management Assets, as applicable, unless
such failure is waived in writing by Regency. Subject to the satisfaction
or waiver by Regency of the condition to the First Closing set forth in
Section 8.1.1 (aggregate assets), Regency shall consummate the First
Closing with respect to those Properties as to which the conditions to
closing set forth in this Section 8.2 have been satisfied or waived, the
time and date for the Closing shall be extended thirty (30) days with
respect to the remaining Property or Properties to afford additional time
for the respective Property Owner(s) to cure the failure(s) of condition.
In the event that such failure of a condition for Closing with respect to
a Property has not been cured or waived within such thirty (30) day
period, Regency, at its election, may determine not to consummate the
Closing with respect to such Property.
8.2.1 Representations and Warranties. The representations and
warranties made in Article 6, and the statements and information contained
in any certificate, instrument, schedule, document or exhibit delivered by
or on behalf of any Property Entity, Joint Venture, Midland Affiliate or
Midland Principal with respect to the Property or the Third Party
Management Assets in connection with the First Closing pursuant to this
Agreement, shall be true, correct and complete on and as of the date
hereof, and shall be true, correct and complete 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, other than a
breach of a representation or warranty which is not likely to have a
Material Adverse Effect on the applicable Property or Assets to be
transferred by the applicable Contributor hereunder, 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, and
provided, further, that an appropriate reduction agreed on by the
Contributor and Regency shall be made as of the First Closing Date to the
Contribution Value for the Asset to take account of any breach discovered
before the First Closing which is not likely to have such a Material
Adverse Effect (and if the parties are not able to so agree, Regency's
remedies with such breach shall be governed by Article 13). Each Midland
Principal, Midland Affiliate and Property Entity 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.
8.2.2 Compliance with Covenants and Agreements. The covenants,
obligations and agreements of the Property Entity, Joint Venture, Midland
Affiliate or Midland Principals to be performed and complied with on or
before the First Closing Date with respect to the Property or the Third
Party Management Assets shall have been duly performed and complied with
other than non-performance or non-compliance which is not likely to have a
Material Adverse Effect on the Assets of such Property Entity, Joint
Venture, Midland Affiliate or Midland Principal; provided, however, that
if any such covenant, obligation or agreement is already qualified in any
respect by materiality or as to Material Adverse Effect, the materiality
qualification immediately before this proviso shall not apply.
8.2.3 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, Option Properties, business or prospects of such
Property Entity or Joint Venture which has had or would reasonably be
expected to have a Material Adverse Effect on such Property Entity or
Joint Venture or the Assets or Option Properties owned by such Property
Entity or Joint Venture (except such as may have arisen by reason of any
matter approved by Regency pursuant to Sections 5.4 (Additional
Acquisitions), 5.8 (New Contracts), 5.9 (Leasing Arrangements) or 5.10
(Obligation to Supplement Information)).
8.2.4 No Injunction. There shall not be in effect any Order
which enjoins or prohibits consummation of the transactions contemplated
hereby with respect to the Assets of such Property Entity, Midland
Affiliate or Joint Venture.
8.2.5 Title. The Title Company shall have delivered to the
Partnership and any other applicable Transferee 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 with
respect to such Property.
8.2.6 Lender Estoppels. Estoppel letters shall have been
received from each lender under the Existing Mortgage Debt encumbering
such Property in form and substance reasonably acceptable to Regency.
8.2.7 Tenant Estoppels. Tenant Estoppels relating to such
Property shall have been received from each of the tenants identified on
Schedule 8.2.7 and 80% of all other tenants, without any material
exceptions, covenants or changes to the forms accepted by Regency pursuant
to Section 5.13.
8.2.8 Work Contract Estoppels. Estoppel letters in form and
substance reasonably acceptable to Regency shall have been received from
each contractor, engineer and architect contracted with pursuant to the
Work Contracts for all contracts relating to such Property which have an
amount due and owing of greater than $10,000.
8.2.9 Delivery of Documents. All of the documents and agreements
required to be delivered and performed pursuant to Section 10.2.1 relating
to such Property or Third Party Management Assets have been so delivered
and performed, except documents required pursuant to Section 10.2.1(g) for
the transfer of Assets which Regency has elected not to acquire hereunder.
8.2.10 Consents. The Property Entity shall have obtained its
applicable consents set forth on Schedule 6.1.2(b).
8.2.11 Xxxxxxxxx and Xxxxxx Properties. As to the Properties
known as the Worthington Park Centre, East Point Shopping Center and
Maxtown Road Shopping Center, Regency shall have received documentation in
form and substance satisfactory to it as to the transfer, option or
restriction, as applicable, of certain outparcels and expansion lands
relating to such Property, as described in the letter from Regency dated
December 4, 1997, attached hereto as Exhibit 8.2.11.
8.2.12 Waiver of Rights of First Refusal. The tenants listed
on Schedule 8.2.12 who have rights of first refusal to acquire the
Properties listed on Schedule 8.2.12 shall have waived such rights in
writing.
8.2.13 Lake Pine Road Construction. As to the Property known
as Lake Pine, Regency and T & M Lake Pine Development Co. LLC (the "Lake
Pine Entity") shall have entered into an agreement in form and substance
satisfactory to Regency pursuant to which the Lake Pine Entity agrees to
fulfill its obligations under that certain Shepards Vineyard Drive
Agreement dated as of November 25, 1997 by and between the Lake Pine
Entity and Faith Baptist Church.
ARTICLE 9: CONDITIONS PRECEDENT TO OBLIGATIONS
OF CONTRIBUTORS
9.1 Conditions for the First Closing. The obligation of each
Contributor to consummate the First Closing as to the Assets owned by such
Contributor 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, after written notice of such failure
followed by a thirty (30) day period in which to cure such failure, shall
excuse and discharge all obligations of such Contributor to carry out the
provisions of this Agreement as to the Assets owned by such Contributor
unless such failure is waived in writing by such Contributor.
9.1.1 Representations and Warranties. The representations and
warranties made by Regency in Article 7 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 on and as
of the date hereof, and shall be true, correct and complete 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 other than a
breach of a representation or warranty which is not likely to have a
Material Adverse Effect on Regency; 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 Property Entities at the First Closing
certificates in form and substance reasonably satisfactory to the Property
Entities dated as of the First Closing Date to such effect.
9.1.2 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 other than non-performance or non-compliance which is not
likely to have a Material Adverse Effect on Regency or on such
Contributor's transactions contemplated by this Agreement, taken as a
whole.
9.1.3 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
such Contributor's transactions contemplated by this Agreement.
9.1.4 No Injunction. There shall not be in effect any Order
which enjoins or prohibits consummation of such Contributor's contribution
of Assets contemplated hereby.
9.1.5 Delivery of Documents. All of the documents and agreements
required to be delivered and performed pursuant to Section 10.2.2 that are
relevant to the Contributor have been so delivered and performed.
9.1.6 Midland Consents. Such Contributor shall have obtained its
applicable consents set forth on Schedule 6.1.2(b) and Midland Development
and the Midland Affiliates shall have obtained the consents set forth on
Schedule 8.1.7, and Regency shall have obtained the consents set forth on
Schedule 7.2(b); provided, however, the consent of any lender to the
Property Entities shall not be required if Regency elects, in its sole
discretion, and causes a Transferee to pay off the loan from such lender
at the First Closing.
9.1.7 No Notice of Material Claims. Such Contributor shall not
have received notice of a failure to satisfy Section 8.1.2, which failure
could result in a claim or liability having a Material Adverse Affect on
such Contributor.
9.1.8 Minimum Asset Contribution. Assets of Contributors
representing not less than 80% of the aggregate Gross Asset Value of the
Assets as set forth on Schedule 2.1 shall be acquired by the Transferees
at the First Closing.
9.1.9 Regency Reorganization. The assets of Regency Centers,
Inc. shall have been transferred to the Partnership, whether by deed,
operation of law or otherwise.
9.1.10 Partnership Agreement. The Partnership Agreement
shall not have been substantially revised in a manner materially adverse
to the Unit Recipients as a result of negotiations between Regency and the
existing limited partners of the Partnership. Making the interests of all
or any portion of the existing limited partners senior to the Units shall
not be deemed adverse to the Unit Recipients as long as the condition in
Section 9.1.9 (Regency reorganization) is satisfied.
9.1.11 Joint Venture Debt. The applicable Midland Principals
and Midland Affiliates shall be released effective at the First Closing
from their guarantees of construction debt incurred by the Joint Ventures
or shall be indemnified by Regency with respect to such guaranties.
ARTICLE 10: CLOSINGS
10.1 Closing.
10.1.1 Time and Place. The First 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 January 30, 1998. A pre-closing conference
shall commence at least five 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 the Midland Representatives and Regency and their respective
counsel. Funds shall be delivered through the Title Company's closing
escrow account at a bank satisfactory to Regency and the Property
Entities. All Subsequent Closings shall take place on the dates specified
in Sections 2.5, 2.6, 5.16, 5.17, 5.18, 5.19 and 8.2 at such time and
location as the parties mutually agree.
10.1.2 Representations, Warranties and Covenants as to
Deferred Property Closings. Section 2.6 and Section 8.2, among others,
provide for Closings on certain Properties to take place (each a "Deferred
Closing") after the First Closing takes place with respect to the other
Properties. Anything in this Agreement to the contrary notwithstanding,
all representations and warranties with respect to a Property that is the
subject of a Deferred Closing and that is owned by a Property Owner in
which Regency does not then own an equity interest which representations
and warranties are required to be made as of the First Closing Date herein
shall be deemed to be made as of the date of the Deferred Closing and all
covenants with respect to such Property that are required to be performed
as of the date of the First Closing shall be required to be performed as
of the date of the Deferred Closing.
10.2 Contribution to the Partnership.
10.2.1 Deliveries by Midland. At the First Closing, in
addition to any other documents or agreements required under any other
provision of this Agreement, each Property Entity and, unless otherwise
indicated, each Midland Affiliate and Midland Principal shall make the
following deliveries and performance:
(a) Certificates. The certificates required pursuant to
Section 8.1.2 and Section 8.2.1.
(b) Partnership Agreement. The Partnership Agreement,
executed by or on behalf of the Property Entities;
(c) OTR Joint Venture Agreements. The joint venture
agreements described in Section 3.2, executed by OTR;
(d) R&M Western Partnership Agreement. The Agreement of
Limited Partnership of R&M Western Partnership described in Section 3.1,
executed by Midland Western Partnership;
(e) Redemption Agreement. The Redemption Agreement,
executed by or on behalf of the Property Entities, for the benefit of the
Unit Recipients;
(f) OTR Redemption Agreement. The OTR Redemption
Agreement, executed by OTR;
(g) Transfer Documents. The deeds, assignments and other
transfer documents which are listed on Schedule 10.2.1(g) transferring
title to its respective Assets free of any claims, except for the
Permitted Exceptions, including assignment of the interests of the Midland
Affiliates in the Joint Ventures to the applicable Transferee;
(h) Memorandum of Option. The Memoranda of Option
described in Section 4.1;
(i) Registration Rights Agreements. The Registration
Rights Agreement, executed by the Property Entities, for the benefit of
the Unit Recipients;
(j) Non-Compete Agreements. Non-Compete Agreements, in
the form attached as Exhibit 10.2.1(j), executed by each Midland Principal
and the officers of Midland Development identified on Schedule 10.2.1(j);
(k) Lock-Up Agreements. Lock-Up Agreements in the form
attached as Exhibit 10.2.1(k) executed by each Midland Principal;
(l) Escrow Agreements. The Escrow Agreements described in
Section 2.2(e), executed by the Escrow Entities described therein;
(m) Legal Opinion. An opinion of Xxxxxxxxxxxx, Xxxxxx &
Xxxx, P.C., with respect to each Property Entity, Midland Affiliate and
Joint Venture, as to due organization, due authorization, consents, waiver
or expiration of all options, rights of first refusal and buy-sells of
which such firm has knowledge triggered by the transactions contemplated
by this Agreement, violations (to such firm's knowledge), litigation (to
such firm's knowledge), the absence of statutory or contractual appraisal
rights of any equity owner thereof, enforceability and such other matters
as counsel to Regency may reasonably request prior to the First Closing,
which opinion may rely on the opinion of The Xxxxxx Partnership, and The
Xxxxxx Partnership may rely on the opinion of local counsel acceptable to
Regency, if The Xxxxxx Partnership opines that such reliance is
reasonable;
(n) Existing Mortgage Documents. The documents evidencing
the assumption of the Existing Mortgage Debt executed by the respective
Property Entities and all deliveries of such Property Entities required
thereunder;
(o) Notice to Tenants. A notice of conveyance to each
tenant in form satisfactory to the parties hereto;
(p) State Law Disclosures. Such disclosures and reports
as are required by applicable state and local Law in connection with the
conveyance of real property;
(q) Affidavits. Owner's affidavits to the extent
reasonably and customarily required by the Title Company to issue the
Title Policy to the Partnership and the other Transferees 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;
(r) Permits and Approvals. Evidence reasonably
satisfactory to Regency to the effect that the Property Entities possess
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 or the applicable Transferee, to the extent
they are assignable;
(s) Terminations. Terminations, effective no later than
the First Closing, of those Service Agreements which Regency and the
Property Entities have agreed that the Partnership shall not assume;
(t) 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;
(u) Authority. Evidence of the existence, organization
and authority of each Property Entity, Midland Affiliate and Joint Venture
and of the authority of the Persons executing documents on behalf of each
Property Entity or Midland Affiliate reasonably satisfactory to the Title
Company and Regency;
(v) Possession. Possession of the Assets, subject only to
the applicable Permitted Exceptions;
(w) 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
into the possession or control of any Midland Principal, Property Entity
or Midland Affiliate: 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 Assets; all advertising materials, booklets, keys
and other items, if any, used in the operation of the Properties or the
Third Party Management Assets; and, if in the possession or control of any
Midland Principal, Property Entity and Midland Affiliate, the original
"as-built" plans and specifications and all other available plans and
specifications. The Property Entities shall cooperate with the
Transferees after the First Closing to provide to the Partnership any such
information stored electronically and to answer questions of the
Transferees from time to time regarding pre-Closing matters (e.g., in
connection with the preparation of Tax returns or financial statements);
(x) Additional Documents. Any additional documents that
Regency may reasonably require for the proper consummation of the
transactions contemplated by this Agreement.
10.2.2 Deliveries by Regency. At the First Closing, Regency
shall make the following deliveries and performance:
(a) Certificates. The certificates required by Section
9.1.1;
(b) Partnership Agreement. The Partnership Agreement,
executed by Regency, together with any filings with any Government Entity
required to be made by or on behalf of the Partnership;
(c) OTR Joint Venture Agreements. The joint venture
agreements described in Section 3.2, executed by R&M Western Partnership;
(d) R&M Western Partnership Agreement. The Agreement of
Limited Partnership of R&M Western Partnership described in Section 3.1,
executed by the Partnership and Third Party Management Company;
(e) Redemption Agreement. The Redemption Agreement,
executed by the Partnership and Regency;
(f) OTR Redemption Agreement. The OTR Redemption
Agreement, executed by the Partnership and Regency;
(g) Transferee Ratification. The written ratification of
this Agreement by the Transferees and their agreement to perform the
obligations of the Transferees that are to be performed after the First
Closing;
(h) Initial Capital Contribution. A cash capital
contribution to the Partnership sufficient to pay: (1) that portion of
the Existing Mortgage Debt which may be prepaid without incurring
penalties or "make whole" payments; and (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) through (3) being the "Regency Capital Contribution") (provided
that the Regency Capital Contribution plus amounts paid by Regency to
redeem Units at the First Closing shall not exceed $80 million). 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 all Midland Principals, Property Entities,
and Midland Affiliates have been made into escrow;
(i) Units. Issuance by the Partnership to the
Contributors of that number of Units specified in Section 2.2(a);
(j) Redemption. Redemption by Regency of all Units in
exchange for cash which are required to be redeemed at the First Closing
pursuant to the terms of the Redemption Agreement;
(k) Application of Capital Contribution. Application by
the Partnership of the Regency Capital Contribution in accordance with
this Agreement;
(l) Assumption Agreements. Execution by the applicable
Transferee of the transfer documents listed on Schedule 10.2.1(g) and any
other documents as the Property Entities may reasonably require to
evidence the assumption of the Assumed Liabilities and Assumed Obligations
by the applicable Transferee;
(m) Registration Rights Agreement. The Registration
Rights Agreement, executed by Regency;
(n) Authority. Evidence of existence, organization and
authority of Regency and the Transferees and the authority of the Person
executing documents on behalf of each of Regency and the Transferees
reasonably satisfactory to the Property Entities;
(o) Legal Opinion. An opinion of Xxxxx & Xxxxxxx, counsel
for Regency, as to due organization; due authorization, enforceability of
Redemption Rights (as described in the Redemption Agreement) and the valid
issuance of Shares upon exercise of Redemption Rights, subject to the
assumptions in Section 7.4; enforceability of the Redemption Agreement and
Registration Rights Agreement; due organization and existence of the
Transferees; 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 the Property Entities
may reasonably request prior to the First Closing;
(p) Existing Mortgage Debt. The documents evidencing the
assumption of the Existing Mortgage Debt, executed by the applicable
Transferee, and all deliveries of the applicable Transferee required
thereunder;
(q) State Law Disclosures. Such disclosures and reports
as are required by applicable state and local Law in connection with the
conveyance of real property;
(r) Election to Board. Certified Board resolutions
creating an additional seat on Regency's Board of Directors and electing
Xxx X. Xxxxxxxxx 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; and
(s) Additional Documents. Any additional documents that
the Property Entities or the holders of the Existing Mortgage Debt may
reasonably require for the proper consummation of the transactions
contemplated by this Agreement.
10.3 Closing Statements/Escrow Fees. The Property Entities and
Regency shall deposit with the Title Company executed closing statements
consistent with this Agreement.
ARTICLE 11: PRORATIONS AND ADJUSTMENTS
11.1 Prorations. Before the First Closing, the Property
Entities shall provide such information and verification reasonably
necessary to support the prorations and adjustments under this Article 11.
All prorations set forth below in this Section 11.1 shall be as of the
First Closing Date (the "Cutoff Date"), with the Cutoff Date being a day
of income and expense to the Property Entities. All income and expense
with respect to the Assets and all items customarily prorated in real
estate closings shall be prorated as of the Cutoff Date between the
Transferee and the Property Entity with respect to the Assets contributed
by such Property Entity, except as otherwise provided herein. No
prorations shall be made with Midland Development for the Third Party
Management Assets, and no prorations shall be made with respect to the
Joint Ventures.
11.1.1 Taxes and Assessments. The Transferee shall receive a
credit for any real estate and tangible personal property Taxes (and any
assessments imposed by private covenant), whether or not then due or
payable, imposed in respect of a Property and applicable for the portion
of the current year or other applicable Tax period which has elapsed by
the Cutoff Date (and to the extent unpaid, for prior years or Tax
periods). If the amount of any such Taxes have not been determined as of
the First Closing, such credit shall be based on a reasonable estimate of
the parties as to the full assessed value of the Properties (based on
their Gross Asset Value as of the First Closing Date where the parties
anticipate that Taxes for the current year will be based on such amount)
and the assessment ratios and Tax rates anticipated to be in effect for
the current year (and if the parties are not able to agree on such rate,
the most recent ascertainable rate shall be used). The Transferee shall
receive a credit for the total amount of any special assessments or
similar charges which are levied or charged against a Property before the
First Closing, whether or not due and payable on the Cutoff Date. Any
such proration for Taxes and assessments shall be offset by the estimated
portions of such taxes which are recoverable from tenants of the
Transferees based on Leases in effect as of the applicable Cutoff Date.
11.1.2 Collected Rent. The Transferee shall receive a credit
for any rent and other income under Leases (and any applicable or local
Tax on rent) collected by the applicable Property Entity before the First
Closing and applicable to any period of time after the Cutoff Date. The
Property Entity shall receive a credit for receivables from tenants (less
any agreed on discount for uncollectibility) for rent and other income
under Leases (and any applicable or local Tax or rent) applicable to any
period of time prior to the Cutoff Date, except to the extent that the
Property Entity and Regency agree that such receivables are unlikely to be
collectible ("Doubtful Receivables"). All collections of accounts
receivable other than Doubtful Receivables after the First Closing shall
be retained by the Transferee. After the First Closing, the Partnership
shall apply all rent and income collected by the Transferees from a
tenant, unless the tenant properly identifies the payment as being for a
specific item, first to such tenant's monthly rental for the month in
which First Closing occurred to the extent not already paid and then to
arrearages in the reverse order in which they were due, remitting to the
Property Entity, after deducting collection costs, any rent properly
allocable to receivables constituting Doubtful Receivables for the period
ending on the Cutoff Date. The Transferees shall xxxx and attempt to
collect such rent arrearages constituting Doubtful Receivables in the
ordinary course of business, but shall not be obligated to engage a
collection agency to collect any such rent arrearages except at the
Contributor's expense, or to take legal action to collect any such rent
arrearages. After the First Closing, the Property Entities shall not have
the right to seek collection of any rents or other income applicable to
any period before the Cutoff Date. Any rent or other income received by
any Property Entity after the First Closing which are owed to the
Transferees shall be held in trust and remitted to the Transferees
promptly after receipt, and any rent collected by the Transferee which is
owed to the Property Entity shall be held in trust and remitted to the
Property Entity promptly after receipt.
11.1.3 Percentage Rents. Estimated percentage rents accrued
from any tenant under any Lease for any lease year in which the First
Closing occurs (with any such percentage rents to be deemed to have been
earned and received on an equal per diem basis spread throughout such
lease year) shall be prorated between the Property Entity and the
Transferees as of the Cutoff Date.
11.1.4 Operating Expense Pass-Throughs. The Property
Entities, as landlords under the Leases, are currently collecting from
tenants under the Leases additional rent to cover Taxes, insurance,
utilities, maintenance and other operating costs and expenses
(collectively, "Operating Expense Pass-Throughs") incurred by them in
connection with the ownership, operation, maintenance and management of
the Properties. If a Property Entity collected estimated prepayments of
Operating Expense Pass-Throughs in excess of any tenant's share of such
expenses, then if the excess can be determined by the First Closing, the
applicable Transferee shall receive a credit for the excess or, if the
excess cannot be determined at the First Closing, the Transferees shall
receive a credit based upon an estimate. The applicable Transferee shall
be responsible for crediting or repaying those amounts to the appropriate
tenants. At the First Closing, the Property Entities shall pay or provide
for all Operating Expense Pass-Throughs for the period through the Cutoff
Date except to the extent reflected in the Proration Items.
11.1.5 Service Contracts. Each Property Entity shall receive
a credit for regular charges under Service Contracts assumed by its
Transferees pursuant to this Agreement paid and applicable to the period
after the Cutoff Date and the Transferee shall receive a credit for such
charges payable and applicable to the period ending on the Cutoff Date.
11.1.6 Utilities. The Property Entities shall cause the
meters, if any, for utilities to be read on the Cutoff Date and to pay the
bills rendered on the basis of such readings, except for utilities paid
directly by tenants. If any such meter reading for any utility is not
available, then adjustment therefor shall be made on the basis of the most
recently issued bills therefor which are based on meter readings no
earlier than 30 days before the Cutoff Date.
11.2 Work Contracts. At the First Closing, the Property
Entities and Regency shall prorate the cost of all work under the Work
Contracts, other than the Development Contracts, that has been performed
through the Cutoff Date. Regency shall receive a credit against the
purchase price for the Property Entities' pro rata share of the work
performed under the Work Contracts, other than the Development Contracts,
through the Cutoff Date. At the First Closing, the Transferees shall
assume the obligation to complete the Work Contracts. TI Contracts,
Repair Contracts and Development Contracts shall be included in the
warranties described as Intangible Property related to the applicable
Properties. At the First Closing, the Property Entities shall provide for
Work Contracts under which all the work described therein has been
substantially completed, lien waivers, payment affidavits, certificates of
completion, and Tenant Estoppels. For Work Contracts which are not
substantially completed at the Cutoff Date, the Property Entities shall
provide contractor progress reports and estoppels and other evidence
reasonably necessary to confirm the Property Entities' compliance with its
obligations pursuant to the Work Contracts and this Section 11.2.
Notwithstanding the foregoing, lien waivers and payment affidavits will
not be required for Work Contracts under which all the work described
therein has been substantially completed but payment for contractual
retention has not been made pending completion of punch list items. At
the First Closing, the Property Entities shall also provide such indemnity
or other assurance to enable the Title Company to issue the Title Policy
without exception for mechanics' and materialmens' liens related to work
performed by the Property Entities under the Work Contracts.
11.3 Tenant Deposits. All tenant security deposits (and
interest thereon if required by Law or contract to be earned thereon)
shall be transferred to the Transferees at the First Closing without
adjustment to any party. As of the First Closing, the applicable
Transferee shall assume each Property Entity's obligations related to
tenant security deposits, but only to the extent they are properly
transferred or credited to the Transferee.
11.4 Deposits. The Partnership shall reimburse each Contributor
(other than a Midland Affiliate contributing an interest in a Joint
Venture) in cash at the First Closing for utility deposits, xxxxxxx money
deposits held by the seller under Acquisition Contracts, and escrows for
taxes and insurance and for similar types of deposits and escrows (but
excluding escrows for capital expenditures), to the extent that such items
are assigned to the Transferees at Closing. To the extent that any such
deposits are not transferable, promptly after the First Closing, the
Partnership shall make its own deposits and request a refund to the
Contributors of their own deposits.
11.5 Wages. The Partnership shall not be liable for any wages,
fringe benefits, payroll Taxes, unemployment insurance contributions,
accrued vacation pay, accrued pay for unused sick leave, accrued severance
pay and other compensation accruing prior to the First Closing for
employees of the Property Entities except to the extent reflected on the
Final Closing Balance Sheet.
11.5.1 Determination of Midland Development Value Adjustment.
(a) Estimated Closing Balance Sheet. For purposes of
determining any adjustment pursuant to Section 2.1(b), not less than five
(5) Business Days prior to the First Closing Date, Midland Development
shall, in consultation with Regency, prepare and deliver to Regency an
estimated balance sheet of Midland Development as of the close of business
on the Cutoff Date which shall represent Midland Development's reasonable
estimate of the Final Closing Balance Sheet; such balance sheet to be in
form and detail identical to, and in its accounting principles and
policies consistent in every respect with, the Midland Financial
Statements relating to Midland Development and accompanied by schedules
setting forth in reasonable detail all current assets (other than accounts
receivable for (i) brokerage transactions that are evidenced on the First
Closing Date by a signed agreement, (ii) any other transactions listed in
Schedule 1.1.143 (Third Party Management Assets), or (iii) advances to
brokers, all of which shall be retained by Midland Development
(collectively, the "Retained Items") and current liabilities (including
the outstanding balance of the line of credit) included therein. Such
balance sheet or the accompanying schedules shall contain sufficient
detail of such current assets and liabilities for the determination of any
adjustment pursuant to Section 2.1(b). In the event Regency shall object
to any of the information set forth on the balance sheet or accompanying
schedules as presented by Midland Development, the parties shall negotiate
in good faith and agree on appropriate adjustments to the end that such
balance sheet and accompanying schedules reflect a reasonable estimate of
the Final Closing Balance Sheet (the estimated balance sheet as finally
determined by the parties pursuant to this subsection is herein referred
to as the "Estimated Closing Balance Sheet"), except that the current
liabilities on the Estimated Closing Balance Sheet, but not on the Final
Closing Balance Sheet, shall be increased by $50,000 as a reserve for
payables that are not exactly determinable as of the First Closing Date.
In connection with the determination of the Estimated Closing Balance
Sheet, Midland Development shall provide to Regency such information and
detail as Regency shall reasonably request.
(b) Final Closing Balance Sheet. The balance sheet of
Midland Development prepared as of the Cutoff Date shall be prepared as
follows:
(i) Within thirty (30) days after the First Closing
Date, Regency shall deliver to Midland Development an
unaudited balance sheet of Midland Development as of the
Cutoff Date, prepared in accordance with GAAP (except for
the exclusion of the Retained Items) from the books and
records of Midland Development, on a basis consistent with
GAAP theretofore followed by Midland Development in the
preparation of the Midland Financial Statements relating to
Midland Development and in accordance with this Section
11.5.1(b), and fairly presenting the financial position of
Midland Development as of the Cutoff Date. The balance
sheet shall be accompanied by detailed schedules of the
current assets and current liabilities (including the
outstanding balance of its line of credit) of Midland
Development.
(ii) Within sixty (60) days following the delivery of
the balance sheet referred to in (i) above, Midland
Development or its independent accountants ("Midland
Development's Accountants") may object to any of the
information contained in said balance sheet or accompanying
schedules which could affect the necessity or amount of any
Midland Development Value Adjustment. Any such objection
shall be made in writing and shall state Midland
Development's determination of the amount of the Midland
Development Value Adjustment. Any dispute regarding the
determination of the Final Closing Balance Sheet shall be
resolved by a "Big 6" accounting firm other than a firm
that provides services to Midland Development or Regency
(which shall be selected by lot or such other procedure as
the parties may agree) whose decision shall be binding on
the parties. As used in this Agreement, the term "Final
Closing Balance Sheet" shall mean the balance sheet of
Midland Development as of the Cutoff Date as finally
determined or agreed to for purposes of this Section
11.5.1(b).
(iii) Regency agrees to permit Midland Development
and its respective representatives, during normal business
hours, to have reasonable access (at a location in St.
Louis, Missouri) to, and to examine and make copies of, all
books and records of Midland Development, including but not
limited to the books, records, schedules and work papers of
Regency, which documents and access are necessary to review
the balance sheet delivered by Regency in accordance with
Section 11.5.1(b)(i). Midland Development similarly agrees
to permit Regency and its representatives, during normal
business hours, to have reasonable access to any books and
records of Midland Development which do not constitute
Assets contributed hereunder, in order to enable them to
prepare such balance sheet.
(iv) Notwithstanding any provision contained herein
requiring that the Final Closing Balance Sheet be prepared
in a manner consistent with Midland Development's past
practices or in accordance with GAAP, the Final Closing
Balance Sheet shall be prepared excluding the Retained
Items and stating accounts receivable and notes receivable
net of an appropriate reserve for doubtful accounts and
anticipated collection expenses.
11.5.2 Midland Development Value Adjustment. The Midland
Development Value Adjustment shall be determined by comparing any
adjustment made to the Contribution Value of the Third Party Management
Assets pursuant to Section 2.1(b) based on the Estimated Closing Balance
Sheet and the adjustment that should have been made had the Final Closing
Balance Sheet been available at the First Closing. The adjustment that
needs to be made, after taking into account any adjustment made at the
First Closing, shall be a Positive Midland Development Value Adjustment if
the Contribution Value with respect to such Assets should be increased
based on the Final Closing Balance Sheet and shall be a Negative Midland
Development Value Adjustment if such Contribution Value should be
decreased based on the Final Closing Balance Sheet.
11.5.3 Payment of Midland Development Value Adjustment. On
or before the fifth Business Day following the final determination of the
Final Closing Balance Sheet (such date being hereinafter referred to as
the "Settlement Date"), either (i) Midland Development shall pay to
Regency in cash the amount, if any, of a Negative Midland Development
Value Adjustment, as reflected on the Final Closing Balance Sheet; or (ii)
Regency shall deliver to Midland Development that number of Additional
Units arrived at by dividing the Unit Value into the amount, if any, of a
Positive Midland Development Value Adjustment, as reflected on the Final
Closing Balance Sheet, and then subtracting the Record Date Adjustment
Amount. In the event that Midland Development fails to pay the Negative
Midland Development Adjustment Amount, the Partnership shall have the
right to offset such amount against the Midland Group Earn-Out payable at
the First Earn-Out Closing.
11.6 Due Diligence Costs. The Partnership shall reimburse the
applicable Contributors with respect to all reasonable costs of due
diligence applicable to an Acquisition Contract contributed to a Regency
Entity or owned by a Joint Venture an interest in which is contributed to
a Regency Entity and to the extent that such amounts are not reimbursable
to the applicable Contributor by Topvalco or Xxxxxx. In addition, the
Partnership shall assume all payables with respect to such items, and
shall acquire as an Asset all receivables from Topvalco or Xxxxxx with
respect to such items. Such due diligence costs shall include without
limitation all reasonable costs of environmental investigation, legal
fees, survey costs, title costs, construction inspections, site
investigations, architectural plans and all other expenses applicable with
respect to the investigation of the applicable property as a site suitable
for building and development.
ARTICLE 12: TERMINATION AND REMEDIES
12.1 Termination. This Agreement may be terminated:
12.1.1 At any time prior to the First Closing Date, with the
written consent of Regency and Midland Development;
12.1.2 At any time prior to the First Closing Date, by Regency
(provided it has not caused a failure of a condition to Closing by reason
of its breach of any of its material obligations hereunder), if there
shall have been a failure of any condition to Regency's obligation to
close, and such failure shall not have been remedied within the applicable
period to cure after notice has been provided pursuant to Article 5 or 8
(and the First Closing Date shall be extended to provide for such cure
period);
12.1.3 At any time prior to the First Closing Date, by Midland
Development (provided no Midland Principal, Property Entity or Midland
Affiliate has caused a failure of a condition to Closing by reason of its
breach of any of its material obligations hereunder), if there shall have
been a failure of any condition of the Contributors' obligation to close,
and such failure shall not have been remedied within the applicable period
to cure after notice has been provided pursuant to Article 9 (and the
First Closing Date shall be extended to provide for such cure period); or
12.1.4 If the First Closing has not taken place by March 31,
1998, at any time thereafter, by Midland Development or Regency, upon
delivery of written notice of termination to the other so long as the
cause for delay is not attributable to a default of this Agreement by the
terminating party.
12.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 12.1, 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 12.3 below.
12.3 Remedies.
12.3.1 All rights and remedies of any party hereunder are
cumulative and in addition to any rights and remedies which such party may
have under applicable law. The exercise of any one right or remedy
against one party hereto will not deprive the exercising party of any
right or remedy against that party or any other parties hereto. No right,
power or remedy conferred upon or reserved to a party under this Agreement
or any other of the Transaction Documents is exclusive of any other right,
power or remedy in any of the Transaction Documents, but each and every
such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power and remedy given hereunder or
under any other Transaction Documents, or now or hereafter existing at
law, in equity or by statute.
12.3.2 If (i) any Contributor receives prior to the First
Closing an offer for a Competing Transaction (as defined in Section 5.7),
and (ii) such Contributor fails to obtain its applicable consents shown on
Schedule 6.1.2(b) for any reason, and (iii) Contributors agree to or
consummate Competing Transactions on or before December 31, 1998 involving
more than 25% of the aggregate Gross Asset Value of the Assets as shown on
Schedule 2.1, and (iv) 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, each Contributor (jointly and severally with each Midland
Principal who directly or indirectly owns an equity interest in such
Contributor) whose Assets are subject to such Competing Transactions shall
immediately pay to Regency upon the closing of such Competing Transactions
(by wire transfer) a break-up fee in an amount equal to 2% of the Gross
Asset Value of such Assets disposed of by such Contributor in the
Competing Transaction as shown on Schedule 2.1, whereupon such Contributor
shall have no further liability to Regency whatsoever arising out of any
Competing Transaction.
ARTICLE 13: INDEMNIFICATION
13.1 By Midland Principals. For a period of one year from the
First Closing Date (except for (i) Claims related to a breach of the
representations and warranties set forth in Sections 6.1.1 (Due
Organization), 6.1.2 (Due Authorization; Consents; No Violations), 6.2.2
(Securities) and 6.3 (Joint Ventures), for which the survival period shall
be two years, and (ii) Claims related to a breach of the representations
and warranties set forth in Section 6.2.6 (No Employees), Section 6.4.5
(Employee Benefit Plans), Section 5.6 (Disclosure) and Section 6.2.3
(Distributions and Payments), and related to any Tax, for which the
survival period shall be the applicable statute of limitation related to
such Claim), the Midland Principals hereby agree to indemnify, defend and
hold harmless Regency, each Transferee 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 such
Transferee pursuant to this Agreement by reason of, arising out of or
resulting from (i) the inaccuracy or breach of any representation or
warranty of (x) such Midland Principal, or (y) any Property Entity
(including Midland Development) or (z) Midland Affiliate in which he owns
an equity interest contained in or made pursuant to this Agreement,
including closing certificates (regardless of whether such breach is
deemed "material"); (ii) the breach of any covenant of (x) such Midland
Principal or (y) any Property Entity (including Midland Development) or
Midland Affiliate in which he owns an equity interest contained in this
Agreement (regardless of whether such breach is deemed "material"); or
(iii) any Claim accruing prior to the First Closing Date not constituting
an Assumed Liability or Assumed Obligation. Notwithstanding the
foregoing, with respect to an Indemnified Claim which results from (i) the
inaccuracy or breach of any representation or warranty of a Property
Entity (other than Midland Development) or Midland Affiliate, (ii) the
breach of a covenant of a Property Entity (other than Midland Development)
or Midland Affiliate or (iii) any Claim against a Property Entity (other
than Midland Development) or Midland Affiliate accruing prior to the First
Closing Date which is not an Assumed Liability or Assumed Obligation, each
Midland Principal shall only be liable to the extent of (i) the sum of the
Contribution Value and the Debt Amount of the Asset to which such
inaccuracy, breach or Claim relates, multiplied by (ii) his percentage
interest in such Property Entity (other than Midland Development) or
Midland Affiliate transferring such Asset. The "Debt Amount" with respect
to an Asset means the total outstanding amount of recourse construction
debt encumbering the Asset as of the First Closing and guaranteed by the
Midland Principal (but only so long as such construction debt remains
outstanding), and in the case of a violation prior to the First Closing of
carve-outs from the non-recourse provisions of Existing Mortgage Debt, the
Debt Amount also includes the amount of such Existing Mortgage Debt
outstanding on the First Closing Date which becomes recourse as a result
of such violation (but only to the extent of the loss caused to the lender
by such violation). With respect to an Indemnified Claim which results
from (i) the inaccuracy or breach of any representation or warranty of
Midland Development, (ii) the breach of a covenant of Midland Development
or (iii) any Claim against Midland Development accruing prior to the First
Closing Date which is not an Assumed Liability or Assumed Obligation, each
Midland Principal shall be jointly and severally liable with each other
Midland Principal. A Midland Principal owning an interest in a Midland
Affiliate is deemed to own an equity interest in any Property Entity owned
by such Midland Affiliate equal to his pro rata interest in such Midland
Affiliate multiplied times such Midland Affiliate's interest in the
Property Entity. As used in this Article 13, the term "Indemnified Claim"
shall include all Loss and Expenses.
13.2 By Contributors. For a period of one year from the First
Coast Closing Date (except for (i) Claims related to a breach of the
representations and warranties set forth in Sections 6.1.1 (Due
Organization), 6.1.2 (Due Authorization; Consents; No Violations), 6.2.2
(Securities) and 6.3 (Joint Ventures), for which the survival period shall
be two years, and (ii) Claims related to a breach of the representations
and warranties set forth in Sections 6.2.6 (No Employees), 6.4.5 (Employee
Benefit Plans), 5.6 (Disclosure) and 6.2.3 (Distributions and Payments),
and related to any Tax, for which the survival period shall be the
applicable statute of limitation related to such Claim), each Contributor
hereby agrees to indemnify, defend and hold harmless Regency, each
Transferee 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 such Transferee pursuant to this Agreement by
reason of, arising out of, or resulting from (i) the inaccuracy or breach
of any representation or warranty of such Contributor contained in or made
pursuant to this Agreement, including closing certificates (regardless of
whether such breach is deemed "material"); (ii) the breach of any covenant
of such Contributor contained in this Agreement (regardless of whether
such breach is deemed "material"); or (iii) any Claim accruing prior to
the First Closing Date not constituting an Assumed Liability or Assumed
Obligation. A Property Entity shall only be responsible for Claims made
with respect to its individual representations, warranties, covenants and
Claims, and not those of any other Property Entity (except as otherwise
specifically provided for with respect to Midland Development).
13.3 By the Partnership and Other Transferees. For the periods
indicated herein and subject to the terms and conditions of this Article
13, each Transferee and the Partnership hereby agrees to indemnify, defend
and hold harmless the Property Entities and their 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 (i) any breach by such Transferee of any obligation of such
Transferee related to the Assets which by this Agreement, or any Closing
delivery, specifically become the obligation of such Transferee, for a
period equal to the applicable statute of limitations relating to such
Claims; or (ii) all Claims against the Property Entities or Midland
Affiliates constituting, relating to or arising out of any Assumed
Liabilities or Assumed Obligations or any Claim accruing after the date at
which the Asset relating to such Claim has been transferred to the
Partnership or other Transferee, for a period equal to the applicable
statute of limitations relating to such Claims.
13.4 By Regency. For a period of two years from the First
Closing Date (except with respect to the inaccuracy of any form or report
filed with the Securities and Exchange Commission in which case the
survival period shall be the applicable statute of limitations) and
subject to the terms and conditions of this Article 13, Regency hereby
agrees to indemnify, defend and hold harmless the Unit Recipients 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 (i) the inaccuracy or breach of any
representation or warranty of Regency contained in or made pursuant to
Article 7 of this Agreement (regardless of whether such breach is deemed
"material") or (ii) the breach of any covenant of Regency contained in
this Agreement (regardless of whether such breach is deemed "material").
13.5 Remedies Upon Fraud. Nothing in this Agreement or in any
Transaction Document shall be deemed to limit any right or remedy of any
party at law or in equity for criminal activity or acts constituting
fraud, notwithstanding anything contained herein to the contrary.
13.6 Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article 13 with
respect to Claims relating to third parties shall be subject to the
following terms and conditions:
13.6.1 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 shall
undertake the defense thereof by representatives chosen by it. Failure to
give such notice shall not affect the Indemnifying Party's duty or
obligations under this Article 13, 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. If there is a reasonable probability that a Claim may materially
and adversely affect the Indemnified Party other than as a result of money
damages or other money payments, the Indemnified Party shall have the
right to retain its own counsel to defend against the portion of the Claim
not involving monetary relief, and the cost of such counsel shall be an
Expense of the Indemnifying Party. 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 Unit Recipient who has received Units 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.
13.6.2 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.
13.7 Payment.
13.7.1 General. The Indemnifying Party shall promptly pay
the Indemnified Party any amount due under this Article 13. 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
(collectively, together with the Shares issued and/or cash paid (and
interest income earned on such cash) upon the exercise of the Redemption
Rights with respect to such Additional Units, the "Collateral"). The
security interests granted pursuant to this Section 13.7.1 shall not
impair any Midland Principal's Redemption Rights; provided, however, that
any Shares issued and/or cash paid (and interest income earned on such
cash) upon the exercise of such Redemption Rights must also be pledged
hereunder and shall be part of the Collateral.
13.7.2 Security Interest.
(a) Grant. In the event that either Regency or the
Partnership notifies a Midland Principal of a Claim, pursuant to Section
13.1, on or before the date of any Subsequent Closing, each Midland
Principal, as a condition to receiving such Person's respective percentage
(as set forth on the Allocation Chart) of Additional Units to be issued at
a Subsequent Closing, shall, in addition to being bound by the other
provisions set forth in this Section 13.7.2, secure such Midland
Principal's liability to pay an Indemnified Claim by pledging and granting
to Regency and the Transferees under the Uniform Commercial Code a first
priority security interest in such Additional Units having a Value as of
such date equal to 125% of such Midland Principal's pro rata portion of
such Claim (the "Collateral").
(b) Evidence and Perfection of Security Interest.
Certificates for the Collateral, together with related stock powers or
other powers of attorney otherwise reasonably acceptable to Regency, shall
be held by Regency until the release of the security interests therein
pursuant to this Article 13. In addition, each Midland Principal shall
deliver to Regency and/or the Transferees, as the case may be, such
financing statements, continuation statements, and similar documents as
Regency and/or the Transferees shall deem appropriate to perfect and to
continue perfection of their respective security interests in the
Collateral.
(c) No Encumbrance, Sale, Etc. Until such time as Regency
and the Transferees release their respective security interests in the
Collateral, each Midland Principal granting the security interest
described above shall (i) 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 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 Transferees.
(d) Disputed Claim. Notwithstanding anything herein to
the contrary, in the event that either Regency or a Transferee notifies a
Midland Principal of a Claim on or before the date of a Subsequent Closing
and such Midland Principal disputes such Claim, the Collateral shall be
pledged, and neither Regency nor any Transferee may exercise its rights
with respect to such security interests until the amount of such Claim has
either (i) been decided by a court of competent jurisdiction and such
decision is not subject to appeal, or (ii) agreed to by the Indemnifying
Parties with respect to such Claim. Once the amount of such Claim has
been decided or agreed upon, the Collateral may be used to satisfy the
Indemnified Claim, based on its then Value.
(e) Adjustment. In the event that the parties are not
able to agree on the amount of the pending Indemnified Claims, the Midland
Representatives 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 arbitration proceedings shall be held in St. Louis, Missouri. 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 of a Midland Principal times the then Value equals at least
125% of his allocable share of the amount determined by the arbitrators to
be the maximum possible exposure of the pending Indemnified Claims,
Regency shall release the excess Collateral.
(f) Substitution of Collateral. Any Midland Principal
holding Collateral may substitute a letter of credit issued by a
responsible financial institution located in the United States in favor of
Regency and the Transferees, provided that the letter of credit (i) is for
an amount equal to or greater than 125% of the then Value of the
Collateral which such letter of credit is replacing and (ii) is
irrevocable until the security interest is released in the remaining
Collateral.
(g) Remedies. In the event that Regency or any Transferee
has the right to use the Collateral to satisfy the liability of a Midland
Principal, if any, to pay an Indemnified Claim, without waiving any other
right under this Agreement, Regency and such Transferee, as the case may
be, shall have all rights and remedies of a secured party under the
Uniform Commercial Code in addition to the rights and remedies as may be
available hereunder, subject to the limitations on their rights to
foreclose set forth in Section 13.7.2(d).
(h) Distributions in Respect of Collateral. Until such
time as Regency and the Transferees release their respective security
interests in the Collateral, each Midland Principal shall assign to and
authorize Regency and the Transferees to receive any and all non-cash
dividends or non-cash 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 any Transferee, 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 Transferees' respective security interests in the
Collateral, each Midland Principal shall be entitled to receive all cash
distributions relating to Additional Units constituting Collateral without
any security interest attaching thereto.
13.8 Jurisdiction. Any suit, action or proceeding against any
Midland Principal with respect to this Article 13 may be brought in the
courts of the State of Missouri or in the U.S. District Court for the
Eastern District of Missouri as Regency or the applicable Transferee, as
the case may be, in its sole discretion may elect, and each Midland
Principal, by acceptance of any Additional Units, shall be deemed to
accept the nonexclusive jurisdiction of those courts for the purpose of
any suit, action or proceeding. In addition, each Midland Principal shall
be deemed to irrevocably waive, to the fullest extent permitted by law,
any objection which such Person may have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Section 13.8
or any judgment entered by any court in respect to any part thereof
brought in the State of Missouri and to further irrevocably waive any
claim that any suit, action or proceeding brought in the State of Missouri
has been brought in an inconvenient forum.
13.9 Threshold and Cap. Notwithstanding anything herein to the
contrary, no party required to indemnify any other under this Article 13
shall be responsible for any Indemnified Claim under the terms of this
Article 13 until the cumulative aggregate amount of such Indemnified
Claims suffered by the applicable Property Owner, on the one hand, or the
Transferees or Regency on the other hand, as the case may be, exceeds
$500,000, with respect to OTR/Midland Realty Holdings, Ltd. or $50,000
with respect to each other Property Owner, in which case the Contributor
and the Midland Principals, on the one hand, or the Transferees or Regency
on the other hand, as the case may be, shall then be liable for all such
Indemnified Claims as to such Property Owner, but (a) in the case of a
Midland Principal's liability for a breach of a representation, warranty
or covenant by a Property Entity, a Midland Affiliate or a Midland
Principal that is not willful or intentional, only to the extent that the
aggregate Loss and Expenses do not exceed the combined value of the
Collateral on the date that the Claim is satisfied, and (b) in the case of
a breach of a representation, warranty or covenant by Regency or any
Transferee that is not willful or intentional (other than a Claim relating
to an Assumed Liability), only to the extent that the aggregate Loss and
Expenses do not exceed the aggregate Contribution Value of the Assets.
13.10 No Waiver. 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 5.10 and
5.11 (requiring notice to the other party).
13.11 Designated Representatives. Xxx Xxxxxxxxx and Xxxxxxx
Xxxxxxxxx are hereby designated to represent the Midland Principals and
each Property Entity and Midland Affiliate in connection with any consent,
approval, agreement, settlement, or other action to be taken after the
First Closing under this Article 13 (the "Midland Representatives"), and
the decision of the Midland Representatives shall be binding on the
Midland Principals and each Property Entity and Midland Affiliate.
Further, the Midland Representatives shall have the right to engage
attorneys to represent the interest of the Midland Principals and each
Property Entity and Midland Affiliate and incur reasonable costs and
expenses in connection with any action to be taken or issues arising under
this Article 13, and the Midland Principals, by acceptance of Additional
Units at any Subsequent Closing, shall be deemed to have agreed to fund
such costs and expenses, which liability shall be joint and several.
ARTICLE 14: POST-CLOSING COVENANTS
14.1 Completion of 1997 Audit. Each Midland Principal 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 each Property Owner, in accordance with GAAP and
reported on by KPMG Peat Marwick, 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. Without limiting the foregoing, each Midland Principal agrees
to give Regency and Regency's independent certified public accountants
access to the work papers for such Property Owner's financial statements.
Regency shall pay the cost of each Property Owner's audit.
14.2 Access to Books and Records. For a period of seven years
following the First Closing, Regency shall cause the Partnership and the
other Transferees to preserve and to give the Property Entities access,
upon reasonable advance notice and during normal business hours, to all
books and records delivered by the Property Entities to such Transferees
to enable the Property Entities to prepare Tax returns or respond to any
request of any Tax authority or Governmental Entity regarding matters
prior to the First Closing.
14.3 Environmental Matters.
14.3.1 Each Property Entity, Midland Principal and Midland
Affiliate hereby waives any claim for contribution against the Transferees
for any damages to the extent they arise from any pre-closing conditions
related to:
(1) any Release of, threatened Release of, or
disposal of any Hazardous Materials at any Property or Option Property;
(2) the operation or violation of any environmental
Law at any Property or Option Property; or
(3) any environmental Claim pursuant to any
environmental Law in connection with any Property or Option Property.
14.3.2 The waiver contained in this Section 14.3 shall be
binding upon the successors and assigns of the Midland Principals,
Property Entities and Midland Affiliates to the benefit of the Transferees
and their directors, officers, employees and agents, and their successors
and assigns.
14.4 Reports on Earn-Out Performance. From the First Closing
Date until the last Earn-Out Closing Date, the Transferees shall provide
the Midland Representatives with quarterly reports in a form reasonably
acceptable to such parties relating to the various factors that form the
basis for the computation of the various earn-outs described in Section
2.5, e.g., the performance of the Eligible Properties with respect to the
In-Process Earn-Out. The Transferees agree 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 Midland
Representatives, all books and records relating to amounts due on any
Earn-Out Closing Date. The Midland Representatives shall have the right
to conduct up to three audits of such books and records for the purpose of
confirming the amount due on any Earn-Out Closing Date, and if any such
audit discloses that any earn-out has been understated for any calendar
year preceding an Earn-Out Closing Date by more than 5%, Regency shall
reimburse the Midland Representatives for the cost of such audit.
14.5 Midland Development 401(k) Plan. Promptly after the First
Closing, Midland Development shall undertake the actions necessary to
inform participants in its 401(k) Plan of their right to a distribution,
including the right to make an eligible rollover distribution to Regency's
Plan. In addition, Midland Development shall maintain its 401(k) Plan for
as long as required by Treasury Regulation Section 401(k)-1(d)(4).
Participants in the Midland 401(k) Plan may receive a distribution
pursuant to this Section until the last day of the calendar year following
the year of the First Closing. Midland Development shall be solely
responsible for any costs associated with the responsibilities/duties
contained in this Section. Regency agrees to cause the Partnership to
provide access to records and to provide employee and management time in
assisting Midland Development in meeting its obligations hereunder with
respect to its 401(k) Plan.
ARTICLE 15: MISCELLANEOUS
15.1 Headings and Interpretation. The headings contained in
this Agreement are for reference purposes only and are in no way intended
to describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof. The parties acknowledge that this
Agreement and all other Transaction Documents have been negotiated at
arms' length, with the assistance of their respective counsel, and
accordingly, this Agreement and the other Transaction Documents shall not
be construed against or in favor of any party over any other party,
regardless of which party was responsible for drafting the same.
15.2 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.
15.3 Time. Time is of the essence for this Agreement.
15.4 Survival. The representations and warranties contained in
this Agreement and the provisions of this Agreement that contemplate
performance after the Closing shall survive the Closing and shall not be
deemed to be merged into or waived by the instruments of such Closing.
15.5 Expenses. At each Closing, Regency shall 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, loan
assumption fees in connection with the assumption by the Partnership of
the Existing Mortgage Debt, and any prepayment penalties; (ii) the cost of
disseminating the disclosure document referred to in Section 5.6 and the
travel and related expenses incurred in connection with meetings with
Midland Principal partners; and (iii) the reasonable, itemized fees and
expenses of attorneys and accountants for the Property Entities. Except
as otherwise provided in Section 12.3, 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.
15.6 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
whatsoever incurred by the prevailing party in connection with such
action, including, without limitation, attorneys' fees and prejudgment
interest.
15.7 Mediation. Except as otherwise provided in Section 13.7.2,
in the Partnership Agreement and in the partnership agreement of R&M
Western Partnership, disputes arising under this Agreement shall be
resolved as follows:
(a) No party to this Agreement shall bring a civil action
seeking enforcement or any other remedy founded on this Agreement without
first complying in good faith with the provisions of this Section 15.7.
Any party may seek injunctive relief to preserve the status quo pending
the completion of mediation under this Agreement.
(b) Disputes arising under this Agreement shall be
submitted to mediation. The Midland Representatives, on the one hand, and
Regency, on the other hand, shall flip a coin to determine whether the
mediation shall be held in St. Louis, Missouri or Jacksonville, Florida,
and shall select a mutually acceptable mediator in such location. In the
event such parties are unable to agree on a mutually acceptable mediator,
then the dispute shall be submitted to the office of JAMS/ENDISPUTE
nearest to the determined location for mediation. If the parties cannot
agree on or have no particular choice of mediator from the list of
neutrals at JAMS/ENDISPUTE, then a list and resumes of available
mediators, numbering one more than there are parties, will be sent to the
parties, each of whom may strike one name. The remaining name shall be
the mediator; provided, however, if more than one name remains, the
mediator shall be selected by the Arbitration Administrator of
JAMS/Endispute from the remaining names. The mediation process shall
continue until the case is resolved or the mediator makes a finding that
there is no possibility of settlement through mediation.
(c) In the event that a dispute is submitted to mediation,
the Midland Representatives shall represent the Midland Principals and any
Contributor or other Property Entity or Midland Affiliate involved in the
dispute.
15.8 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
Transferees of, and the vesting in the Transferees title to, the Assets.
15.9 Remedies Cumulative. Except as otherwise expressly
provided in Section 12.3 and subject to the limitations set forth in
Article 13, 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.
15.10 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 Midland Development and Regency dated February 10,
1997 (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.
15.11 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 Contributors: (ii) If to Regency or
Transferees:
Xxxxx 000, Xxxxxxxx I 000 X. Xxxxxxx Xx., Xxxxx 000
00000 Xxxxx Xxxx. Xxxxxxxxxxxx, Xxxxxxx 00000
Xx.Xxxxx, Xxxxxxxx 00000 Telephone: (000) 000-0000
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Attention: Xxxxxx X. Xxxxx,
Attention: Xxx X. Xxxxxxxxx Xx., President
Xxxxx X. Xxxxxxx,
Managing Director
and CFO
copy to: copy to:
Xxxxxx X. Xxxxxx, Esq. Xxxxxxx X. Commander, Esq.
Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C. Xxxxx & Lardner
2000 Equitable Building Green Leaf Building
000 Xxxxx Xxxxxxxx 000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000 Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (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 15.11, 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 15.11,
such communication shall be deemed delivered upon receipt; and if sent by
U.S. mail pursuant to this Section 15.11, 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
15.11.
15.12 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, 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.
15.13 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.
15.14 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.
15.15 Assignment; Parties in Interest.
15.15.1 Assignment. 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; provided, that Regency, without the consent of any
other party hereto, may assign its rights and/or obligations under this
Agreement, in whole or in part, to any Affiliate. For the purposes of
this paragraph, "Affiliate" means (a) an entity that directly or
indirectly controls, is controlled by or is under common control with
Regency or (b) an entity at least a majority of whose economic interest is
owned by Regency; and the term "control" means the power to direct the
management of such entity through voting rights, ownership or contractual
obligations.
15.15.2 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.
15.16 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.
15.17 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.
15.18 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 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.
15.19 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 15.19 SHALL SURVIVE ANY
TERMINATION OF THIS AGREEMENT.
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.
THE MIDLAND PRINCIPALS: REGENCY REALTY CORPORATION
/s/ Xxx X. Xxxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
Xxx X. Xxxxxxxxx Xxxxx X. Xxxxxxx
Managing Director and CFO
/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
/s/ Xxx X. Xxxxxxxx
Xxx X. Xxxxxxxx
THE PROPERTY ENTITIES
MIDLAND DEVELOPMENT GROUP, INC.,
a Missouri Corporation
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
OTR Eastern Properties
Bent Tree Plaza (North Carolina)
Westchester Plaza (Ohio)
Xxxxxxxx Xxxxxxx (Ohio)
Brookville Plaza (Virginia)
Lakeshore (Michigan)
Xxxxx Crossing (Georgia)
Xxxxxxx Square (Virginia)
Kernersville Marketplace (North Carolina)
Xxxxxxx Crossing (North Carolina)
Shoppes at Mason (Ohio)
Lake Pine Plaza (North Carolina)
OTR/MIDLAND REALTY HOLDINGS, LTD.,
an Ohio Limited Liability Company
By: Midland Realty Holdings L.L.C.,
a Missouri Limited Liability Company,
Managing Member
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Managing Member
Xxxxxxx Commons Shopping Center
No. 1712
XXXXXXX PARTNERS LIMITED PARTNER-
SHIP, an Ohio Limited Partnership
By: Midland-Xxxxxxx Limited Partnership,
a Missouri Limited Partnership, General
Partner
By: Xxxxxxx Equities, Inc., a Missouri
Corporation, General Partner
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
Xxxx Xxxxxx Xxxxxxxx Xxxxxx
Xx. 0000
XXXXXXXXXXXX PARTNERS,
an Ohio General Partnership
By: Midland Reynoldsburg Development
Company Limited Partnership, a
Missouri Limited Partnership, Managing
General Partner
By: Reynoldsburg Equities, Inc., a
Missouri Corporation, General
Partner
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx
Managing Member
Xxxxxxxx Xxxxxx
Xx. 0000
XXXXXXX XXXXXXXXX DEVELOPMENT CO.
L.L.C., a Kentucky Limited Liability Company
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Manager
By: /s/ Xxx X. Xxxxxxxx
Xxx X. Xxxxxxxx, Manager
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx, Manager
Maxtown Road Shopping Center
No. 1710
MAXTOWN PARTNERS, LTD.,
an Ohio Limited Liability Company
By: Maxtown Development Company L.L.C.,
a Missouri Limited Liability Company,
Voting Member
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Managing Member
By: /s/ Xxx X. Xxxxxxxx
Xxx X. Xxxxxxxx, Managing Member
Xx. Xxx Xxxxxx
Xx. 0000
X & M DEVELOPMENT COMPANY,
a Missouri General Partnership
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Managing Partner
Xxxxxxxxxxx Xxxx Xxxxxx
Xx. 0000
XXXXXXXXXXX DEVELOPMENT COMPANY,
an Ohio General Partnership
By: /s/ Xxx X. Xxxxxxxx
Xxx X. Xxxxxxxx, Managing General
Partner
Acquisition Contracts
MIDLAND ACQUISITIONS, INC.
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
Acquisition Contracts
MIDLAND RALEIGH ACQUISITIONS, LLC,
a North Carolina Limited Liability Company
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Manager
Acquisition Contracts
MIDLAND DALLAS ACQUISITIONS, INC.
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
Acquisition Contracts
MIDLAND MICHIGAN ACQUISITIONS, INC.
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
THE MIDLAND AFFILIATES
OTR Portfolio
MIDLAND REALTY HOLDINGS, L.L.C.,
a Missouri Limited Liability Company
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Managing Member
Xxxxxxx Commons Shopping Center
No. 1712
MIDLAND-XXXXXXX LIMITED PARTNERSHIP,
a Missouri Limited Partnership, General
Partner
By: Xxxxxxx Equities, Inc., a Missouri
Corporation, General Partner
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
Xxxx Xxxxxx Xxxxxxxx Xxxxxx
Xx. 0000
XXXXXXX XXXXXXXXXXXX DEVELOPMENT
COMPANY LIMITED PARTNERSHIP, a
Missouri Limited Partnership, Managing
General Partner
By: Reynoldsburg Equities, Inc., a
Missouri Corporation, General Partner
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
Garner Festival Center
No. 1725
MIDLAND GARNER DEVELOPMENT
COMPANY, L.L.C., a North Carolina Limited
Liability Company, Administrative Member
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Administrative Member
Maxtown Road Shopping Center
No. 1710
MAXTOWN DEVELOPMENT COMPANY
L.L.C., a Missouri Limited Liability
Company, Voting Member
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Managing Member
By: /s/ Xxx X. Xxxxxxxx
Xxx X. Xxxxxxxx, Managing Member
Xxxxxxxxx Xxxxxxxx Xxxxxx
Xx. 0000
XXXXXXX XXXXXXXXX DEVELOPMENT
COMPANY, L.P., a Texas Limited Partnership
By: Arlington Creekside Equities, Inc.,
a Texas Corporation, General Partner
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
Frisco Shopping Center
No. 1735
MIDLAND FRISCO DEVELOPMENT
COMPANY, L.P., a Texas Limited Partnership
By: Frisco Equities, Inc.,
a Texas Corporation, General Partner
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
Xxxxxxxxxx Xxxxxxxx
Xx. 0000
XXXXXXX XXXXXX DEVELOPMENT
COMPANY L.L.C., a North Carolina
Limited Liability Company
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Manager
Xxxxx Xxxx Center
No. 1737
MIDLAND ARVADA DEVELOPMENT
LLC, a Colorado Limited Liability Company
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Manager
Xxxxxxxx Xxxxxxx
Xx. 0000
XXXXXXX XXXXXXXX DEVELOPMENT
COMPANY L.L.C., a Tennessee Limited
Liability Company
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Administrative Member
(Chief Manager)
Shiloh Springs Shopping Center
No. 1734
MIDLAND SHILOH DEVELOPMENT
COMPANY L.P., a Texas Limited Partnership
By: Shiloh Equities, Inc.,
a Texas Corporation, General Partner
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
Xxxxxxx Xxxxxx
Xx. 0000
XXXXXXX XXXXXXXXX DEVELOPMENT
COMPANY, L.P., a Texas Limited Partnership
By: Southlake Equities, Inc., a Texas
Corporation, General Partner
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
Xxxxxxxx Xxxxxxx
MIDLAND XXXXXXXX XXXXXXX
DEVELOPMENT, LLC,
a Colorado Limited Liability Company
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Manager
Xxxxxxx Xxxx
MIDLAND XXXXX DEVELOPMENT, L.P.,
a Texas Limited Partnership
By: Xxxxxxx Equities, Inc.,
a Texas Corporation, General Partner
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, President
Xxxxxxxxxx
No. 1724
MIDLAND PICKERINGTON DEVELOPMENT
LIMITED LIABILITY COMPANY,
an Ohio Limited Liability Company
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Administrative Member
Xxxxx Crossing Expansion Land
MIDLAND REALTY NO. 1 LLC,
a Georgia Limited Liability Company
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Manager
NWC Woodmen
MIDLAND WOODMEN DEVELOPMENT LLC,
a Colorado Limited Liability Company
By: /s/ Xxx X. Xxxxxxxxx
Xxx X. Xxxxxxxxx, Manager
LIST OF SCHEDULES TO CONTRIBUTION AGREEMENT
Schedule 1.1.1 Abated Rent Criteria
Schedule 1.1.2 Acquisition Contracts
Schedule 1.1.7 Allocation Chart
Schedule 1.1.8 Structural Reserve Allowances
Schedule 1.1.11 Assumed Liabilities
Schedule 1.1.12 Assumed Obligations
Schedule 1.1.15 Capital Expenditure Budget and Schedule
Schedule 1.1.27 Development Contracts
Schedule 1.1.30 Development Properties
Schedule 1.1.34 Eligible Properties
Schedule 1.1.39 Excluded Assets
Schedule 1.1.40 Existing Mortgage Debt
Schedule 1.1.45 TI Contracts
Schedule 1.1.47 First Midland NOI Threshold
Schedule 1.1.60 King Soopers Joint Ventures
Schedule 1.1.62 Kroger Joint Ventures
Schedule 1.1.65 Leasing Criteria
Schedule 1.1.70 Management Contracts
Schedule 1.1.72 Midland Affiliates
Schedule 1.1.90 OSTRS Committed Eastern Properties
Schedule 1.1.91 OSTRS Committed Western Properties
Schedule 1.1.92 OSTRS Eastern Option Properties
Schedule 1.1.95 OSTRS Western Option Properties
Schedule 1.1.105(c) Permitted Exceptions
Schedule 1.1.110 Property Entities
Schedule 1.1.115 Real Property
Schedule 1.1.124 Rent Roll and Lease Summaries
Schedule 1.1.125 Repair Contracts
Schedule 1.1.131 Second Midland NOI Threshold
Schedule 1.1.134 Service Contracts
Schedule 1.1.143 In Process Real Estate Brokerage and Other Third
Party Transactions Being Retained by Midland
Development
Schedule 1.1.145 TI Budget and Schedule
Schedule 1.1.146 TI Contracts
Schedule 2.1 Contribution Values of Assets as of November 30,
1997
Schedule 2.2(a) Existing Mortgage Debt to be Paid at First Closing
Schedule 2.2(c) Midland Principals' Relative Share of Units Which
Cannot be Redeemed
Schedule 2.4.1 Assumed Liabilities Encumbering Option Properties
Schedule 2.5.2 Unit Recipients for In-Place Earn-Out
Schedule 2.5.4 Worthington Outparcel Earn-Out
Schedule 2.5.5 Xxxxx Crossing Land Earn-Out
Schedule 4.1 Option Properties, Owners and Option Exercise
Prices; Additional Restrictive Covenants
Schedule 4.4 Land Owned by Midland Principals Which Will Not
Be Optioned
Schedule 5.2 Outparcels that May be Sold Prior to Closing
Schedule 5.20 Legal Description of Xxxxxxxxxx Property to be
transferred after Platting
Schedule 6 Persons Whose Knowledge is Attributed to Midland
Schedule 6.1.2(a) Governing Documents of each Property Entity,
Midland Affiliate and Joint Venture
Schedule 6.1.2(b) Midland Consents
Schedule 6.1.3 Defaults Under Existing Mortgage Debt
Schedule 6.1.6 Pending or Threatened Litigation
Schedule 6.1.7 Leased Real Property
Schedule 6.1.8 Leased Personal Property
Schedule 6.1.10 Contracts
Schedule 6.1.11 Insurance Policies
Schedule 6.1.12 Tax Matters
Schedule 6.2.1 Retained Properties
Schedule 6.2.2(f) Unit Recipients' Jurisdictions of Residence
Schedule 6.2.6 Employees of Property Entities and Joint Ventures
Schedule 6.2.7 Brokers
Schedule 6.3.3 Joint Venture as Successor to Liabilities
Schedule 6.4.2 Termination of Management Contracts
Schedule 6.4.3 Absence of Midland Development Permits
Schedule 6.4.5 Employee Benefit Plan Disclosure
Schedule 6.5.1 Encumbrances to Be Discharged
Schedule 6.5.2 Physical Condition
Schedule 6.5.3 Rentable Area and Parking Spaces
Schedule 6.5.4 Non-Compliance with Laws
Schedule 6.5.6 Absence of Utilities; Permits
Schedule 6.5.7 Contract Payments
Schedule 6.5.8 Assessments
Schedule 6.5.10 Matters Relating to Leases
Schedule 6.5.12 Service Contracts
Schedule 6.5.13 Security Deposits
Schedule 6.5.14 Condemnation
Schedule 6.5.15 Environmental Matters
Schedule 6.5.17 Zoning Variances
Schedule 6.5.18 Lack of Access
Schedule 6.5.20 Use of Property
Schedule 6.5.22 Development Properties
Schedule 6.5.24 Work Contracts
Schedule 6.5.25 Budgets and Projections
Schedule 7 Persons Whose Knowledge is Attributed to Regency
Schedule 7.1(b) Regency Non-100% Entities
Schedule 7.2(b) Regency Consents
Schedule 7.3.2 Commitments to Issue Regency Stock
Schedule 7.3.3 Regency's Redemption Obligations
Schedule 7.3.4 Regency Voting Agreements
Schedule 7.9 Regency Litigation
Schedule 7.11 Regency Environmental Matters
Schedule 8.1.7 Mandatory Midland Consents
Schedule 8.2.7 Mandatory Tenant Estoppels
Schedule 8.2.12 Waiver of Tenant Rights of First Refusal
Schedule 10.2.1(g) List of Transfer Documents
Schedule 10.2.1(j) Officers to Sign Non-Compete Agreements
LIST OF EXHIBITS TO CONTRIBUTION AGREEMENT
Exhibit 1.1.102 OTR Redemption Agreement
Exhibit 1.1.104 Partnership Agreement
Exhibit 1.1.118 Redemption Agreement
Exhibit 1.1.123 Registration Rights Agreement
Exhibit 3.1.1 R&M Western Partnership Allocation Provisions
Exhibit 4.1 Memorandum of Option and Form of Purchase
Agreement
Exhibit 5.13 Tenant Estoppel Certificates
Exhibit 5.20 Xxxxxxxxxx Agreement
Exhibit 8.1.9 Additional Indemnity
Exhibit 8.2.11 Regency Letter dated December 4, 1997
Exhibit 10.2.1(j) Non-Compete Agreement
Exhibit 10.2.1(k) Lock-Up Agreement
Schedules and Exhibits omitted pursuant to Section 601(b)(2) of Regulation
S-K.
