AGREEMENT RELATING TO DISPOSITION OF SHARES
THIS AGREEMENT is dated as of June 11, 2003, by and between
REGENCY CENTERS CORPORATION, a Florida corporation ("Company"), and SECURITY
CAPITAL GROUP INCORPORATED, a Maryland corporation ("Security Capital").
WHEREAS, Security Capital beneficially owns 34,273,236 shares
of the Company's common stock (the "Shares"), constituting approximately 56.6%
of the Company's outstanding common stock;
WHEREAS, Security Capital and the Company are parties to a
Stockholders Agreement dated as of July 10, 1996 entered into by the Company and
Security Capital's predecessors in interest, Security Capital U.S. Realty and
Security Capital Holdings, S.A., as amended by (i) Amendment No. 1 to
Stockholders Agreement dated as of February 10, 1997, (ii) Amendment No. 2 to
Stockholders Agreement dated as of December 4, 1997, (iii) Amendment No. 3 to
Stockholders Agreement dated as of September 23, 1998, (iv) Amendment No. 4 to
Stockholders Agreement dated as of September 2, 1999, (v) letter agreement dated
June 14, 2002, and (vi) Amendment to Stockholders Agreement dated as of April 4,
2002 (as so amended, the "Stockholders Agreement");
WHEREAS, pursuant to a Registration Rights Agreement dated as
of July 10, 1996 (the "Registration Rights Agreement"), the Company has filed a
registration statement with the Securities and Exchange Commission for the sale
by Security Capital of the Shares from time to time (SEC File No. 333-105408)
(the "Registration Statement");
WHEREAS, Security Capital wishes to realize the value of its
investment in the Shares by disposing of a portion of the Shares in an
underwritten public offering pursuant to the Registration Statement (the
"Secondary Offering") and a contemporaneous underwritten public offering
involving the sale of underwriter debt securities exchangeable for Shares after
three years (the "DECS Offering");
WHEREAS, Security Capital expects to enter into forward
contracts (the "Forward Contracts") with certain of the underwriters (the
"Forward Contract Underwriters") covering a portion of the Shares (the "Forward
Contract Shares") providing for Security Capital to deliver the Forward Contract
Shares to the Forward Contract Underwriters in 2004;
WHEREAS, Security Capital expects to cease to have any
economic interest in the Forward Contract Shares at the time of closing of the
public offerings but will continue to have voting power over the Forward
Contract Shares during the term of the Forward Contracts;
WHEREAS, the Company wishes to facilitate Security Capital's
sale of the Shares and in connection therewith and as a condition to this
Agreement is entering into a purchase and sale agreement of even date herewith
(the "Purchase and Sale Agreement") to acquire up to $150,000,000 of Shares,
subject to adjustment as provided therein;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties agree as follows (all capitalized terms not
otherwise defined herein shall have the meanings set forth in the Stockholders
Agreement):
1. Extension of Lock-Up Period. The Company hereby agrees that
the lock-up period referred to in Section 2(c) of the Registration Rights
Agreement shall extend for 90 days (as opposed to 60 days) after the filing with
the Securities and Exchange Commission of the final prospectus supplement for
the Secondary Offering. The Company agrees to use good faith efforts to cause
each of its directors and executive officers to enter into lock-up agreements
having the same lock-up period.
2. Events to Occur at Closing of Public Offerings. On the later
of the date of closing (the "Closing Date") of the Secondary Offering and the
DECS Offering (the "Closing"), provided that Security Capital shall not
Beneficially Own (as defined in the Stockholders Agreement) Shares constituting
more than 15% of the common stock of Regency outstanding, on a fully diluted
basis, immediately following the Closing and Regency's purchase of Shares
pursuant to the Purchase and Sale Agreement (assuming for this purpose that all
Shares subject to the Forward Contracts at Closing are Beneficially Owned by the
Forward Contract Underwriters and not by Security Capital), the following shall
occur:
(a) Termination of Stockholders Agreement. The Stockholders
Agreement shall terminate on the Closing Date, and neither party shall
have any right, claim or obligation thereunder, except for the
provisions of Section 7.14 ("Confidentiality"), which shall remain in
full force and effect until the six-month anniversary of the Closing
Date, at which time such Section 7.14 shall terminate and be of no
further force or effect.
(b) Resignation of Security Capital Director. Security
Capital shall cause Xxxxxx X. Xxxxxxx a representative on the Company's
board of directors nominated by Security Capital pursuant to Section
2.1 of the Stockholders Agreement, to resign as a director as promptly
as practicable following the Closing Date.
(c) Voting of Forward Shares. From the Closing Date, if
there shall be any vote by the holders of the Company's common stock,
Security Capital shall vote all of the Forward Contract Shares over
which Security Capital has voting power (including but not limited to
any Forward Contract Shares that it retains upon any cash settlement of
the Forward Contracts), proportionally in accordance with the vote of
the other holders of the Company's common stock, except as provided in
Section 6 with respect to deleting the Special Shareholder Limit from
the Articles.
3. Events to Occur if Forward Contracts Settled in Cash. If,
after the termination of the Stockholders Agreement pursuant to Section 2(a),
Security Capital settles Forward Contracts in cash, the Forward Contract Shares
that Security Capital retains as a result shall continue to constitute
"Registrable Securities" under the Registration Rights Agreement until sold
pursuant to the Registration Statement or sold in reliance on Rule 144. In
addition, Security Capital agrees to sell Forward Contract Shares within 100
trading days following the consummation of the cash settlement to the extent
necessary to cause the number of Shares Beneficially Owned by it (as defined in
the Articles) to not exceed the 7% Ownership Limit.
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4. Lapse. The provisions of Section 1 ("Extension of Lock-Up
Period"), Section 2 ("Events to Occur at Closing of Public Offerings") and
Section 3 ("Events to Occur if Forward Contracts Settled in Cash") shall cease
to have any effect if the Closing Date has not occurred on or prior to September
30, 2003.
5. Amendment to Stockholders Agreement. If the Closing occurs on
or prior to September 30, 2003, but the Stockholders Agreement remains in effect
because Security Capital did not dispose of sufficient Shares to reduce its
ownership below the requisite threshold set forth in Section 2, the Stockholders
Agreement shall be amended on the Closing Date (a) to provide that it terminates
on the 15% Termination Date, with the same force and effect as a termination
pursuant to Section 2(a), and the definition of 15% Termination Date shall be
amended to read in full as follows:
" `15% Termination Date' shall mean the first date,
if any, on which Investor's Beneficial Ownership of Company
Common Stock shall be less than 15% of the outstanding shares
of Company Common Stock, on a fully diluted basis."
6. Ownership Limit. All capitalized terms not otherwise
expressly defined above or defined in this Section 6 shall have the meanings
given to them in the Company's Articles of Incorporation as presently in effect
(the "Articles"). If the Closing occurs on or before September 30, 2003, the
Company and Security Capital agree that notwithstanding any provision that may
be interpreted to the contrary in the Articles, and subject to the condition set
forth in the last sentence of this paragraph, the Special Shareholder Limit
shall be eliminated and may not be transferred to any person, Security Capital
shall not be entitled to the benefit thereof, and in lieu thereof Security
Capital shall be entitled to the Security Capital Shareholder Limit, all as more
fully described in ownership limit waiver resolutions adopted by the Board of
Directors on the date hereof, a copy of which are attached hereto as Exhibit A.
If so requested by Regency, Security Capital agrees to vote any Shares over
which it has voting power in favor of an amendment to the Articles carrying out
the intent of this Section 6. The relinquishment of the Special Shareholder
Limit described above will not occur if the closing of the Secondary Offering or
the DECS Offering occurs and on such date Security Capital will continue to
Beneficially Own (as defined in the Stockholders Agreement) Shares constituting
45% or more of the common stock of Regency outstanding, on a fully diluted basis
(assuming for this purpose that all Shares subject to the Forward Contracts at
Closing are Beneficially Owned by the Forward Contract Underwriters and not by
Security Capital).
7. Specific Performance. The parties agree that in view of the
uniqueness of the arrangements contemplated by this Agreement, the parties
hereto would not have an adequate remedy at law for money damages in the event
that this Agreement is not performed in accordance with its terms, and
therefore, the parties agree that they shall be entitled to specific performance
of this Agreement in addition to any other remedy to which the parties may be
entitled at law or in equity.
8. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the laws of the state of Florida, without regard to
conflict of law principles. This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their
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respective successors, assigns and affiliates. No provision of this Agreement
may be waived, modified or amended except in a writing signed by the party
against which enforcement is sought. The captions in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement. This Agreement shall be construed without regard to any presumption
requiring construction against the party causing its drafting.
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REGENCY CENTERS CORPORATION
By: /s/ Xxxxxx X. Xxxxx, Xx.
-------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chairman
SECURITY CAPITAL GROUP INCORPORATED
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: Authorized Signatory
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