<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 14, 1997
REGISTRATION NO. 333-22731
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 4
TO
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES
-------------------
WESTFIELD AMERICA, INC.
(Exact name of Registrant as specified in governing instruments)
11601 WILSHIRE BOULEVARD
12TH FLOOR
LOS ANGELES, CALIFORNIA 90025
(Address of principal executive offices)
------------------------
ROBERT P. BERMINGHAM
11601 WILSHIRE BOULEVARD
12TH FLOOR
LOS ANGELES, CALIFORNIA 90025
(Name and address of agent for service)
-------------------
COPIES TO:
<TABLE>
<S> <C>
BARRY MILLS, ESQ. GREGG A. NOEL, ESQ.
DEBEVOISE & PLIMPTON SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
875 THIRD AVENUE 300 SOUTH GRAND AVENUE
NEW YORK, NEW YORK 10022 LOS ANGELES, CALIFORNIA 90071
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
-------------------
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF SECURITIES AGGREGATE OFFERING AMOUNT OF REGISTRATION
BEING REGISTERED PRICE(1) FEE
<S> <C> <C>
Shares of Common Stock, par value $.01............................ $375,000,000 $113,636.37
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
WESTFIELD AMERICA, INC.
-------------------
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING LOCATION IN PROSPECTUS OR
REGISTRATION
STATEMENT OF INFORMATION REQUIRED BY ITEMS 1-29 OF FORM S-11
<TABLE>
<CAPTION>
FORM S-11
ITEM NUMBER AND CAPTIONS LOCATION OR HEADING IN PROSPECTUS
----------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus........................... Forepart of Registration Statement; Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus......................................... Inside Front Cover Page of Prospectus; Outside Back
Cover Page of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges.......................... Prospectus Summary; Risk Factors; Business and
Properties
4. Determination of Offering Price ..................... Outside Front Cover Page of Prospectus; Risk Factors;
Underwriting
5. Dilution............................................. Risk Factors; Dilution
6. Selling Security Holders............................. Not Applicable
7. Plan of Distribution................................. Outside Front Cover Page of Prospectus; Prospectus
Summary; Distributions; Description of Capital Stock;
Shares Available for Future Sale; Underwriting
8. Use of Proceeds...................................... Prospectus Summary; Use of Proceeds
9. Selected Financial Data.............................. Selected Financial Data; Pro Forma Condensed
Consolidated Financial Information
10. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ Management's Discussion and Analysis of Financial
Condition and Results of Operations
11. General Information as to Registrant................. Prospectus Summary; The Company; Business and
Properties; Policies and Objectives with Respect to
Investments, Financing and Other Activities
12. Policy With Respect to Certain Activities............ Prospectus Summary; Risk Factors; Policies and
Objectives with Respect to Investments, Financing and
Other Activities; Certain Provisions of the Company's
Articles of Incorporation and By-Laws and of Missouri
Law; Additional Information
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
FORM S-11
ITEM NUMBER AND CAPTIONS LOCATION OR HEADING IN PROSPECTUS
----------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
13. Investment Policies of Registrant.................... Prospectus Summary; Risk Factors; Policies and
Objectives with Respect to Investments, Financing and
Other Activities; Certain Provisions of the Company's
Articles of Incorporation and By-Laws and of Missouri
Law; Additional Information
14. Description of Real Estate........................... Prospectus Summary; Risk Factors; Business and
Properties; The Company--The Company's Strategy for
Operations and Growth; Management's Discussion and
Analysis of Financial Condition and Results of
Operations
15. Operating Data....................................... Business and Properties; Selected Financial Data;
Index to Financial Statements
16. Tax Treatment of Registrant and Its Security-
Holders............................................ Prospectus Summary; Risk Factors; Federal Income Tax
Considerations; ERISA Considerations
17. Market Price of and Dividends on the Registrant's
Common Equity and Related Shareholder Matters...... Prospectus Summary; Risk Factors--Absence of Public
Market; Possible Volatility of Stock Price; Shares
Available for Future Sale; Distributions; Principal
Shareholders; Certain Provisions of the Company's
Articles of Incorporation and By-Laws and of Missouri
Law
18. Description of Registrant's Securities............... Outside Front Cover Page of Prospectus; Prospectus
Summary; Risk Factors; Description of Capital Stock;
Certain Provisions of the Company's Articles of
Incorporation and By-Laws and of Missouri Law
19. Legal Proceedings.................................... Business and Properties--Legal Proceedings
20. Security Ownership of Certain Beneficial Owners and
Management......................................... Prospectus Summary; The Company; Business and
Properties; Principal Shareholders
21. Directors and Executive Officers..................... Management
22. Executive Compensation............................... Management
23. Certain Relationships and Related Transactions....... Prospectus Summary--The Company; Risk Factors; The
Company; Business and Properties; The Company's
Strategy for Operations and Growth; Management;
Advisory, Management and Development Services to the
Company; Certain Transactions; Principal Shareholders
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
FORM S-11
ITEM NUMBER AND CAPTIONS LOCATION OR HEADING IN PROSPECTUS
----------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
24. Selection, Management and Custody of Registrant's
Investments........................................ Risk Factors; The Company--Westfield Holdings;
Business and Properties; Advisory, Management and
Development Services to the Company; Certain
Transactions; Policies and Objectives with Respect to
Investments, Financing and Other Activities
25. Policies with Respect to Certain Transactions........ Risk Factors; The Company--Westfield Holdings;
Business and Properties; The Company's Strategy for
Operations and Growth; Policies and Objectives with
Respect to Investments, Financing and Other
Activities; Management; Certain Transactions;
Principal Shareholders
26. Limitations of Liability............................. Risk Factors; Business and Properties; Certain
Provisions of the Company's Articles of Incorporation
and By-Laws and of Missouri Law
27. Financial Statements and Information................. Selected Financial Data; Index to Financial
Statements
28. Interests of Named Experts and Counsel............... Experts; Legal Matters
29. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities..................... Not Applicable
</TABLE>
iii
<PAGE>
EXPLANATORY NOTE
On April 7, 1997, the Company changed its name from "CenterMark Properties,
Inc." to "Westfield America, Inc."
This Registration Statement contains two forms of prospectus: one to be used
in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and another to be used in a concurrent international offering (the
"International Prospectus"). The two prospectuses will be identical in all
material respects except for the front and back cover pages and the section
entitled "Underwriting." The form of the U.S. Prospectus is included herein,
with the alternate cover pages of the International Prospectus and the section
entitled "Underwriting" immediately following the U.S. Prospectus. The alternate
pages are labeled to identify their intended uses.
iv
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 14, 1997
[LOGO]
18,000,000 SHARES
WESTFIELD AMERICA, INC.
COMMON STOCK
---------------------------
Westfield America, Inc. (formerly known as CenterMark Properties, Inc.) (the
"Company"), a Missouri corporation incorporated in 1924, is
engaged in owning, operating, leasing, developing, redeveloping and acquiring
super regional and regional shopping centers and power centers located primarily
in major metropolitan areas in the United States. The Company's portfolio
consists of interests in 13 super regional and six regional shopping centers and
three power centers containing approximately 19.2 million square feet of gross
leasable area (together, the "Centers") and 13 separate department store
properties. The Company has engaged subsidiaries of Westfield Holdings Limited
(individually, "Westfield Holdings Limited" and collectively with its
subsidiaries, "Westfield Holdings"), an Australian public corporation and a
principal shareholder in the Company, to provide advisory, management and
development services to the Company and the Centers. The Company will use $145
million of the proceeds of the Offerings (as defined below) to make a
non-recourse loan to Westfield Holdings secured by its indirect 50% interest in
Garden State Plaza, a super regional shopping center, and $15.3 million to
purchase from Westfield Holdings Limited warrants (the "Westfield Holdings
Warrants") to acquire 9.8 million ordinary shares of Westfield Holdings Limited.
Westfield Holdings Limited is an independent company from the Company and,
except for the Company's interest in the Westfield Holdings Warrants, the
purchasers of the Shares will not acquire any interest in Westfield Holdings
Limited. The Company is organized and operated as a real estate investment trust
("REIT") and expects to continue to be operated as a REIT for Federal income tax
purposes. The Company intends to continue to pay regular quarterly
distributions.
All of the shares (the "Shares") of common stock, par value $.01 per share
(the "Common Stock"), of the Company offered hereby are being sold by the
Company. Of the 18,000,000 Shares being offered, 15,300,000 Shares are being
offered initially in the United States and Canada by the U.S. Underwriters (the
"U.S. Offering") and the remaining 2,700,000 Shares are being offered initially
outside the United States and Canada by the International Managers (the
"International Offering" and, together with the U.S. Offering, the "Offerings").
Westfield Holdings, interests associated with the Lowy family and a Co-President
of the Company have placed orders to purchase up to 2,300,000; 600,000; and
100,000 of the Shares, respectively (the "Orders"), at the price to public in
the Offerings. The Common Stock has been approved for listing on the New York
Stock Exchange, subject to official notice of issuance, under the symbol "WEA."
Prior to the Offerings, there has been no public market for the Common Stock. It
is currently anticipated that the initial public offering price will be between
$16.00 and $17.50 per Share. See "Underwriting" for a discussion of the factors
considered in determining the initial public offering price. The Company's
articles of incorporation impose limitations, subject to certain limited
exceptions, on the number of shares of capital stock that may be directly or
indirectly owned by any person or affiliated group. See "Description of Capital
Stock--Restrictions on Ownership and Transfer."
Upon consummation of the Offerings and concurrent transactions and taking
account of the maximum number of Shares which may be acquired under the Orders,
Westfield America Trust, an Australian public property trust ("WAT"), will own
62.4% and Westfield Holdings will own 16.7% (31.7% including its indirect
interest through WAT), of the outstanding Common Stock on a fully-diluted basis.
The Shares offered hereby represent approximately 22.7% of all shares of Common
Stock (including up to 3.8% which may be acquired under the Orders) that will be
issued and outstanding after the Offerings and concurrent transactions on a
fully-diluted basis.
SEE "RISK FACTORS" BEGINNING ON PAGE 21 FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK, INCLUDING:
- POSSIBLE CONFLICTS OF INTEREST AMONG WESTFIELD HOLDINGS, THE LOWY FAMILY,
WAT AND THE OTHER SHAREHOLDERS OF THE COMPANY.
- RELIANCE BY THE COMPANY ON WESTFIELD HOLDINGS FOR ADVISORY, MANAGEMENT AND
DEVELOPMENT SERVICES SUCH THAT THE COMPANY IS NOT CURRENTLY ABLE TO
OPERATE WITHOUT WESTFIELD HOLDINGS.
- THE ABILITY OF WESTFIELD HOLDINGS, THE LOWY FAMILY AND WAT TO EXERCISE
SIGNIFICANT INFLUENCE OVER THE BUSINESS AND POLICIES OF THE COMPANY.
- LIMITATIONS ON THE SHAREHOLDERS' ABILITY TO CHANGE CONTROL OF THE COMPANY
DUE TO SIGNIFICANT OWNERSHIP BY WESTFIELD HOLDINGS AND WAT AND DUE TO
RESTRICTIONS ON OWNERSHIP OF MORE THAN 5.5% OF THE SHARES OF CAPITAL STOCK
BY OTHER SHAREHOLDERS.
- RISKS GENERALLY INHERENT IN RETAIL REAL ESTATE INVESTMENTS, SUCH AS RISKS
FROM CHANGES IN ECONOMIC CONDITIONS, REDEVELOPMENT RISK, COMPETITION FROM
OTHER SHOPPING CENTERS AND OTHER FORMS OF RETAILING AND FINANCIAL
DIFFICULTIES OR BANKRUPTCIES OF TENANTS OR ANCHORS.
- RISKS NORMALLY ASSOCIATED WITH DEBT FINANCING, INCLUDING POSSIBLE
INABILITY TO REFINANCE BALLOON PAYMENTS AND THE RISK OF HIGHER INTEREST
RATES.
- TAXATION OF THE COMPANY AS A REGULAR CORPORATION AND RESULTING ADVERSE
CONSEQUENCES IF IT FAILS TO CONTINUE TO QUALIFY AS A REIT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share..................................... $ $ $
Total (3)..................................... $ $ $
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of $ payable by the Company.
(3) The Company has granted to the U.S. Underwriters and the International
Managers options, exercisable for a period of 30 days after the date of the
Prospectus, to purchase up to an aggregate of 2,295,000 and 405,000
additional shares of Common Stock, respectively, solely to cover
over-allotments. If all such shares of Common Stock are purchased, the total
Price to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
------------------------
The Shares are offered by the several Underwriters, subject to prior sale,
when, as and if delivered to and accepted by the Underwriters, and subject to
their right to withdraw, modify, cancel and reject orders in whole or in part.
It is expected that delivery of the Shares offered hereby will be made in New
York City on or about May , 1997.
---------------------------
MERRILL LYNCH & CO.
FURMAN SELZ
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
BT SECURITIES CORPORATION
---------------------------
The date of this Prospectus is , 1997
<PAGE>
Map showing the locations of Westfield America, Inc.'s shopping centers
throughout the United States and identifying the redevelopment projects over a
five-year period; photograph of Montgomery Mall; aerial photographs of Annapolis
Mall, Topanga Plaza, Trumbull Shopping Park, West County Center, Meriden Square,
Mission Valley Center, Plaza Bonita, Mid Rivers Mall, The Plaza at West Covina;
interior photographs of Montgomery Mall, Plaza Camino Real, Vancouver Mall,
Plaza Bonita, Annapolis Mall and Connecticut Post Mall.
Certain persons participating in these offerings may engage in transactions that
stabilize, maintain, or otherwise affect the price of the shares of Common
Stock. Such transactions may include stabilizing the purchase of Common Stock to
cover syndicate short positions and the imposition of penalty bids. For a
description of these activities, see "Underwriting."
Certain information relating to Westfield Holdings Limited, Westfield Trust
(as defined in the Glossary) and WAT has been included in this Prospectus. Each
such entity reports its financial results, and its securities trade on the
Australian Stock Exchange, in Australian currency. As used herein, references to
"$," "U.S.$" and "U.S. dollars" are references to U.S. currency and references
to "Aus.$" and "Australian dollars" are references to Australian currency. For
the convenience of the reader, the calculation of the purchase price for the
Westfield Holdings Warrants has been converted from Australian dollars to U.S.
dollars based on an exchange rate of $0.78 to Aus.$1.00 (the rate as of May 8,
1997).
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary....................................................................................... 1
The Company............................................................................................ 1
Westfield Holdings..................................................................................... 2
Westfield America Trust................................................................................ 5
Risk Factors........................................................................................... 5
Business and Properties................................................................................ 6
The Centers.......................................................................................... 6
The Company's Strategy for Operations and Growth..................................................... 11
Company Structure and History.......................................................................... 13
Financing Policies..................................................................................... 15
Federal Income Tax Considerations and Tax Status of the Company........................................ 15
The Offerings.......................................................................................... 16
Distributions.......................................................................................... 16
Summary Financial Data................................................................................. 18
Risk Factors............................................................................................. 21
Possible Conflicts of Interests with Inside Parties and Related Party Transactions..................... 21
Limitations on Acquisitions and Change in Control...................................................... 23
Risks Generally Inherent in Real Estate Investment..................................................... 23
Risks Associated with Debt Financing................................................................... 27
Adverse Consequences of Failure to Qualify as a REIT................................................... 29
Possible Taxation on Capital Gains..................................................................... 30
Distributions to Shareholders; Potential Requirement to Borrow......................................... 30
Conflicts of Interest with Outside Partners in Jointly-Owned Centers and Limited Control with Respect
to Certain Activities................................................................................ 32
Bankruptcy of Outside Partners......................................................................... 33
Effect of Uninsured Loss on Profitability.............................................................. 33
Possible Environmental Liabilities..................................................................... 34
Lack of Independent Valuation of the Company........................................................... 34
Absence of Public Market; Possible Volatility of Stock Price........................................... 35
Possible Adverse Effects on Stock Prices Arising from Shares Available for Future Sale................. 35
Changes in Policy Without Shareholder Approval......................................................... 36
Forward-Looking Statements............................................................................. 36
Immediate Dilution..................................................................................... 36
The Company.............................................................................................. 37
General................................................................................................ 37
Company Structure and History.......................................................................... 38
Westfield Holdings..................................................................................... 39
The Company's Strategy for Operations and Growth....................................................... 42
Use of Proceeds.......................................................................................... 47
Capitalization........................................................................................... 48
Dilution................................................................................................. 49
Distributions............................................................................................ 50
Selected Financial Data.................................................................................. 51
Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 54
General Background..................................................................................... 54
Results of Operations.................................................................................. 55
Cash Flows............................................................................................. 58
Funds from Operations.................................................................................. 59
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.............................. 60
Portfolio Data......................................................................................... 61
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
Leasing................................................................................................ 61
<S> <C>
Tenant Occupancy Costs................................................................................. 62
Liquidity and Capital Resources........................................................................ 62
Inflation.............................................................................................. 64
Seasonality............................................................................................ 65
Business and Properties.................................................................................. 65
General................................................................................................ 65
The Shopping Center Business........................................................................... 65
The Centers............................................................................................ 66
The East Coast Properties.............................................................................. 71
The Mid West Properties................................................................................ 72
The West Coast Properties.............................................................................. 73
Anchors................................................................................................ 76
Mall Stores............................................................................................ 77
Sales.................................................................................................. 78
Leasing................................................................................................ 79
Costs of Occupancy..................................................................................... 79
Leases................................................................................................. 79
Lease Expirations...................................................................................... 80
Mall Store Rental Rates................................................................................ 80
Competition............................................................................................ 81
Certain Tax Information................................................................................ 82
Additional Information Regarding Connecticut Post Mall, Montgomery Mall, The Plaza at West Covina,
South Shore Mall and Trumbull Shopping Park.......................................................... 82
Additional Information Regarding Annapolis Mall........................................................ 88
Additional Information Regarding Garden State Plaza.................................................... 90
Additional Information Regarding Wheaton Plaza......................................................... 92
May Properties......................................................................................... 94
Other Real Estate Interests............................................................................ 95
Insurance Arrangements................................................................................. 95
Employees.............................................................................................. 95
Debt Summary........................................................................................... 95
Environmental Matters.................................................................................. 97
Legal Proceedings...................................................................................... 98
Policies and Objectives with Respect to Investments, Financing and Other Activities...................... 99
Investment Objectives and Policies..................................................................... 99
Real Estate Investment Policies and Criteria........................................................... 99
Acquiring Additional Properties........................................................................ 99
Dispositions........................................................................................... 100
Partnership Restructuring.............................................................................. 100
Other Investments...................................................................................... 100
Financing.............................................................................................. 101
Equity Capital......................................................................................... 102
Working Capital Reserves............................................................................... 102
Annual Reports......................................................................................... 103
Other Policies......................................................................................... 103
Management............................................................................................... 104
Directors and Executive Officers....................................................................... 104
Biographies of Directors and Executive Officers........................................................ 104
Certain Information Regarding the Board of Directors................................................... 107
Committees of the Board of Directors................................................................... 107
Compensation of Directors.............................................................................. 108
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
Executive Compensation................................................................................. 108
<S> <C>
Advisory, Management and Development Services to the Company............................................. 109
The Advisor and the Advisory Agreement................................................................. 109
The Manager and the Management Agreements.............................................................. 110
The Developer and the Development Agreement............................................................ 111
Westfield Holdings Management.......................................................................... 112
Certain Transactions..................................................................................... 112
Relationships and Transactions with Westfield Holdings................................................. 112
Relationships and Transactions with WAT................................................................ 115
Principal Shareholders................................................................................... 117
Description of Capital Stock............................................................................. 120
Capital Stock.......................................................................................... 120
Senior Preferred Shares................................................................................ 120
Preferred Stock........................................................................................ 120
Common Shares.......................................................................................... 122
Restrictions on Ownership and Transfer................................................................. 123
Transfer Agent and Registrar........................................................................... 124
Listing................................................................................................ 124
Certain Provisions of the Company's Articles of Incorporation and By-Laws and of
Missouri Law........................................................................................... 124
Ownership Limit........................................................................................ 125
Additional Classes and Series of Preferred Stock....................................................... 125
Size of Board, Election of Directors, Classified Board, Removal of Directors and
Filling Vacancies.................................................................................... 125
Limitations on Shareholder Action by Written Consent; Ability to Call Special Meetings................. 125
Advance Notice for Raising Business or Making Nominations at Meetings.................................. 126
Business Combination and Control Share Acquisition Statutes and Related Provisions..................... 126
Termination of REIT Status............................................................................. 128
Limitation on Liability of Directors; Indemnification of Directors and Officers........................ 128
Shares Available for Future Sale......................................................................... 129
General................................................................................................ 129
Registration Rights.................................................................................... 130
Federal Income Tax Considerations........................................................................ 131
Taxation of the Company................................................................................ 131
Tax Aspects of the Company's Investments in Partnerships............................................... 137
Taxation of Taxable Domestic Shareholders.............................................................. 139
Taxation of Tax-Exempt Shareholders.................................................................... 139
Taxation of Foreign Shareholders....................................................................... 139
Information Reporting and Backup Withholding........................................................... 141
Other Tax Consequences................................................................................. 141
ERISA Considerations..................................................................................... 143
Underwriting............................................................................................. 144
Experts.................................................................................................. 148
Legal Matters............................................................................................ 148
Additional Information................................................................................... 148
Glossary................................................................................................. G-1
Index to Financial Statements............................................................................ F-1
</TABLE>
iii
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION
AND FINANCIAL DATA AND STATEMENTS AND THE NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, THE INFORMATION CONTAINED IN THIS
PROSPECTUS ASSUMES (I) AN INITIAL PUBLIC OFFERING PRICE TO THE PUBLIC OF $16.75
PER SHARE (THE MID-POINT OF THE PRICE RANGE SHOWN ON THE COVER PAGE OF THIS
PROSPECTUS) AND (II) THAT THE U.S. UNDERWRITERS' AND THE INTERNATIONAL MANAGERS'
OVER-ALLOTMENT OPTIONS ARE NOT EXERCISED. AS USED IN THIS PROSPECTUS, "REGIONAL
SHOPPING CENTERS" MEANS MALL FACILITIES BUILT AROUND ONE OR TWO ANCHORS AND
CONTAINING FROM 400,000 TO 800,000 SQUARE FEET OF TOTAL GROSS LEASABLE AREA. THE
TERM "SUPER REGIONAL SHOPPING CENTERS" MEANS MALL FACILITIES BUILT AROUND THREE
OR MORE ANCHORS AND CONTAINING MORE THAN 800,000 SQUARE FEET OF TOTAL GROSS
LEASABLE AREA. THE TERM "POWER CENTERS" REFERS TO MALL FACILITIES WHOSE MAJOR
TENANTS ARE LARGE DISCOUNT DEPARTMENT STORES OR CATEGORY KILLERS. THE TERM
"ANCHOR" MEANS THE CENTERS' (AS DEFINED BELOW) FULL LINE DEPARTMENT STORES OR
OTHER LARGE RETAIL STORES GENERALLY OCCUPYING MORE THAN 50,000 SQUARE FEET OR A
LARGE ENTERTAINMENT COMPLEX. "MALL STORES" REFERS TO STORES SMALLER THAN ANCHORS
AND KIOSKS PERMANENTLY LOCATED WITHIN THE CORRIDORS OF THE COMPANY'S CENTERS
THAT ARE TYPICALLY SPECIALTY RETAILERS AND FREE STANDING BUILDINGS GENERALLY
LOCATED ALONG THE PERIMETER OF THE COMPANY'S CENTERS. "STABILIZED CENTERS" REFER
TO THE COMPANY'S CENTERS (OTHER THAN NORTH COUNTY FAIR) NOT UNDER REDEVELOPMENT
FOR THE RELEVANT PERIOD. UNLESS OTHERWISE INDICATED, OR UNLESS THE CONTEXT
OTHERWISE REQUIRES, REFERENCES TO THE "COMPANY" INCLUDE WESTFIELD AMERICA, INC.,
ITS SUBSIDIARIES AND JOINT VENTURE INTERESTS. SEE "GLOSSARY" FOR DEFINITIONS OF
CERTAIN TERMS USED IN THIS PROSPECTUS.
THE COMPANY
The Company has been engaged for over 40 years in owning, operating,
leasing, developing, redeveloping and acquiring super regional and regional
shopping centers and power centers located primarily in major metropolitan areas
in the United States.The Company owns interests in a portfolio of 13 super
regional and six regional shopping centers (together, the "Regional Centers"),
three power centers (the "Power Centers" and, collectively with the Regional
Centers, the "Centers"), 13 separate department store properties (the "May
Properties") which are net leased under financing leases to The May Department
Stores Company (the "May Company") and are not located at the Centers, and
certain other real estate investments (collectively, the "Properties"). The
Centers are located in seven states in the United States. The Company is
organized and operated as a REIT and expects to continue to be operated as a
REIT for Federal income tax purposes.
The Centers contain approximately 19.2 million square feet of total gross
leasable area ("Total GLA"), including 74 Anchors and approximately 2,500 Mall
Stores, of which approximately 1.3 million square feet are currently under
redevelopment and approximately 3.2 million square feet are planned for
redevelopment over the next five years. For the year ended December 31, 1996,
the Mall Stores reported sales exceeding $1.5 billion and Anchors reported sales
exceeding $2.0 billion. The Centers under Westfield Holdings's management
(representing all of the Centers other than North County Fair) reported average
Mall Store sales of $297 per square foot ("psf") for the same period (and,
including North County Fair, $300 psf for the same period). Mall gross leasable
area ("Mall GLA") at Stabilized Centers was 92% leased (and, including North
County Fair, 91% leased) as of December 31, 1996.
Since 1994, subsidiaries of Westfield Holdings Limited have provided
management, development and advisory services to the Company. The Company has no
employees and relies solely on Westfield Holdings for management services.
Subject to the discretion and approval of the Board of Directors of the Company,
the Company's strategic policy will be determined by Westfield Holdings and
possible conflicts of interest may exist between the Company, Westfield Holdings
and, by virtue of its ability to significantly influence Westfield Holdings
Limited, the Lowy family. In addition, as a result of Westfield Holdings's
ownership interest in the Company and its management of WAT, the purchasers of
the Shares may not be able to change the composition of the management of the
Company through a vote of shareholders. See "Risk Factors--Possible Conflicts of
Interest and Related Party Transactions" for a discussion of possible conflicts.
1
<PAGE>
The Company has an option (the "Garden State Plaza Option") to acquire at
fair market value the stock of Westland Realty, Inc., the holder of an indirect
50% interest in Garden State Plaza located in Paramus, New Jersey. Garden State
Plaza is one of the largest and most productive super regional shopping centers
in the nation, with five anchors and containing approximately 2.0 million square
feet of total gross leasable area and average mall store sales psf of $467 for
the year ended December 31, 1996. The Garden State Plaza Option is exercisable
following the completion of an independent valuation of the property to
determine its fair market value. The valuation procedure may be commenced by the
Company upon the satisfaction of certain conditions, but in any event no later
than January 3, 2000. The exercise of the Garden State Plaza Option will require
the approval of at least 75% of the Independent Directors and, if the purchase
price (which is payable in Common Stock) will exceed $55 million (net of the
$145 million Garden State Plaza Loan described below), the approval of a
majority of the holders of the Common Stock voting at a meeting on such issue
other than Westfield Holdings and its affiliates (including, without limitation,
WAT) and interests associated with the Lowy family. Although the Garden State
Plaza Option is not currently exercisable, the Company will acquire a
substantial economic interest in the revenues to be received from Garden State
Plaza by making a $145 million participating secured loan (the "Garden State
Plaza Loan") to the subsidiaries of Westfield Holdings Limited which own the
indirect 50% interest in Garden State Plaza. For more detailed descriptions of
the Garden State Plaza Option and the Garden State Plaza Loan, see "The
Company--The Company's Strategy for Operations and Growth--Garden State Plaza
Option" and "Certain Transactions--Relationships and Transactions with Westfield
Holdings--Garden State Plaza Option."
The Company has achieved substantial growth since 1994 when Westfield
Holdings began advising the Company and providing management services to its
Centers. For the Mall Stores under Westfield Holdings management, from 1994 to
1996, average base rent per square foot at the Centers increased at a compound
annual rate of approximately 4.5% (4.2%, including North County Fair), sales per
square foot increased at a compound annual rate of 6.3% (6.2%, including North
County Fair) and leased Mall GLA at Stabilized Centers improved from 88% leased
to 92% leased (from 88% leased to 91% leased, including North County Fair).
Following consummation of the Offerings, the Board of Directors of the
Company (the "Board of Directors") will have 10 directors, 6 of whom will be
Independent Directors.
The principal executive offices of the Company are located at 11601 Wilshire
Boulevard, Los Angeles, California 90025 (telephone: 310-478-4456). The
headquarters of the Company's manager (the "Manager"), advisor (the "Advisor")
and developer (the "Developer") are located at the same address in Los Angeles,
California.
WESTFIELD HOLDINGS
Westfield Holdings is a fully-integrated, international developer, builder
and manager of shopping centers and manager and advisor to public real estate
investment entities. Westfield Holdings has its headquarters in Sydney,
Australia and employed approximately 2,400 people worldwide as of December 31,
1996. Westfield Holdings, which was publicly listed in 1960, was co-founded by
Frank P. Lowy. In 1993, Frank P. Lowy was acknowledged as one of the six
"pioneers" of the shopping center industry worldwide by the International
Council of Shopping Centers ("ICSC"). By combining financial strength and over
35 years of experience with a business philosophy that stresses innovation,
Westfield Holdings has built a successful shopping center business, with
shopping center assets under management having a value in excess of Aus.$10.0
billion as of December 31, 1996, comprised of more than 8,500 retail stores in
56 centers in the United States, Australia and Asia with 39.3 million square
feet of total gross leasable area.
Westfield Holdings Limited, listed on the Australian Stock Exchange Limited
(the "ASX"), had a market capitalization of approximately Aus.$2.2 billion as of
April 18, 1997. Westfield Holdings is also a manager and advisor to public real
estate investment entities--Westfield Trust and WAT, both of which are
Australian public property trusts traded on the ASX. Based on its market
capitalization of approximately Aus.$3.1 billion as of April 18, 1997, Westfield
Trust is one of the two largest property trusts in Australia.
2
<PAGE>
Since 1977, Westfield Holdings's U.S. business has included the
redevelopment and expansion of 11 shopping centers in California, Connecticut,
Michigan, Missouri, New Jersey and New York. Westfield Holdings's U.S. business
currently manages and provides development services to 26 shopping centers (two
of which are owned by subsidiaries of The Prudential Insurance Company of
America ("Prudential"), one of which is owned by a real estate investment fund
managed by Heitman/JMB Advisory Corporation and one of which is owned by a real
estate investment fund managed by Goldman, Sachs & Co.) with more than 24.5
million square feet of total gross leasable area, including the Centers and
Garden State Plaza. Westfield Holdings also manages the retail facilities at
Dulles and National Airports in Washington, D.C. and Terminal C at Logan Airport
in Boston, Massachusetts. Westfield Holdings's U.S. operations are headquartered
in Los Angeles, California, and employ approximately 950 people in the United
States. Westfield Holdings's U.S. senior management team has extensive
experience in the development, construction, management and financing of super
regional and regional shopping centers, with an average of approximately 20
years in the industry. Westfield Holdings derived approximately 41% of its U.S.
management, development and advisory fee revenue from the Company in 1996.
Westfield Holdings has advised the Company that it expects the amount of its
U.S. business attributable to the Company to substantially increase upon
completion of the redevelopment of Garden State Plaza in 1997 from which it
received substantial development revenue in 1996.
The Company has access to and relies upon the resources and depth of
management of Westfield Holdings's worldwide operations. Westfield Holdings
provides a full range of services to the Company including many which are
typically outsourced by real estate owners to third parties. These services
include strategic and day-to-day management, research, investment analysis,
acquisition and due diligence, development, construction, architectural,
marketing, asset management, capital markets, disposition of assets, legal and
accounting services. In contrast to many other shopping center companies, the
Company is not exposed to the same degree of risk of increasing costs for many
of these services because the fees payable to the Manager and the Advisor are
incentive based or fixed as a percentage of assets or revenues. For a
description of Westfield Holdings's management arrangements with the Company,
including fees payable to Westfield Holdings for its services, see "Certain
Transactions--Relationships and Transactions with Westfield Holdings" and
"Advisory, Management and Development Services to the Company."
Westfield Holdings will agree that it will not acquire any ownership
interest in shopping center properties or power centers in the United States
(excluding airport projects) for so long as it is the Advisor to the Company and
the Manager of the Centers. Each of Frank Lowy, David Lowy, Peter Lowy and
Steven Lowy will agree with the Company that he will not acquire any ownership
interest in shopping center properties or power centers in the United States for
so long as (i) Westfield Holdings is the Advisor to the Company and the Manager
of the Centers, and (ii) interests associated with the Lowy family have
significant ownership interest and significant management involvement in the
operations of Westfield Holdings Limited. In addition, Westfield Holdings has
agreed in its management and development agreements with the Company that it
will not manage or develop any shopping center in competition with a Center
owned by the Company, except in the case of the acquisition by Westfield
Holdings of an entity that does not have any ownership interest in shopping
center properties or power centers in the United States and is then managing or
developing a competitive center (in addition to other properties).
Contemporaneously with the Offerings, the Company will purchase from
Westfield Holdings Limited for an aggregate purchase price of $15.3 million
(Aus.$19.6 million) non-transferable Westfield Holdings Warrants to acquire 9.8
million ordinary shares of Westfield Holdings Limited, which would be as of the
date hereof equal to approximately 9% of the ordinary shares of Westfield
Holdings Limited outstanding after the exercise of the options. See "The
Company--Westfield Holdings." Westfield Holdings Limited is an independent
company from the Company, and except for the Company's interest in the Westfield
Holdings Warrants, the purchasers of the Shares will not acquire any interest in
Westfield Holdings Limited.
Westfield Holdings has placed an order to purchase up to 2,300,000 shares at
the price to public and will continue to own a significant stake in the Company.
The following table demonstrates the Common Stock ownership of Westfield
Holdings in the Company on a fully-diluted basis (which for purposes of this
3
<PAGE>
Prospectus assumes the exercise of the warrants to acquire additional Common
Stock held by WAT as well as the exercise by certain investors of options to
acquire additional units in WAT) upon consummation of the Offerings and
concurrent transactions and taking account of the maximum number of Shares which
may be acquired under the Orders (for a description of the concurrent
transactions, see "Use of Proceeds" and "Pro Forma Condensed Consolidated
Financial Information"). See "Principal Shareholders."
<TABLE>
<CAPTION>
Direct ownership of the Company...................................... 16.7%
<S> <C>
Indirect ownership through direct ownership of WAT units............. 15.0%
---------
Total.............................................................. 31.7%
---------
---------
</TABLE>
Interests associated with the Lowy family have placed an order to purchase
up to 600,000 Shares at the price to public and will indirectly continue to own
a significant interest in the Company. The following table demonstrates the
indirect ownership of the Common Stock by interests associated with the Lowy
family on a fully-diluted basis upon consummation of the Offerings and
concurrent transactions and taking account of the maximum number of Shares which
may be acquired under the Orders.
<TABLE>
<S> <C>
Direct ownership of the Company....................................... 0.8%
Indirect ownership through direct ownership of Westfield Holdings..... 13.9%
Indirect ownership through direct ownership of WAT units.............. 4.4%
---
Total............................................................... 19.1%
---
---
</TABLE>
WESTFIELD AMERICA TRUST
WAT is an Australian public property trust which was formed to acquire a
majority interest in the Company and was listed on the ASX in July 1996 when it
raised approximately Aus.$402 million. WAT had a market capitalization as of
April 18, 1997 of approximately Aus.$885.0 million. WAT is managed by Westfield
America Management Limited, a subsidiary of Westfield Holdings Limited.
Perpetual Trustee Company Limited is the independent public trustee of WAT.
4
<PAGE>
RISK FACTORS
Prospective investors should carefully consider the matters addressed under
"Risk Factors" in addition to the other information presented in this Prospectus
before making an investment decision regarding the Shares offered hereby. Each
of these matters could have adverse consequences to the Company. These risks
include:
- Possible conflicts of interest among Westfield Holdings, the Lowy family,
WAT and the other shareholders of the Company.
- Reliance by the Company on Westfield Holdings for advisory, management and
development services such that the Company is not currently able to
operate without Westfield Holdings.
- The ability of Westfield Holdings and WAT (and interests associated with
the Lowy family by virtue of their interests in such entities) to exercise
significant influence over the business and policies of the Company
through the (i) ownership by Westfield Holdings and WAT of Common Stock,
(ii) ownership by Westfield Holdings of units in WAT, (iii) management of
WAT by a subsidiary of Westfield Holdings Limited and (iv) management of
the Company by Westfield Holdings.
- Limitations on the shareholders' ability to change control of the Company
due to the significant ownership by Westfield Holdings and WAT of the
outstanding Common Stock and restrictions on ownership of more than 5.5%
of the Company's outstanding shares of capital stock and other measures.
- Risks generally inherent in retail real estate investment, such as risks
from changes in economic conditions, redevelopment risk, competition from
other shopping centers and forms of retailing, financial difficulties or
bankruptcies of tenants or anchors and the concentration of 43% of the
Total GLA in California, 18% of the Total GLA in Connecticut and 14% of
the Total GLA in Missouri.
- Risks normally associated with debt financing, the amount of which debt
financing is not restricted by the Company's organizational documents,
including the possible inability to refinance balloon payments upon
maturity and the risk of higher interest rates.
- Tax risks, including (i) if the Company fails to continue to qualify as a
REIT, taxation of the Company as a regular corporation and possible
inability to requalify as a REIT for four years, (ii) the 100% tax on net
income from transactions that constitute prohibited transactions, pursuant
to the rules relating to REITs under the Code and (iii) possible taxation
of the Company with respect to built-in gain on disposition of certain
property if such property is disposed of during a ten-year period. Cash
available for distributions could be decreased dramatically if any such
taxes become payable.
- The fact that the Company's initial distribution level is based on a
number of assumptions, any change in which could affect the Company's
ability to sustain the initial distribution level and that the Company
intends to distribute approximately 90% of its Funds from Operations.
- Limited control by the Company over certain Properties that the Company
owns in partnership with third parties, conflicts of interest with outside
partners in jointly-owned Centers and the possibility of bankruptcy of
such outside partners.
- The fact that tenants whose parent company is The Limited Stores occupy
over 10% of the Mall GLA, that department stores owned by the May Company
are Anchors at 18 of the Centers, and that a negative change in the
financial strength of The Limited Stores or the May Company could have a
material adverse effect on the Company.
- The fact that the value of the Company is not based on third-party
appraisals; therefore the aggregate market value of the Common Stock based
on its market price may exceed the fair market value of the Properties.
- Lack of a prior public market in the United States for the Common Stock as
well as potential reduction in the market price of the Shares due to
increases in interest rates or future sales of shares of Common Stock.
- Immediate dilution in the amount of $6.80 per share in the net book value
of the Common Stock acquired by purchasers in the Offerings.
5
<PAGE>
BUSINESS AND PROPERTIES
THE CENTERS
As set forth in the following table, the Company's portfolio consists of
interests in 13 super regional shopping centers, six regional shopping centers
and three power centers located in seven states in the East Coast, the Mid West
and the West Coast regions of the United States totaling 19.2 million square
feet of Total GLA. In addition, the Company has an option to acquire the stock
of Westland Realty, Inc., the holder of an indirect 50% interest in Garden State
Plaza, pursuant to the Garden State Plaza Option.
6
<PAGE>
CENTER PROFILE
<TABLE>
<CAPTION>
PERCENTAGE OF MALL 1996 MALL HISTORY AND
SHOPPING CENTER AND PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT STORE SALES STATUS
LOCATION(1) OWNERSHIP (SQ.FT.) (SQ.FT.) DECEMBER 31, 1996 (PER SQ. FT.)(2) OF DEVELOPMENT
- ------------------------------ ----------- ----------- ----------- ----------------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
EAST COAST
Annapolis Mall,(3) ........... 30 990,702 408,554 96% $ 371 Opened 1980
Annapolis, Maryland Redeveloped
1983/1994
Connecticut Post Mall,(4) .... 100 831,707 438,405 91 298 Opened 1960
Milford, Connecticut Redeveloped 1991
Enfield Square,(4)(5) ........ 100 678,822 260,632 76 215 Opened 1971
Enfield, Connecticut Redeveloped
1987/1997
Meriden Square, .............. 50 746,695 294,654 92 330 Opened 1971
Meriden, Connecticut Redeveloped
1988/1993
Montgomery Mall, ............. 100 1,253,482 467,872 97 405 Opened 1968
Bethesda, Maryland Redeveloped
1976/1982/1984
1991
South Shore Mall,(5)(6) ...... 100 1,108,111 370,962 92 292 Opened 1963
Bay Shore, New York Under
Redevelopment
Trumbull Shopping Park, ...... 100 1,160,716 464,088 86 314 Opened 1962
Trumbull, Connecticut Redeveloped
1982/1987/1990
1992
----------- ----------- --
Total (6)............... 6,770,235 2,705,167 92
----------- ----------- --
<CAPTION>
SHOPPING CENTER AND
LOCATION(1) MAJOR RETAILERS AND SPECIAL FEATURES
- ------------------------------ ------------------------------------
<S> <C>
EAST COAST
Annapolis Mall,(3) ........... Nordstrom, Hecht's, J.C. Penney,
Annapolis, Maryland Montgomery Ward
Connecticut Post Mall,(4) .... Filene's, J.C. Penney, Caldor
Milford, Connecticut
Enfield Square,(4)(5) ........ Filene's, J.C. Penney. Sears
Enfield, Connecticut scheduled to open Spring 1997
Meriden Square, .............. Filene's, J.C. Penney, Sears
Meriden, Connecticut
Montgomery Mall, ............. Nordstrom, Hecht's, Sears, J.C.
Bethesda, Maryland Penney
South Shore Mall,(5)(6) ...... Macy's, J.C. Penney. Sears scheduled
Bay Shore, New York to open Fall 1997
Trumbull Shopping Park, ...... Macy's, Filene's, Lord & Taylor,
Trumbull, Connecticut J.C. Penney
Total (6)...............
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF MALL 1996 MALL
SHOPPING CENTER AND PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT STORE SALES
LOCATION(1) OWNERSHIP (SQ.FT.) (SQ.FT.) DECEMBER 31, 1996 (PER SQ. FT.)(2)
- ------------------------------ --------------- ----------- ------------ ----------------------- -----------------
<S> <C> <C> <C> <C> <C>
MID WEST
Mid Rivers Mall,(5) .......... 100 929,185 352,371 87 248
St. Peters, Missouri
South County Center,(4) ...... 100 754,063 259,360 93 270
St. Louis, Missouri
West County Center, .......... 100 583,646 152,590 95 267
Des Peres, Missouri
West Park Mall, .............. 100 502,856 230,505 92 212
Cape Girardeau,
Missouri
Westland Towne Center, ....... 100 470,943 137,520 95 175
Lakewood, Colorado
----------- ------------ --
Total................... 3,240,693 1,132,346 93
----------- ------------ --
WEST COAST
Eagle Rock Plaza, ............ 100 474,230 163,912 81 177
Los Angeles, California
Eastland Center,(5) .......... 100 819,244 617,444 76 --
West Covina, California
Mission Valley Center, ....... 76 1,340,410 508,492 96 283
San Diego, California
Mission Valley 76 178,624 178,624 82 283
Center-West,(5) .
San Diego, California
<CAPTION>
HISTORY AND
SHOPPING CENTER AND STATUS MAJOR RETAILERS AND SPECIAL
LOCATION(1) OF DEVELOPMENT FEATURES
- ------------------------------ ----------------- ---------------------------------
<S> <C> <C>
MID WEST
Mid Rivers Mall,(5) .......... Opened 1987 Famous-Barr, Dillard's, Sears,
St. Peters, Missouri Redeveloped J.C. Penney
1990/1996
South County Center,(4) ...... Opened 1963 Famous-Barr, Dillard's, J.C.
St. Louis, Missouri Redeveloped 1979 Penney
West County Center, .......... Opened 1969 Famous-Barr, J.C. Penney
Des Peres, Missouri Redeveloped 1985
West Park Mall, .............. Opened 1981 Famous-Barr, J.C. Penney, Venture
Cape Girardeau, Redeveloped 1984
Missouri
Westland Towne Center, ....... Opened 1960 Sears, Super Kmart
Lakewood, Colorado Redeveloped
1978/1994
Total...................
WEST COAST
Eagle Rock Plaza, ............ Opened 1973 Robinsons-May, Montgomery Ward
Los Angeles, California
Eastland Center,(5) .......... Opened 1957 Mervyn's, Target
West Covina, California Redeveloped
1979/1996/1997
(substantially
completed)
Mission Valley Center, ....... Opened 1961 Robinsons-May, Macy's, Montgomery
San Diego, California Redeveloped Ward, AMC 20-screen theater,
1975/1983 Nordstrom Rack
1996/1997
Mission Valley Opened 1961
Center-West,(5) . Under
San Diego, California Redevelopment
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF MALL 1996 MALL
SHOPPING CENTER AND PERCENTAGE TOTAL GLA MALL GLA GLA LEASED AT STORE SALES
LOCATION(1) OWNERSHIP (SQ.FT.) (SQ.FT.) DECEMBER 31, 1996 (PER SQ. FT.)(2)
- ------------------------------ --------------- ----------- ------------ ----------------------- -----------------
<S> <C> <C> <C> <C> <C>
North County Fair,(7) ........ 45 1,243,551 363,054 79 316
Escondido, California
Plaza Bonita, ................ 100 822,075 313,248 94 304
National City, California
Plaza Camino Real, ........... 40 1,152,194 433,984 92 275
Carlsbad, California
The Plaza at West Covina, .... 100 1,233,582 585,488 91 256
West Covina, California
Topanga Plaza, ............... 42 1,085,038 373,006 95 332
Canoga Park, California
Vancouver Mall, .............. 50 870,141 328,575 88 243
Vancouver, Washington
----------- ------------ --
Total................... 9,219,089 3,865,827 92(8)
----------- ------------ --
Grand Total(6)........ 19,230,017 7,703,340 92(8)
----------- ------------ --
----------- ------------ --
<CAPTION>
HISTORY AND
SHOPPING CENTER AND STATUS MAJOR RETAILERS AND SPECIAL
LOCATION(1) OF DEVELOPMENT FEATURES
- ------------------------------ ----------------- ---------------------------------
<S> <C> <C>
North County Fair,(7) ........ Opened 1986 Nordstrom, Robinsons-May (2),
Escondido, California Macy's, J.C. Penney, Sears
Plaza Bonita, ................ Opened 1981 Robinsons-May, J.C. Penney,
National City, California Montgomery
Ward and Mervyn's
Plaza Camino Real, ........... Opened 1969 Macy's(2), Robinsons-May, Sears,
Carlsbad, California Redeveloped J.C. Penney
1979/1989
The Plaza at West Covina, .... Opened 1975 Robinsons-May, Macy's, Sears,
West Covina, California Redeveloped J.C. Penney
1990/1993
Topanga Plaza, ............... Opened 1964 Nordstrom, Robinsons-May, Sears,
Canoga Park, California Redeveloped Montgomery Ward
1984/1992/1994
Vancouver Mall, .............. Opened 1977 Nordstrom, Meier & Frank, Sears,
Vancouver, Washington Redeveloped J.C. Penney, Mervyn's
1979/1993
Total...................
Grand Total(6)........
</TABLE>
- ------------------
(1) For a description of the mortgage encumbrances on each Center, see "Business
and Properties--Debt Summary." All of the Centers are managed by Westfield
Holdings, other than North County Fair which is managed by Trizec Hahn
Corporation Limited.
(2) Sales are based on reports of Mall Store tenants reporting sales; Mall Store
sales are not provided for Eastland Center as such Center was under
redevelopment for all of 1996. Mall Store sales for Mission Valley Center
and Mission Valley Center--West are calculated on an aggregate basis for
such Centers. For Mall Store sales per square foot for 1994 and 1995 at such
Centers, see "Business and Properties--The East Coast Properties," "Business
and Properties--The Mid West Properties" and "Business and Properties--The
West Coast Properties."
(3) The Company has entered into a letter of intent to purchase the remaining
70% interest in Annapolis Mall from its Joint Venture partner.
(4) The Company's interest in this Center includes certain incidental long-term
ground leases.
(5) Under redevelopment.
(6) After giving effect to the South Shore Mall redevelopment anticipated to be
completed in Fall 1997.
(7) The Joint Venture which owns this Center leases it from the City of
Escondido pursuant to a 50-year ground lease which expires in 2033. This
Center is not managed by Westfield Holdings.
(8) Total and Grand Total are for Stabilized Centers and exclude North County
Fair as such Center is not managed by Westfield Holdings.
9
<PAGE>
The following table sets forth the number of Centers in each State and the
Total GLA per State for such Centers.
<TABLE>
<CAPTION>
TOTAL GROSS
NO. OF SHOPPING LEASABLE AREA PERCENT OF
STATE OF SHOPPING CENTER LOCATIONS CENTERS SQ. FT. TOTAL GLA
- -------------------------------------------------- --------------------- ------------- ---------------
<S> <C> <C> <C>
California........................................ 9 8,348,900 43%
Colorado.......................................... 1 470,900 2
Connecticut....................................... 4 3,417,900 18
Maryland.......................................... 2 2,244,200 12
Missouri.......................................... 4 2,769,800 14
New York.......................................... 1 1,108,100 6
Washington........................................ 1 870,100 5
</TABLE>
Business highlights of the operation and performance of the Centers include
the following:
- Successful redevelopment of a number of the Centers has generated
increased returns. The Company is in the process of redeveloping South
Shore Mall and anticipates that the redevelopment of Mission Valley
Center-West will commence in the second quarter of 1997. In addition, the
Company is currently planning the redevelopment of eight additional
Properties.
- In 1996, the Centers under Westfield Holdings's management (excluding the
recently redeveloped Eastland Center) reported average Mall Store sales
psf of $297 (and, including North County Fair, $300 psf for the same
period) as compared to an industry average of $278 psf for the same period
(Source: ICSC Monthly Mall Merchandise Index, February 1997).
- Mall GLA at Stabilized Centers was 92% leased as of December 31, 1996
(and, including North County Fair, 91% leased).
- Upon completion of construction at South Shore Mall and Enfield Square, 17
of the 19 Regional Centers will have three or more Anchors. The quality
and the number of Anchors both enhance the Centers' competitive position
with other retail facilities and make the development of competing centers
in the same trade area less likely.
- A significant concentration of Centers in California (43% of the Total GLA
of the Centers as of December 31, 1996) provides an excellent opportunity
to take advantage of that State's recent economic recovery.
- All of the Regional Centers are located on major road systems, primarily
in major metropolitan areas, including Los Angeles and San Diego,
California; Hartford, Connecticut; Portland, Oregon; St. Louis, Missouri;
Washington, D.C.; and Long Island, New York, providing easy access and
high visibility and thus creating a competitive advantage for the Company.
- The Centers have 74 Anchors operating under 18 trade names. The Company's
portfolio includes 20 May Company stores (Famous-Barr, Filene's, Hecht's,
Lord & Taylor, Meier & Frank, and Robinsons-May), 16 J.C. Penneys, 11
Sears, seven Federated (Macy's) and five Nordstrom stores. In addition,
other major Anchors include Dillard's, Dayton Hudson (Mervyn's, Target)
and Montgomery Ward. The Manager's strong relationships with these Anchors
enhance the Company's opportunities by providing substantial pre-leasing
of new projects, lease-up of existing space, improved tenant retention and
releasing opportunities. For a description of the total 1996 annualized
base rent and the percentage of Total GLA for such Anchors, see "Business
and Properties--Anchors."
- Montgomery Mall, the Company's Center with the largest revenues, was 97%
leased as of December 31, 1996, and had effective rents psf of $38 and
average Mall Store sales psf of $405, for the year ended December 31,
1996.
- Most of the Centers' Mall GLA is leased to national and regional chains,
including The Limited Stores (Abercrombie & Fitch, Bath & Body Works,
Express, Lane Bryant, Lerner's, Limited Too, Structure, The Limited and
Victoria Secret), The Gap (Banana Republic, Gap Kids, The Gap), Baker's
Shoes, CVS, Eddie Bauer, The Woolworth Corporation (Foot Locker and Kinney
Shoes),
10
<PAGE>
Edison Bros. (J. Riggins, JW and Oaktree), Kay Bee Toys & Hobby, The Body
Shop, The Disney Store and Warner Bros.
- In 1996, the Centers derived approximately 95% of their base rents from
Mall Stores. Mall Stores occupied approximately 40.1% of the Total GLA and
the balance of the Total GLA was represented by Anchors and outparcel
stores. No Mall Store retailer accounted for more than 5% of the Mall GLA
or more than 6% of the Company's 1996 annualized effective rent (I.E.,
base plus percentage rent), except for The Limited Stores, a clothing
retailer, which occupied approximately 10% of Mall GLA and accounted for
11% of the 1996 Mall Store annualized effective rent.
THE COMPANY'S STRATEGY FOR OPERATIONS AND GROWTH
GENERAL STRATEGY
The Company's goal is to increase per share Funds from Operations and
thereby maximize the long-term value of the Company and the return to
shareholders through the following key strategies: (i) the redevelopment,
expansion and market repositioning of its current Centers, (ii) the acquisition
of additional regional and super regional shopping centers with a view towards
increasing the value of such centers through redevelopment, expansion and
repositioning, (iii) the improvement of the operating performance of its
properties through intensive and efficient management, cost control, leasing and
marketing and (iv) the awareness and anticipation of trends in the retailing
industry and the introduction of new retailing concepts to the Centers.
REDEVELOPMENT, REPOSITIONING AND EXPANSION POTENTIAL AND IMPLEMENTATION
The Company believes that redevelopment, repositioning and expansion are key
to maximizing the use and performance of its assets and increasing income growth
and capital appreciation. The Company is continually evaluating the
redevelopment potential of its Properties and anticipates that it will pursue
opportunities for substantial redevelopment and repositioning at the Properties.
The Company also believes that Westfield Holdings is well situated to take
advantage of these opportunities, due to, among other things, its management
expertise and its ability to utilize operating staff, ideas and systems from its
operations in the United States, Australia and Asia.
Since 1994, the Company has completed or substantially completed the
redevelopment of Eastland Center in West Covina, California, Enfield Square in
Enfield, Connecticut, Mid Rivers Mall in St. Peters, Missouri and Mission Valley
Center in San Diego, California. The Company is currently redeveloping South
Shore Mall in Bay Shore, New York. This redevelopment involves the addition of a
Sears store and 40,000 square feet of Mall GLA. Project completion is scheduled
for Fall 1997. The foregoing Centers represent approximately 25.4% of Total GLA.
The Company expects to commence the redevelopment of Mission Valley
Center--West in the Fall of 1997 to create a new power center with
value-oriented retailers that will complement Mission Valley Center. In
addition, the Company has identified eight additional Properties for
redevelopment over the next five years, which the Company believes will result
in future income growth and capital appreciation. For a more detailed
description of redevelopment planning, see "The Company--The Company's Strategy
for Operations and Growth--Redevelopment, Repositioning and Expansion Potential
and Implementation."
The Company has entered into a letter of intent with National Australia Bank
Limited, Australia and New Zealand Banking Group Limited, Commonwealth Bank of
Australia and Union Bank of Switzerland to provide a $600.0 million unsecured
line of credit which may be used to finance the implementation of its
redevelopment and acquisition strategies. There can be no assurance that a
definitive credit agreement with respect to this loan facility will be entered
into.
ACQUISITION OF NEW CENTERS AND JOINT VENTURE INTERESTS
The Company's acquisition strategy is to acquire additional super regional
and regional shopping centers that meet the Company's investment criteria. In
general, the Company's investment criteria include
11
<PAGE>
the goals that the property be of a quality consistent with the Company's
portfolio, that the property has potential for increased income and value
through redevelopment and/or repositioning and that the property generates
sufficient income pending any such redevelopment to support the acquisition
price. The Company's strategy also includes seeking to acquire the Outside
Partners' interests in the Joint Venture Centers.
The Company has entered into a letter of intent with its Joint Venture
partner, RREEF USA Fund-III/Annapolis, Inc., to purchase the remaining 70%
interest in Annapolis Mall, together with an adjoining parcel of real property
leased to Montgomery Ward & Co., for an aggregate purchase price of $133.0
million (the "Annapolis Acquisition"). Although no assurance can be given in
this regard and the Annapolis Acquisition is subject to numerous conditions, the
Company expects the Annapolis Acquisition to close in the second quarter of
1997. See "The Company--The Company's Strategy for Operations and
Growth--Acquisition of New Centers and Joint Venture Interests" and "Business
and Properties-- Additional Information Regarding Annapolis Mall."
The Company has also entered into an agreement to acquire approximately 70%
of the partnership interests in Wheaton Plaza Regional Shopping Center LLP, the
entity that owns Wheaton Plaza Regional Shopping Center located in Wheaton,
Montgomery County, Maryland for a purchase price of $52.5 million (the "Wheaton
Acquisition"). The enclosed, one-level center (with a two-level connection to
Hecht's), which opened in 1960, has over 1.1 million square feet of total gross
leasable area, with 120 mall stores and three anchors: J.C. Penney, Montgomery
Ward and Hecht's. The Wheaton partnership also owns two office buildings of
approximately 107,000 square feet and approximately 73,000 square feet. Wheaton
Plaza was originally constructed as an open-air mall and was enclosed in 1981.
One of the Company's principal reasons for making the acquisition is due to the
center's redevelopment potential, although the Company has no current plans for
redevelopment. See "The Company--The Company's Strategy for Operations and
Growth--Acquisition of New Centers and Joint Venture Interests" and "Business
and Properties--Additional Information Regarding Wheaton Plaza."
In addition, the Company holds the Garden State Plaza Option. See "The
Company--The Company's Strategy for Operations and Growth--Garden State Plaza
Option" and "Business and Properties-- Additional Information Regarding Garden
State Plaza."
INCREASING OPERATING INCOME FROM EXISTING SPACE; INTENSIVE MANAGEMENT APPROACH
Westfield Holdings concentrates on actively managing the Centers and
providing efficient and customer-friendly service to both the consumers who shop
in the Centers and the retailers who lease space in the Centers while strictly
controlling operating costs. The concept of the "Westfield Customer Service
System" has been introduced in the Centers to train and focus the personnel at
the Centers on its retailers and customers. The Company believes that this is
one of the most important strategies that differentiates Westfield Holdings's
management philosophy from the Company's competitors. The Company believes that
branding the Centers through advertising, promotions and customer service
programs will build shopper recognition and loyalty, especially in multi-center
markets.
Westfield Holdings's management strategy includes initiatives designed to
increase customer traffic through the Centers, which improves sales turnover
and, ultimately, rents. Initiatives include increasing occupancy levels,
increasing revenue by increasing rentable area within the existing building
envelope, the introduction of cost control efficiencies resulting in a reduction
of operating costs, maximizing the temporary leasing program, improving the
merchandise mix and range of tenants, developing emerging themes such as
entertainment, cinemas and Category Killer retailers, converting non-productive
space to mall gross leasable area and promoting such converted space with
intensive marketing.
The Company seeks to increase rental income from existing space by leasing
currently unleased space, increasing base rent as current leases with below
market rents expire, negotiating new leases to reflect step-ups in base rent,
and repositioning and aggressively marketing to increase sales productivity and
expand the market penetration and market base. The average base rental rate per
square foot at the Centers has increased at a compound annual rate of
approximately 4.5% from December 31, 1994 through December 31, 1996 (4.2% for
the same period, including North County Fair).
12
<PAGE>
COMPANY STRUCTURE AND HISTORY
The Company was incorporated in 1924 for the purpose of holding title to
certain department store properties and has been involved in developing shopping
centers since the mid 1950's. In 1994, Prudential sold 40% of the Company to
Westfield Holdings and the remainder to certain other investors, after
Prudential had filed a registration statement for the initial public offering of
common stock of the Company to the public but before marketing of the securities
commenced or such registration statement was declared effective. In 1995,
Westfield Holdings acquired an additional 10% of the Company. In 1996 and early
1997, the Company was recapitalized when WAT acquired 74.6% of the outstanding
Common Stock and a warrant (the "1996 WAT Warrant") to purchase 6,246,096 shares
of Common Stock from the Company. In addition the Company sold $134.0 million of
non-voting preferred stock and Common Stock to foreign and U.S. investors
(inclusive of a $14.0 million investment that certain of the then existing
investors agreed to retain in the Company). The Company utilized a portion of
the proceeds of the sale of its Common Stock and non-voting preferred stock to
repurchase the stock of certain investors other than Westfield Holdings.
Contemporaneously with these transactions, the Company acquired indirect
ownership of Connecticut Post Mall, Trumbull Shopping Park and South Shore Mall
(collectively, the "Acquired Properties") from interests associated with the
Lowy family and an option to acquire the stock of Westland Realty, Inc., the
holder of an indirect 50% interest in Garden State Plaza from Westfield
Holdings. For more information on the Garden State Plaza Option and the
transactions referred to above, see "Certain Transactions-- Relationships and
Transactions with Westfield Holdings."
These transactions are referred to collectively as the "Recapitalization."
As part of the Recapitalization, Stichting Pensioenfonds ABP, an entity
established under the laws of the Kingdom of the Netherlands ("ABP"), acquired
an equity interest in the Company through the purchase of 940,000 shares of
Series A preferred stock, par value $1.00 per share, of the Company (the "Series
A Preferred Shares"), with an aggregate liquidation amount of $94.0 million. ABP
has agreed to acquire, subject to the satisfaction of certain conditions, an
additional equity interest in the Company by purchasing 301,500 shares (based on
the mid-point of the price range and subject to adjustment based on the gross
proceeds of the Offerings) of Series B preferred stock, par value $1.00 per
share, of the Company (the "Series B Preferred Shares" and, together with the
Series A Preferred Shares, the "Preferred Stock") with an aggregate liquidation
amount of $30.15 million simultaneously with the closing of the Offerings.
Although the Company expects all of the conditions to the sale of the Series B
Preferred Shares will be satisfied, no assurance can be given in this regard.
Following consummation of the Offerings and concurrent transactions, ABP will
hold options issued by WAT that permit ABP to acquire units of WAT for cash or
in exchange for Series A Preferred Shares or Series B Preferred Shares. See
"Description of Capital Stock--Preferred Stock."
Also simultaneously, with the closing of the Offerings, WAT will acquire a
warrant (the "1997 WAT Warrant" and, together with the 1996 WAT Warrant, the
"WAT Warrants") to purchase $35.0 million (or 2,089,552 shares based on the
mid-point of the price range) of additional Common Stock from the Company at the
same price as the initial public offering price for the Shares. The sale price
for the 1997 WAT Warrant will be $2.9 million.
WAT currently owns 77.3% of the Common Stock and Westfield Holdings
currently owns 18.5% of the Common Stock on a fully-diluted basis. As a result
of these transactions and after giving effect to the Offerings and concurrent
transactions and taking account of the maximum number of Shares which may be
acquired under the Orders, WAT will own 62.4%, and Westfield Holdings will own
16.7% (31.7% including its indirect interest through WAT) of the outstanding
Common Stock on a fully-diluted basis. Westfield Holdings will also hold an
approximately 24.0% equity interest in WAT on a fully diluted basis. In
addition, ABP will have an approximately $124.1 million investment in the
Company through the ownership of the Preferred Stock. See "Principal
Shareholders."
13
<PAGE>
The following diagram illustrates the results of the foregoing transactions
and the beneficial ownership of the Company upon consummation of the Offerings
and concurrent transactions and taking account of the maximum numbers of Shares
which may be acquired under the Orders on a fully diluted basis.
[For Edgar Version, the diagram indicates ownership of the Company, warrants and
management/ development/advisory relationships.]
14
<PAGE>
FINANCING POLICIES
The Company currently intends to adhere to a policy of maintaining a ratio
of debt-to-Total Market Capitalization of not more than 50%. No assurance can be
given in this regard, however, and the organizational documents of the Company
do not limit the amount or percentage of indebtedness that it may incur. On a
pro forma basis at March 31, 1997, after giving effect to the Offerings and
concurrent transactions and the application of the net proceeds as set forth in
"Use of Proceeds," the Company would have a ratio of debt-to-Total Market
Capitalization of approximately 41%. The debt-to-Total Market Capitalization
ratio, which is based upon the market value of the Company's equity and,
accordingly, fluctuates with changes in the price of the Common Stock, differs
from the debt-to-total asset ratio, which is based upon book values. The
consolidated pro forma debt-to-total asset ratio at March 31, 1997 was 49%. See
"Capitalization." The Company may from time to time reevaluate its debt policy
in light of current economic conditions, relative costs of debt and equity
capital, changes in the Company's market capitalization, growth and acquisition
opportunities and other factors, and modify its debt financing policy
accordingly. As a result, the Company may increase its debt-to-Total Market
Capitalization ratio beyond the limits described above. See "Risk Factors--Risks
Associated with Debt Financing--No Limitation on Debt." If the Board of
Directors (or, in the case of certain Joint Ventures in which the Company does
not act as managing general partner, an Outside Partner) determines that
additional funding is required, the Company or the Joint Ventures may raise such
funds through additional equity offerings, debt financing or retention of cash
flow (subject to provisions in the the Internal Revenue Code of 1986, as amended
(the "Code") concerning taxability of undistributed income), or a combination of
these methods. See "Policies and Objectives with Respect to Investment,
Financing and Other Certain Activities--Financing."
FEDERAL INCOME TAX CONSIDERATIONS AND
TAX STATUS OF THE COMPANY
The Company elected to be taxed as a REIT under the Code, commencing with
its taxable year ending December 31, 1994, and the Company intends to continue
to operate in such a manner. If the Company continues to qualify for taxation as
a REIT, the Company generally will not be taxed at the corporate level so long
as it distributes to its shareholders at least 95% of its taxable income
currently. REITs are subject to numerous technical organizational and
operational requirements. Skadden, Arps, Slate, Meagher & Flom LLP has issued an
opinion as to the Company's qualification as a REIT. If the Company fails to
qualify for taxation as a REIT in any taxable year, the Company generally will
be subject to Federal income tax (including any applicable alternative minimum
tax) on its taxable income at regular corporate rates. See "Risk
Factors--Adverse Consequences of Failure to Qualify as a REIT." Even if the
Company continues to qualify for taxation as a REIT, the Company could be
subject to certain state and local taxes on its income and property and Federal
and state income and excise taxes on its undistributed income and undistributed
net capital gains in accordance with the Code and applicable state law. In
addition, the Company may be subject to certain other taxes if it engages in
transactions which are prohibited transactions under the Code. See "Federal
Income Tax Considerations."
15
<PAGE>
THE OFFERINGS
All of the Shares offered hereby are being offered by the Company.
<TABLE>
<S> <C>
Shares of Common Stock offered......... 18,000,000 shares(1)
U.S. Offering........................ 15,300,000 shares
International Offering............... 2,700,000 shares
Shares of Common Stock outstanding
After the Offerings.................. 79,265,183 shares(1)(2)
Use of Proceeds........................ To fund in part, the Garden State Plaza Loan to be
made to Westfield Holdings, the Annapolis
Acquisition, the Wheaton Acquisition and the
purchase of the Westfield Holdings Warrants.
Proposed NYSE symbol................... "WEA"
</TABLE>
- --------------
(1) Does not include 2,700,000 shares of Common Stock that may be issued upon
the exercise of the U.S. Underwriters' and International Managers'
over-allotment options.
(2) Includes shares of Common Stock that may be issued upon exercise of the WAT
Warrants.
DISTRIBUTIONS
The Company intends to continue to pay regular quarterly distributions to
the holders of its Common Stock. Since Westfield Holdings's acquisition of an
interest in the Company on February 11, 1994, the Company has made regular
quarterly distributions on its Common Stock. The Company made distributions of
$36.5 million for the period from February 12, 1994 through December 31, 1994
(or 68.5% of Funds from Operations), $75.4 million for the period from January
1, 1995 through December 31, 1995 (or 114.6% of Funds from Operations) and $78.5
million for the period from January 1, 1996 through December 31, 1996 (or 103.5%
of Funds from Operations). For the period from February 12, 1994 through
December 31, 1996, the Company made distributions of $190.4 million (or 98% of
Funds from Operations). Following such distributions, the Company received
recontributions from its shareholders of $4.1 million, $3.2 million and $3.4
million in 1994, 1995 and 1996, respectively. For the three month period ended
March 31, 1997, the Company has declared a distribution of $.373 per share (or
97% of Funds from Operations in the aggregate) to its shareholders.
For the period February 12, 1994 through December 31, 1996, the Company
distributed approximately 98% of its Funds from Operations. However, the Company
intends to revise its policy upon consummation of the Offerings such that it
will distribute annually approximately 90% of its Funds from Operations through
December 31, 1998. Thereafter, the Company intends to distribute annually
approximately 90% to 95% of its Funds from Operations; however, the Company does
not intend to distribute more than 100% of Funds from Operations less recurring
capital expenditures (not including capital expenditures recovered from tenants)
and rental income attributable to rent straight-lining. As a result of the
revision of its policy, the Company has declared a special distribution to the
shareholders of the Company immediately prior to the closing of the Offerings in
an amount of $13.0 million (the "Special Distribution"). The Special
Distribution is payable on the regular payment date for the second quarter
distribution if the Offerings occur or, if the Offerings do not occur, in seven
quarterly installments at the same time as the Company's regular quarterly
distributions. The Special Distribution represents a portion of the
distributions estimated at the time of WAT's initial offering of units in
Australia for the period through 1998.
The Company intends to pay a pro rata distribution to all shareholders with
respect to the period from the closing of the Offerings through June 30, 1997
based upon $0.35 per share for a full quarter. On an annual basis, this
distribution would be $1.40 per share. In addition, the Company has declared a
distribution to the shareholders of the Company immediately preceding the
closing of the Offerings for the
16
<PAGE>
portion of the second quarter preceding the closing of the Offerings, such
distribution to be payable on or before the regular payment date for the second
quarter distribution.
It is estimated that initially approximately 35% of the distribution to the
Company's shareholders will represent a return of capital for tax purposes. The
expected size of the distributions may not allow the Company, using only cash
flow from operations, to fund 100% of (i) the tenant allowances and (ii) the
retirement of all of its debt when due, and therefore, the Company may be
required to seek periodic debt or equity financings to cover such items. The
Company's income will consist primarily of its share of income from the
Properties. Differences in timing between the receipt of income and the payment
of expenses in arriving at taxable income of the Company, and the effect of
required debt amortization payments, could require the Company to borrow funds
on a short-term basis to meet the REIT distribution requirements even if the
Company believes that then prevailing market conditions are not generally
favorable for such borrowings or that such borrowings would not be advisable in
the absence of such tax considerations. In addition, no distributions may be
paid on any Common Stock unless the full dividends on the Preferred Shares have
been paid. See "Policies and Objectives with Respect to Investments, Financing
and Other Certain Activities--Financing."
The Company plans to adopt a distribution reinvestment plan under which its
shareholders may elect to reinvest all or part of their distributions
automatically in additional shares of Common Stock. Any such distribution
reinvestment plan will not adversely affect the Company's ability to qualify as
a REIT for Federal income tax purposes. The Company understands that WAT plans
to adopt a similar plan for its unitholders and intends to use the proceeds of
such distribution reinvestment plan to participate in the Company's distribution
reinvestment plan, although no assurance can be given in this regard. The
Company also understands that Westfield Holdings intends to participate in WAT's
distribution reinvestment plan to the full extent of its distributions on its
units in WAT for a three-year period commencing with the first distribution
period for which reinvestment is permitted, although no assurance can be given
in this regard.
The Company computes Funds from Operations in accordance with standards
established by the White Paper on Funds from Operations approved by the Board of
Governors of NAREIT in March 1995 which defines Funds from Operations as net
income (loss) (computed in accordance with GAAP), excluding gains (or losses)
from debt restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures except for the years ended December 31, 1993 and
1992 for which income taxes are not included. Funds from Operations should not
be considered as an alternative to net income (determined in accordance with
GAAP) as a measure of the Company's financial performance or to cash flow from
operating activities (determined in accordance with GAAP) as a measure of the
Company's liquidity, nor is it indicative of funds available to fund the
Company's cash needs, including its ability to make distributions. In addition,
Funds from Operations as computed by the Company may not be comparable to
similarly titled figures reported by other REITs.
Notwithstanding the foregoing, all distributions will be at the discretion
of the Board of Directors and will depend on the actual Funds from Operations,
the Company's financial condition, the annual distribution requirements under
the REIT Requirements and such other factors as the Board of Directors deems
relevant and will be subject to the prior payment of preferred stock dividends.
See "Risk Factors-- Distributions to Shareholders; Potential Requirement to
Borrow."
17
<PAGE>
SUMMARY FINANCIAL DATA
The following table sets forth historical and unaudited pro forma
consolidated financial data for the Company and should be read in conjunction
with the Consolidated Financial Statements of Westfield America, Inc. and the
Notes thereto, the Pro Forma Condensed Consolidated Financial Information of the
Company (unaudited) and the Notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The Company believes
that the book value of its real estate assets, which reflect the historical
costs of such real estate assets less accumulated depreciation, is less than the
current market value of its properties.
The results for 1994 are not comparable to prior years because of the
acquisition of the Company in February 1994. Hence, a Pro Forma adjustment has
been applied to historical results of operations for the 42 days ended February
11, 1994 to present operating and other data as if the acquisition of the
Company on February 12, 1994 had been consummated on January 1, 1994. The
results for 1996 are not comparable to prior years because of the
Recapitalization, the acquisition of the Acquired Properties and the
consolidation of the Mission Valley Partnership.
Unaudited pro forma operating information is presented as if the
consummation of the Offerings and concurrent transactions and Recapitalization
had occurred as of the period presented, and therefore incorporates certain
assumptions that are described in the Notes to the Pro Forma Condensed
Consolidated Statement of Income (unaudited). The Pro Forma balance sheet
(unaudited) data is presented as if the Offerings and concurrent transactions
and the Recapitalization had occurred on March 31, 1997.
The unaudited Pro Forma information does not purport to represent what the
Company's financial position or results of operations would actually have been
if these transactions had, in fact, occurred on such date or at the beginning of
the periods indicated, or to project the Company's financial position or results
of operations at any future date or for any future period.
18
<PAGE>
SUMMARY SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------
UNAUDITED
PRO FORMA
1997 1997 1996
------------ ------------ ---------
(IN THOUSANDS OF DOLLARS, EXCEPT PER
SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C>
OPERATING DATA:
Total revenue............................................................................. $ 56,034 $ 46,903 $ 32,001
Operating expenses........................................................................ 18,609 15,927 10,518
Interest expense, net..................................................................... 13,566 12,860 7,482
Depreciation and amortization............................................................. 12,828 11,539 8,027
------------ ------------ ---------
Income before other income and income taxes........................................... 11,031 6,577 5,974
Equity in net income (loss) of unconsolidated real estate partnerships.................... 501 1,293 733
Interest and other income................................................................. 3,637 312 230
Gains on sales of properties and partnership interests.................................... -- -- --
------------ ------------ ---------
Income before income taxes and minority interest...................................... $ 15,169 8,182 6,937
Income taxes.............................................................................. -- -- --
Minority interest in earnings of consolidated real estate partnership..................... (931) (218) (230)
------------ ------------ ---------
Net income............................................................................ $ 14,238 $ 7,964 $ 6,707
------------ ------------ ---------
------------ ------------ ---------
Earnings per share (1).................................................................... $ 0.16 $ 0.11 $ 0.15
------------ ------------ ---------
------------ ------------ ---------
OTHER DATA:
EBITDA (2)................................................................................ $ 45,045 $ 37,242 $ 27,540
Funds from operations (3)................................................................. $ 29,661 $ 22,564 $ 18,046
Cash flows provided by operating activities............................................... $ -- $ 11,570 $ 11,808
Cash flows (used in) provided by investing activities..................................... $ -- $ (5,389) $ (833)
Cash flows (used in) provided by financing activities..................................... $ -- $ (10,263) $ (9,510)
Ratio of earnings to combined fixed charges (4)........................................... 1.96 1.59 1.99
Ratio of FFO to combined fixed charges (4)................................................ 2.67 2.33 3.30
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
UNAUDITED
PRO FORMA
1996 1996 1995
------------ ------------ ----------
<S> <C>
OPERATING DATA:
Total revenue............................................................................. $ 220,072 $ 156,089 $ 111,327
Operating expenses........................................................................ 78,153 55,903 36,849
Interest expense, net..................................................................... 53,040 40,233 27,916
Depreciation and amortization............................................................. 48,287 38,033 28,864
------------ ------------ ----------
Income before other income and income taxes........................................... 40,592 21,920 17,698
Equity in net income (loss) of unconsolidated real estate partnerships.................... 55 3,063 3,359
Interest and other income................................................................. 13,512 776 789
Gains on sales of properties and partnership interests.................................... -- -- --
------------ ------------ ----------
Income before income taxes and minority interest...................................... 54,159 25,759 21,846
Income taxes.............................................................................. -- -- --
Minority interest in earnings of consolidated real estate partnership..................... (3,006) (1,063) --
------------ ------------ ----------
Net income............................................................................ $ 51,153 $ 24,696 $ 21,846
------------ ------------ ----------
------------ ------------ ----------
Earnings per share (1).................................................................... $ 0.57 $ 0.42 $ 0.48
------------ ------------ ----------
------------ ------------ ----------
OTHER DATA:
EBITDA (2)................................................................................ $ 172,033 $ 124,352 $ 102,199
Funds from operations (3)................................................................. $ 110,716 $ 75,842 $ 65,792
Cash flows provided by operating activities............................................... N/A $ 55,888 $ 42,990
Cash flows (used in) provided by investing activities..................................... N/A $ (91,613) $ 5,476
Cash flows (used in) provided by financing activities..................................... N/A $ 42,454 $ (62,722)
Ratio of earnings to combined fixed charges (4)........................................... 1.81 1.60 2.25
Ratio of FFO to combined fixed charges (4)................................................ 2.58 2.52 3.35
<CAPTION>
PREDECESSOR
PERIOD FROM PERIOD FROM YEAR ENDED
FEBRUARY 12, JANUARY 1, DECEMBER
1994 THROUGH 1994 THROUGH 31,
DECEMBER 31, FEBRUARY 11, -----------
1994 1994 1993
------------ ------------ -----------
OPERATING DATA:
Total revenue............................................................................. $ 99,456 $ 12,769 $ 105,237
Operating expenses........................................................................ 36,606 6,869 51,731
Interest expense, net..................................................................... 24,156 481 7,160
Depreciation and amortization............................................................. 24,897 3,605 29,011
------------ ------------ -----------
Income before other income and income taxes........................................... 13,797 1,814 17,335
Equity in net income (loss) of unconsolidated real estate partnerships.................... (386) (2,151) (3,177)
Interest and other income................................................................. 1,830 340 2,996
Gains on sales of properties and partnership interests.................................... -- -- 2,566
------------ ------------ -----------
Income before income taxes and minority interest...................................... 15,241 3 19,720
Income taxes.............................................................................. -- -- (13,819)
Minority interest in earnings of consolidated real estate partnership..................... -- -- --
------------ ------------ -----------
Net income............................................................................ $ 15,241 $ 3 $ 5,901
------------ ------------ -----------
------------ ------------ -----------
Earnings per share (1).................................................................... $ 0.34
------------
------------
OTHER DATA:
EBITDA (2)................................................................................ $ 83,529 $ 8,691 $ 80,432
Funds from operations (3)................................................................. $ 53,315 $ 4,942 $ 60,472
Cash flows provided by operating activities............................................... $ 20,665 $ 5,294 $ 35,883
Cash flows (used in) provided by investing activities..................................... $ 23,556 $ (23,501) $ (42,778)
Cash flows (used in) provided by financing activities..................................... $ (67,988) $ 26,013 $ (13,722)
Ratio of earnings to combined fixed charges (4)........................................... 2.89 N/A(3) 3.47
Ratio of FFO to combined fixed charges (4)................................................ 3.21 N/A(3) 7.26
<CAPTION>
1992
----------
OPERATING DATA:
Total revenue............................................................................. $ 102,545
Operating expenses........................................................................ 53,929
Interest expense, net..................................................................... 24,652
Depreciation and amortization............................................................. 22,650
----------
Income before other income and income taxes........................................... 1,314
Equity in net income (loss) of unconsolidated real estate partnerships.................... (76)
Interest and other income................................................................. 4,191
Gains on sales of properties and partnership interests.................................... 23,428
----------
Income before income taxes and minority interest...................................... 28,857
Income taxes.............................................................................. (11,231)
Minority interest in earnings of consolidated real estate partnership..................... --
----------
Net income............................................................................ $ 17,626
----------
----------
Earnings per share (1)....................................................................
OTHER DATA:
EBITDA (2)................................................................................ $ 94,545
Funds from operations (3)................................................................. $ 37,974
Cash flows provided by operating activities............................................... $ 25,138
Cash flows (used in) provided by investing activities..................................... $ (3,999)
Cash flows (used in) provided by financing activities..................................... $ 14,742
Ratio of earnings to combined fixed charges (4)........................................... 1.47
Ratio of FFO to combined fixed charges (4)................................................ 2.45
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR
MARCH 31, ENDED
-------------------------- DECEMBER
UNAUDITED 31,
PRO FORMA ---------
1997 1997 1996
------------ ------------ ---------
(IN THOUSANDS OF DOLLARS, EXCEPT PER
SHARE AMOUNTS AND RATIOS)
BALANCE SHEET DATA:
<S> <C> <C> <C>
Investment in real estate, net............................................................ $ 1,635,962 $ 1,305,462
Total assets.............................................................................. 1,684,802 1,339,002
Mortgage and notes payable................................................................ 823,612 783,285
Minority interest......................................................................... -- --
Shareholders' equity...................................................................... 829,557 524,084
<CAPTION>
YEAR ENDED
DECEMBER
31,
----------
1995 1994 1993
------------ ------------ ----------
BALANCE SHEET DATA:
<S> <C>
Investment in real estate, net............................................................ $ 1,310,434 $ 829,484
Total assets.............................................................................. 1,344,570 844,706
Mortgage and notes payable................................................................ 770,625 426,781
Minority interest......................................................................... 54 --
Shareholders' equity...................................................................... 518,530 380,419
<CAPTION>
1992
------------
BALANCE SHEET DATA:
Investment in real estate, net............................................................ $ 848,892 $ 884,392
Total assets.............................................................................. 882,667 944,490
Mortgage and notes payable................................................................ 420,397 38,205
Minority interest......................................................................... -- --
Shareholders' equity...................................................................... 430,782 669,967
<CAPTION>
BALANCE SHEET DATA:
Investment in real estate, net............................................................ $ 851,168
Total assets.............................................................................. 951,678
Mortgage and notes payable................................................................ 317,857
Minority interest......................................................................... --
Shareholders' equity...................................................................... 393,466
<CAPTION>
BALANCE SHEET DATA:
Investment in real estate, net............................................................
Total assets..............................................................................
Mortgage and notes payable................................................................
Minority interest.........................................................................
Shareholders' equity......................................................................
</TABLE>
(1) Unaudited pro forma net income and earnings per share for the three months
ended March 31, 1997 and the year ended December 31, 1996 are based on
71,206 and 71,481 shares, respectively, of Common Stock outstanding after
the Offering. Information for the period January 1, 1994 through February
11, 1994 and the year ended December 31, 1993 and 1992 is not presented
because it is not comparable.
(2) EBITDA represents the Company's share of net income before interest, taxes,
depreciation and amortization. While EBITDA should not be construed as an
alternative to operating income (as determined in accordance with GAAP) as
an indicator of the Company's operating performance or to cash flows from
operating activities (as determined in accordance with GAAP) as a measure of
liquidity and other consolidated income or cash flow statement data
determined in accordance with GAAP, the Company believes that EBITDA is an
effective measure of shopping center operating performance because EBITDA is
unaffected by the debt and equity structure of the property owner.
(3) The Company computes Funds from Operations in accordance with standards
established by the White Paper on Funds from Operations approved by the
Board of Governors of NAREIT in March 1995 which defines Funds from
Operations as net income (loss) (computed in accordance with GAAP) excluding
gains (or losses) from debt restructuring and sales of property, plus real
estate related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures except for the years ended
December 31, 1993 and 1992 for which income taxes are not included. Funds
from Operations should not be considered as an alternative to net income
(determined in accordance with GAAP) as a measure of the Company's financial
performance or to cash flow from operating activities (determined in
accordance with GAAP), as a measure of the Company's liquidity, nor is it
indicative of funds available to fund the Company's cash needs, including
its ability to make distributions. Funds from Operations as computed by the
Company may not be comparable to similarly titled figures reported by other
REITS.
(4) Combined fixed charges consist of interest expense, whether expensed or
capitalized, amortization of debt expense and income allocable on Senior
Preferred Shares, Series A Preferred Shares and on an unaudited Pro Forma
basis, Series B Preferred Shares.
(5) The computation for the 42 days ended February 11, 1994 is not presented as
it is not comparable.
20
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING INFORMATION IN
CONJUNCTION WITH THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE
PURCHASING SHARES IN THE OFFERINGS.
POSSIBLE CONFLICTS OF INTERESTS WITH INSIDE PARTIES AND RELATED PARTY
TRANSACTIONS
INFLUENCE OF WAT AND WESTFIELD HOLDINGS
Upon consummation of the Offerings and concurrent transactions and taking
account of the maximum number of Shares which may be acquired under the Orders,
WAT will own 62.4% and 58.0%, and Westfield Holdings will own 16.7% and 18.7%,
of the outstanding Common Stock on a fully-diluted and non-fully diluted basis,
respectively. Westfield Holdings will also hold approximately 24.0% of the
outstanding units of WAT on a fully-diluted basis. Westfield Holdings Limited is
an independent company from the Company and, except for the acquisition by the
Company of the Westfield Holdings Warrants, the purchasers of the Shares will
not acquire any interest in Westfield Holdings Limited. To maintain the
Company's qualification as a REIT, generally no Individual (other than Frank P.
Lowy and the members of his family, who are subject to a higher ownership
threshold based on their current percentage ownership that is in excess of the
limit currently applicable to other shareholders) may directly or indirectly
hold more than 5.5%, by value, of the Company's stock.
In addition, WAT is managed by Westfield America Management Limited ("WAM"),
a subsidiary of Westfield Holdings Limited. The WAT Trustee generally exercises
all of the voting rights over the shares of Common Stock as directed by WAM,
subject to applicable Australian law and certain other exceptions including an
exception in relation to the designation and election of directors of the
Company as set forth below. See "Principal Shareholders." The WAT Trustee may
only vote shares for the election of directors as directed by a majority of the
WAT unitholders voting on the matter at a meeting of unitholders. By virtue of
WAT's substantial ownership of Common Stock, WAT is in a position to exercise
significant influence on the Company. The Company is also managed and advised by
Westfield Holdings. Accordingly, WAT and Westfield Holdings together will be
able to elect all of the Company's directors and to control the vote on all
matters submitted to the Company's shareholders including approval of mergers,
sales of all or substantially all of the Company's assets, and "going private"
transactions and to exercise significant influence on the decision to terminate
the Manager, Developer or Advisor.
As of December 31, 1996, interests associated with the Lowy family owned
approximately 45% of the ordinary shares of Westfield Holdings Limited and 9% of
the outstanding WAT units and members of the Lowy family act as officers and
directors of Westfield Holdings, the manager of WAT and the Company. By virtue
of their ownership interests in Westfield Holdings Limited and WAT and their
positions as officers and directors, the Lowy family is in a position to
exercise significant influence on Westfield Holdings, WAT and the Company with
respect to the foregoing matters.
CONFLICTS OF INTERESTS WITH INSIDE PARTIES
Approximately $160.3 million of the proceeds of the Offerings and concurrent
transactions will be utilized to purchase the Westfield Holdings Warrants and to
make the Garden State Plaza Loan to Westfield Holdings. In addition, WAT will
purchase the 1997 WAT Warrant. The terms, agreements and understandings relating
to these transactions were negotiated by the Company and Westfield Holdings or
WAT. See "Certain Transactions."
By virtue of the contractual relationship between Westfield Holdings and the
Company with respect to management, development and advisory services and its
substantial ownership of Common Stock, Westfield Holdings has interests that may
conflict with the interests of persons acquiring Shares in the Offerings.
Implementation of the Company's key growth strategies will result in increased
management, development and advisory fees to Westfield Holdings. See "The
Company--The Company's Strategy for Operations and Growth" and "Advisory,
Management and Development Services to the Company."
21
<PAGE>
Both WAT, by virtue of its stock ownership of the Company, and Westfield
Holdings, by virtue of its ownership of Common Stock, units of WAT and
management of WAT and the Company, are in a position to exercise significant
influence over the affairs of the Company, which influence might not be
consistent with the interests of other shareholders. Certain officers and/or
directors of Westfield Holdings also act as officers and/or directors of the
Company.
A subsidiary of Westfield Holdings Limited is also the manager of WAT and
certain officers and/or directors of such subsidiary are also directors and/or
officers of the Company. In addition, all of the executive officers of the
Company are employed by and provide services to Westfield Holdings and other
properties managed by Westfield Holdings. All of the executive officers, other
than Frank P. Lowy, currently devote substantially all of their time to the
business and affairs of the Company. The Company anticipates that such officers
will continue to devote substantially all of their time to the business and
affairs of the Company. However, as a result of services performed for Westfield
Holdings and other properties managed by Westfield Holdings, there may be
periods of time during which a particular officer devotes less than
substantially all, or less than a majority, of his or her time to the business
and affairs of the Company.
Westfield Holdings will agree that, during the period in which it is the
Manager of the Centers and Advisor to the Company, it will not acquire any
ownership interest in shopping center properties or power centers in the United
States or manage or develop a shopping center property in competition with a
Center owned by the Company, except in the case of the acquisition by Westfield
Holdings of an entity that does not have any ownership interest in shopping
center properties and power centers in the United States and is then managing or
developing a competitive center (in addition to other properties). This non-
competition agreement shall not apply to any activity by Westfield Holdings with
respect to airport projects. Each of Frank Lowy, David Lowy, Peter Lowy and
Steven Lowy will agree with the Company that he will not acquire any ownership
interest in shopping center properties or power centers in the United States for
so long as (i) Westfield Holdings is the Advisor to the Company and the Manager
of the Centers, and (ii) interests associated with the Lowy family have
significant ownership and significant management involvement in Westfield
Holdings Limited. The terms of these agreements are summarized in "Advisory,
Management and Development Services to the Company." See "Principal
Shareholders," "Certain Transactions--Relationships and Transactions with
Westfield Holdings" and "Certain Transactions--Relationships and Transactions
with WAT."
RELIANCE ON WESTFIELD HOLDINGS; LACK OF CONTROL OVER
DAY-TO-DAY ACTIVITIES OF OUTSIDE MANAGEMENT
Subsidiaries of Westfield Holdings Limited have management contracts (the
"Management Agreements") to manage the operations and leasing of the Centers and
an advisory agreement (the "Advisory Agreement") with the Company to provide
corporate strategic planning, administrative and other asset management services
to the Company. The Company has also entered into a master development framework
agreement (the "Master Development Framework Agreement") with a subsidiary of
Westfield Holdings Limited to perform the necessary planning and predevelopment
work to determine if a particular development is feasible and economically
viable and to provide the development services. The Company has agreed that any
properties acquired in the future that it controls will be subject to the
Management Agreements and Master Development Framework Agreement. The Company
has no employees and relies entirely on Westfield Holdings for the management of
the Company and the Centers and is not currently able to operate without
Westfield Holdings.
Because the Company cannot elect the directors of the Manager, the Advisor
or the Developer, its ability to control their actions on a day to day basis is
limited. However, the Company does have various approval rights over aspects of
management and development including that the Manager must operate within
budgets and leasing guidelines approved by the Company and in accordance with
policies set by the Company and that all development projects are subject to the
approval of the Company's Board of Directors (including at least 75% of the
Independent Directors) of the plans and feasibility for such project and the
cost thereof. If the guidelines are not met or the Company does not grant its
approval to a
22
<PAGE>
development project, then the Manager or the Developer may not take actions to
lease the property or commence a development project. If the Manager or
Developer nonetheless takes any such action and a material breach of the
Management or Development Agreement occurs, then the Manager, Advisor or
Developer may be terminated. In addition, the Company generally has the ability
to terminate the agreements after the initial three-year term upon certain
conditions, including a determination by at least 75% of the Independent
Directors and the WAT Trustee (so long as WAT owns at least 10% of the capital
stock of the Company) not to renew the Management or Advisory Agreements because
of unsatisfactory performance of the Manager or the Advisor that is materially
detrimental to the Company or because the fees thereunder are not fair. The
Company may also terminate the agreements upon the occurrence and during the
continuance of an event of default under the Garden State Plaza Loan.
The terms, agreements and understandings relating to these transactions were
negotiated by the Company and Westfield Holdings. The Company believes that,
although these agreements were negotiated between associated parties, they
reflect market terms. The Company has discretion as to whether or not to
undertake a development project. The fees payable by the Company under the
Master Development Framework Agreement for any development project are subject
to the review and approval of the Board of Directors, including at least 75% of
the Independent Directors.
For further details, see "Advisory, Management and Development Services to
the Company."
LIMITATIONS ON ACQUISITIONS AND CHANGE IN CONTROL
There are limitations on the ability of the shareholders of the Company to
change control of the Company due to the significant ownership by Westfield
Holdings and WAT of the outstanding Common Stock. In addition, restrictions on
direct or constructive ownership of more than 5.5% by an individual (other than
Frank P. Lowy and the members of his family) of the Company's outstanding shares
of capital stock may prevent a change of control of the Company. The ownership
restriction is designed in part to ensure that the REIT ownership requirements
continue to be met by the Company.
The ownership restrictions, the substantial influence of WAT and Westfield
Holdings and certain other provisions of the Company's Third Amended and
Restated Articles of Incorporation (the "Articles") and Amended and Restated
By-Laws (the "By-Laws") and of Missouri law, may discourage a change in control
of the Company and may also (i) deter tender offers for the Common Stock which
offers may be advantageous to holders of the shares and (ii) limit the
opportunities of holders of the Common Stock to receive a premium for their
shares that might otherwise exist if an investor were attempting to assemble a
block of shares or otherwise effect a change of control of the Company. These
provisions include, among others, (i) a classified Board of Directors, (ii) the
availability of capital stock for issuance from time to time at the discretion
of the Board of Directors, (iii) inability of shareholders to take action by
written consent, (iv) prohibitions against shareholders calling a special
meeting of shareholders, (v) requirements for advance notice for raising of
business or making nominations at shareholders' meetings and (vi) additional
requirements for business combination transactions. See "Certain Provisions of
the Company's Articles of Incorporation and By-Laws and of Missouri Law."
RISKS GENERALLY INHERENT IN REAL ESTATE INVESTMENT
GENERAL FACTORS AFFECTING INVESTMENTS IN REAL ESTATE;
EFFECT OF ECONOMIC AND REAL ESTATE CONDITIONS
A shopping center's revenues and value may be adversely affected by a number
of factors, including but not limited to: the national economic climate; the
regional economic climate (which may be adversely affected by plant closings,
industry slowdowns and other factors); local real estate conditions (such as an
oversupply of retail space); perceptions by retailers or shoppers of the safety,
convenience and attractiveness of the shopping center; trends in the retail
industry; competition for tenants; high vacancy rates; changes in market rental
rates; the inability to collect rent due to bankruptcy or insolvency of tenants
or otherwise; the need periodically to renovate, repair and relet space and the
costs thereof; the ability of an owner to provide adequate maintenance and
insurance; increased operating costs; and the willingness and ability of the
property's owner to provide capable management and adequate maintenance. These
factors
23
<PAGE>
could influence the price a purchaser would be willing to pay for a Center if
the Company elects to sell such Center. In the case of vacant space, the Company
may not get full credit for the income that can be earned from such vacant space
in determining the sales price. In addition, other factors may adversely affect
a shopping center's value without affecting its current revenues, including:
changes in governmental regulations, zoning or tax laws; potential environmental
or other legal liabilities; and changes in interest rate levels.
GEOGRAPHIC CONCENTRATION
Nine of the 22 Centers are located in California (representing approximately
43% of the Total GLA), four are located in Missouri (representing approximately
14% of the Total GLA) and four are located in Connecticut (representing
approximately 18% of the Total GLA). To the extent that general economic or
other relevant conditions in these regions decline and result in a decrease in
consumer demand in these regions, the Company's performance may be adversely
affected. The markets for certain Centers are also significantly dependent on
the financial results of major local employers and on industry concentrations.
For example, the sales growth of the Centers located in California was
negatively affected by the California economic recession from 1990 to 1993.
RISKS OF EXPANSION, REDEVELOPMENT AND ACQUISITION ACTIVITIES
The Company may incur risks in connection with the redevelopment and
expansion of existing shopping centers or the redevelopment of new and existing
shopping centers. These risks include the risk that redevelopment opportunities
explored by the Company may be abandoned after funds have been expended; the
risk that permits or approvals required for such development may not be
obtained; the risk that construction costs of a project may exceed original
estimates, possibly making the project uneconomical; the risk that redevelopment
may temporarily disrupt income; and the risk that occupancy rates and rents at a
completed project will not be sufficient to make the project profitable. In case
of an unsuccessful expansion or redevelopment project, the Company's loss could
exceed its investment in the project. Also, there may be competitors seeking to
expand properties or to acquire properties for redevelopment, some of which may
have greater resources than the Company. See "The Company--Company's Strategy
for Operations and Growth--Redevelopment, Repositioning and Expansion Potential
and Implementation" and "The Company--The Company's Strategy for Operations and
Growth--Acquisition of New Centers and Joint Venture Interests."
RELIANCE ON CERTAIN TENANTS AND ANCHORS
The Company's income and Funds from Operations could be adversely affected
in the event of the bankruptcy or insolvency, or a downturn in the business, of
any Anchor tenant or Anchor-owned store, or if any Anchor tenant does not renew
its lease when it expires. If the tenant sales in the Centers were to decline,
tenants might be unable to pay their rent or other occupancy costs. In the event
of default by a tenant, delays and costs in enforcing the lessor's rights could
be experienced. In addition, lease termination by one or more Anchor tenants of
a shopping center or the closing of one or more Anchor-owned stores whose
reciprocal easement agreements or leases may permit closing could result in
lease terminations or reductions in rent by other tenants whose leases may
permit cancellation or rent reduction in those circumstances and adversely
affect the Company's ability to re-lease the space that is vacated. Similarly,
the leases of certain Anchor tenants, and the reciprocal easement agreements to
which certain of the Anchor-owned stores are parties, permit an Anchor to
transfer its interest in a shopping center to another retailer, often only after
the expiration of an initial period. The transfer to a new Anchor tenant could
adversely affect customer traffic in the Center and thereby reduce the income
generated by that Center and could also allow certain other Anchors and other
tenants to make reduced rental payments or to terminate their leases at that
Center. Each of these developments could adversely affect the Company's Funds
from Operations and its ability to make expected distributions to shareholders.
As of December 31, 1996, Anchors owned (in fee or subject to ground leases)
49.7% and leased 10.2% of the Total GLA of the Centers. As of the same date, the
May Company owned 17.0%, J.C. Penney owned 9.9% and Sears owned 8.1% of the
Total GLA. No other Anchor owned more than 4.1% of the Total GLA.
24
<PAGE>
Also, as of such date, Macy's leased 2.8% of Total GLA and no other Anchor
leased more than 2.7% of Total GLA. Also as of such date J.C. Penney represented
1.1% of the aggregate annualized base rent of the Centers and no other Anchor
represented more than 1.1% of the aggregate annualized base rent of the Centers.
Collectively, tenants whose parent company is The Limited Stores occupy over
10% of the Mall GLA. These tenants include Abercrombie & Fitch, Bath & Body
Works, Express, Lane Bryant, Lerner, The Limited, Structure and Victoria Secret,
among others. While each of these tenants is operated as an independent
subsidiary, an unexpected negative change in the financial strength of the
parent company, The Limited Stores, could conceivably result in the loss of some
or all of the revenues provided to the Company under the leases executed with
these tenants.
In addition to being an Anchor at many of the Centers, the May Company is
the lessee under financing leases of the May Properties. A negative change in
the financial condition of the May Company could result in the loss of some or
all of the revenues provided to the Company under the May Properties.
The Company has established a temporary leasing program pursuant to which it
leases Mall Store space on a short-term basis (usually for a term of between 30
days to eleven months) pending its ability to secure suitable long term tenants.
These leases are generally subject to the termination by the Company on 30 days
notice. This short-term leasing program may present risks not encountered in
typical long-term retail leasing arrangements as the Company may not be able to
re-lease such space upon expiration of any such short-term lease.
COMPETITION
All of the Centers are located in developed retail and commercial areas.
With respect to certain of the Centers, other malls or neighborhood and
community shopping centers, may compete within the Primary Trade Area of each of
the Centers. The amount of rentable space in the relevant Primary Trade Area,
the quality of facilities and the nature of stores at such competing malls could
each have a material adverse effect on the Company's ability to lease space and
on the level of rents the Company can obtain. In addition, retailers at the
Centers face potentially changing consumer preferences and increasing
competition from other forms of retailing, such as discount shopping centers,
outlet malls, upscale neighborhood strip centers, catalogues, discount shopping
clubs and telemarketing. In addition, while specific competitive conditions vary
on a center-by-center basis, all of the Centers are located in major
metropolitan areas which are served by multiple retailing outlets and
accordingly face strong competition. See "Business and Properties--The Shopping
Center Business" and "Business and Properties--Competition."
Although the Company believes the Centers compete effectively within their
trade areas, the Company must also compete with other owners, managers and
developers of super regional and regional shopping centers. Those competitors
that are not REITs may be at an advantage to the extent they can utilize working
capital to finance projects, while the Company (and its competitors that are
REITs) will be required by the annual distribution provisions under the Code to
distribute significant amounts of cash from operations to its shareholders. In
addition, the Company intends to distribute more cash to its shareholders than
is required by the Code. See "Distributions." If the Company should require
funds, it may have to borrow when the cost of capital is high. Moreover,
increased competition could adversely affect the Company's revenues and Funds
from Operations. See "Business and Properties--Competition."
LIQUIDITY OF ASSETS
Equity real estate investments are relatively illiquid and therefore tend to
limit the ability of the Company to vary its portfolio promptly in response to
changes in economic or other conditions. Additionally, the corporate level tax
that would be imposed upon certain built-in gains may make it uneconomical for
the Company or the applicable subsidiary to sell certain assets owned on the
first day of the first taxable year for which the Company or the applicable
subsidiary qualified as a REIT within 10 years of such applicable qualification
date, without adversely affecting returns to shareholders. See "--Possible
Taxation on Capital Gains" and "Federal Income Tax Considerations--Taxation of
the Company."
25
<PAGE>
RISKS OF TENANT BANKRUPTCY
Because virtually all of the Company's income consists of rental income paid
by retail tenants at the Centers, the Company's cash flow and its ability to
make distributions to shareholders will be adversely affected if the Company is
unable to lease a significant amount of space in the Centers, or if a
significant number of tenants are unable to pay their rent. In times of
recession or other economic downturn, there is an increased risk that retail
tenants will be unable to meet their obligations to the Company, otherwise
default under their leases, or become debtors in cases under the Bankruptcy
Code. If any tenant becomes a debtor in a case under the Bankruptcy Code, the
Company would not be permitted to evict the tenant solely because of its
bankruptcy, but the bankruptcy court could authorize the tenant to reject and
terminate its lease with the Company. The Company's claim against such a tenant
for unpaid, future rent would be subject to a statutory cap that could be
substantially less than the remaining rent actually owned under the lease. In
any event, the Company's claim for unpaid rent (as capped) would likely not be
paid in full.
The bankruptcy of an Anchor could have especially adverse consequences for a
Center, both by depriving the Company of the rent due from the Anchor and by
reducing foot traffic at the Center, impairing the performance of the remaining
tenants and their ability to meet their obligations to the Company.
The bankruptcy of any tenant, including any Anchor, and the rejection of its
lease may provide a Center with an opportunity to lease the vacant space to
another more desirable tenant on better terms, but there can be no assurance
that the Company would be able to do so. The Company has experienced retail
bankruptcies by tenants in the past, including Edison Bros., Judy's, Paul Harris
and Merry Go Round. The Company experienced no adverse effects of such
bankruptcies because the stores were either acquired by stronger tenants or were
acquired by the Company and re-leased at the same or higher rents.
LACK OF UPDATED TITLE INSURANCE
The Company will not obtain new policies of title insurance on the
Properties. Based upon (i) the Company's review of the existing owner's and/or
mortgagee's title insurance policies, which have been issued with respect to 12
of the Properties within the last six years, (ii) updated title reports obtained
by the Company for certain of the Properties, and (iii) the absence of any
knowledge by the Company of material title defects since Westfield Holdings
acquired an interest in the Company, the Company has determined that the
substantial cost of new owner's title insurance policies for the full market
value of these properties is not warranted.
CHANGES IN LAWS AFFECTING REAL ESTATE
Costs resulting from changes in real estate tax laws or real estate tax
rates generally are passed through to tenants and therefore should not affect
the Company. Changes in laws increasing the potential liability for
environmental conditions existing at properties, increasing the restrictions on
discharges or other hazardous waste conditions, or increasing building code or
similar local law requirements may result in significant unanticipated
expenditures which would adversely affect the Company's Funds from Operations
and its ability to make distributions to shareholders.
LAWS BENEFITTING DISABLED PERSONS
A number of Federal, state and local laws (including the Americans with
Disabilities Act of 1990) and regulations exist that may require modifications
to existing buildings or restrict certain renovations by requiring improved
access to such buildings by disabled persons. Additional legislation or
regulations may impose further burdens or restrictions on owners with respect to
improved access by disabled persons. The costs of compliance with such laws and
regulations may be substantial, and limits or restrictions on completion of
certain renovations may limit implementation of the Company's investment
strategy in certain instances or reduce overall returns on its investments. The
Company will review its properties periodically to determine the level of
compliance and, if necessary, take appropriate action to bring such properties
into compliance. Although management has concluded based on its review to date
that the costs of compliance with such current laws and regulations will not
have a material adverse effect on the Company, no assurance can be given in this
regard.
26
<PAGE>
RISKS ASSOCIATED WITH DEBT FINANCING
POSSIBLE INABILITY TO REFINANCE BALLOON PAYMENTS ON DEBT
The Company does not expect to have sufficient Funds from Operations to be
able to make all of the balloon payments of principal on the debt of the Joint
Ventures and the Company in the aggregate principal amount of $822.0 million on
a pro forma basis as of March 31, 1997, after giving effect to the Offerings and
concurrent transactions and the application of the net proceeds as set forth in
"Use of Proceeds" (including amounts allocable to the Outside Partners) which
becomes due in the period 1999 through 2001. The Company intends to refinance
such debt at or before maturity or otherwise to obtain funds through secured
financings by utilizing unencumbered properties or unsecured financings. The
Company may also issue equity or debt in order to obtain funds. Any such equity
issuance may have a dilutive effect on existing shareholders of the Company.
However, there can be no assurance that the Company or the Outside Partners will
be able to refinance any such indebtedness or to otherwise obtain funds on
commercially reasonable terms, if at all. An inability to make such balloon
payments when due could cause a mortgage lender to foreclose on such properties,
which could have a material adverse effect on the Company. In addition, interest
rates on any debt incurred to refinance mortgage debt or debt facilities may be
higher than the rates on the current mortgages or debt facilities or at floating
rates.
The Company has entered into interest rate exchange agreements with a
counterparty to manage future interest rates. These agreements consists of swaps
and involve the future receipt, corresponding with the expiration of existing
fixed rate mortgage debt, of a floating rate based on LIBOR and the payment of a
fixed rate. In the unlikely event that a counterparty fails to meet the terms of
an interest rate exchange agreement, the Company's exposure is limited to the
interest rate differential on the notional amount. The Company does not
anticipate non-performance by the counterparty.
At December 31, 1996, the Company had interest rate exchange agreements
beginning February 11, 1999 and expiring after three years with notional
principal amounts totaling $90 million which provide that the Company will pay
6.125% per annum. Subsequently, the Company entered into interest rate exchange
agreements beginning in February 1999 and April 2000 and expiring at various
dates in 2002 with notional principal amounts totaling $227.0 million which
provide that the Company will pay 6.25% per annum.
These exchange rate agreements ensure that, upon the expiration of certain
of the Company's mortgage debt, if the Company refinances such debt with new
LIBOR based loans, the interest rate on such loans will be no more than 6.125%
or 6.25%, plus the applicable spread of the loan at such time.
NO LIMITATION ON DEBT
On a pro forma basis as of March 31, 1997, after giving effect to the
Offerings and concurrent transactions and the application of the net proceeds as
set forth in "Use of Proceeds," the Company would have an aggregate of $917
million of debt, including $354.0 million of fixed rate debt, at an average
interest rate of 6.4% per annum, with Prudential secured and
cross-collateralized by seven wholly-owned Centers and $76.0 million of fixed
rate debt, at an average interest rate of 7.1% per annum, secured by the May
Properties. Except for a $15.0 million portion of the Prudential loan which
relates to the redevelopment of Mid Rivers Mall, such indebtedness is all
non-recourse.
The Company currently intends to adhere to a policy of maintaining a ratio
of a debt-to-Total Market Capitalization of not more than 50%. No assurance can
be given in this regard, however, and the organizational documents of the
Company do not limit the amount or percentage of indebtedness that it may incur.
On a pro forma basis at March 31, 1997, after giving effect to the Offerings and
concurrent transactions and the application of the net proceeds as set forth in
"Use of Proceeds," the Company would have a ratio of debt-to-Total Market
Capitalization of approximately 41%. As of March 31, 1997, the Company's balance
of cash and cash equivalents was $2.6 million, not including its proportionate
share of cash held by unconsolidated real estate partnerships. In addition, the
Company has entered into a letter of intent for a new $600.0 million unsecured
revolving credit facility with National Australia Bank Limited, Australia and
New Zealand Banking Group Limited, Commonwealth Bank of Australia and Union Bank
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of Switzerland, of which approximately $163.0 million would be used to refinance
existing secured debt and the balance of which would be used by the Company to
fund redevelopment and acquisition activities, as well as for working capital,
capital costs and general corporate purposes. There can be no assurance that a
definitive credit agreement with respect to this credit facility will be entered
into.
The Company currently anticipates that cash from operations and its working
capital facility will be available to fund its business operations, recurring
and certain developmental capital expenditures, continuing debt service
obligations (other than the balloon payments discussed above), the payment of
distributions, accounts payable and deferred taxes in respect of installment
sales and other dispositions of property. Additional borrowings will be required
for developmental capital expenditures and may from time to time be required in
connection with the obligations described in the preceding sentence. There can
be no assurance, however, that such borrowings will be available on commercially
reasonable terms, if at all. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations-- Liquidity and Capital Resources"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends."
EFFECTS OF DEBT FINANCING
The Company is subject to the risks normally associated with debt financing,
including the risk that the Company's cash flow from operations will be
insufficient to meet required payments of principal and interest, the risk that
existing indebtedness will not be able to be refinanced or that the terms of
such refinancing will not be as favorable as the terms of such indebtedness, and
the risk that necessary capital expenditures for such purposes as renovations
and other improvements will not be able to be financed on favorable terms or at
all. Certain significant expenditures associated with a property (such as
mortgage payments and other indebtedness) are generally not reduced when
circumstances cause a reduction in income from such property. Should such events
occur, the Company's Funds from Operations and its ability to make expected
distributions to shareholders would be adversely affected. If a property is
mortgaged to secure payment of indebtedness and the Company is unable to meet
mortgage payments, the property could be transferred to the mortgagee (or other
third parties) with a consequent loss of income and asset value to the Company.
The Company has entered into a letter of intent for a new $600 million revolving
credit facility, which loan facility will contain customary financial covenants
and limitations on changes in the Advisor or the Manager without the approval of
the lenders, although no assurance can be given that such loan facility will be
entered into. The Company has $354.0 million of mortgage indebtedness held by
Prudential which contains cross-default and cross-collateralization features
among seven properties. See "Business and Properties--Debt Summary." Under
cross-default provisions, a default under the mortgages included in the
cross-defaulted loan constitutes a default under all such mortgages and can lead
to acceleration of the indebtedness due on each center within the collateral
package. Pursuant to such cross-collateralization feature, the excess of the
value of a center over the mortgage indebtedness specific to that center serves
as additional collateral for the entire indebtedness.
With respect to the loan obtained by the Joint Venture which owns North
County Fair, the lender participates in a percentage of gross revenues above a
specified base and after deduction of debt service and various expenses.
INTEREST RATE SWAPS
At December 31, 1996, the Company had two swap agreements with respect to
interest currently payable by the Company. Interest rate swaps are contractual
agreements between the Company and third parties to exchange fixed and floating
interest payments periodically without the exchange of the underlying principal
amounts (notional amounts). In the unlikely event that a counterparty fails to
meet the terms of an interest rate swap contact, the Company's exposure is
limited to the interest rate differential on the notional amount. The Company
does not anticipate non-performance by any of the counterparties. Under one of
the swap agreements, which has a notional amount of $125.0 million, the Company
is credited interest at LIBOR and incurs interest at a fixed rate of 5.75%.
Under the second swap agreement, which
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has a notional amount of $11.4 million, the Company incurs interest at LIBOR and
is credited interest at a fixed rate of 6.23%. Both swap agreements expire in
2000.
In addition, the Company has entered into interest rate exchange agreements
with a counterparty to manage future interest rates as described in "--Possible
Inability to Refinance Balloon Payments on Debt."
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT
FAILURE TO QUALIFY AS A REIT
Qualification as a REIT involves the application of highly technical and
complex provisions of the Code (for which there are only limited judicial or
administrative interpretations) and the determination of various factual matters
and circumstances not entirely within the Company's control. For example, in
order to qualify as a REIT, at least 95% of the Company's gross income in any
year must be derived from qualifying sources and the Company must make
distributions to shareholders aggregating annually to at least 95% of its REIT
taxable income (excluding net capital gains). In addition, the Company's
qualification as a REIT depends on the qualification of Westland Properties,
Inc., a subsidiary of the Company ("WPI") as a REIT. Although the Company and
WPI each believes that it has operated since February 12, 1994 in the case of
the Company and since January 1, 1996 in the case of WPI in a manner so as to
qualify as a REIT, and the Company and WPI intend to continue to operate in a
manner so as to continue to qualify as a REIT, no assurance can be given that
the Company or WPI is or will remain so qualified. See "Federal Income Tax
Considerations." Although the Company is not aware of any pending tax
legislation that would adversely affect the Company's or WPI's ability to
operate as a REIT, no assurance can be given that new legislation, regulations,
administrative interpretations or court decisions will not change the tax laws
with respect to qualification as a REIT or the Federal income tax consequences
of such qualification.
Skadden, Arps, Slate, Meagher and Flom LLP, tax counsel to the Company, will
issue an opinion on or before the effectiveness of this Registration Statement
that, commencing with the Company's taxable year ended December 31, 1994, the
Company was organized in conformity with the requirements for qualification as a
REIT, and its planned method of operation, and its actual method of operation
from February 12, 1994 through the date of this Prospectus, will enable it to
meet the requirements for qualification and taxation under the Code. In
addition, Skadden, Arps, Slate, Meagher and Flom LLP, as tax counsel to WPI,
will issue an opinion on or before the effectiveness of this Registration
Statement that, commencing with WPI's taxable year ended December 31, 1996, WPI
was organized in conformity with the requirements for qualification as a REIT,
and its planned method of operation, and its actual method of operation from
January 1, 1996 through the date of this Prospectus, will enable it to meet the
requirements for qualification and taxation under the Code. In rendering these
opinions, Skadden, Arps, Slate, Meagher & Flom LLP relied on certain assumptions
and representations, dated as of the date of the Prospectus, by the Company and
WPI and on opinions of local counsel with respect to matters of local law. The
opinions are expressed based upon facts, representations and assumptions as of
their date and Skadden, Arps, Slate, Meagher & Flom LLP has no obligation to
advise holders of Common Stock of any subsequent change in the matters stated,
represented or assumed or any subsequent change in applicable law. No assurance
can be given that the Company or WPI has met these requirements or will continue
to meet these requirements in the future, and a legal opinion is not binding on
the Internal Revenue Service (the "IRS").
If, in any taxable year, the Company fails to qualify as a REIT, the Company
would not be allowed a deduction for distributions to shareholders in computing
taxable income and would be subject to Federal income tax on its taxable income
at corporate rates. As a result of the additional tax liability, the Company
might need to borrow funds or liquidate certain investments in order to pay the
applicable tax and the funds available for investment or distribution to the
Company's shareholders would be reduced for each of the years involved. In
addition, the Company would no longer be required by the Code to make any
distributions. Unless entitled to relief under certain statutory provisions, the
Company would also be disqualified from treatment as a REIT for the four taxable
years following the year during which qualification is lost. Although the
Company currently intends to operate in a manner designed to qualify as
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a REIT, it is possible that future economic, market, legal, tax or other
considerations may cause the Company to fail to qualify as a REIT or may cause
the Board of Directors of the Company with the consent of a majority of the
holders of the Preferred Stock and Common Stock to revoke the REIT election. See
"Federal Income Tax Considerations."
OWNERSHIP LIMIT
In order for the Company to maintain its qualification as a REIT, not more
than 50% of the value of its outstanding stock may be owned, directly or
constructively, by five or fewer individuals or entities (as set forth in the
Code and referred to herein as "Individuals"). Upon consummation of the
Offerings, the Articles will prohibit, subject to certain exceptions, direct or
constructive ownership of more than 5.5%, by value, of the outstanding shares of
capital stock of the Company by any Individual (except for Frank P. Lowy and the
members of his family who are prohibited from owning, directly or indirectly,
more than 26% of the outstanding capital stock of the Company). The U.S.
constructive ownership rules are complex and may cause shares of capital stock
owned directly or constructively by a group of related individuals or entities
to be constructively owned by one individual or entity. The Articles authorize
the Board of Directors to increase the ownership restrictions if the Board of
Directors obtains satisfactory assurances that ownership in excess of a
particular limit will not jeopardize the Company's status as a REIT. A transfer
of shares to a person who, as a result of the transfer, would violate the
ownership restrictions, may be void. Under some circumstances, such shares may
be transferred to a trust, for the benefit of one or more qualified charitable
organizations designated by the Company, with the intended transferee having
only a right to share (to the extent of the transferee's original purchase price
for such shares) in proceeds from the trust's subsequent sale of such shares.
See "Federal Income Tax Considerations--Taxation of the Company--Requirements
for Qualification" and "Description of Capital Stock--Restrictions on Ownership
and Transfer" for additional information regarding the Ownership Limitations.
POSSIBLE TAXATION ON CAPITAL GAINS
Pursuant to an election made by the Company and to be made by WPI under
Internal Revenue Service Notice 88-19 ("Notice 88-19"), if during the ten-year
period beginning on the first day (the "Qualification Date") of the first
taxable year for which each such entity qualified as a REIT (February 12, 1994
for the Company and January 1, 1996 for WPI), the Company or WPI recognizes gain
on the disposition of any property (including, any partnership interest) held by
the Company or WPI or any partnership in which the Company or WPI held an
interest as of the Qualification Date, then, to the extent of the excess of (i)
the fair market value of such property as of the Qualification Date over (ii)
the adjusted income tax basis of the Company or WPI or the partnerships in such
property as of the Qualification Date, the Company and WPI, as the case may be,
will be required to pay a corporate level Federal income tax on its share of
such gain at the highest regular corporate rate.
Additionally, the taxable portion of the distributions paid to shareholders
of an entity that is subject to such corporate level tax will be increased by
the amount that the current and accumulated earnings and profits of such entity
are increased in respect of such gain. See "Federal Income Tax Considerations"
- -- "Taxation of the Company," "Federal Income Tax Considerations--Taxation of
Taxable Domestic Shareholders" and "Federal Income Tax Considerations--Taxation
of Foreign Shareholders." Although the Company and WPI have no present intention
to dispose of any such property in a manner that would trigger such tax
consequences, there can be no assurance that such dispositions will not occur.
Among other reasons, such dispositions could occur in the case of properties
held by the Company or WPI through partnerships and with respect to which the
Company and WPI may not have control over disposition decisions. See
"--Conflicts of Interest with Outside Partners in Jointly-Owned Centers and
Limited Control With Respect to Certain Activities."
DISTRIBUTIONS TO SHAREHOLDERS; POTENTIAL REQUIREMENT TO BORROW
To obtain the favorable tax treatment associated with REITs qualifying under
the Code, the Company generally will be required each year to distribute to its
shareholders at least 95% of its net taxable income
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(excluding any net capital gain). In addition, the Company will be subject to
tax on its undistributed net taxable income and net capital gain, and to a 4%
nondeductible excise tax on the amount, if any, by which certain distributions
paid by it with respect to any calendar year are less than the sum of 85% of its
ordinary income plus 95% of its capital gain net income for the calendar year
plus certain undistributed amounts from prior years.
The Company intends to make distributions to its shareholders to comply with
the distribution provisions of the Code and to avoid income taxes and the
nondeductible excise tax. The Company's income will consist primarily of its
share of income from the Properties. Differences in timing between the receipt
of income and the payment of expenses in arriving at taxable income of the
Company, and the effect of required debt amortization payments could require the
Company to borrow funds on a short-term basis to meet the REIT distribution
requirements even if the Company believes that then prevailing market conditions
are not generally favorable for such borrowings or that such borrowings would
not be advisable in the absence of such tax considerations. For Federal income
tax purposes, distributions paid to shareholders may consist of ordinary income,
capital gains, nontaxable return of capital or a combination thereof. The
Company will provide its shareholders with an annual statement indicating the
tax character of the distributions.
For the three month period ended March 31, 1997, the Company has declared a
distribution of $.373 per share (or 97% of Funds from Operations in the
aggregate) to its shareholders. For the period February 12, 1994 through
December 31,1997, the Company distributed approximately 98% of its Funds from
Operations. However, the Company intends to revise its policy upon consummation
of the Offerings and to distribute annually approximately 90% of its Funds from
Operations through December 31, 1998. Thereafter, the Company intends to
distribute annually approximately 90% to 95% of its Funds from Operations;
however, the Company does not intend to distribute more than 100% of Funds from
Operations less recurring capital expenditures (not including capital
expenditures recovered from tenants) and rental income attributable to rent
straight-lining. As a result of the revision of its policy, the Company has
declared the Special Distribution for the shareholders of the Company
immediately prior to the closing of the Offerings in an amount of $13.0 million,
such Special Distribution to be payable on the regular payment date for the
second quarter distribution if the Offerings occur or, if the Offerings do not
occur, in seven quarterly installments at the same time as its regularly
quarterly distributions. The Special Distribution represents a portion of the
distributions estimated at the time of WAT's initial offering of units in
Australia for the period through 1998.
The Company intends to pay a pro rata distribution to all shareholders with
respect to the period from the closing of the Offerings through June 30, 1997
based upon $0.35 per share for a full quarter. On an annual basis, this
distribution would be $1.40 per share. In addition, the Company has declared a
distribution to the shareholders of the Company immediately preceding the
closing of the Offerings for the portion of the second quarter preceding the
closing of the Offerings, such distribution to be payable on or before the
regular payment date for the second quarter distribution. No distributions may
be paid on any Common Stock unless the full dividends on the Preferred Shares
have been paid. See "Distributions" and "Description of Capital Stock." The
expected size of the distributions may not allow the Company, using only cash
flow from operations, to fund 100% of (i) the tenant allowances associated with
renewal or replacement of current tenants as their leases expire and (ii) the
retirement of all of its debt when due, and therefore, the Company may be
required to seek periodic debt or equity financings to cover such items. The
Company's income will consist primarily of its share of income from the
Properties. Differences in timing between the receipt of income and the payment
of expenses in arriving at taxable income of the Company, and the effect of
required debt amortization payments, could require the Company to borrow funds
on a short-term basis to meet the REIT distribution requirements even if the
Company believes that then prevailing market conditions are not generally
favorable for such borrowings or that such borrowings would not be advisable in
the absence of such tax considerations. In addition, no distributions may be
paid on any Common Stock unless the full dividends on the Preferred Shares have
been paid. In addition, the Company's distribution policy may negatively affect
the Company in adverse market conditions and result in a reevaluation of the
level of distributions. In economic conditions where market prices for shopping
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center properties are decreasing, the Company's distribution policy may place
the Company at a competitive disadvantage with respect to potential acquisitions
to other entities that distribute at a lower payout ratio because retained
earnings are a favorable source of capital. See "Policies and Objectives with
Respect to Investments, Financing and Other Certain Activities--Financing."
The Company plans to adopt a distribution reinvestment plan under which its
shareholders may elect to reinvest all or part of their distributions
automatically in additional shares of Common Stock. Any such distribution
reinvestment plan will not adversely affect the Company's ability to qualify as
a REIT for U.S. Federal income tax purposes. The Company understands that WAT
plans to adopt a similar plan for its unitholders, and intends to use the
proceeds of such distribution reinvestment plan to participate in the Company's
distribution reinvestment plan to the extent that its unitholders participate in
the WAT distribution reinvestment plan. The Company also understands that
Westfield Holdings intends to participate in WAT's distribution reinvestment
plan to the full extent of distributions on its units in WAT for a three-year
period commencing with the first distribution period for which reinvestment is
permitted. No assurances can be given that WAT will in fact adopt a distribution
reinvestment plan, that WAT will participate in the Company's distribution
reinvestment plan, and that Westfield Holdings will choose not to participate in
WAT's distribution reinvestment plan in the future.
CONFLICTS OF INTEREST WITH OUTSIDE PARTNERS IN JOINTLY-OWNED
CENTERS AND LIMITED CONTROL WITH RESPECT TO CERTAIN ACTIVITIES
Eight of the Centers (and certain other properties) are owned by Joint
Ventures consisting of the Company and one or more Outside Partners who own
interests from 24% to 70% of the Joint Ventures, although with respect to
Annapolis Mall, the Company has entered into a letter of intent with its Joint
Venture partner to acquire the remaining 70% interest in Annapolis Mall and
certain adjoining real property for $133.0 million. Although the Company
currently owns less than a 50% interest in four of the Centers, three are
managed by Westfield Holdings. In addition, the Company is a limited partner in
the Joint Venture which owns North County Fair (which is not managed by
Westfield Holdings), and is one of two general partners in four Joint Ventures
(Annapolis Mall, Meriden Square, Topanga Plaza and Vancouver Mall) and,
therefore, has limited control regarding the operation and management of the
Centers owned by such Joint Venture. With respect to partnerships for which the
Company serves as general partner, the Company may have certain fiduciary
responsibilities to other partners in those partnerships which it will need to
consider when making decisions that affect those properties owned by such Joint
Ventures. As a result, potential conflicts and other problems, certain of which
are summarized below, could arise as a consequence of these ownership
arrangements.
The sale or transfer of interests in some of the Joint Ventures is subject
to buy-sell provisions or rights of first refusal or first offer. A right of
first refusal generally requires a partner desiring to sell its interests to a
third party to offer the interest first to the other partner on the same terms
and conditions offered by the third party. A right of first offer generally
requires a partner that does not yet have a third-party offer (but that desires
to sell its interest) to first offer the partnership interest to the other
partner for a specified price. If the other partner declines to purchase, the
offering partner may then attempt to sell its interest to a third party on terms
not materially less favorable to the offering partner than those offered to its
partner. A buy-sell provision generally allows either partner to initiate a
process that will result in one of the partners purchasing the other partner's
interest. The initiating partner specifies the price at which it would be
willing to sell its interest or purchase its partner's interest, and the other
partner elects whether to sell or buy at the specified price. These provisions
and rights may work to the advantage or disadvantage of the Company because,
among other things, they may provide an opportunity to acquire the interests of
the Outside Partners on advantageous terms or require the Company to make
decisions as to the purchase or sale of interests in a Joint Venture at a time
when the Company may not desire to sell but may be forced to do so because it
does not have the cash to purchase the other party's interest.
In addition, the consent of each Outside Partner could be required with
respect to certain major transactions, such as refinancing, encumbering,
expanding or selling a Property and with respect to a Joint Venture's
distribution policies. The interest of the Outside Partners and those of the
Company are not
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necessarily aligned in connection with the resolution of such issues.
Accordingly, the Company may not be able to resolve any such issue favorably, or
the Company may have to provide financial or other inducement to the Outside
Partner to obtain such a resolution. These limitations may result in decisions
by third parties with respect to such Properties that do not fully reflect the
interests of the Company at such time, including decisions relating to the
requirements with which the Company must comply in order to maintain its status
as a REIT for tax purposes. The Company will be contractually restricted from
selling certain of these Properties after the closing of the Offerings without
the consent of unrelated parties. These limitations on sale may adversely affect
the Company's ability to sell these Properties at the most advantageous time for
the Company.
Since the Company is only a limited partner in the partnership that owns
North County Fair and the Center is not managed by Westfield Holdings, the
Company has presented its financial data in this Prospectus on a basis that both
includes and excludes the results of North County Fair to differentiate between
Centers managed by Westfield Holdings and North County Fair that is managed by a
third party.
For a more detailed description of the Joint Ventures, see "Business and
Properties--The Centers."
BANKRUPTCY OF OUTSIDE PARTNERS
The bankruptcy of an Outside Partner could adversely affect the operation of
any Property in which the Outside Partner held an interest. Under the Bankruptcy
Code, any action by the debtor that is not in the ordinary course of its
business requires bankruptcy court approval, which in turn generally requires
prior notice to the debtor's creditors and a hearing in court. Thus, any action
that requires approval of an Outside Partner in bankruptcy and is arguably not
an "ordinary course" matter may be subject to delay and uncertainty while the
Outside Partner seeks bankruptcy court approval. There can be no assurance that
such approval would be obtained, particularly in cases in which the interests of
the Outside Partner and the Company may conflict, or where additional funding
from the Outside Partner is required. If a Joint Venture has incurred recourse
obligations, the discharge in bankruptcy of an Outside Partner might result in
the ultimate liability of the Company for a greater portion of such obligations
than it would otherwise bear. In addition, even if the Outside Partner (or its
estate) was not completely relieved of liability for such obligations, the
Company might be required to satisfy such obligations and then rely upon a claim
against the Outside Partner's estate for reimbursement.
EFFECT OF UNINSURED LOSS ON PROFITABILITY
The Company's subsidiaries, the Joint Ventures and the Company carry
comprehensive liability, fire, extended coverage and rental loss insurance
covering the Properties, with policy specifications and insured limits
customarily carried for similar properties. There are, however, certain types of
losses (such as from wars, floods and earthquakes) that are generally either not
insured, not insured at full replacement cost or insured subject to larger
deductibles. Should an uninsured loss or a loss in excess of insured limits
occur, some or all of the capital invested in the Property, as well as the
anticipated future revenues from the Property, could be lost, while the Property
owner remains obligated for any mortgage indebtedness or other financial
obligations related to the Property. Any such loss could materially adversely
affect the Company. Moreover, wherever the Company is a general partner of the
Joint Venture, the Company will generally be liable for any unsatisfied
obligations of such Joint Ventures other than nonrecourse obligations. The
Company believes that the Properties are adequately insured in accordance with
industry standards. Many of the Properties are located in areas where the risk
of earthquakes is greater than in other parts of the country, including nine
Centers in California. The Company currently carries earthquake insurance on all
Centers managed by Westfield Holdings. Such policies are subject to a deductible
equal to 5% of the total insured value of each Center managed by Westfield
Holdings and a combined annual aggregate loss limit of $100 million on the
Centers.
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POSSIBLE ENVIRONMENTAL LIABILITIES
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of releases, including removal or remediation, of hazardous
or toxic materials on, under, in, or from such property. Such laws often impose
liability whether or not the owner or operator knew of, or was responsible for,
the presence or release of such hazardous or toxic materials. The presence of
hazardous or toxic materials, or the failure to remediate such property
properly, may adversely affect the owner's ability to sell such property or to
borrow using such property as collateral, and may cause the property owner to
incur substantial cleanup costs. Persons who arrange for the disposal or
treatment of hazardous or toxic materials may also be liable for the costs of
removal or remediation at the disposal or treatment facility to which such
materials were sent. Certain other laws regulate the management of, and may
impose liability for, personal injuries associated with exposure to
asbestos-containing materials or other regulated materials. In addition, if any
of the Centers undergoes renovation or demolition in the future, the Company may
incur substantial costs for the removal and disposal of such materials.
In connection with its ownership and operation of its currently and
formerly-owned properties, the Company and the Joint Ventures may be potentially
liable for removal or remediation costs, as well as certain other costs,
including governmental fines and costs related to injuries to persons and
property, resulting from environmental conditions at such properties. An
independent consultant has reviewed certain existing environmental reports,
including "Phase I" site assessments (which generally include a visual site
inspection, interviews and a records review) of the Centers, to identify
environmental conditions at the Centers and certain formerly-owned properties.
The environmental reports were prepared in 1993 for all of the Centers other
than the Acquired Properties and in 1996 for the Acquired Properties. Although
all of the environmental reports were made available to the Company, a majority
of the reports were prepared for parties other than the Company and the Company
does not have recourse against the preparer of such reports in the event such
reports are inaccurate. The Company has from time to time commissioned
additional or follow-up investigations by various outside consultants. There can
be no assurance, however, that circumstances have not changed since any
investigations were completed, that they reveal all potential environmental
liabilities and obligations or are accurate, or that prior owners or operators
of the properties have not created a potential environmental liability unknown
to the Company. On the basis of the foregoing investigations and the Company's
knowledge of the operation of the Properties, the Company believes that many of
the Centers and properties formerly owned by the Company contain or historically
contained petroleum storage tanks and included automobile service operations,
and that such operations have, or may have, resulted in soil or groundwater
contamination. Further, the Company is aware of asbestos containing materials in
each of the Centers and in at least some of the formerly owned properties.
Although there can be no assurances, the Company does not believe that
environmental conditions at any of the Properties will have a material adverse
effect on the Company's business, financial condition or results of operations.
There can be no assurance that environmental laws and regulations will not
become more stringent in the future or that the environmental conditions on or
near the Properties, presently known or unknown, will not have a material
adverse effect on individual Properties or the Company in the future. See
"Business and Properties--Environmental Matters."
LACK OF INDEPENDENT VALUATION OF THE COMPANY
No appraisals, or independent valuation or fairness opinions from a
financial point of view of the Properties have been used by the Company in
connection with the Offerings. Furthermore, the valuation of the Company is not
based upon the historical cost of assets or the current market value thereof.
Accordingly, the aggregate price of the Common Stock may exceed the aggregate
fair market value of the Properties. For a discussion of the factors considered
in determining the initial public offering price, see "Underwriting."
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ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offerings, there has been no public market for the shares of
Common Stock. The Common Stock has been approved for listing on the NYSE,
subject to official notice of issuance, under the symbol "WEA;" however, no
assurance can be given that an active trading market for the Shares will develop
or be sustained after the Offerings or that the Shares may be resold at or above
the initial public offering price. See "Description of Capital Stock--Listing."
The market for equity securities can be volatile and the trading price of the
Shares could be subject to wide fluctuations in response to operating results,
news announcements, trading volume, general market trends and other factors. The
initial public offering price of the Shares was determined based on, among other
factors, prevailing market conditions in the equity securities market, the price
at which WAT units have been trading on the ASX, dividend yields, price-earnings
and price-Funds from Operations ratios of publicly traded REITS that the Company
and the underwriters believe to be comparable to the Company, an assessment of
the recent results on operations of the Company (which are based on the results
of operations of the Properties), estimates of the future prospects of the
Company, the present state of the Company's development projects, the current
state of the real estate markets in the geographic areas in which the Company
operates and the economics of the Company's principal markets as a whole. See
"Underwriting." One of the factors that may influence the price of the shares of
Common Stock in public markets will be the annual distribution rate on such
shares as compared with the yields on alternative investments. Any significant
increase in market interest rates from their current low levels could lead
holders of Common Stock to seek higher yields through other investments, which
could adversely affect the market price of the Common Stock. Moreover, numerous
other factors, such as governmental regulatory action and tax laws, as well as
the number of shares available for future sale, could have a significant impact
on the future market price of the shares of Common Stock. The public market
price for WAT units on the ASX could adversely affect the prevailing market
price of the shares of Common Stock. WAT's distribution policy may differ from
the Company's distribution policy for the Common Stock.
POSSIBLE ADVERSE EFFECTS ON STOCK PRICES ARISING FROM SHARES AVAILABLE FOR
FUTURE SALE
Upon consummation of the Offerings and concurrent transactions, in addition
to the shares of Common Stock to be issued in connection with the Offerings,
52,929,535 shares of Common Stock will be outstanding. In addition WAT will
continue to hold the 1996 WAT Warrant entitling it to purchase 6,246,096 shares
of Common Stock, in whole or in part, at any time and from time to time prior to
July 1, 2016, at an exercise price of $16.01 per share, subject to adjustment in
certain events, and will purchase the 1997 WAT Warrant entitling it to purchase
$35.0 million (or 2,089,552 shares based on the mid-point of the price range) of
Common Stock, in whole or in part, at any time and from time to time prior to
May , 2017, at an exercise price equal to the initial public offering price
for the Shares. See "Certain Transactions--Relationships and Transactions with
WAT" and "Principal Shareholders."
All of the Shares sold in the Offerings will be freely tradeable by persons
other than "affiliates" of the Company without restriction under the Securities
Act, subject to the limitations on ownership set forth in the Articles. There
are 52,055,082 shares of outstanding Common Stock currently held by WAT,
Westfield Holdings and certain other existing shareholders, as well as shares
issuable upon exercise of the WAT Warrants, which will be "restricted"
securities within the meaning of Rule 144 promulgated under the Securities Act
and may not be sold in the absence of registration under the Securities Act or
unless an exemption from the registration is available, including exemptions
contained in Rule 144. Certain of those shares (as well as any Shares which may
be acquired by Westfield Holdings and other affiliates under the Orders) may
become eligible for sale in the public market 90 days after the effective date
of this Registration Statement of which this Prospectus is a part, subject to
compliance with the volume limitations under Rule 144. See "Shares Available for
Future Sale." Westfield Holdings will have certain demand rights to register
sales of the 10,930,672 shares of Common Stock held by Westfield Holdings prior
to consumation of the Offerings 36 months after the date of closing of the
Offerings. It will also have certain demand rights to register sales of any
other shares of Common Stock 90 days after the date of closing of the Offerings.
See "Shares Available for Future Sale--Registration Rights."
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The Company, Westfield Holdings, interests associated with the Lowy family
and Richard E. Green, a Co-President of the Company, will each agree, subject to
certain exceptions (including the exercise of the WAT Warrants and the
concurrent transactions) not to (i) sell, grant any option, right or warrant for
the sale of, or to purchase or otherwise transfer or dispose of any Common Stock
or securities convertible into or exchangeable or exercisable for Common Stock
or file a registration statement under the Securities Act with respect to the
foregoing or (ii) enter into any swap or other agreement or transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock, for a period of 90 days from the date of this
Prospectus in the case of the Company and any Shares which may be acquired under
the Orders and 36 months from the date of this Prospectus in the case of shares
held by Westfield Holdings immediately prior to consummation of the Offerings,
without the prior written consent of Merrill Lynch.
No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock, the availability of shares of Common Stock for future
sale, or future issuances of shares including upon the exercise of the WAT
Warrants will have on the market price of the Common Stock prevailing from time
to time. Sales of substantial numbers of shares of Common Stock, or the
perception that such sales could occur, could adversely affect the prevailing
market price for the Common Stock. If such sales reduce the market price of the
Common Stock, the Company's ability to raise additional capital in the equity
markets could be adversely affected. The existence of the WAT Warrants and the
registration rights referred to above also may adversely affect the terms upon
which the Company can obtain additional equity in the future. See "Shares
Available For Future Sale" and "Underwriting."
CHANGES IN POLICY WITHOUT SHAREHOLDER APPROVAL
The major policies of the Company, including its policies with respect to
acquisitions, financing, growth, investments, debt capitalization, distributions
and operating policies, will be determined by the Board of Directors. Although
it has no current intention of doing so, the Board of Directors may amend or
rescind these and other policies from time to time without a vote of the
shareholders of the Company. Accordingly, shareholders will have no control over
changes in policies of the Company, and changes in the Company's policies may
not fully serve the interests of all shareholders.
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements. Discussions containing
such forward-looking statements may be found in the material set forth under
"Prospectus Summary," "The Company," "Capitalization," "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and "Business
and Properties," as well as within the Prospectus generally. Such statements are
subject to a number of risks and uncertainties. Actual results in the future
could differ materially from those described in the forward-looking statements
as a result of the risk factors set forth above and the matters set forth in the
Prospectus generally.
IMMEDIATE DILUTION
The pro forma net tangible book value per share of the Company's assets
after the Offerings and concurrent transactions is lower than the initial public
offering price per Share in the Offerings. Accordingly, the purchasers of Shares
will experience an immediate dilution of $6.80 per share in the net tangible
book value of the Shares. See "Dilution."
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THE COMPANY
GENERAL
The Company has been engaged for over 40 years in owning, operating,
leasing, developing, redeveloping and acquiring super regional and regional
shopping centers and power centers located primarily in major metropolitan areas
in the United States. The Company owns interests in a portfolio of 13 super
regional shopping centers, six regional shopping centers, three Power Centers,
the May Properties and certain other minor real estate investments. The Centers
are located in seven states in the United States. The Company is organized and
operates as a REIT and expects to continue to be operated as a REIT under the
Code for Federal income tax purposes.
The Centers contain approximately 19.2 million square feet of Total GLA,
including 74 Anchors and approximately 2,500 Mall Stores, of which approximately
1.3 million square feet are currently under redevelopment and approximately 3.2
million square feet are planned for redevelopment over the next five years. For
the year ended December 31, 1996, the Mall Stores reported sales exceeding $1.5
billion and Anchors reported sales exceeding $2.0 billion. The Centers under
Westfield Holdings management reported average Mall Store sales of $297 psf for
the same period ($300 psf, including North County Fair for the same period).
Mall GLA at Stabilized Centers was 92% leased as of December 31, 1996 (91%
leased, including North County Fair).
Since 1994, subsidiaries of Westfield Holdings Limited have provided
management, development and advisory services to the Company. The Company has no
employees and relies solely on Westfield Holdings for management services.
Subject to the discretion and approval of the Board of Directors of the Company,
the Company's strategic policy will be determined by Westfield Holdings and
possible conflicts of interest may exist between the Company, Westfield Holdings
and, by virtue of its ability to significantly influence Westfield Holdings
Limited, the Lowy family. In addition, based on Westfield Holdings's ownership
interest in the Company and its management of WAT, the purchasers of the Shares
may not be able to change the composition of the management of the Company
through a vote of shareholders. See "Risk Factors--Possible Conflicts of
Interests with Inside Parties and Related Party Transactions" for a discussion
of possible conflicts.
The Company has achieved substantial growth since 1994 when Westfield
Holdings began advising the Company and providing management services to its
Centers. For the Mall Stores under Westfield Holdings management (excluding the
recently redeveloped Eastland Center), from 1994 to 1996, average base rent per
square foot at the Centers increased at a compound annual rate of approximately
4.5% (4.2%, including North County Fair), sales per square foot at the Centers
increased at a compound annual rate of 6.3% (6.2%, including North County Fair)
and leased Mall GLA at Stabilized Centers improved from 88% leased to 92% leased
(88% to 91%, including North County Fair).
The management and leasing of the Company's super regional and regional
shopping centers and power centers are conducted by a partnership wholly-owned
by Westfield Holdings which receives a property management fee from the Company
equal to 5% of all minimum, fixed and percentage rents payable with respect to
the wholly-owned Centers, with fees payable with respect to Joint Venture
Centers based on the terms of the Joint Venture agreements (subject to a cap of
5% on the Company's share of such payments). Westfield Holdings also provides
advisory services to the Company through the Advisor, which will receive an
annual advisory fee based on the annual Funds from Operations of the Company but
shall not exceed 55 basis points on the net equity value of the Company's
assets. The advisory fee is not payable for the period through December 31,
1997. Design, architectural, engineering and development services are provided
by a wholly-owned subsidiary of Westfield Holdings Limited for which it receives
a fixed architectural and engineering fee equal to 10% of the construction costs
plus a fixed development fee equal to 5% of the final gross project price. For a
more detailed description of Westfield Holdings's managing role including
further information on fees payable to Westfield Holdings for its services, see
"Advisory, Management and Development Services to the Company."
The principal executive offices of the Company are located at 11601 Wilshire
Boulevard, 12th Floor, Los Angeles, California 90025 (telephone: 310-478-4456).
The headquarters for each of the Manager, Advisor and Developer are located at
the same address in Los Angeles, California.
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COMPANY STRUCTURE AND HISTORY
The Company was incorporated in 1924 for the purpose of holding title to
certain department store properties and has been involved in developing shopping
centers since the mid 1950's. In 1994, Prudential sold 40% of the Company to
Westfield Holdings and the remainder to certain other investors, after
Prudential had filed a registration statement for the initial public offering of
common stock of the Company to the public but before marketing of the securities
commenced or such registration statement was declared effective. In 1995,
Westfield Holdings acquired an additional 10% of the Company. In 1996 and early
1997, the Company was recapitalized when WAT acquired 74.6% of the outstanding
Common Stock and the 1996 WAT Warrant. In addition the Company sold $134.0
million of non-voting preferred stock and Common Stock to foreign and U.S.
investors (inclusive of a $14.0 million investment that certain of the then
existing investors agreed to retain in the Company). The Company utilized a
portion of the proceeds of the sale of its Common Stock and non-voting preferred
stock to repurchase the stock of certain investors other than Westfield
Holdings.
Contemporaneously with these restructuring transactions, the Company
acquired indirect ownership of the Acquired Properties from interests associated
with the Lowy family and an option to acquire the stock of Westland Realty,
Inc., the holder of an indirect 50% interest in Garden State Plaza from
Westfield Holdings. For more information on the Garden State Plaza Option and
the transactions referred to above, see "The Company--The Company's Strategy for
Operations and Growth--Garden State Plaza Option" and "Certain
Transactions--Relationships and Transactions with Westfield Holdings."
As part of the Recapitalization, ABP acquired an equity interest in the
Company through the purchase of 940,000 shares of Series A Preferred Shares,
with an aggregate liquidation value of $94.0 million. ABP has agreed to acquire,
subject to the satisfaction of certain conditions, an additional equity interest
in the Company by purchasing 301,500 shares of Series B Preferred Shares (based
on the mid-point of the price range and subject to adjustment based on the gross
proceeds of the Offerings), with an aggregate liquidation amount of $30.15
million simultaneously with the closing of the Offerings. Although the Company
expects all of the conditions to the sale of the Series B Preferred Shares will
be satisfied, no assurance can be given in this regard. ABP also holds options
issued by WAT that permit ABP to acquire units of WAT for cash or in exchange
for Series A Preferred Shares. In connection with the acquisition of the Series
B Preferred Shares, ABP has also agreed to acquire additional options issued by
WAT that will permit ABP to acquire additional units of WAT for cash or in
exchange for Series B Preferred Shares.
Also simultaneously with the closing of the Offerings, WAT will acquire a
warrant (the "1997 WAT Warrant", and together with the 1996 WAT Warrant, the
"WAT Warrants") to purchase $35.0 million (or 2,089,552 shares based on the
mid-point of the price range) of additional Common Stock from the Company at the
same price as the initial public offering price for the Shares. The purchase
price for the 1997 WAT Warrant is $2.9 million.
As a result of these transactions and after giving effect to the Offerings
and concurrent transactions and taking account of the maximum number of Shares
which may be acquired under the Orders, WAT will own 62.4%, and Westfield
Holdings will own 16.7% (31.7% including its indirect interest through WAT), of
the outstanding Common Stock on a fully-diluted basis. Westfield Holdings will
also hold an approximately 24.0% equity interest in WAT on a fully diluted
basis. In addition, ABP will have an approximately $124.1 million investment in
the Company through the ownership of the Preferred Stock. See "Principal
Shareholders."
Following the consummation of the Offerings and prior to January 1, 1998,
the Company intends to form an operating partnership (the "Operating
Partnership"). The Company will be the sole general partner of and initially own
100% of the Operating Partnership. The Company intends to transfer substantially
all of its assets and liabilities to the Operating Partnership or to subsidiary
property partnerships or limited liability companies wholly-owned by the
Operating Partnership. The Company expects the Operating Partnership will
thereafter be the entity through which the Company conducts substantially all of
its operations. Westfield Holdings will provide advisory services to the
Operating Partnership pursuant to the Advisory Agreement. As a result of such
transfer of the Properties to the Operating Partnership, the Company does not
expect to incur any material transfer or other taxes. The
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transfer of assets and liabilities will be accounted for at historical amounts
and will not impact the Company's consolidated financial statements.
WESTFIELD HOLDINGS
Westfield Holdings is a fully-integrated, international developer, builder
and manager of shopping centers and manager and advisor to public real estate
investment entities. Westfield Holdings has its headquarters in Sydney,
Australia and employed approximately 2,400 people worldwide as of December 31,
1996. Westfield Holdings, which was publicly listed in 1960, was co-founded by
Frank P. Lowy. In 1993, Frank P. Lowy was acknowledged as one of the six
"pioneers" of the shopping center industry worldwide by the ICSC. By combining
financial strength and over 35 years of experience with a business philosophy
that stresses innovation, Westfield Holdings has built a successful shopping
center business, with shopping center assets under management having a value in
excess of Aus.$10.0 billion as of December 31, 1996, comprised of more than
8,500 retail stores in 56 centers in the United States, Australia and Asia, with
39.3 million square feet of total gross leasable area.
Westfield Holdings Limited, listed on the ASX, had a market capitalization
of approximately Aus.$2.2 billion as of April 18, 1997. Westfield Holdings is
also a manager and advisor to real estate investment entities, Westfield Trust
and WAT, both of which are Australian public property trusts traded on the ASX.
Based on its market capitalization of approximately Aus.$3.1 billion as of April
18, 1997, Westfield Trust is one of the two largest property trusts in
Australia.
The Company believes that Westfield Holdings's success stems from its
integrated approach to all disciplines required to conceive, build and then
manage a modern retail development on behalf of its owners. The Company believes
it is this integration across all operating divisions and Westfield Holdings's
intense involvement in key aspects of the centers it manages that makes
Westfield Holdings unique. Westfield Holdings's development expertise includes
establishing the feasibility of the projects, securing development approvals,
producing architectural designs and performing and supervising construction.
Westfield Holdings also arranges the ongoing leasing program and installs and
operates management and marketing systems to ensure that a center achieves its
full potential. This in-house integrated approach to shopping center
development, management and leasing enhances Westfield Holdings's ability to
carry out major redevelopment and upgrading of centers.
Since 1977, Westfield Holdings's U.S. business has included the
redevelopment and expansion of 11 shopping centers in California, Connecticut,
Michigan, Missouri, New Jersey and New York. Westfield Holdings's U.S. business
currently manages and provides development services to 26 shopping centers (two
of which are owned by subsidiaries of Prudential, one of which is owned by a
real estate investment fund managed by Heitman/JMB Advisory Corporation and the
third of which is owned by a real estate investment fund managed by Goldman,
Sachs & Co.) with more than 24.5 million square feet of total gross leasable
area, including the Centers and Garden State Plaza as well as the retail
facilities at Dulles and National Airports in Washington, D.C. and Terminal C at
Logan Airport in Boston, Massachusetts. Westfield Holdings's U.S. operations are
headquartered in Los Angeles, California, and employ approximately 950 people in
the United States. Westfield Holdings's senior management team has extensive
experience in the development, construction, management and financing of super
regional and regional shopping centers, with an average of approximately 20
years in the industry. Westfield Holdings derived approximately 41% of its U.S.
management, advisory and development revenues from the Company in 1996.
Westfield Holdings has advised the Company that it expects the amount of its
U.S. business attributable to the Company to substantially increase upon
completion of the redevelopment of Garden State Plaza in 1997 from which it
received substantial development revenue in 1996.
The Company has access to and relies upon the resources and depth of the
management of Westfield Holdings's worldwide operations. Westfield Holdings
provides a full range of services to the Company including many which are
typically outsourced by real estate owners to third parties. These services
include strategic and day-to-day management, research investment analysis,
acquisition and due diligence, development, construction, architectural advice,
marketing, asset management, capital markets, disposition of asset, legal and
accounting services. In contrast to many other shopping center companies, the
Company is not exposed to the same degree of risk of increasing costs for many
of these services because the fees
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payable to the Manager and the Advisor are incentive based or fixed as a
percentage of assets or revenues. For a fuller description of Westfield
Holdings's management arrangements with the Company, including fees payable to
Westfield Holdings for its services, see "Advisory, Management and Development
Services to the Company."
Westfield Holdings will agree that it will not acquire any ownership
interest in shopping center properties or power centers in the United States for
so long as it is the Advisor to the Company and the Manager of the Centers. Each
of Frank Lowy, David Lowy, Peter Lowy and Steven Lowy will agree with the
Company that he will not acquire any ownership interest in shopping center
properties or power centers in the United States for so long as (i) Westfield
Holdings is the Advisor to the Company and Manager of the Centers and (ii)
interests associated with the Lowy family have significant ownership and
significant management involvement in the operations of Westfield Holdings
Limited. In addition, Westfield Holdings has agreed in its management and
development agreements with the Company that it will not manage or develop any
shopping center in competition with a Center owned by the Company, except in the
case of the acquisition by Westfield Holdings of an entity that does not have
any ownership interest in any shopping center properties or power centers in the
United States and is then managing or developing a competitive property (in
addition to other properties). This non-competition agreement shall not apply to
any activity by Westfield Holdings with respect to airport projects.
Contemporaneously with the Offerings, the Company will purchase from
Westfield Holdings Limited for an aggregate purchase price of $15.3 million
(Aus.$19.6 million) the non-transferable Westfield Holdings Warrants to acquire
9.8 million ordinary shares of Westfield Holdings Limited, which would be as of
the date hereof equal to approximately 9% of the ordinary shares of Westfield
Holdings Limited outstanding after the exercise of the options. The term of the
Westfield Holdings Warrants is five years but will be seven years if Australian
law is changed to permit such longer term. The Westfield Holdings Warrants may
be exercised in whole or in part following the third anniversary of the grant of
the Westfield Holdings Warrant. Each Westfield Holdings Warrant will have an
exercise price equal to the weighted average of the sale prices of ordinary
shares of Westfield Holdings Limited on the ASX for the 20 business days
immediately preceding the consummation of the Offerings and, subject to certain
anti-dilution adjustments, will entitle the Company to receive one ordinary
share of Westfield Holdings Limited. In addition, the Company has the right to
elect to exercise the option without a cash payment, in which event the Company
would be entitled to receive, at the option of Westfield Holdings Limited,
either the number of Westfield Holdings Limited ordinary shares equal in value
to, or cash in an amount equal to, the amount by which the then market price of
the ordinary shares of Westfield Holdings Limited exceeds the exercise price of
such options. For these purposes, the market price of an ordinary share of
Westfield Holdings Limited will be equal to the weighted average of the sale
prices of such shares on the ASX for the 20 business days immediately preceding
the exercise date. On April 18, 1997, the closing sale price on the ASX of the
Westfield Holdings Limited ordinary shares was Aus.$21.35. Westfield Holdings
Limited is an independent company from the Company and, except for the Company's
interest in the Westfield Holdings Warrants, the purchasers of the Shares will
not acquire any interest in Westfield Holdings.
Prior to 1988, Westfield Holdings Limited indirectly owned seven regional
shopping centers located in the United States. In 1988, Westfield Holdings
Limited distributed to its existing shareholders (approximately 42% of whom were
interests associated with the Lowy family) the stock of the foreign corporation
that indirectly owned the seven shopping centers. The stock was listed on the
ASX and the London stock exchange and no capital was raised in conjunction with
the listing. The foreign corporation was self-administered, self-managed and had
its own employees. The foreign corporation was not advised by Westfield Holdings
in connection with its business operations in the United States. Westfield
Holdings coordinated certain Australian shareholder and London stock exchange
and ASX regulatory and listing matters for the foreign corporation pursuant to a
services agreement under which Westfield Holdings received compensation and
reimbursement of expenses aggregating approximately $350,000 for the period the
foreign corporation was publicly listed. In 1989, interests associated with the
Lowy family made a cash tender offer of $3.35 per share. Although the seven
centers were not offered for sale, the purchase price exceeded the highest price
at which the shares had traded during the corporation's public trading history
and represented a 46% premium over the highest price during the week before the
offer was made. After
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taking into account all liabilities, including tax liabilities, that would have
been payable prior to the distribution of the net assets to the shareholders,
the purchase price exceeded the net asset value by approximately 35%. The per
share purchase price without regard to tax liability on account of a sale of the
assets was less than the net asset value per share by approximately 35%. The
offer was conditioned on the tender of at least 90% of the shares of the foreign
corporation. Three of the seven properties were acquired by the Company from
interests associated with the Lowy family in connection with the
Recapitalization. See "Certain Transactions." Garden State Plaza, which was also
one of the seven properties, was sold to Westfield Holdings and affiliates of
Rodamco North America B.V., an unrelated party, in 1993. The other three centers
were encumbered by participating mortgages in 1988 and 1989 and were conveyed to
affiliates of the lenders in 1995 and 1996. The three centers were conveyed in
two separate transactions for consideration in excess of the outstanding debt,
with one of the centers conveyed on the condition that Westfield Holdings
continue to manage the center for two years.
WAT is an Australian public property trust which was formed to acquire a
majority interest in the Company and was listed on the ASX in July 1996 when it
raised approximately Aus.$402 million. WAT had a market capitalization as of
April 18, 1997 of approximately Aus.$885.0 million. WAT is managed by Westfield
America Management Limited, a wholly-owned subsidiary of Westfield Holdings
Limited. Perpetual Trustee Company Limited is the independent public trustee of
WAT. The Company believes that in the future WAT may be able to raise additional
funds in the Australian capital markets which it may elect to invest in the
Company if the Company elects to raise additional equity capital, thereby
providing to the Company an additional source of capital.
Westfield Holdings has placed an order to purchase up to 2,300,000 Shares at
the price to public and will continue to own a significant stake in the Company.
The following table demonstrates the Common Stock ownership of Westfield
Holdings in the Company on a fully-diluted basis upon consummation of the
Offerings and concurrent transactions and taking account of the maximum number
of Shares which may be acquired under the Orders (for a description of
concurrent transactions, see "Use of Proceeds" and "Pro Forma Condensed
Consolidated Financial Information"). See "Principal Shareholders."
<TABLE>
<S> <C>
Direct ownership of the Company....................................... 16.7%
Indirect ownership through direct ownership of WAT units.............. 15.0%
---
Total............................................................... 31.7%
---
---
</TABLE>
Interests associated with the Lowy family have placed an order to purchase
up to 600,000 Shares at the price to public and will indirectly continue to own
a significant interest in the Company. The following table demonstrates the
indirect ownership of the Common Stock by interests associated with the Lowy
family on a fully-diluted basis upon consummation of the Offerings and
concurrent transactions and taking account of the maximum number of Shares which
may be acquired under the Orders.
<TABLE>
<S> <C>
Direct ownership of the Company....................................... 0.8%
Indirect ownership through direct ownership of Westfield Holdings..... 13.9%
Indirect ownership through direct ownership of WAT units.............. 4.4%
---
Total............................................................... 19.1%
---
---
</TABLE>
THE COMPANY'S STRATEGY FOR OPERATIONS AND GROWTH
GENERAL STRATEGY
The Company's goal is to increase per share Funds from Operations and
thereby maximize the long-term value of the Company and the return to
shareholders through the following key strategies: (i) the redevelopment,
expansion and market repositioning of its current Centers, (ii) the acquisition
of additional super regional and regional shopping centers with a view towards
increasing the value of such centers through redevelopment, expansion and
repositioning, (iii) the improvement of the operating performance of its
properties through intensive and efficient management, cost control, leasing and
marketing and
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(iv) the awareness and anticipation of trends in the retailing industry and the
introduction of new retailing concepts to its properties.
The Company has engaged subsidiaries of Westfield Holdings Limited to
provide management and advisory services to the Company and the Centers and to
provide property management and architectural, design, engineering and
development services to the Properties. The Company believes that Westfield
Holdings, as a fully integrated, international developer, builder and manager of
shopping centers with a history as a manager and advisor of public real estate
investment entities, and with substantial experience in the U.S. market,
possesses the skills and expertise to execute successfully the Company's
strategy and enhance the income and value of the Company's portfolio.
REDEVELOPMENT, REPOSITIONING AND EXPANSION POTENTIAL AND IMPLEMENTATION
The Company believes that redevelopment, repositioning and expansion are key
to maximizing the use and performance of its assets and increasing its income
growth and capital appreciation. The Company is continually evaluating the
redevelopment potential of its Properties and anticipates that it will pursue
opportunities for substantial redevelopment and repositioning at the Properties.
The Company believes that redevelopment is important because of the financial
and regulatory burdens presented by the development of new regional shopping
centers. The Company believes that these projects will enable the existing
Centers both to compete better within their existing markets and to attract new
customers and therefore attain a stronger market position and an expanded
customer base. The Company believes that most of its Centers, even those which
have undergone redevelopment in the past five years, have continuing
redevelopment potential. The Company also believes that Westfield Holdings is
well situated to take advantage of these opportunities, due to, among other
things, its management expertise and its ability to utilize operating staff,
ideas and systems from its operations in the United States, Australia and Asia.
Since 1994, the Company has completed or substantially completed the
redevelopment of five Centers, representing 25.4% of Total GLA.
Redevelopment has recently been completed or substantially completed at the
following Centers:
- Eastland Center in West Covina, California, which opened in 1955 and was
formerly anchored by Mervyn's and an empty department store that had been
occupied by the May Company, has been substantially converted from an
out-dated enclosed mall into a power center through the addition of a new
Target discount store and additional Big Box Retailers and Category
Killers retailers, including Old Navy and Babies R' Us in order to
reposition the Center within its trade area and to complement The Plaza at
West Covina, a super regional shopping center owned by the Company. The
May Company store that occupied the space was relocated to The Plaza at
West Covina. The redevelopment is scheduled to be completed in Spring
1997.
- Enfield Square in Enfield, Connecticut, which opened in 1971, was
redeveloped with the addition of a Sears store which is scheduled to open
in Spring 1997. The Sears store replaces a smaller Steiger's store which
the Company purchased as an opportunity to upgrade and expand the Center.
Enfield Square will now have three Anchors: Filene's, J.C. Penney and
Sears.
- Mid Rivers Mall in St. Peters, Missouri, which opened in 1987, had three
Anchors before the recent redevelopment: Famous Barr, Dillard's and Sears.
In Fall 1996, a fourth Anchor, a 125,000 square-foot J.C. Penney store and
an additional 40,000 square feet of Mall GLA were added.
- Mission Valley Center in San Diego, California, which opened in 1961, was
redeveloped in 1996 with the addition of Bed Bath and Beyond, Nordstom
Rack, Michael's and Loehmann's. In addition, a 75,000 square-foot, 4,500
seat, 20 screen AMC theater and theme restaurants were added. The
redevelopment and renovation is scheduled to be completed in the first
half of 1997.
The Company is currently redeveloping South Shore Mall in Bay Shore, New
York. The redevelopment involves the addition of a Sears store and 40,000 square
feet of Mall GLA. The addition of a Sears store will provide the Center with
three Anchors and expands the Center from a regional shopping center to a super
regional shopping center. Project completion is scheduled for Fall 1997.
The Company expects to commence redevelopment of Mission Valley Center-West
in Fall 1997. Mission Valley Center-West, in San Diego, California, has 34 Mall
Stores in a strip center format with
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several outparcels adjacent to the Center. The redevelopment plan involves the
creation of a new power center with value-oriented retailers that will
complement Mission Valley Center.
In addition to the redevelopment of Mission Valley Center-West, the Company
has identified the following eight additional Properties for redevelopment over
the next five years which the Company believes will result in future income
growth and capital appreciation.
- Annapolis Mall in Annapolis, Maryland, is a four-Anchor super regional
shopping center with 151 Mall Stores. Redevelopment planning is proceeding
with the addition of a fifth anchor at the Center, which will further
solidify its strong market position.
- Connecticut Post Mall, in Milford, Connecticut, is a three-Anchor super
regional shopping center with 137 Mall Stores. Redevelopment planning is
proceeding for the addition of up to two anchors and specialty stores in
order to solidify the Center's position in its market.
- Eagle Rock Plaza, located southeast of Glendale, California, is a
two-Anchor regional shopping center with 63 Mall Stores. Redevelopment and
repositioning planning is proceeding and may include an additional anchor
and Category Killer.
- Enfield Square in Enfield, Connecticut is a two-Anchor regional shopping
center with 81 Mall Stores. Redevelopment planning is proceeding for the
addition of a third anchor and an additional 25,000 square feet of Mall
GLA.
- South County Center, in St. Louis, Missouri, is a three-Anchor regional
shopping center with 102 Mall Stores. Redevelopment and renovation
planning is proceeding to reposition the Center through the addition of a
fourth anchor and more than 200,000 square feet of Mall GLA. After
redevelopment, the Company believes that the Center will have a highly
favorable market position within south St. Louis County.
- Topanga Plaza, in Canoga Park, California, is a four-Anchor super regional
shopping center with 130 Mall Stores. Redevelopment planning is proceeding
for the addition of up to two anchors and 100,000 square feet of Mall GLA.
- West County Center, in Des Peres, Missouri is a two-Anchor regional
shopping center with 65 Mall Stores. Redevelopment planning is progressing
to add a third anchor and to redevelop and expand the specialty stores in
order to position the Center as a large competitive super regional
shopping center in the affluent west county market of St. Louis.
- West Valley, in Canoga Park, California, is a property adjacent to Topanga
Plaza that is primarily vacant land with several developed outparcels.
Planning is proceeding to develop a value-oriented power center.
In addition, the Company believes that redevelopment potential exists for
the following Centers and Properties over the next five to 10 years: Meriden
Square in Meriden, Connecticut, with the possibility of an additional 40,000
square feet of Mall GLA and/or another anchor; Trumbull Shopping Park in
Trumbull, Connecticut, with the addition of a third level and increased Mall
GLA; further redevelopment at Annapolis Mall in Annapolis, Maryland, with the
addition of two anchors and additional Mall GLA; Montgomery Mall with two
additional anchors and additional Mall GLA; West Park Mall in Cape Girardeau,
Missouri, with the addition of another anchor; Plaza Bonita in San Diego,
California, with a fifth "pad" for an anchor and additional shops; Plaza Camino
Real in San Diego, California, with the addition of theaters, restaurants or
Category Killers; and Vancouver Mall in Vancouver, Washington, with the possible
expansion of its current department stores to solidify that Center's position
within its market.
The completion of these and other redevelopments is contingent upon numerous
factors and therefore no assurance can be given that a redevelopment will be
undertaken.
The Company has entered into a letter of intent with National Australia Bank
Limited, Australia and New Zealand Banking Group Limited, Commonwealth Bank of
Australia and Union Bank of Switzerland to provide a $600.0 million unsecured
line of credit which may be used to finance the implementation of its
redevelopment and acquisition strategies. There can be no assurance that a
definitive credit agreement with respect to this loan facility will be entered
into.
43
<PAGE>
ACQUISITION OF NEW CENTERS AND JOINT VENTURE INTERESTS
The Company's acquisition strategy is to acquire additional super regional
and regional shopping centers that meet the Company's investment criteria. In
general, the Company's investment criteria includes the goals that the property
be of a quality consistent with the Company's portfolio, that the property has
potential for increased income and value through redevelopment and/or
repositioning and that the property generates sufficient income pending any such
redevelopment to support the acquisition price. The Company's strategy also
includes seeking to acquire the Outside Partners' interests in the Joint Venture
Centers.
The Company has entered into a letter of intent with its Joint Venture
partner, RREEF USA-Fund-III/Annapolis, Inc., to purchase the remaining 70%
interest in Annapolis Mall, together with an adjoining parcel of real property
leased to Montgomery Ward & Co., for an aggregate purchase price of $133.0
million. Although no assurance can be given in this regard and the Annapolis
Acquisition is subject to numerous conditions, the Company expects the Annapolis
Acquisition to close in the second quarter of 1997.
The Company has also entered into an agreement to acquire approximately 70%
of the partnership interests in Wheaton Plaza Regional Shopping Center LLP, the
entity that owns Wheaton Plaza Regional Shopping Center located in Wheaton,
Montgomery County, Maryland for a purchase price of $52.5 million. The enclosed,
one-level center (which a two-level connection to Hecht's), which opened in
1960, has over 1.1 million square feet of total gross leasable area, with 120
mall stores and three anchors: J.C. Penney, Montgomery Ward and Hecht's. The
Wheaton partnership also owns two office buildings of approximately 107,000
square feet and approximately 73,000 square feet. Wheaton Plaza was originally
constructed as an open-air mall and was enclosed in 1981. One of the Company's
principal reasons for making the acquisition is due to the center's
redevelopment potential, although the Company has no immediate plans for
redevelopment. Sales per square foot of $281 were achieved in 1996. As of
December 31, 1996, the center's total gross leasable area was 92% leased.
Consummation of the Wheaton Acquisition is subject to numerous conditions and
there can be no assurance that the acquisition will be consummated.
GARDEN STATE PLAZA OPTION
The Company has an option to acquire at fair market value the stock of
Westland Realty Inc., the holder of an indirect 50% interest in the Garden State
Plaza, located in Paramus, New Jersey. Garden State Plaza is one of the largest
and most productive super regional shopping centers in the nation with five
Anchors and containing approximately 2.0 million square feet of total gross
leasable area and average mall store sales psf of $467 for the year ended
December 31, 1996. Westfield Holdings completed the first part of a major
redevelopment of Garden State Plaza in 1996, adding Lord & Taylor and Neiman
Marcus stores to the existing Macy's and Nordstrom stores and expanding a J.C.
Penney department store. The redevelopment also added 200,000 square feet of
additional mall gross leasable area to connect the two new department stores and
accommodate 100 new specialty retailers. An additional redevelopment of
approximately 50,000 square feet of mall gross leasable area which will provide
direct access from the expansion to the lower level food court is currently in
progress and is scheduled for completion in Fall 1997. The redevelopment,
management and leasing of Garden State Plaza is handled by Westfield Holdings.
For a more detailed description of the Garden State Plaza Option and Loan
Transaction, see "Certain Transactions--Relationships and Transactions with
Westfield Holdings--Garden State Plaza Option."
The Garden State Plaza Option is exercisable following a completion of an
independant valuation of the property to determine its fair market value. The
valuation procedure may be commenced by the Company upon the earliest to occur
of (x) any time after completion and stabilization of the current expansion of
the property, defined to mean the leasing of 95% of the mall gross leasable area
for the expansion, (y) any time after the date which is 18 months after
completion of the current expansion of the property and (z) January 3, 2000, and
in any event no later than 5:00 p.m. (e.s.t.) on January 3, 2000. The exercise
of the Garden State Plaza Option will require the approval of at least 75% of
the Independent Directors and, if the purchase price (which is payable in Common
Stock) will exceed $55 million (net of the $145 million Garden State Plaza
Loan), the approval of a majority of the holders of the Common Stock
44
<PAGE>
voting at a meeting on such issue other than Westfield Holdings and its
affiliates (including, without limitation, WAT) and interests associated with
the Lowy family.
INCREASING OPERATING INCOME FROM EXISTING SPACE; INTENSIVE MANAGEMENT APPROACH
Westfield Holdings (i) manages shopping centers not as passive real estate
investments but as "living entities" which must be skillfully managed and
redeveloped over time to maintain and enhance their capacity to generate optimum
returns; (ii) has in-house skills to manage every stage in the development and
on-going life of a shopping center, including initial concept, design,
construction, leasing of stores and day-to-day management and promotion; (iii)
works to build and maintain long-term relationships with major retailers and
institutional investors; (iv) continually searches for new ways to increase
income and add capital growth to the shopping centers it manages; and (v) makes
customer service a major focus. Westfield Holdings concentrates on obtaining
repeat business with all key stakeholders in its shopping centers. The Company
believes that this management style has the potential to improve the performance
of its retail property assets, resulting in income growth and capital
appreciation for investors.
Westfield Holdings concentrates on actively managing the Centers and
providing efficient and customer-friendly service to both the consumers who shop
in the Centers and the retailers who lease space in the Centers while strictly
controlling operating costs. The concept of the "Westfield Customer Service
System" has been introduced in the Centers to train and focus the personnel at
the Centers on its retailers and customers. The Company believes that this is
one of the most important strategies that differentiates Westfield Holdings's
management philosophy from the Company's competitors. The Company also believes
that branding the Centers through advertising, promotions and customer service
programs will build shopper recognition and loyalty, especially in multi-center
markets.
Westfield Holdings's management strategy includes initiatives designed to
increase customer traffic through the Centers, which improves sales turnover
and, ultimately, rents. Initiatives include increasing occupancy levels,
increasing revenue by increasing rentable area within the existing building
envelope, the introduction of cost control efficiencies resulting in a reduction
of operating costs, maximizing the temporary leasing program, improving the
merchandise mix and range of tenants, developing emerging themes such as
entertainment, cinemas and Category Killer retailers, converting non-productive
space to mall gross leasable area and promoting the Centers with intensive
marketing.
Westfield Holdings's marketing expertise has been recognized through a
number of national and international awards, most notably an ICSC 'Maxi' Award
for marketing in 1993, and three additional 'Maxi' Awards in 1994 and an ICSC
Award for shopping center public relations in 1996.
The Company seeks to increase rental income by leasing of currently unleased
space, increasing base rent as current leases with below market rents expire,
increasing occupancy levels, increasing rentable area in the Centers, adding to
the temporary leasing program and repositioning to increase sales productivity
and expand market penetration and market base. The average base rental rate per
square foot for the Mall Stores at the Centers under Westfield Holdings
management has increased at a compound annual rate of approximately 4.5% from
December 31, 1994 through December 31, 1996 (4.2%, including North County Fair).
The Company's share of total annual base rent from tenants at the existing
Centers is expected to increase by approximately $16.5 million over the next
five years as a result of contractual rent increases for all Centers. As
required by GAAP, contractual rent increases are recognized as rental income
using the straight line method over the respective lease term. For the year
ended December 31, 1996, with respect to Centers managed by Westfield Holdings
353 leases totaling approximately 880,000 square feet (representing 11.4% of
Mall GLA) were signed at an average annualized base rent of $28.16 psf for the
initial year of occupancy, which represented a 31.1% increase over expiring
leases. Including North County Fair, for the year ended December 31, 1996, 391
leases totalling approximately 961,500 square feet (representing 12.5% of Mall
GLA) were signed at an average annualized base rent of $28.62 psf for the
initial year of occupancy, which represented a 25.1% increase over expiring
leases.
The Company's goal is to increase customer traffic through the Centers for
the purpose of improving sales turnover and, ultimately, rents. The Company
believes that the introduction of entertainment concepts such as the AMC
multiplex 20-screen theater added to the Mission Valley Center, which theater
complex drew in excess of two million people for the year ended 1996, is one
strategy for increasing
45
<PAGE>
customer traffic. The Westfield Customer Service System is utilized in order to
train and focus the Centers' personnel and promote repeat business. New services
being introduced at some Centers include: special customer service personnel,
free strollers and wheelchairs, valet parking, gift vouchers and parents'
facilities.
The Company believes that advertising is also critical to improving customer
traffic. The Manager has an in-house marketing staff and utilizes the resources
of a leading U.S. advertising agency in the United States to provide
advertising, promotional and media services to the Centers. The Company utilizes
a national marketing program that includes shared advertising, media and
community promotions in the Centers. This strategy is particularly cost
effective in the Company's multi-Center regional markets in San Diego, Missouri,
Maryland and Connecticut.
The Manager analyzes marketing trends for the Company and develops and
implements creative approaches to retail shopping in the Centers. Each Center
follows an annual marketing plan that features a combination of advertising,
promotions and participation in community and charitable events. Activities such
as Kids Clubs and senior citizen "mall walkers clubs" have been effective in
positioning the Centers as the "Main Street" within their communities.
The Company believes the diversity and strength of its Anchors and the
diversity and mix of its Mall Stores are critical to expanding a Center's market
share and the Company monitors and coordinates the mix of its Anchors and Mall
Stores accordingly. The Company believes that the recent sales and
consolidations of department stores have given the Company the opportunity to
enhance its mix of Anchors. Periodically, the Company engages market research
firms to evaluate the trade area of each Center. Demographic information lets
the Company match the tenant mix of its Centers with the merchandise and service
needs of its customers in order to increase sales.
46
<PAGE>
USE OF PROCEEDS
The net cash proceeds to be received by the Company from the Offerings
(after deducting underwriting discounts and the estimated expenses of the
Offerings) are estimated to be approximately $275.9 million, $318.8 million if
the underwriters exercise their over-allotment options in full. The Company also
expects to receive at the closing of the Offerings net cash proceeds of $29.6
million from the sale to ABP of 301,500 shares of the Series B Preferred Shares
and the sale to WAT of the 1997 WAT Warrant. The Company expects to use the
aggregate net proceeds of the Offerings to fund a portion of the following:
$145.0 million to make the Garden State Plaza Loan, approximately $133.0 million
for the Annapolis Acquisition, approximately, $52.5 million for the Wheaton
Acquisition, and approximately $15.3 million (Aus.$19.6 million) to purchase the
Westfield Holdings Warrants.
In addition, the Company expects to increase its unsecured borrowings under
its line of credit by $40.3 million in connection with the transactions
described above. The Company has entered into a letter of intent with National
Australia Bank Limited, Australia and New Zealand Banking Group Limited,
Commonwealth Bank of Australia and Union Bank of Switzerland to increase and
expand its existing line of credit from $50.0 million to $600.0 million,
although no assurance can be given in this regard. See "Business and
Properties--Debt Summary."
Consummation of certain of the foregoing transactions are subject to certain
conditions, including the sale to ABP of the Series B Preferred Shares, the
Annapolis Acquisition and the Wheaton Acquisition, and there can be no assurance
that each of the contemplated transactions will be consummated. If any such
transaction is not completed, the net proceeds to be raised from the Offerings
and concurrent transactions or utilized thereby may be reallocated for general
corporate purposes including the repayment of debt and potential acquisitions.
Pending application of the aggregate net proceeds of the Offerings (and the
net proceeds of the exercise of the over-allotment options, if they are
exercised) and concurrent transactions, the Company will invest such net
proceeds in interest-bearing accounts and short-term, interest-bearing
securities that are intended to permit the Company to qualify for taxation as a
REIT or to temporarily repay certain revolving credit loans. Such investments
may include, for example, obligations of the Government National Mortgage
Association, other government and government agency securities, certificates of
deposit, interest-bearing bank deposits and mortgage loan participations. See
"Federal Income Tax Considerations-- Taxation of the Company--Income Tests."
47
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company, as of
March 31, 1997, and as adjusted to give effect to the consummation of the
Offerings and concurrent transactions and the application of the estimated net
proceeds therefrom as set forth under "Use of Proceeds." The information set
forth in the table should be read in connection with the financial statements
and notes thereto, the pro forma financial information and notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------------------
HISTORICAL AS ADJUSTED
------------ ------------
($ IN THOUSANDS EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
Cash and cash equivalents............................................................. $ 2,647 $ 2,647
------------ ------------
------------ ------------
Long-term debt........................................................................ 783,285 823,612
Shareholders' equity:
Senior Preferred Shares, $1.00 par value per share (200 shares authorized, 105
shares issued and outstanding).................................................... -- --
Preferred Stock, $1.00 par value per share (5,000,000 shares authorized, of which
940,000 shares of Series A Preferred Shares are issued and outstanding and 301,500
shares of Series B Preferred Shares will be issued and outstanding)............... 94,000 124,150
Common Stock, $.01 par value per share (225,006,300 authorized, 52,929,535 shares
issued and outstanding at March 31, 1997, 200,000,000 authorized and 70,929,535
shares issued and outstanding as adjusted)........................................ 529 709
Excess Shares, $.01 par value per share (205,000,000 shares authorized, no shares
issued and outstanding, as adjusted).............................................. -- --
Additional paid-in capital............................................................ 424,001 699,144
Retained earnings..................................................................... 5,554 5,554
------------ ------------
Total shareholders' equity........................................................ 524,084 829,557
------------ ------------
Total capitalization............................................................ $ 1,310,016 $ 1,655,816
------------ ------------
------------ ------------
</TABLE>
48
<PAGE>
DILUTION
"Dilution per share" means the difference between the initial public
offering price per share of Common Stock and the pro forma net tangible book
value per share of Common Stock after giving effect to the sale by the Company
of the Shares offered hereby, assuming an initial public offering price of
$16.75 (the mid-point of the price range). "Pro forma net tangible book value
per share" is determined by dividing total assets less total liabilities and
Preferred Stock by the number of shares of Common Stock outstanding. The
following table illustrates such pro forma per share dilution after giving
effect to the Offerings as of March 31, 1997.
<TABLE>
<CAPTION>
Assumed initial public offering price per Share(1)........... $ 16.75
<S> <C> <C>
---------
Pro forma net tangible book value prior to the Offerings..... 8.13
Increase in net tangible book value attributable to the
Offerings.................................................. 1.82
---------
Pro forma net tangible book value after the Offerings........ 9.95
---------
Dilution in net tangible book value per share of Common Stock
to new investors........................................... $ 6.80
---------
---------
</TABLE>
- --------------
(1) Before deduction of the estimated underwriting discounts and expenses of the
Offerings.
The following table summarizes, on a pro forma basis after giving effect to
the Offerings and concurrent transactions, the number of shares of Common Stock
held on a fully-diluted basis by, and the effective cost and average price per
share paid by Westfield Holdings, WAT and the purchasers in the Offerings (based
on the initial public offering price per share of $16.75 (the mid-point of the
price range)).
<TABLE>
<CAPTION>
SHARES ISSUED EFFECTIVE COST AVERAGE
----------------------- FOR SHARES OF PRICE PER
NUMBER PERCENT COMMON STOCK SHARE
------------ --------- ----------------- -----------
<S> <C> <C> <C> <C>
Shares of Common Stock sold
to purchasers in the Offerings....................... 18,000,000 22.7% $ 301,500,000 $ 16.75
Shares of Common Stock owned
by Westfield Holdings................................ 10,930,672 13.8 122,288,000 11.19
Shares of Common Stock owned
by WAT............................................... 49,453,758 62.4 796,173,000 16.10
------------ -----------------
Total................................................ 78,384,430 $ 1,219,961,000 $ 15.56
------------ ----------------- -----------
------------ ----------------- -----------
</TABLE>
Westfield Holdings has placed an order to purchase up to 2,300,000 Shares, which
would, taking account of the maximum number of Shares which may be acquired by
Westfield Holdings under the Orders and based on the mid-point of the price
range, increase the effective cost for its shares of Common Stock to
$160,813,000 and its average price per share to $12.15.
49
<PAGE>
DISTRIBUTIONS
The Company intends to continue to pay regular quarterly distributions to
the holders of its Common Stock. Since Westfield Holdings's acquisition of an
interest in the Company on February 11, 1994, the Company has made regular
quarterly distributions on its Common Stock. The Company made distributions of
$36.5 million for the period from February 12, 1994 through December 31, 1994
(or 68.5% of Funds from Operations), $75.4 million for the period from January
1, 1995 through December 31, 1995 (or 114.6% of Funds from Operations) and $78.5
million for the period from January 1, 1996 through December 31, 1996 (or 103.5%
of Funds from Operations). For the period from February 12, 1994 through
December 31, 1996, the Company made distributions of $190.4 million (or 98% of
Funds from Operations). Following such distributions, the Company received
recontributions from its shareholders of $4.1 million, $3.2 million and $3.4
million in 1994, 1995 and 1996, respectively. For the three month period ended
March 31, 1997, the Company has declared a distribution of $.373 per share (or
97% of Funds from Operations in the aggregate) to its shareholders.
For the period February 12, 1994 through March 31, 1997, the Company has
distributed approximately 98% of its Funds from Operations. However, the Company
intends to revise its policy upon consummation of the Offerings such that it
will distribute annually approximately 90% of its Funds from Operations through
December 31, 1998. Thereafter, the Company intends to distribute annually
approximately 90% to 95% of its Funds from Operations; however, the Company does
not intend to distribute more than 100% of Funds from Operations less recurring
capital expenditures (not including capital expenditures recovered from tenants)
and rental income attributable to rent straight-lining. As a result of the
revision of its policy, the Company has declared the Special Distribution for
the shareholders of the Company immediately prior to the closing of the
Offerings in an amount of $13.0 million. The Special Distribution will be
payable on the regular payment date for the second quarter distribution if the
Offerings occur or, if the Offerings do not occur, in seven quarterly
installments at the same time as the Company's regular quarterly distributions.
The Special Distribution represents a portion of the distributions estimated at
the time of WAT's initial offering of units in Australia for the period through
1998.
The Company intends to pay a pro rata distribution to all shareholders with
respect to the period from the closing of the Offerings through June 30, 1997
based upon $0.35 per share for a full quarter. On an annual basis, this
distribution would be $1.40 per share. In addition, the Company has declared a
distribution to the shareholders of the Company immediately preceeding the
closing of the Offerings for the portion of the second quarter preceeding the
consummation of the Offerings, such distribution to be payable on or before the
regular payment date for the second quarter distribution.
It is estimated that initially approximately 35% of the distribution to the
Company's shareholders will represent a return of capital for tax purposes. The
expected size of the distributions may not allow the Company, using only cash
flow from operations, to fund 100% of (i) the tenant allowances and (ii) the
retirement of all of its debt when due, and therefore, the Company may be
required to seek periodic debt or equity financings to cover such items. The
Company's income will consist primarily of its share of income from the
Properties. Differences in timing between the receipt of income and the payment
of expenses in arriving at taxable income of the Company, and the effect of
required debt amortization payments, could require the Company to borrow funds
on a short-term basis to meet the REIT distribution requirements even if the
Company believes that then prevailing market conditions are not generally
favorable for such borrowings or that such borrowings would not be advisable in
the absence of such tax considerations. See "Policies and Objectives with
Respect to Investments, Financing and Other Activities--Financing."
The Company plans to adopt a distribution reinvestment plan under which its
shareholders may elect to reinvest all or a part of their distributions
automatically in additional shares of Common Stock. Any such distribution
reinvestment plan will not adversely affect the Company's ability to qualify as
a REIT for Federal income tax purposes. The Company understands that WAT plans
to adopt a similar plan for its unitholders and intends to use the proceeds of
such distribution reinvestment plan to participate in the Company's distribution
reinvestment plan to the extent that its unitholders participate in the WAT
50
<PAGE>
distribution reinvestment plan. The Company also understands that Westfield
Holdings intends to participate in WAT's distribution reinvestment plan to the
full extent of its distributions on its units in WAT for a three-year period
commencing with the first distribution period for which reinvestment is
permitted. No assurances can be given that WAT will in fact adopt a distribution
reinvestment plan, that WAT will participate in the Company's distribution
reinvestment plan, and that Westfield Holdings will choose not to participate in
WAT's distribution reinvestment plan in the future.
The Company computes Funds from Operations in accordance with standards
established by the White Paper on Funds from Operations approved by the Board of
Governors of NAREIT in March 1995 which defines Funds from Operations as net
income (loss) (computed in accordance with GAAP), excluding gains (or losses)
from debt restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. Funds from Operations should not be considered
as an alternative to net income (determined in accordance with GAAP) as a
measure of the Company's financial performance or to cash flow from operating
activities (determined in accordance with GAAP) as a measure of the Company's
liquidity, nor is it indicative of funds available to fund the Company's cash
needs, including its ability to make distributions. In addition, Funds from
Operations as computed by the Company may not be comparable to similarly titled
figures reported by other REITs.
Notwithstanding the foregoing, all distributions will be at the discretion
of the Board of Directors and will depend on the actual Funds from Operations,
the Company's financial condition, the annual distribution requirements under
the REIT Requirements and such other factors as the Board of Directors deems
relevant and will be subject to the prior payment of preferred stock dividends.
See "Risk Factors-- Distributions to Shareholders; Potential Requirement to
Borrow."
SELECTED FINANCIAL DATA
The following table sets forth historical and unaudited pro forma
consolidated financial data for the Company and should be read in conjunction
with the Consolidated Financial Statements of Westfield America, Inc. and the
Notes thereto, the Pro Forma Condensed Consolidated Financial Information of the
Company (unaudited) and the Notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The Company believes
that the book value of its real estate assets, which reflects the historical
costs of such real estate assets less accumulated depreciation, is less than the
current market value of its properties.
The results for 1994 are not comparable to prior years because of the
acquisition of the Company in February 1994. Hence, a pro forma adjustment has
been applied to historical results of operations for the 42 days ended February
11, 1994 to present operating and other data as if the acquisition of the
Company on February 12, 1994 had been consummated on January 1, 1994. The
results for 1996 are not comparable to prior years because of the
Recapitalization, the acquisition of the Acquired Properties and the
consolidation of the Mission Valley Partnership.
Unaudited Pro Forma operating information is presented as if the
consummation of the Offerings and concurrent transactions and the
Recapitalization had occurred as of the period presented, and therefore
incorporates certain assumptions that are described in the Notes to the Pro
Forma Condensed Consolidated Statement of Income (unaudited). The Pro Forma
balance sheet data (unaudited) is presented as if the Offerings and concurrent
transactions and the Recapitalization had occurred on March 31, 1997.
The unaudited Pro Forma information does not purport to represent what the
Company's financial position or results of operations would actually have been
if these transactions had, in fact, occurred on such date or at the beginning of
the periods indicated, or to project the Company's financial position or results
of operations at any future date or for any future period.
51
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED DECEMBER 31,
MARCH 31, ---------------------------------
------------------------------- UNAUDITED
UNAUDITED PRO
PRO FORMA FORMA
1997 1997 1996 1996 1996 1995
--------- --------- --------- ----------- --------- ---------
(IN THOUSANDS OF
DOLLARS, EXCEPT PER
SHARE AMOUNTS AND
RATIOS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
REVENUES:
Minimum rents................................................ $ 37,641 $ 30,742 $ 20,967 $ 151,927 $ 106,393 $ 75,154
Tenant recoveries............................................ 16,287 14,055 8,987 62,872 44,423 32,335
Percentage rents............................................. 1,986 1,986 1,572 3,991 3,991 1,690
Service fee and other income................................. 120 120 475 1,282 1,282 2,148
--------- --------- --------- ----------- --------- ---------
Total revenue............................................ 56,034 46,903 32,001 220,072 156,089 111,327
EXPENSES:
Operating--recoverable....................................... 15,895 13,771 8,916 64,325 44,487 31,184
Other operating.............................................. 1,205 992 721 7,458 4,513 3,061
Management fees.............................................. 1,273 928 728 5,562 3,495 1,828
Advisory Fees................................................ -- -- -- 2,600
General and administrative................................... 236 236 153 808 808 776
Depreciation and amortization................................ 12,828 11,539 8,027 48,287 38,033 28,864
--------- --------- --------- ----------- --------- ---------
Operating income......................................... 24,597 19,437 13,456 93,632 62,153 45,614
Interest expense, net.......................................... 13,566 12,860 7,482 53,040 40,233 27,916
--------- --------- --------- ----------- --------- ---------
Income before other income and income taxes.............. 11,031 6,577 5,974 40,592 21,920 17,698
Equity in net income (loss) of unconsolidated real estate
partnerships.................................................. 501 1,293 733 55 3,063 3,359
Interest and other income...................................... 3,637 312 230 13,512 776 789
Gains on sales of properties and partnership interests......... -- -- -- --
Income taxes................................................... -- -- -- -- -- --
Minority interest in earnings of consolidated real estate
partnership................................................... (931) (218) (230) (3,006) (1,063) --
--------- --------- --------- ----------- --------- ---------
Net income................................................... $ 14,238 $ 7,964 $ 6,707 $ 51,153 $ 24,696 $ 21,846
--------- --------- --------- ----------- --------- ---------
--------- --------- --------- ----------- --------- ---------
Net income allocable to common shares.......................... $ 11,600 $ 5,966 $ 6,706 $ 40,600 $ 20,432 $ 21,843
Earnings per share(1).......................................... $ 0.16 $ 0.11 $ 0.15 $ 0.57 $ 0.42 $ 0.48
--------- --------- --------- ----------- --------- ---------
--------- --------- --------- ----------- --------- ---------
Dividends declared per common share(1)......................... $ 0.34 $ 0.01 $ 0.06 $ 1.27 $ 1.51 $ 1.68
--------- --------- --------- ----------- --------- ---------
--------- --------- --------- ----------- --------- ---------
OTHER DATA
EBITDA(2)...................................................... $ 45,045 $ 37,242 $ 27,540 $ 172,033 $ 124,352 $ 102,199
Funds from Operations(3)....................................... $ 29,661 $ 22,564 $ 18,046 $ 110,716 $ 75,842 $ 65,792
Cash flows provided by Operating Activities.................... $ -- $ 11,570 $ 11,808 $ -- $ 55,888 $ 42,990
Cash flows (used in) provided by Investing Activities.......... $ -- $ (5,389) $ (833) $ -- $ (91,613) $ 5,476
Cash flows (used in) provided by Financing Activities.......... $ -- $ (10,263) $ (9,510) $ -- $ 42,454 $ (62,722)
Ratio of earnings to combined fixed charges(4)................. 1.96 1.59 1.99 1.81 1.60 2.25
Ratio of FFO to combined fixed charges(4)...................... 2.67 2.33 3.30 2.58 2.52 3.35
Funds from operations allocable to common shares............... $ 27,023 $ 20,566 $ 18,045 $ 100,163 $ 71,578 $ 65,789
Weighted average number of common shares....................... 71,206 53,481 45,109 71,481 49,383 44,978
<CAPTION>
PREDECESSOR
PERIOD FROM PERIOD FROM
FEBRUARY 12, JANUARY 1, YEAR ENDED DECEMBER
1994 THROUGH 1994 THROUGH 31,
DECEMBER 31, FEBRUARY 11, --------------------
1994 1994 1993 1992
------------- ------------- --------- ---------
<S> <C> <C> <C> <C>
OPERATING DATA:
REVENUES:
Minimum rents................................................ $ 58,750 $ 7,309 $ 60,726 $ 58,152
Tenant recoveries............................................ 32,023 4,036 31,359 30,285
Percentage rents............................................. 2,470 467 2,960 3,041
Service fee and other income................................. 6,213 957 10,192 11,067
------------- ------------- --------- ---------
Total revenue............................................ 99,456 12,769 105,237 102,545
EXPENSES:
Operating--recoverable....................................... 29,477 4,326 31,693 32,959
Other operating.............................................. -- -- -- --
Management fees.............................................. -- -- -- --
Advisory Fees................................................
General and administrative................................... 7,129 2,543 20,038 20,970
Depreciation and amortization................................ 24,897 3,605 29,011 22,650
------------- ------------- --------- ---------
Operating income......................................... 37,953 2,295 24,495 25,966
Interest expense, net.......................................... 24,156 481 7,160 24,652
------------- ------------- --------- ---------
Income before other income and income taxes.............. 13,797 1,814 17,335 1,314
Equity in net income (loss) of unconsolidated real estate
partnerships.................................................. (386) (2,151) (3,177) (76)
Interest and other income...................................... 1,830 340 2,996 4,191
Gains on sales of properties and partnership interests......... -- -- 2,566 23,428
Income taxes................................................... -- -- (13,819) (11,231)
Minority interest in earnings of consolidated real estate
partnership................................................... -- -- -- --
------------- ------------- --------- ---------
Net income................................................... $ 15,241 $ 3 $ 5,901 $ 17,626
------------- ------------- --------- ---------
------------- ------------- --------- ---------
Net income allocable to common shares.......................... $ 15,241 3 $ 5,901 $ 17,626
Earnings per share(1).......................................... $ 0.34 n/a(5) $ -- $ --
------------- ------------- --------- ---------
------------- ------------- --------- ---------
Dividends declared per common share(1)......................... $ 0.81 n/a(5)
-------------
-------------
OTHER DATA
EBITDA(2)...................................................... $ 83,529 $ 8,691 $ 80,432 $ 94,545
Funds from Operations(3)....................................... $ 53,315 $ 4,942 $ 60,472 $ 37,974
Cash flows provided by Operating Activities.................... $ 20,665 $ 5,294 $ 35,883) $ 25,138
Cash flows (used in) provided by Investing Activities.......... $ 23,556 $ (23,501) $ (42,778) $ (3,999)
Cash flows (used in) provided by Financing Activities.......... $ (67,988) $ 26,013 $ (13,772) $ 14,742
Ratio of earnings to combined fixed charges(4)................. 2.89 3.47 1.47
Ratio of FFO to combined fixed charges(4)...................... 3.21 7.26 2.45
Funds from operations allocable to common shares............... $ 53,315 $ 60,472 $ 37,974
Weighted average number of common shares....................... 44,902 52 52
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
52
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------- YEAR ENDED YEAR ENDED
UNAUDITED DECEMBER 31, DECEMBER 31,
PRO FORMA ------------------------------------ ----------------------
1997 1997 1996 1995 1994 1993 1992
------------ ------------ ------------ ---------- ---------- ---------- ----------
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Investment in real
estate, net.......... $ 1,635,962 $ 1,305,462 $ 1,310,434 $ 829,484 $ 848,892 $ 884,392 $ 851,168
Total assets.......... $ 1,684,802 $ 1,339,002 $ 1,344,570 $ 844,706 $ 882,667 $ 944,490 $ 951,678
Mortgage and notes
payable.............. $ 823,612 $ 783,285 $ 770,625 $ 426,781 $ 420,397 $ 38,205 $ 317,857
Minority interest..... $ -- $ -- $ 54 $ -- $ -- $ -- $ --
Shareholders'
equity............... $ 829,557 $ 524,084 $ 518,530 $ 380,419 $ 430,782 $ 669,967 $ 393,466
</TABLE>
(1) Unaudited pro forma net income and earnings per share for the three months
ended March 31, 1997 and the year ended December 31, 1996 are based on
71,206 and 71,481 shares, respectively, of Common Stock outstanding after
the Offering. Information for the period January 1, 1994 through February
11, 1994 and the year ended December 31, 1993 and 1992 is not presented
because it is not comparable.
(2) EBITDA represents the Company's share of net income before interest, taxes,
depreciation and amortization. While EBITDA should not be construed as an
alternative to operating income (as determined in accordance with GAAP) as
an indicator of the Company's operating performance or to cash flows from
operating activities (as determined in accordance with GAAP) as a measure of
liquidity and other consolidated income or cash flow statement data
determined in accordance with GAAP, the Company believes that EBITDA is an
effective measure of shopping center operating performance because EBITDA is
unaffected by the debt and equity structure of the property owner.
(3) The Company computes Funds from Operations in accordance with standards
established by the White Paper on Funds from Operations approved by the
Board of Governors of NAREIT in March 1995 which defines Funds from
Operations as net income (loss) (computed in accordance with GAAP) excluding
gains (or losses) from debt restructuring and sales of property, plus real
estate related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures except for the years ended
December 31, 1993 and 1992 for which income taxes are not included. Funds
from Operations should not be considered as an alternative to net income
(determined in accordance with GAAP) as a measure of the Company's financial
performance or to cash flow from operating activities (determined in
accordance with GAAP), as a measure of the Company's liquidity, nor is it
indicative of funds available to fund the Company's cash needs, including
its ability to make distributions. In addition, Funds from Operations as
computed by the Company may not be comparable to similarily titled figures
reported by other REITs.
(4) Combined fixed charges consist of interest expense, whether expensed or
capitalized, amortization of debt expense and income allocable to Senior
Preferred Shares, Series A Preferred Shares and on an unaudited Pro Forma
basis, Series B Preferred Shares.
(5) The computation for the 42 days ended February 11, 1994 is not presented as
it is not comparable.
53
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the "Selected
Financial Data," the Company's Consolidated Financial Statements and Notes
thereto, and the Unaudited Pro Forma Condensed Consolidated Financial Statements
of the Company and Notes thereto. Historical results set forth in "Selected
Financial Data," the Company's Consolidated Financial Statements and the
Unaudited Pro Forma Condensed Consolidated Financial Statements of the Company
are not necessarily indicative of the future financial position and results of
operations of the Company.
On February 11, 1994, the Company was acquired by Westfield Holdings and
certain other investors from Prudential (the "Acquisition"). The financial
statement results presented for the 323-day period from February 12, 1994
through December 31, 1994 and the 42-day period from January 1, 1994 through
February 11, 1994 are not indicative of the Company's performance on an annual
basis. Therefore, the discussion of results of operations for 1994 are presented
on a combined basis to compare to the full year 1995. The Company believes this
presentation provides a more meaningful discussion of year-to-year results.
GENERAL BACKGROUND
At December 31, 1996 and the year then ended, the Consolidated Financial
Statements and Notes thereto reflect the consolidated financial results of 12
Centers, the equity in income (loss) of seven unconsolidated real estate
partnerships, the Acquired Properties following their acquisition on July 1,
1996, 13 separate department store properties that are net leased to the May
Company under financing leases, and a 116-unit apartment complex. At December
31, 1995 and the year then ended, the Consolidated Financial Statements reflect
the Mission Valley Partnership, the owner of Mission Valley Center and Mission
Valley Center-West, as an unconsolidated real estate partnership. In September
1995, the Company acquired a controlling interest in the Mission Valley
Partnership and consolidated the Mission Valley Partnership beginning in 1996.
In connection with the Acquisition, Westfield Holdings's assumed the management
of the Company's shopping centers and consolidated the Company's St. Louis
headquarters operations with Westfield Holdings's U.S. operations in Los
Angeles. As a result of the transfer of the management, the Company's general
and administrative expenses decreased by $4.0 million from 1994 to 1995 and its
service fee and other income decreased by $5.0 million for such period because
the Company previously provided management services to certain of the
unconsolidated real estate partnerships. As a result of the above described
items and Westfield Holdings's management of the Properties, the Company's Funds
from Operations has increased 13% and 15% in 1995 and 1996, respectively, from
the prior years.
The Company believes that the Offerings will improve the Company's financial
condition by providing the Company with capital to take advantage of the
redevelopment and acquisition opportunities represented by the Annapolis
Acquisition and the Wheaton Acquisition. The Company's operating results are
expected to improve as a result of certain transactions as discussed in "Use of
Proceeds," "Capitalization" and the Unaudited Pro Forma Condensed Consolidated
Financial Statements.
The following Pro Forma Operating Data compares the pro forma consolidated
results of the Company for the twelve months ended December 31, 1994 and 1995.
The pro forma information has been derived by the application of a pro forma
adjustment to the historical consolidated results of the Company for the 42 and
323 day periods in 1994. The pro forma balance for the year ended December 31,
1994 gives effect to the acquisition of the Company on February 11, 1994 as if
it had been consummated on January 1, 1994.
54
<PAGE>
<TABLE>
<CAPTION>
PREDECESSOR PRO FORMA
PERIOD FROM PERIOD FROM ADJUSTMENTS THROUGH
FEBRUARY 12, JANUARY 1, PREDECESSOR PRO FORMA
YEAR 1994 1994 OPERATIONS YEAR
ENDED THROUGH THROUGH JAN. 1, 1994 ENDED
DECEMBER 31, DECEMBER 31, FEBRUARY 11, TO FEB. 11, DECEMBER 31,
1995 1994 1994 1994 1994
------------- ------------- ------------- ----------------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenue...................... $ 111,327 $ 99,456 $ 12,769 $ 0 $ 112,225
Operating expenses................. 36,849 36,606 6,869 43,475
Interest expense, net.............. 27,916 24,156 481 0 24,637
Depreciation and amortization...... 28,864 24,897 3,605 (368)(a) 28,134
------------- ------------- ------------- ----- -------------
Income before other income and
income taxes................... 17,698 13,797 1,814 368 15,979
Equity in net income (loss) of
unconsolidated real estate
partnerships..................... 3,359 (386) (2,151) 0 (2,537)
Interest and other income.......... 789 1,830 340 0 2,170
Gains on sales of properties and
partnership interests............ 0 0 0 0 0
------------- ------------- ------------- ----- -------------
Income before income taxes and
minority interest.............. 21,846 15,241 3 368 15,612
Income taxes....................... 0 0 0 0
Minority interest in consolidated
real estate partnership.......... 0 0 0 0 0
------------- ------------- ------------- ----- -------------
Net income....................... $ 21,846 $ 15,241 $ 3 $ 368 $ 15,612
------------- ------------- ------------- ----- -------------
------------- ------------- ------------- ----- -------------
</TABLE>
- ------------------------------
(a) Depreciation and amortization expense has been reduced to reflect the
depreciation and amortization of property and equipment as if the purchase
of the Company had been consummated on January 1, 1994.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1997 TO THE THREE MONTHS ENDED
MARCH 31, 1996 (UNAUDITED)
TOTAL REVENUES increased $14.9 million or 47% to $46.9 million for the three
months ended March 31, 1997 as compared to $32.0 million for the same period in
1996. The increase is primarily the result of the acquisition of the Acquired
Properties which contributed $13.3 million or 89% of the increase. Excluding the
total revenues generated by the Acquired Properties, total revenues increased
$1.6 million due to an increase in average rental rates throughout the portfolio
and strong specialty (temporary) leasing (which involves temporary leases of
space for a period of 30 days to 11 months). The Company believes such specialty
leasing will continue to be part of the Company's leasing program.
TOTAL EXPENSES increased $9.0 million or 49% to $27.5 million for the three
months ended March 31, 1997 as compared to $18.5 million for the same period in
1996. The increase was primarily the result of the acquisition of the Acquired
Properties which contributed $7.7 million or 86% of the increase in total
expenses. Additionally, depreciation expense increased $1.1 million or 12% of
the increase in total expenses due to the Mission Valley Center and Mid Rivers
Mall redevelopment projects being substantially completed during the quarter
ended March 31, 1997.
INTEREST EXPENSE increased $5.4 million or 72% to $12.9 million for the
three months ended March 31, 1997 as compared to $7.5 million for the same
period in 1996. The increase was primarily due to the acquisition of the
Acquired Properties which contributed $4.9 million or 91% of the increase in
interest expense. The remaining increase in interest expense was due primarily
to the Mission Valley Center and Mid Rivers Mall redevelopment projects
substantially completed during the quarter ended March 31, 1997.
EQUITY IN INCOME of unconsolidated real estate partnerships increased
approximately $0.55 million or 76% to $1.3 million for the three months ended
March 31, 1997 as compared to $0.75 million for the same period in 1996 due to
the 1997 recovery of earthquake repair costs totaling $0.2 million which were
incurred by the Topanga Plaza Partnership as a result of the 1994 Northridge
earthquake. Additionally, minimum rents increased for the portfolio of
unconsolidated real estate partnerships.
55
<PAGE>
NET INCOME increased $1.2 million or 19% to $7.9 million for the three
months ended March 31, 1997 as compared to $6.7 million for the same period in
1996 for the reasons discussed above.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
TOTAL REVENUES increased $44.8 million or 40% to $156.1 million for the year
ended December 31, 1996 as compared to $111.3 million for the same period in
1995. The increase is primarily the result of the acquisition of the Acquired
Properties and consolidation of the Company's equity interest in the Mission
Valley Partnership. The Acquired Properties contributed $27.1 million or 61% of
the increase in total revenues from 1995 to 1996 and the Mission Valley
Partnership contributed $13.1 million or 29% of the increase. Total revenues
increased $4.5 million or 10% of the increase in total revenues from 1995 to
1996 due to increases in average rental rates throughout the portfolio and
strong specialty (temporary) leasing (which involves temporary licenses of space
for a period from 30 days to 11 months). The Company believes such specialty
leasing will continue to be an ongoing part of the Company's leasing program.
TOTAL EXPENSES increased $28.2 million or 43% to $93.9 million for the year
ended December 31, 1996 as compared to $65.7 million for the same period in
1995. The increase is primarily the result of the acquisition of the Acquired
Properties and consolidation of the Company's equity interest in the Mission
Valley Partnership. The Acquired Properties contributed $15.5 million or 55% of
the increase in total expenses from 1995 to 1996 and the Mission Valley
Partnership contributed $8.2 million or 29% of the increase. Total expenses
increased $1.9 million or 7% of the increase in total expenses from 1995 to 1996
due to increases in other operating expenses ($0.6 million), management fees
($0.4 million) and depreciation and amortization ($0.9 million).
INTEREST EXPENSE, net of capitalized interest, increased $12.3 million or
44% to $40.2 million for the year ended December 31, 1996 as compared to $27.9
million for the same period in 1995. The increase is due primarily to the
acquisition of the Acquired Properties and consolidation of the Company's equity
interest in the Mission Valley Partnership. The Acquired Properties contributed
$10.0 million to the increase in net interest expense and the Mission Valley
Partnership contributed $1.9 million to the increase. On a combined basis, the
Acquired Properties and the Mission Valley Partnership represent 97% of the
increase in net interest expense.
MINORITY INTEREST IN REAL ESTATE PARTNERSHIPS was $1.1 million for the year
ended December 31, 1996 due to the consolidation of the Mission Valley
Partnership in 1996.
EQUITY IN INCOME (LOSSES) of unconsolidated real estate partnerships
decreased by $0.3 million due primarily to the consolidation of the Mission
Valley Partnership in 1996.
NET INCOME increased $2.9 million (which is net of a $2.6 million advisory
fee) or 13% to $24.7 million from $21.8 million for the same period in 1995.
Excluding the advisory fee, which was not payable for 1996, net income increased
$5.5 million of which the Acquired Properties contributed $1.6 million or 29% of
the increase, the Mission Valley Partnership contributed $2.1 million or 38% of
the increase and the other Properties contributed $1.8 million or 33% of the
increase.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO PRO FORMA YEAR ENDED DECEMBER 31,
1994
TOTAL REVENUES decreased $0.9 million or 1% to $111.3 million for the year
ended December 31, 1995 as compared to $112.2 million for the Pro Forma year
ended December 31, 1994. The increase in rental revenues from $66.1 million to
$75.1 million for Pro Forma 1994 to 1995 is primarily the result of increased
minimum rents at Montgomery Mall and The Plaza at West Covina, the completion of
the redevelopment of Westland Towne Center in late 1994, and the increase in the
specialty leasing and kiosk program. Offsetting this increase was a reduction in
service fee income and tenant recoveries. Service fee income decreased $5.0
million in 1995 as a result of Westfield Holdings's assumption of the management
of the Company's shopping centers as described above. Tenant recovery revenue
decreased $3.7 million due to lower recoverable operating expenses.
56
<PAGE>
TOTAL EXPENSES decreased $6.3 million or 9% to $65.7 million for the year
ended December 31, 1995 as compared to $72.0 million for the Pro Forma year
ended December 31, 1994. The decrease is due primarily to a decrease of $4.0
million in general and administrative costs resulting from Westfield Holdings's
assumption of the management of the Centers as described above. Additionally,
operating-recoverable expenses decreased $2.6 million due to operational
efficiencies.
INTEREST EXPENSE increased $3.3 million or 13% to $27.9 million for the year
ended December 31, 1995 as compared to $24.6 million for the Pro Forma year
ended December 31, 1994. The increase resulted primarily from borrowings assumed
in connection with the Acquisition and the borrowings of $1.5 million in
connection with the purchase of a department store at Enfield Square and $9.0
million for the purchase of an additional 25.8% interest in the Mission Valley
Partnership.
EQUITY IN INCOME (LOSSES) of unconsolidated real estate partnerships
increased $5.9 million to $3.4 million for the year ended December 31, 1995 as
compared to a loss of $2.5 million for the Pro Forma year ended 1994 resulting
from an improvement in operations at each of the partnerships in which the
Company has an equity interest. The Annapolis Mall net income increased $0.7
million in 1995 as a result of an increase in minimum rent. The Company's share
of operations of the Topanga Plaza Partnership increased $2.8 million as the
Topanga Plaza Partnership recognized a loss of $1.5 million for the Pro Forma
year ended 1994 as a result of the 1994 Northridge Earthquake and recognized
income of $1.3 million in 1995 from insurance proceeds received for business
interruption caused by the earthquake. Additionally, the Company increased its
ownership interest in the Mission Valley Partnership in September 1995 resulting
in the recognition of an additional 25.8% of operations of the Mission Valley
Partnership.
NET INCOME increased $6.2 million or 40% to $21.8 million for the year ended
December 31, 1995 as compared to $15.6 million for the same period in 1994 for
the reasons discussed above.
PRO FORMA OPERATING RESULTS--THREE MONTHS ENDED MARCH 31, 1997 TO THREE MONTHS
ENDED MARCH 31, 1997
On a pro forma basis, after giving effect to the Offerings and concurrent
transactions, net income of the Company for the three months ended March 31,
1997 was $14.2 million as compared to historical net income of the Company for
the same period of $7.9 million. The pro forma adjustments increased revenues by
$9.1 million and total operating expenses by $4.0 million, as a result of
reflecting the operations for Annapolis Mall and Wheaton Plaza for the three
months ended March 31, 1997. The pro forma adjustments increased interest
expense by $0.7 million as a result of additional borrowings on the Company's
unsecured corporate credit line as described under "Use of Proceeds." Equity in
income of unconsolidated real estate partnerships decreased $0.8 million due to
the purchase of the outside partner's interest in Annapolis Mall and
consolidating Annapolis Mall. The pro forma adjustments increased interest
income by $3.3 million reflecting interest earned on the Garden State Plaza Loan
as described under "Use of Proceeds." The pro forma adjustments increased the
minority interest in earnings of unconsolidated real estate partnerships by $0.7
million due to purchasing a 70% interest in Wheaton Plaza.
PRO FORMA OPERATING RESULTS--YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER
31, 1996
On a pro forma basis, after giving effect to the Offerings and concurrent
transactions, net income of the Company for the year ended December 31, 1996 was
$51.2 million as compared to historical net income of the Company for the same
period of $24.7 million. The pro forma adjustments increased revenues by $63.9
million and total operating expenses by $32.5 million, as a result of reflecting
the operations of the Acquired Properties for the period January 1, 1996 through
June 30, 1996, the operations of Annapolis Mall and Wheaton Plaza for the year
ended December 31, 1996 and a decrease in the advisory fee due to an amendment
of the Advisory Agreement. The pro forma adjustments increased interest expense
by $12.8 million as a result of additional borrowings on the Company's unsecured
corporate credit line as described under "Use of Proceeds," and additional
interest expense that would have been incurred had the Acquired Properties been
acquired on January 1, 1996 versus July 1, 1996. Equity in income of
unconsolidated real estate partnerships decreased $3.0 million due to the
purchase of
57
<PAGE>
the outside partner's interest in Annapolis Mall and consolidating Annapolis
Mall. The pro forma adjustments increased interest income by $12.7 million
reflecting interest earned on the Garden State Plaza Loan as described under
"Use of Proceeds." The pro form adjustments increased the minority interest in
earnings of unconsolidated real estate partnerships by $1.9 million due to
purchasing a 70% interest in Wheaton Plaza.
CASH FLOWS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1997 TO THE THREE MONTHS
ENDED MARCH 31, 1996 (UNAUDITED). Cash and cash equivalents decreased $5.5
million for the three months ended March 31, 1997 when compared to the same
period in 1996 due primarily to cash used in operating, investing and financing
activities. Net cash provided by operating activities decreased $0.2 million due
to an increase in tenant accounts receivable. Net cash used in investing
activities increased $4.6 million primarily due to capital expenditures totaling
$4.7 million pertaining to the expansion and redevelopment of South Shore Mall,
Eastland Center and Mid Rivers Mall partially offset by an increase in net
distributions received from unconsolidated real estate partnerships of $0.2
million. Net cash used in financing activities increased due to an increase in
net distributions to shareholders of $6.6 million, partially offset by increased
borrowings of $6.3 million incurred primarily to finance redevelopment and
expansion activities.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31,
1995. Cash and cash equivalents increased $6.7 million in 1996 when compared to
the same period in 1995 due to the excess of cash provided by operating
activities and financing activities over cash used for investing activities. Net
cash provided by operating activities increased by $12.9 million to $55.8
million when compared to $42.9 million in 1995. The increase in cash provided by
operating activities is primarily due to the additional cash flow generated from
the Acquired Properties. Net cash used in investing activities was $97.1 million
higher in the year ended 1996 than the comparable period of 1995 as a result of
purchasing the Acquired Properties in July 1996 for $62.8 million, renovation
and redevelopment costs of $13.3 million for Mission Valley Center which was not
consolidated in 1995, renovation and redevelopment costs at Eastland Center and
Mid Rivers Mall aggregating $17.2 million, and pre-development costs for the
Properties of $1.0 million. Net cash provided by financing activities was $105.2
million higher in the year ended 1996 than the comparable period of 1995. The
increase in cash flows provided by financing activities reflects the issuance of
stock, repurchase of stock and repayment of debt associated with the
Recapitalization. Additionally, the 1996 financing activities reflect
distributions to common and preferred shareholders which were $9.8 million
higher when compared to the same period in 1995 as a result of additional
distributable income generated by the Acquired Properties and increased
specialty leasing.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31,
1994. Cash and cash equivalents decreased $14.3 million in 1995 when compared
to the same period in 1994 due to the excess of cash used in financing
activities over cash provided by operating activities and investing activities.
Net cash provided by operating activities increased $17.1 million to $43.0
million when compared to $25.9 million in 1994. The increase in cash provided by
operating activities is due primarily to an increase in net income, increased
collections of accounts receivable, and changes in deferred expenses, other
assets and deferred taxes. Net cash provided by investing activities was $5.4
million higher in the year ended December 31, 1995 when compared to the
comparable period in 1994. The increase in cash provided by investing activities
reflects $12.8 million of capital expenditures in 1995 as compared to $32.1
million in 1994 primarily due to the completion of the Westland Towne Center
redevelopment in 1994. In 1995, the Company began the Eastland Center and Mid
Rivers Mall developments. This increase in cash flows from investing activities
is partially offset by a reduction in distributions received from unconsolidated
real estate partnerships of $13.7 million primarily due to a special
distribution received by the Company in 1994 from the Meriden Square Partnership
as a result of a debt financing. Net financing activities increased $20.7
million to $62.7 million for the year end December 31, 1995 when compared to
$42.0 million for the same period in 1994. The increase in cash used for
financing activities is due primarily to increased distributions due to an
increase in cash provided by operations.
58
<PAGE>
EBITDA--EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
The Company believes that there are several important factors that
contribute to the ability of the Company to increase rent and improve
profitability of its shopping centers, including aggregate tenant sales volume,
sales per square foot, occupancy levels and tenant costs. Each of these factors
has a significant effect on EBITDA. The Company believes that EBITDA is an
effective measure of shopping center operating performance because, EBITDA is
unaffected by the debt and equity structure of the property owner. EBITDA: (i)
does not represent cash flow from operations as defined by GAAP; (ii) should not
be considered as an alternative to net income (determined in accordance with
GAAP) as a measure of the Company's operating performance; (iii) is not
indicative of cash flows from operating, investing and financing activities
(determined in accordance with GAAP); and (iv) is not an alternative to cash
flows (determined in accordance with GAAP) as a measure of the Company's
liquidity.
The Company's total EBITDA before minority interest plus its pro-rata share
of EBITDA of unconsolidated real estate partnerships ("Total EBITDA") increased
from $92.2 million in 1994 to $124.4 million in 1996, representing a compound
annual growth rate of 16%. The growth in total EBITDA reflects the addition of
Total GLA, increased rental rates, increased tenant sales, improved occupancy
levels and effective control of operating costs. During this period, the
operating profit margin increased from 62% to 64%. This improvement is also
primarily attributable to aggressive leasing of new and existing space and
effective control of operating costs.
A summary of EBITDA for the three months ended March 31, 1997 and 1996 and
the years ended December 31, 1996, 1995 and 1994 follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED DECEMBER 31,
ENDED MARCH 31, ----------------------------------
-------------------- PROFORMA
1997 1996 1996 1995 1994
--------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
EBITDA of wholly-owned and consolidated real estate
partnerships......................................... $ 31,288 $ 21,762 $ 100,962 $ 75,267 $ 70,920
Pro rata share of EBITDA of unconsolidated real estate
partnerships......................................... 6,563 6,193 24,020 26,932 21,300
--------- --------- ---------- ---------- ----------
Total EBITDA........................................... $ 37,851 $ 27,955 $ 124,982 $ 102,199 $ 92,220
--------- --------- ---------- ---------- ----------
--------- --------- ---------- ---------- ----------
EBITDA after minority interest (1)..................... $ 37,242 $ 27,540 $ 124,352 $ 102,199 $ 92,220
--------- --------- ---------- ---------- ----------
--------- --------- ---------- ---------- ----------
Increase in Total EBITDA from prior period............. 35% -- 22.3% 10.8% --
Increase in EBITDA after minority interest from prior
period............................................... 35% -- 21.7% 10.8% --
</TABLE>
- ------------------------
(1) EBITDA after minority interest represents earnings before interest, taxes,
depreciation and amortization for all Properties after the minority share in
Mission Valley Partnership EBITDA.
FUNDS FROM OPERATIONS
The Company computes Funds from Operations in accordance with standards
established by the White Paper on Funds from Operations approved by the Board of
Governors of NAREIT in March 1995 which defines Funds from Operations as net
income (loss) (computed in accordance with GAAP), excluding gains (or losses)
from debt restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. Funds from Operations should not be considered
as an alternative to net income (determined in accordance with GAAP) as a
measure of the Company's financial performance or to cash flow from operating
activities (determined in accordance with GAAP) as a measure of the Company's
liquidity, nor is it indicative of funds available to fund the Company's cash
needs, including its ability to make distributions. In addition, Funds from
Operations as computed by the Company may not be comparable to similarly titled
figures reported by other REITs.
59
<PAGE>
The following is a summary of the Funds from Operations of the Company and a
reconciliation of net income to Funds from Operations for the periods presented:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE YEARS ENDED
DECEMBER 31,
ENDED MARCH 31, ---------------------------------
-------------------- PROFORMA
1997 1996 1996 1995 1994
--------- --------- --------- --------- -----------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Funds from Operations...................................... $ 22,564 $ 18,046 $ 75,842 $ 65,792 $ 58,257
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
Increase in Funds from Operations from prior period........ 25.0% -- 15.3% 12.9% --
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
Reconciliation:
Net income............................................... $ 7,964 $ 6,707 $ 24,696 $ 21,846 $ 15,612
Amortization of deferred financing leases................ 499 466 1,883 1,786 1,679
Plus:
Depreciation and amortization from consolidated
properties............................................. 11,622 8,221 38,596 29,150 28,134
The Company's share of depreciation and amortization from
unconsolidated real estate partnerships................ 2,710 2,741 11,100 13,010 12,832
Less:
Minority interest portion of depreciation and
amortization.............................................. (231) (89) (433) -- --
--------- --------- --------- --------- -----------
Funds from Operations...................................... $ 22,564 $ 18,046 $ 75,842 $ 65,792 $ 58,257
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
</TABLE>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1997 TO THREE MONTHS ENDED MARCH
31, 1996.
The ratio of earnings to combined fixed charges and preferred stock
dividends decreased to $1.59 for the three months ended March 31, 1997 compared
to 1.99 for the three months ended March 31, 1996. This decrease is mainly due
to approximately $2.0 million in distributions on preferred stock issued on July
1, 1996, an increase in interest expense of approximately $5.4 million offset by
an increase in net income of approximately $1.3 million and an increase in
distributions from unconsolidated real estate partnerships in excess of related
earnings of approximately $2.0 million.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
The ratio of earnings to combined fixed charges and preferred stock
dividends decreased to 1.60 for the year ended December 31, 1996 compared to
2.25 for the year ended December 31, 1995. This decrease is due primarily to an
increase in interest expense in 1996 compared to 1995 of approximately $12.3
million, payment of approximately $4.3 million of distributions on preferred
stock issued in 1996, offset by an increase in income before taxes and minority
interest of approximately $2.9 million.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO PERIOD FROM FEBRUARY 12, 1994
THROUGH DECEMBER 31, 1994
The ratio of earnings to combined fixed charges and preferred stock
dividends decreased to 2.25 for the year ended December 31, 1995 compared to
2.89 for the period from February 12, 1994 through December 31, 1994. This
decrease is due to an increase in net income of approximately $6.6 million,
offset by a decrease of approximately $13.4 million in distributions from
unconsolidated real estate partnerships and an increase in interest expense of
approximately $3.8 million.
60
<PAGE>
PORTFOLIO DATA
REPORTED TENANT SALES VOLUME AND SALES PER SQUARE FOOT. From 1994 to 1996,
reported sales for Mall Stores (excluding the recently redeveloped Eastland
Center) increased from $1,487 million to $1,591 million, an average annual
compound growth rate of 3%. Total sales for Mall Stores affect revenue and
profitability levels of the Company because they determine the amount of minimum
rent the Company can charge, the percentage rent it realizes, and the
recoverable expenses (common area maintenance, real estate taxes, etc.) the
tenants can afford to pay.
The following illustrates total sales for Mall Stores:
<TABLE>
<CAPTION>
ANNUAL
FOR YEAR ENDED DECEMBER 31, PERCENTAGE INCREASE
- --------------------------------------------------------- TOTAL SALES FOR -----------------------
MALL STORES
---------------
(IN MILLIONS)
<S> <C> <C>
1994..................................................... $ 1,487 --
1995..................................................... 1,533 3.1%
1996..................................................... 1,591 3.8
</TABLE>
Reported sales per square foot for Mall Stores located at Centers under
Westfield Holdings's management (excluding the recently redeveloped Eastland
Center) for the years 1994 to 1996 were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Reported sales per square foot.............................. $ 297 $ 279 $ 263
Increase from prior year.................................... 6.5% 6.1% --
</TABLE>
If North County is included reported sales per square foot for Mall Stores
located at Centers (excluding the recently redeveloped Eastland Center) for the
years 1994 to 1996 were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Reported sales per square foot.............................. $ 300 $ 280 $ 266
Increase from prior year.................................... 7.1% 5.3% --
</TABLE>
In 1996, the Centers under Westfield Holdings's management (including the
Acquired Properties as if they were owned by the Company during such period but
excluding the recently redeveloped Eastland Center) reported average Mall Store
sales psf of $297 (including North County Fair, sales psf of $300) as compared
to an industry average of $278 psf for the same period (Source: ICSC Monthly
Mall Merchandise Index, February 1997).
As reflected in the above table, the increase in sales per square foot from
1994 to 1996 for Mall Stores located at Centers under Westfield Holdings's
management (excluding the recently redeveloped Eastland Center) was 13%.
The Company believes these sales levels enhance the Company's ability to
obtain higher rents from tenants.
LEASING
The amount of leased Mall Store space at Stabilized Centers (including the
Acquired Properties as if they were owned by the Company as of December 31,
1994) increased each year from 88% at December 31, 1994 to 92% (88% to 91%,
including North County Fair) at December 31, 1996, excluding temporary leases
with durations of less than one year. The Company excludes temporary leasing
from the calculation of leased Mall Store space since such leases are on a
short-term team basis (30 days to 11 months) and are subject to termination by
the Company on 30 days' notice.
61
<PAGE>
TENANT OCCUPANCY COSTS
A tenant's ability to pay rent is affected by the percentage of its sales
represented by occupancy costs, which consist of base rents and expense
recoveries. As sales levels increase, if expenses subject to recovery are
controlled, the tenant can pay higher rent. From 1994 to 1996 recoverable
expenses remained relatively constant while sales per square foot continued to
increase. This has permitted base rents to increase without raising a tenant's
total occupancy cost beyond its ability to pay.
The following table illustrates occupancy cost as percentage of sales for
reporting tenants for 1996 and 1995:
<TABLE>
<CAPTION>
(INCLUDING NORTH (EXCLUDING NORTH
COUNTY FAIR) FOR THE COUNTY FAIR) FOR THE
YEARS ENDED DECEMBER YEARS ENDED DECEMBER
31, 31,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Mall Stores
Base rents......................................... 8.6% 8.9% 8.5% 8.7%
Expense recoveries................................. 4.6 4.8 4.7 4.9
--- --- --- ---
Total............................................ 13.2% 13.7% 13.2% 13.6%
--- --- --- ---
--- --- --- ---
</TABLE>
As a result of these factors, the average effective (base plus percentage)
rents for Mall Stores located at Centers under Westfield Holdings's management
(including the Acquired Properties as if they were owned by the Company as of
December 31, 1994) increased from 1994 to 1996. Effective rents per square foot
of Mall Stores located at Centers under Westfield Holdings's management
increased 8% during this period (including North County Fair, 7%). The following
highlights this trend:
<TABLE>
<CAPTION>
(INCLUDING NORTH (EXCLUDING NORTH
COUNTY FAIR) AVERAGE COUNTY FAIR) AVERAGE
EFFECTIVE RENT PER EFFECTIVE RENT PER
SQUARE FOOT SQUARE FOOT
---------------------- ----------------------
MALL MALL
AS OF DECEMBER 31, STORES % CHANGE STORES % CHANGE
- -------------------------------------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
1992........................................ $ 21.73 -- $ 21.29 --
1993........................................ 22.84 5.1% 22.50 5.7%
1994........................................ 25.77 12.3 25.55 13.6
1995........................................ 26.51 2.9 26.33 3.1
1996........................................ 27.50 3.7 27.62 4.9
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE BASE RENT PER SQUARE FOOT MALL
STORES
<S> <C>
Dollars Per Square Ft
1994 $25
1995 $26
1996 $28
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
On a pro forma basis as of March 31, 1997, after giving effect to the
Offerings and concurrent transactions and the application of the proceeds
thereof, the Company's consolidated indebtedness is
62
<PAGE>
expected to increase from approximately $783.3 million to approximately $823.6
million. The maturity dates of such indebtedness range from 1999 to 2014. The
Company's ratio of debt-to-Total Market Capitalization would be approximately
41% on a pro forma basis as of March 31, 1997. The interest rate on the
fixed-rate debt ranges from 6.15% to 8.09%. See "Debt Summary." After the
Offerings, scheduled principal amortization and balloon payments in connection
with maturing mortgage indebtedness over the next five years and thereafter are
set forth in the table below:
<TABLE>
<CAPTION>
YEAR
- ------------------------------------------------------------------------------ AMOUNT
--------------
(IN THOUSANDS)
<S> <C>
1997.......................................................................... $ 4,944
1998.......................................................................... 7,022
1999.......................................................................... 194,542
2000.......................................................................... 383,899
2001.......................................................................... 170,157
Thereafter.................................................................... 63,048
</TABLE>
At December 31, 1996, the Company had two swap agreements with respect to
interest currently payable by the Company. Interest rate swaps are contractual
agreements between the Company and third parties to exchange fixed and floating
interest payments periodically without the exchange of the underlying principal
amounts (notional amounts). In the unlikely event that a counterparty fails to
meet the terms of an interest rate swap contact, the Company's exposure is
limited to the interest rate differential on the notional amount. The Company
does not anticipate non-performance by any of the counterparties. Under one of
the swap agreements, which has a notional amount of $125.0 million, the Company
is credited interest at LIBOR and incurs interest at a fixed rate of 5.75%.
Under the second swap agreement, which has a notional amount of $11.4 million,
the Company incurs interest at LIBOR and is credited interest at a fixed rate of
6.23%. Both swap agreements expire in 2000.
The Company has also entered into interest rate exchange agreements to
manage future interest rates. These agreements consists of swaps and involve the
future receipt, corresponding with the expiration of existing fixed rate
mortgage debt, of a floating rate based on LIBOR and the payment of a fixed
rate. At December 31, 1996, the Company had interest rate exchange agreements
beginning February 11, 1999 and expiring after three years with notional
principal amounts totaling $90.0 million which provide that the Company will pay
6.125% per annum. Subsequently, the Company entered into interest rate exchange
agreements beginning in February 1999 and April 2000 and expiring at various
dates in 2002 with notional principal amounts totaling $227.0 million which
provide that the Company will pay 6.25% per annum. These exchange rate
agreements ensure that, upon the expiration of certain of the Company's mortgage
debt, if the Company refinances such debt with new LIBOR based loans, the
interest rate on such loans will be no more than 6.125% or 6.25%, plus the
applicable spread of the loan at such time.
The historical sources of capital used to fund the Company's operating
expenses, interest expense, recurring capital expenditures and non-recurring
capital expenditures (such as major building renovations and expansions) have
been: (i) Funds from Operations, (ii) property financing and (iii) capital
contributions. The Company anticipates that all development projects, expansion
projects and potential acquisitions will be funded by external financing
sources.
Capital expenditures were $44.1 million, $12.8 million and $32.1 million for
the years ended December 31, 1996, 1995 and 1994, respectively. The following
table shows the components of capital expenditures.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1996 1995 1994
--------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
Renovations and expansions........................................... $ 39.0 $ 8.3 $ 27.1
Tenant allowances.................................................... 5.0 4.1 4.1
Other capital expenditures........................................... 0.1 0.4 0.9
--------- --------- ---------
Total............................................................ $ 44.1 $ 12.8 $ 32.1
--------- --------- ---------
--------- --------- ---------
</TABLE>
63
<PAGE>
Capital expenditures were financed by external funding and recovery of costs
from tenants where applicable. The Company is currently involved in several
development projects and had outstanding commitments with contractors totaling
approximately $35.8 million as of December 31, 1996, which will be funded
through existing mortgage debt and the secured revolving credit facility
discussed below.
The Company anticipates that its Funds from Operations will provide the
necessary funds on a short-and long-term basis for its operating expenses,
interest expense on outstanding indebtedness and all distributions to the
shareholders in accordance with the REIT Requirements. Sources of recurring and
non-recurring capital expenditures on a short-term and long-term basis, such as
major building renovations and expansions, as well as for scheduled principal
payments, including balloon payments on outstanding indebtedness are expected to
be obtained from: (i) additional debt financing, (ii) additional equity and
(iii) working capital reserves.
The Company also may obtain additional funds for future acquisitions and
development through borrowings, the issuance of equity securities or partnership
arrangements. Certain acquisitions may be undertaken through the issuance of
additional equity securities. The Company intends to incur additional
indebtedness in a manner consistent with its policy of maintaining a
debt-to-Total Market Capitalization ratio of not more than 50%. The Company
intends to access debt financing from the capital markets on a secured or
unsecured basis.
As of March 31, 1997, the Company's balance of cash and cash equivalents was
$2.6 million, not including its proportionate share of cash held by
unconsolidated real estate partnerships. The Company currently has a $50.0
million unsecured revolving credit facility. The Company has entered into a
letter of intent for a new $600.0 million unsecured revolving credit facility
with National Australia Bank Limited, Australia and New Zealand Banking Group
Limited, Commonwealth Bank of Australia, and Union Bank of Switzerland, of which
approximately $163.0 million will be used to refinance existing secured debt and
the balance will be used for the Company's redevelopment and acquisition
activities, as well as working capital, capital costs and general corporate
purposes. There can be no assurance that a definitive credit agreement with
respect to this loan facility will be entered into. For a further description of
the proposed credit facility see "Business and Properties--Debt Summary."
Although no assurance can be given, the Company believes that it will have
access to capital resources sufficient to satisfy the Company's cash
requirements and expand and develop its business in accordance with its strategy
for growth.
INFLATION
Inflation has remained relatively low during the past three years and has
had a minimal impact on the operating performance of the Properties.
Nonetheless, substantially all of the tenants' leases contain provisions
designed to lessen the impact of inflation. Such provisions include clauses
enabling the Company to receive percentage rentals based on tenants' gross
sales, which generally increase as prices rise, and/or escalation clause, which
generally increase rental rates during the terms of the lease. In addition, many
of the leases are for terms of less than ten years, which may enable the Company
to replace existing leases with new leases at higher base and/or percentage
rentals if rents of the existing leases are below the then-existing market rate.
Substantially all of the leases, other than those for anchors, require the
tenants to pay a proportionate share of operating expenses, including common
area maintenance, real estate taxes and insurance, thereby reducing the
Company's exposure to increases in cost and operating expenses resulting from
inflation.
However, inflation may have a negative impact on some of the Company's other
operating items. Interest and general and administrative expenses may be
adversely affected by inflation as these specified costs could increase at a
rate higher than rents. Also, for tenant leases with stated rent increases,
inflation may have a negative effect as the stated rent increases in these
leases could be lower than the increase in inflation at any given time.
64
<PAGE>
SEASONALITY
The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season, when tenant occupancy and retail sales
are typically at their highest levels. In addition, shopping malls achieve most
of their temporary tenant rents during the holiday season. As a result of the
above, earnings are generally highest in the fourth quarter of each year.
BUSINESS AND PROPERTIES
GENERAL
The Company's portfolio consists of interests in 13 super regional shopping
centers, six regional shopping centers and three Power Centers, the May
Properties and certain other real estate investments.
THE SHOPPING CENTER BUSINESS
According to "The Scope of the Shopping Center Industry in the United States
1996" as published by the ICSC, retail shopping centers accounted for
approximately 58% of retail sales in the United States (excluding sales by
automotive dealers and gasoline service stations), or an estimated $914.2
billion, in 1996. The ICSC divides shopping centers into various categories
including, among others, super regional shopping centers which are greater than
800,000 square feet of total gross leasable area, regional shopping centers
ranging from 400,000 to 800,000 square feet of total gross leasable area, and
power centers ranging from 250,000 to 600,000 square feet of total gross
leasable area.
Most regional and super regional shopping centers compete for consumer
retail dollars by offering fashion merchandise, hard goods and services,
generally in an enclosed, climate-controlled environment with convenient
parking. Regional and super regional shopping centers have differing strategies
for price levels depending upon the market demographics, competition and the
merchants and merchandise offered, from very high-end presentations, on the one
extreme, to a strategy of leasing exclusively to promotional, single category
outlet stores, on the other. Super regional shopping centers generally have more
variety and assortment than regional shopping centers.
The Company owns interests in 13 super regional shopping centers, with
approximately 14.0 million square feet of Total GLA, representing 72.9% of the
Total GLA. According to the ICSC, nationwide there are approximately 680 super
regional shopping centers, representing 1.7% of shopping centers across the
country.
The Company owns interests in six regional shopping centers with
approximately 3.7 million feet of Total GLA, representing 19.5% of the Total
GLA. According to the ICSC, nationwide there are approximately 1,235 regional
shopping centers representing 3% of shopping centers across the country.
Power centers tend to have category-dominant anchors and few small tenants.
The Company has three Power Centers, including Eastland Center which was
recently converted from a regional shopping center. The Company is also planning
to build a power center on land adjacent to Topanga Plaza and to redevelop the
existing Power Center known as Mission Valley Center-West into a value-oriented
power center. The Power Centers have approximately 1.5 million square feet of
Total GLA, representing 7.6% of Total GLA.
INDUSTRY TRENDS AND THE COMPANY'S MERCHANDISING
The Manager continually monitors and analyzes trends in the Centers and the
industry as a whole. The Manager's in-house research, marketing, merchandising,
and leasing professionals work together to identify retail trends and seek to
merchandise and lease the Centers in response to those market trends. The
following significant industry trends have been identified.
Over the past six years, the Manager has identified a major fashion shift in
ready-to-wear with women's fashion retailers decreasing from approximately 24%
to 19.8% of Mall GLA. The trend to casual dressing and the resulting consumer
interest in value-oriented ready-to-wear, including casual and athletic
footwear, has changed the nature of fashion in the Centers. The trend has moved
from women's ready-to-
65
<PAGE>
wear to unisex apparel with unisex retailers increasing from 8.2% to 14.7% of
Mall GLA over the period. The Manager has sought out unisex tenants such as
Eddie Bauer, J. Crew, The Gap, Banana Republic, American Eagle and others.
New retailers are revitalizing the merchandise variety available at the
Centers, including The Disney Store, Starbucks, Garden Botanika, Coach Leather,
The Museum Company, Warner Bros., Crate and Barrel, The Nature Company, The
Bombay Company, and California Pizza Kitchen.
Successful retailers (including The Gap, Banana Republic and The Limited)
are expanding their formats into larger stores and combining stores such as The
Gap, Gap Kids and the Baby Gap.
There has been a recent "baby-boom" in the U.S., in years 1989-1993, births
have exceeded four million for the first time since the early 1960's; there are
now 20 million Americans between the ages of four and eight. As a result of this
new "baby-boom," the Manager is making a special effort to attract children's
ready-to-wear (i.e., Gap Kids, Baby Gap, and Gymboree) and related kids'
retailers (toys, software, videos), to its Centers. Marketing has also been
tailored to attract this young market and their parents through strategies such
as "Kids Clubs" and mall promotions.
The Manager is merchandising the Centers today to take advantage of the fast
growing teenage market. There are 37 million teens in the U.S., and there has
been a fashion shift to more stylish, junior ready-to-wear. Also, as the new
"baby-boomers" reach their teenage years the Manager believes such tenants as
Wet Seal, Contempo Casuals, Rampage/Friends, Pacific Sunwear, Claire's Store and
The Limited will benefit from these demographic trends.
The Manager and the Company are optimistic about the future of the regional
shopping center business because the consolidation of the department stores in
recent years provides the Centers with financially stronger anchor stores. Also,
the new innovative retailers entering the Centers offer greater merchandise
selection for the shopper. The Company believes the demographic trends described
above will be beneficial to the fashion retailers in the same manner that the
first generation of "baby-boomers" that were fashion oriented drove the dramatic
growth of the shopping industry in the 1970's and 1980's.
THE CENTERS
As set forth in the following table, the Company's portfolio consists of
interests in 13 super regional shopping centers, six regional centers and three
Power Centers located in seven states in the East Coast, the Mid West, and the
West Coast regions of the United States and totalling 19.2 million square feet
of Total GLA. In addition, the Company has an option to acquire the stock of
Westland Realty, Inc., the holder of an indirect 50% interest in Garden State
Plaza pursuant to the Garden State Plaza Option.
66
<PAGE>
CENTER PROFILE
<TABLE>
<CAPTION>
PERCENTAGE OF
MALL GLA
LEASED AT 1996 MALL STORE HISTORY AND
SHOPPING CENTER AND PERCENTAGE TOTAL GLA MALL GLA DECEMBER 31, SALES STATUS OF
LOCATION(1) OWNERSHIP (SQ. FT.) SQ. FT. 1996 (PER SQ. FT.)(2) DEVELOPMENT
- ------------------------------ ------------ ----------- ----------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
EAST COAST
Annapolis Mall,(5) ........... 30 990,702 408,554 96 $ 371 Opened 1980
Annapolis, Maryland Redeveloped
1983/1994
Connecticut Post Mall,(6) .... 100 831,707 438,405 91 298 Opened 1960
Milford, Connecticut Redeveloped 1991
Enfield Square,(6)(7) ........ 100 678,822 260,632 76 215 Opened 1971
Enfield, Connecticut Redeveloped
1987/1997
Meriden Square, .............. 50 746,695 294,654 92 330 Opened 1971
Meriden, Connecticut Redeveloped
1988/1993
Montgomery Mall, ............. 100 1,253,482 467,872 97 405 Opened 1968
Bethesda, Maryland Redeveloped
1976/1982/1984
1991
South Shore Mall,(7)(8) ...... 100 1,108,111 370,962 92 292 Opened 1963 Under
Bay Shore, New York Redevelopment
Trumbull Shopping Park, ...... 100 1,160,716 464,088 86 314 Opened 1964
Trumbull, Connecticut Redeveloped
1982/1987/1990
1992
----------- ----------- --
Total(8).................. 6,770,235 2,705,167 92
----------- ----------- --
<CAPTION>
TRADE AREA
POPULATION
(000S)(3)/
AVERAGE ANNUAL
SHOPPING CENTER AND HOUSEHOLD MAJOR RETAILERS AND
LOCATION(1) INCOME $(4) SPECIAL FEATURES
- ------------------------------ --------------- ---------------------
<S> <C> <C>
EAST COAST
Annapolis Mall,(5) ........... 450/ Nordstrom, Hecht's,
Annapolis, Maryland $63,400 J.C. Penney,
Montgomery Ward
Connecticut Post Mall,(6) .... 430/ Filene's, J.C.
Milford, Connecticut $54,600 Penney, Caldor
Enfield Square,(6)(7) ........ 312/ Filene's, J.C.
Enfield, Connecticut $53,700 Penney. Sears
scheduled to open
Spring 1997.
Meriden Square, .............. 396/ Filene's, J.C.
Meriden, Connecticut $54,800 Penney, Sears
Montgomery Mall, ............. 612/ Nordstrom, Hecht's,
Bethesda, Maryland $79,900 Sears, J.C. Penney
South Shore Mall,(7)(8) ...... 495/ Macy's, J.C. Penney,
Bay Shore, New York $66,500 Sears scheduled to
open Fall 1997
Trumbull Shopping Park, ...... 536/ Macy's, Filene's,
Trumbull, Connecticut $71,400 Lord & Taylor, J.C.
Penney
Total(8)..................
</TABLE>
67
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
MALL GLA LEASED
AT 1996 MALL STORE HISTORY AND
SHOPPING CENTER AND PERCENTAGE TOTAL GLA MALL GLA DECEMBER 31, SALES STATUS OF
LOCATION(1) OWNERSHIP (SQ. FT.) (SQ. FT.) 1996 (PER SQ. FT.)(2) DEVELOPMENT
- ------------------------------ ------------ ----------- ----------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
MID WEST
Mid Rivers Mall,(7) .......... 100 929,185 352,371 87 248 Opened 1987
St. Peters, Missouri Redeveloped
1990/1996
South County Center,(6) ...... 100 754,063 259,360 93 270 Opened 1963
St. Louis, Missouri Redeveloped 1979
West County Center, .......... 100 583,646 152,590 95 267 Opened 1969
Des Peres, Missouri Redeveloped 1985
West Park Mall, .............. 100 502,856 230,505 92 212 Opened 1981
Cape Girardeau, Missouri Redeveloped 1984
Westland Towne Center, ....... 100 470,943 137,520 95 175 Opened 1960
Lakewood, Colorado Redeveloped
1979/1994
----------- ----------- --
Total..................... 3,240,693 1,132,346 93
----------- ----------- --
WEST COAST
Eagle Rock Plaza, ............ 100 474,230 163,912 81 177 Opened 1973
Los Angeles, California
Eastland Center,(7) .......... 100 819,244 617,444 76 -- Opened 1957
West Covina, California Redeveloped
1979/1996/1997
(substantially
completed)
Mission Valley Center, ....... 76 1,340,410 508,492 96 283 Opened 1961
San Diego, California Redeveloped
1975/1983
1996/1997
Mission Valley 76 178,624 178,624 82 283 Opened 1961
Center-West,(7) . Under
San Diego, California Redevelopment
North County Fair,(9) ........ 45 1,243,551 363,054 79 316 Opened 1986
Escondido, California
<CAPTION>
TRADE AREA
POPULATION
(000S)(3)/
AVERAGE ANNUAL
SHOPPING CENTER AND HOUSEHOLD MAJOR RETAILERS AND
LOCATION(1) INCOME $(4) SPECIAL FEATURES
- ------------------------------ --------------- ---------------------
<S> <C> <C>
MID WEST
Mid Rivers Mall,(7) .......... 265/ Famous-Barr,
St. Peters, Missouri $50,400 Dillard's, Sears,
J.C. Penney
South County Center,(6) ...... 430/ Famous-Barr,
St. Louis, Missouri $45,400 Dillard's, J.C.
Penney
West County Center, .......... 324/ Famous-Barr, J.C.
Des Peres, Missouri $71,000 Penney
West Park Mall, .............. 231/ Famous-Barr, J.C.
Cape Girardeau, Missouri $30,600 Penney, Venture
Westland Towne Center, ....... 266/ Sears, Super Kmart
Lakewood, Colorado $44,300
Total.....................
WEST COAST
Eagle Rock Plaza, ............ 525/ Robinsons-May,
Los Angeles, California $50,500 Montgomery Ward
Eastland Center,(7) .......... 528/ Mervyn's, Target
West Covina, California $52,600
Mission Valley Center, ....... 936/ Robinsons-May,
San Diego, California $48,600 Macy's, Montgomery
Ward, AMC 20-screen
theater, Nordstrom
Rack
Mission Valley 936/
Center-West,(7) . $48,600
San Diego, California
North County Fair,(9) ........ 743/ Nordstrom,
Escondido, California $54,700 Robinsons-May (2),
Macy's, J.C. Penney,
Sears
</TABLE>
68
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
MALL GLA LEASED
AT 1996 MALL STORE HISTORY AND
SHOPPING CENTER AND PERCENTAGE TOTAL GLA MALL GLA DECEMBER 31, SALES STATUS OF
LOCATION(1) OWNERSHIP (SQ. FT.) (SQ. FT.) 1996 (PER SQ. FT.)(2) DEVELOPMENT
- ------------------------------ ------------ ----------- ----------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Plaza Bonita, ................ 100 822,075 313,248 94 304 Opened 1981
National City, California
Plaza Camino Real, ........... 40 1,152,194 433,984 92 275 Opened 1969
Carlsbad, California Redeveloped
1979/1989
The Plaza at West Covina, .... 100 1,233,582 585,488 91 256 Opened 1975
West Covina, California Redeveloped
1990/1993
Topanga Plaza, ............... 42 1,085,038 373,006 95 332 Opened 1964
Canoga Park, California Redeveloped
1984/1992/1994
Vancouver Mall, .............. 50 870,141 328,575 88 243 Opened 1977
Vancouver, Washington Redeveloped
1979/1993
----------- ----------- --
Total..................... 9,219,089 3,865,827 92(10)
----------- ----------- --
Grand Total(8).......... 19,230,017 7,703,340 92(10)
----------- ----------- --
----------- ----------- --
<CAPTION>
TRADE AREA
POPULATION
(000S)(3)/
AVERAGE ANNUAL
SHOPPING CENTER AND HOUSEHOLD MAJOR RETAILERS AND
LOCATION(1) INCOME $ (4) SPECIAL FEATURES
- ------------------------------ --------------- ---------------------
<S> <C> <C>
Plaza Bonita, ................ 696/ Robinsons-May, J.C.
National City, California $41,800 Penney, Montgomery
Ward and Mervyn's
Plaza Camino Real, ........... 475/ Macy's (2),
Carlsbad, California $52,300 Robinsons- May,
Sears, J.C. Penney
The Plaza at West Covina, .... 679/ Robinsons-May,
West Covina, California $54,900 Macy's, Sears, J.C.
Penney
Topanga Plaza, ............... 846/ Nordstrom,
Canoga Park, California $66,900 Robinsons-May, Sears,
Montgomery Ward
Vancouver Mall, .............. 278/ Nordstrom, Meier &
Vancouver, Washington $43,500 Frank, Sears, J.C.
Penney, Mervyn's
Total.....................
Grand Total(8)..........
</TABLE>
- ------------------
(1) For a description of the mortgage encumbrances on each Center, see "Business
and Properties--Debt Summary." All of the Centers are managed by Westfield
Holdings Limited other than North County Fair which is managed by Trizec
Hahn Corporation Limited.
(2) Sales are based on reports of Mall Store tenants reporting sales; Mall Store
sales are not provided for Eastland Center as such Center was under
redevelopment for all of 1996. Mall Store sales for Mission Valley Center
and Mission Valley Center - West are calculated on an aggregate basis for
such Centers. For Mall Store sales per square foot for 1994 and 1995 at such
Centers, see "Business and Properties--The East Coast Properties," "Business
and Properties--The Mid West Properties" and "Business and Properties--The
West Coast Properties."
(3) Trade Area Population means the number of people that reside in a
geographically defined area surrounding the shopping center that equates to
approximately 70% to 80% of the Centers' customer draw.
(4) U.S. national average household income $44,799. All figures are 1994
estimates provided by Equifax National Decisions Systems.
(5) The Company has entered into a letter of intent to purchase the remaining
70% interest in Annapolis Mall from its Joint Venture partner.
(6) The Company's interest in this Center includes certain incidental long-term
ground leases.
(7) Under redevelopment.
(8) After giving effect to the South Shore Mall redevelopment anticipated to be
completed in Fall 1997.
(9) The Joint Venture which owns this Center leases it from the City of
Escondido pursuant to a 50-year ground lease which expires in 2033. This
Center is not managed by Westfield Holdings.
(10) Total and Grand Total are for Stabilized Centers and exclude North County
Fair as such Center is not managed by Westfield Holdings.
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<PAGE>
The following table sets forth the number of Centers in each State and the
Total GLA per State for such Centers.
<TABLE>
<CAPTION>
PERCENT OF TOTAL
STATE OF SHOPPING CENTER LOCATIONS NO. OF SHOPPING CENTERS TOTAL GLA GLA
- ---------------------------------------------- ----------------------- ---------- -------------------
<S> <C> <C> <C>
California.................................... 9 8,348,900 43%
Colorado...................................... 1 470,900 2
Connecticut................................... 4 3,417,900 18
Maryland...................................... 2 2,244,200 12
Missouri...................................... 4 2,769,800 14
New York...................................... 1 1,108,100 6
Washington.................................... 1 870,100 5
</TABLE>
Business highlights of the operation and performance of the Centers include
the following:
- Successful redevelopment of a number of the Centers has generated
increased returns. The Company is in the process of redeveloping South
Shore Mall and anticipates that the redevelopment of Mission Valley
Center--West will commence in the second quarter of 1997. In addition, the
Company is currently planning the redevelopment of eight additional
Properties.
- In 1996, the Centers under Westfield Holdings's management (excluding the
recently redeveloped Eastland Center) reported average Mall Stores sales
psf of $297 (and including North County Fair, $300 psf for the same
period) as compared to an industry average of $278 psf for the same period
(Source: ICSC Monthly Mall Merchandise Index, February 1997).
- Mall GLA at Stabilized Centers was leased 92% as of December 31, 1996
(and, including North County Fair, 91% leased).
- Upon completion of construction at South Shore Mall and Enfield Square, 17
of the 19 Regional Centers will have three or more Anchors. The quality
and the number of Anchors both enhance the Centers' competitive position
with other retail facilities and make the development of competing centers
in the same trade area less likely.
- A significant concentration of Centers in California (43% of the Total GLA
of the Centers as of December 31, 1996) provides an excellent opportunity
to take advantage of that state's recent economic recovery.
- All of the Regional Centers are located on major road systems, primarily
in major metropolitan areas, including Los Angeles and San Diego,
California; Hartford, Connecticut; Portland, Oregon; St. Louis, Missouri;
Washington, D.C.; and Long Island, New York, providing easy access and
high visibility and creating a competitive advantage for the Company.
- The Centers have 74 Anchors operating under 18 trade names. The portfolio
includes 20 May Company stores (Famous-Barr, Filene's, Hecht's, Lord &
Taylor, Meier & Frank, and Robinsons-May), 16 J.C. Penneys, 11 Sears,
seven Federated (Macy's) and five Nordstrom stores. In addition, other
major Anchors include Dillard's, Dayton Hudson (Mervyn's, Target) and
Montgomery Ward. The Manager's strong relationships with these Anchors
enhance the Company's opportunities by providing substantial pre-leasing
of new projects, lease-up of existing space, improved tenant retention and
releasing opportunities. For a description of the total 1996 annualized
base rent and the percentage of Total GLA for such Anchors, see "Business
and Properties--Anchors."
- Montgomery Mall, the Company's Center with the largest revenues, was 97%
leased as of December 31, 1996, and had effective rents psf of $38 and
average Mall Store sales psf of $405, for the year ended December 31,
1996.
- Most of the Centers' Mall GLA is leased to national and regional chains,
including The Limited Stores (Abercrombie & Fitch, Bath & Body Works,
Express, Lane Bryant, Lerner's, Limited Too, Structure, The Limited and
Victoria Secret), The Gap (Banana Republic, Gap Kids, The Gap), Baker's
Shoes, CVS, Eddie Bauer, The Woolworth Corporation (Foot Locker and Kinney
Shoes), Edison Bros. (J. Riggins, JW and Oaktree), Kay Bee Toys & Hobby,
The Body Shop, The Disney Store and Warner Bros.
- In 1996, the Centers derived approximately 95% of their base rents from
Mall Stores. Mall Stores occupied approximately 40.1% of the Total GLA,
and the balance of Total GLA was represented by
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<PAGE>
Anchors and outparcel stores. No Mall Store retailer accounted for more
than 5% of Mall GLA or more than 6% of the Company's 1996 annualized
effective rent (I.E., base plus percentage rent), except for The Limited
Stores, a clothing retailer, which occupied approximately 10% of Mall GLA
and accounted for 11% of the 1996 Mall Store annualized effective rent.
THE EAST COAST PROPERTIES
The East Coast portfolio consists of interests in four Centers in
Connecticut, two in Maryland and one in New York. The East Coast properties are
well located in areas with large populations and generally middle to high
incomes. Connecticut has a population of more than 3.3 million, Long Island, New
York has 2.7 million and the greater Washington, D.C. area has 5.2 million
people. Many of the Centers have significant development opportunities over the
next 10 years. While competition is generally strong, Centers such as Annapolis
Mall, Montgomery Mall and Trumbull Shopping Park have established a competitive
advantage because of their strong department store and specialty store tenant
mix. For example, Montgomery Mall is differentiated from its competition by
having the only Nordstrom store in its market and a distinctive tenant mix.
Annapolis Mall, with its upscale suburban market, has the only Nordstrom store
in its Primary Trade Area.
CONNECTICUT SUPER REGIONAL SHOPPING CENTERS
CONNECTICUT POST MALL. Connecticut Post Mall is located in Milford,
Connecticut, at the intersection of Interstate 95 and Boston Post Road, and has
a significant market share of the greater New Haven market. The Center, which
opened in 1960, was last redeveloped in 1991 by adding J.C. Penney, Filene's and
a new food court. The enclosed, two-level mall has 831,707 square feet of Total
GLA on a 79-acre site, with 137 Mall Stores and three Anchors: Filene's, J.C.
Penney and Caldor. The Company anticipates that further redevelopment could
include the addition of up to two more anchors and additional Mall GLA. The
Company owns 100% of the Center. Mall Store sales per square foot (based on Mall
Store tenants reporting sales) were $297, $297 and $298 for 1994, 1995 and 1996,
respectively.
TRUMBULL SHOPPING PARK. Trumbull Shopping Park is located in Trumbull,
Connecticut, near the Merritt Parkway and serves the affluent Fairfield County
communities. The Center, which opened in 1964, has undergone multiple
redevelopments, including a significant redevelopment in 1992 which added Lord &
Taylor and 10,000 square feet of additional Mall GLA. The two-level Center has
approximately 1.2 million square feet of Total GLA on a 78-acre site, with 176
Mall Stores and four Anchors: Macy's, Filene's, Lord & Taylor and J.C. Penney.
The Company believes that there is redevelopment potential with the addition of
a third level of specialty stores. The Company owns 100% of the Center. Mall
Store sales per square foot (based on Mall Store tenants reporting sales) were
$271, $307 and $314 for 1994, 1995 and 1996, respectively.
CONNECTICUT REGIONAL SHOPPING CENTERS
ENFIELD SQUARE. Enfield Square is located in Enfield, Connecticut, 15 miles
north of downtown Hartford, Connecticut, along Interstate 91 and serves North
Hartford County. The Center, which opened in 1971, was last renovated in 1987,
and is currently under redevelopment with the addition of Sears as a new anchor
scheduled for Spring 1997. Upon completion of redevelopment, the one-level
Center will have 678,822 square feet of Total GLA on a 104-acre site, with 81
Mall Stores and three Anchors: Filene's and J.C. Penney and a new Sears store.
The Company believes that potential redevelopment exists for a possible fourth
anchor and an additional Mall GLA. The Company owns 100% of the Center. Mall
Store sales per square foot (based on Mall Store tenants reporting sales) were
$215, $211 and $215 for 1994, 1995 and 1996, respectively.
MERIDEN SQUARE. Meriden Square is located in Meriden, Connecticut, 20 miles
southwest of downtown Hartford, Connecticut, and serves New Haven County. The
Center, which opened in 1971, was last redeveloped in 1993 with the addition of
Sears and 100,000 square feet of Mall GLA. This two-level Center has 746,695
square feet of Total GLA on a 63-acre site, with 113 Mall Stores and three
Anchors: Filene's, J.C. Penney and Sears. The Company believes that further
redevelopment may include the addition of a fourth anchor and an expansion of
Mall GLA. Mall Store sales per square foot (based on Mall Store tenants
reporting sales) were $292, $309 and $330 for 1994, 1995 and 1996, respectively.
71
<PAGE>
The Company is a 50% general partner in Meriden Square, under a partnership
agreement expiring in 2058 with two entities that together comprise the other
50% general partner interest. Each partner may only sell the Center with the
consent of the other or after offering its interest to the other partner where
the partner elects not to purchase.
MARYLAND/WASHINGTON, D.C. SUPER REGIONAL SHOPPING CENTERS
ANNAPOLIS MALL. Annapolis Mall is located in Annapolis, Maryland, the home
of the U.S. Naval Academy and a popular tourist destination, 20 miles east of
the Washington, D.C. metropolitan area. The Center, which opened in 1980, was
redeveloped in 1994 with the addition of Nordstrom and 100,000 square feet of
Mall GLA. At that time the Center was also renovated and repositioned with
upscale specialty stores to complement Nordstrom. The 1994 redevelopment and
repositioning significantly expanded the Center's trade area and enabled
Annapolis Mall to hold a significant market share. The one-level Center has
990,702 square feet of Total GLA on a 93-acre site, with 151 Mall Stores and
four Anchors: Hecht's, Montgomery Ward, J.C. Penney and Nordstrom. There is
early redevelopment planning for the addition of a fifth anchor. The Company
believes that two additional anchors and Mall GLA can be added to the Center.
Mall Store sales per square foot (based on Mall Store tenants reporting sales)
were $280, $336 and $371 for 1994, 1995 and 1996, respectively.
The Company is a 30% general partner in Annapolis Mall. Under the terms of
the partnership agreement expiring May 1, 2078, neither joint venture partner
may dispose of an interest except (i) to an affiliate, (ii) in connection with
the merger, consolidation, or sale or substantially all the assets or (iii)
subject to a right of first refusal. The agreement contains buy-sell provisions
with respect to partnership interests in the event of a deadlock as to the sale
of the Center, refinancing or the identity of a department store operator.
Neither joint venture partner may mortgage its partnership interest. The Company
has entered into a letter of intent with its Joint Venture partner to acquire
the remaining 70% interest in Annapolis Mall and an adjoining parcel of real
property leased to Montgomery Ward & Co., for an aggregate purchase price of
$133.0 million. See "The Company--The Company's Strategy for Operation and
Growth Acquisition of New Centers and Joint Venture Interests."
MONTGOMERY MALL. Montgomery Mall is located in Bethesda, Maryland, and
serves Montgomery County. The Center, which opened in 1968, was expanded and
redeveloped in 1991 with the addition of a Nordstrom and a new fashion retail
wing. The repositioning of the Center includes serving the high income
demographics of the market and additional upscale merchandise to better
compliment Nordstrom. The Center has approximately 1.25 million square feet of
Total GLA on a 58-acre site, with 178 Mall Stores and four Anchors: Nordstrom,
Hecht's, Sears and J.C. Penney. The Center has the most significant market share
of the super regional shopping centers serving Montgomery County in Maryland.
The Company believes that additional anchors and Mall GLA can be added to the
Center. The Company owns 100% of the Center. Mall Store sales per square foot
(based on Mall Store tenants reporting sales) were $384, $397 and $405 for 1994,
1995 and 1996, respectively.
NEW YORK SUPER REGIONAL CENTER
SOUTH SHORE MALL. South Shore Mall is located in Bay Shore, New York in
Long Island near the Sunrise Highway. The Center, which opened in 1963, is
presently being expanded with a new Sears and 40,000 square feet of Mall GLA. As
part of its expansion, the Center is being renovated. The redevelopment is
expected to be completed in Fall 1997. Upon completion of the redevelopment, the
Center will have approximately 1.1 million square feet of Total GLA on a 84-acre
site, with 120 Mall Stores and three Anchors: J.C. Penney, Macy's and the new
Sears store. The Company owns 100% of the Center. Mall Store sales per square
foot (based on Mall Store tenants reporting sales) were $265, $282 and $292 for
1994, 1995 and 1996, respectively.
THE MID WEST PROPERTIES
The Mid West portfolio consists of interests in four Centers in Missouri and
one in Denver, Colorado. All of the Missouri Centers are easily accessible to
and readily visible from major interstate highways. Three of the Mid West
Properties are located in the St. Louis metropolitan area which has a population
of more than 2.5 million.
72
<PAGE>
MISSOURI/ST. LOUIS SUPER REGIONAL CENTER
MID RIVERS MALL. Mid Rivers Mall is located on Interstate 70 in St. Charles
County in the St. Peters, Missouri metropolitan area. The Center, which opened
in 1987, was redeveloped in 1990, and again in 1996. The 1996 redevelopment
resulted in an addition of 40,000 square feet of Mall GLA and added J.C. Penney.
The two-level Center has 929,185 square feet of Total GLA on a 78-acre site,
with 142 Mall Stores and Anchors all four major department stores that serve St.
Louis: Famous-Barr, Dillard's, Sears and J.C. Penney. The Company owns 100% of
the Center. Mall Store sales per square foot (based on Mall Store tenants
reporting sales) were $199, $226 and $248 for 1994, 1995 and 1996, respectively.
MISSOURI/ST. LOUIS REGIONAL CENTERS
SOUTH COUNTY CENTER. South County Center is located at the intersection of
Interstate 270 and Interstate 55 in St. Louis, Missouri, and serves the south
St. Louis and South County markets. The two-level Center, which opened in 1963,
has 754,063 square feet of Total GLA on a 73-acre site, with 102 Mall Stores and
three Anchors: Famous-Barr, Dillard's and J.C. Penney. Substantial redevelopment
planning is proceeding for the addition of a fourth anchor and additional
specialty stores. The Company owns 100% of the Center. Mall Store sales per
square foot (based on Mall Store tenants reporting sales) were $241, $258 and
$270 for 1994, 1995 and 1996, respectively.
WEST COUNTY CENTER. West County Center is located in Des Peres, Missouri,
on Interstate 270 and serves the affluent west county suburbs of St. Louis
County. The Center, which opened in 1969, has 583,646 square feet of Total GLA
on a 51-acre site, with 65 Mall Stores and two Anchors: Famous-Barr and J.C.
Penney. Substantial redevelopment planning is proceeding for the addition of a
fashion anchor, additional Mall GLA and the redevelopment of the existing Mall
GLA. The Company owns 100% of the Center. Mall Store sales per square foot
(based on Mall Store tenants reporting sales) were $244, $247 and $267 for 1994,
1995 and 1996, respectively.
WEST PARK MALL. West Park Mall is located in southeast Missouri in Cape
Girardeau. The Center serves a geographically large Primary Trade Area and is
the only regional shopping center in southeast Missouri. The Center, which
opened in 1981, was redeveloped in 1984. The one-level Center has 502,856 square
feet of Total GLA on a 65-acre site, with 82 Mall Stores and three Anchors:
Famous-Barr, J.C. Penney and Venture. The Company believes that there is
redevelopment potential for another anchor. The Company owns 100% of the Center.
Mall Store sales per square foot (based on Mall Store tenants reporting sales)
were $189, $206 and $212 for 1994, 1995 and 1996, respectively.
DENVER POWER CENTER
WESTLAND TOWNE CENTER. Westland Towne Center is located to the west of
downtown Denver in suburban Lakewood, Colorado. The Center, which opened in
1960, was redeveloped into a power center in 1994. The Center has 470,943 square
feet of Total GLA on a 46-acre site, with 15 Mall Stores and is anchored by a
Super Kmart (approximately 191,000 square feet) and a Sears store. The 1994
redevelopment repositioned the Center to better serve the middle income west
Denver market. No further redevelopment is currently planned. The Company owns
100% of the Center. Mall Store sales per square foot (based on Mall Store
tenants reporting sales) were $148 and $175 for 1995 and 1996, respectively.
Mall Store sales per square foot are not provided for 1994 as the Center was
under redevelopment in 1994.
THE WEST COAST PROPERTIES
The West Coast portfolio consists of interests in nine Centers in California
and one in Vancouver, Washington. With a population of more than 15.6 million,
the Los Angeles properties serve a broad customer base. The San Diego properties
serve a growing market with a base of 2.7 million people. The California
properties are well located with good access to major highways and are well
positioned to take advantage of the economic recovery taking place in
California. Vancouver Mall is in the Portland/ Vancouver market which has a
population of 1.7 million.
73
<PAGE>
CALIFORNIA SUPER REGIONAL CENTERS
MISSION VALLEY CENTER. Mission Valley Center is located in Mission Valley
in the heart of San Diego County, and is easily accessible from Interstates 8,
805 and 5. The one-level, open-air Center, which opened in 1961, was redeveloped
and strategically repositioned in 1996-7. A new 20-screen AMC theater which
opened in 1995 drew over 2 million theater-goers in its first year, making it
one of the top five movie theaters in the United States. As part of the
redevelopment, a major mall concourse was redeveloped with Category Killers,
including Bed Bath & Beyond, Loehmann's, Michaels and Nordstrom Rack. Theme
restaurants including Jr. Seau's, Canyon Cafe and Wolfgang Puck's Cafe have been
added to the Center. The repositioning of the Center allows it to better serve
its large middle class market. The Center has over 1.3 million square feet of
Total GLA on a 58-acre site, with 95 Mall Stores and three Anchors: Robinsons-
May, Montgomery Ward and Macy's. Mall Store sales per square foot (based on Mall
Store tenants reporting sales and computed on an aggregate basis for Mission
Valley Center and Mission Valley Center-West) were $239, $246 and $283 for 1994,
1995 and 1996, respectively.
The Company owns 75.8% of the Mission Valley partnership and is the sole
general partner. Under the terms of the partnership agreement, which terminates
on October 8, 2007, a partner may not transfer its interest, other than to an
affiliate, without the consent of the other partners.
NORTH COUNTY FAIR. North County Fair is located in Escondido, California,
and serves the north San Diego County market along Interstate 15. The
three-level Center, which opened in 1986, has over 1.2 million square feet of
Total GLA on a 83-acre site, with 168 Mall Stores and six Anchors: Nordstrom,
two Robinsons-May, Macy's, J.C. Penney and Sears. The Center has a significant
position in the upper middle class trade area. The Center is leased from the
city of Escondido under a 50-year lease which expires in 2033. North County Fair
is the only Center not managed by Westfield Holdings. Mall Store sales per
square foot (based on Mall Store tenants reporting sales) were $302, $297 and
$316 for 1994, 1995 and 1996, respectively.
The Company is a 45% limited partner in North County Fair. Under the terms
of the partnership agreement terminating on June 30, 2033, a partner may not
transfer its interest except to (i) an affiliate, (ii) a third party, subject to
a right of first refusal or (iii) a successor by merger or purchase of all or
substantially all of the assets.
PLAZA BONITA. Plaza Bonita is located in the south bay area of San Diego
County along Interstate 805, eight miles from the Mexican border. This two-level
Center, which opened in 1981, has 822,075 square feet of Total GLA on a 70-acre
site, with 135 Mall Stores and four Anchors: Robinsons-May, J.C. Penney,
Montgomery Ward and Mervyn's. Further redevelopment on a fifth pad may include
an additional anchor or specialty shops. The Company owns 100% of the Center.
Mall Store sales per square foot (based on Mall Store tenants reporting sales)
were $287, $269 and $304 for 1994, 1995 and 1996, respectively.
PLAZA CAMINO REAL. Plaza Camino Real is located in northern San Diego
County near the intersection of Highway 78 and El Camino Real and serves the
tri-city area of Carlsbad, Vista and Oceanside. This Center, which opened in
1969, was last redeveloped in 1989. The two-level Center has over 1.1 million
square feet of Total GLA on a 82-acre site, with 155 Mall Stores and five
Anchors: two Macy's, Robinsons-May, J.C. Penney and Sears. The Company believes
the Center has redevelopment potential with the inclusion of theaters,
restaurants or, possibly, Category Killers. Mall Store sales per square foot
(based on Mall Store tenants reporting sales) were $222, $245 and $275 for 1994,
1995 and 1996, respectively.
The Company is the 40% general partner in Plaza Camino Real. Under the terms
of the partnership agreement terminating in 2065, the consent of a majority
interest of limited partners is generally required for any transfer by the
Company of its interest in the Center other than to certain affiliated entities.
THE PLAZA AT WEST COVINA. The Plaza at West Covina is located in West
Covina, California, Los Angeles County on Interstate 10 (the San Bernardino
Freeway). The Center is the leading super regional shopping center serving the
San Gabriel Valley. The Center, which opened in 1975, was renovated in 1990. In
1993, a Robinsons-May store and 100,000 square feet of Mall GLA was added to the
Center. In 1996,
74
<PAGE>
the former Broadway store converted into a new Sears, the Bullock's converted
into Macy's and the Company added a 50,000 square-foot Oshman's Super Store. The
Center has over 1.2 million square feet of Total GLA on a 71-acre site, with 194
Mall Stores and four Anchors: Robinsons-May, Macy's, Sears and J.C. Penney. The
Company owns 100% of the Center. Mall Store sales per square foot (based on Mall
Store tenants reporting sales) were $218, $220 and $256 for 1994, 1995 and 1996,
respectively.
TOPANGA PLAZA. Topanga Plaza is located in Warner Center in the West San
Fernando Valley, in Los Angeles, California. The Center, which opened in 1964,
was renovated and repositioned in 1994 with an upscale merchandise mix including
Crate & Barrel, Guess, The Museum Company, and Warner Bros. A Sears opened in
late 1996, replacing a Broadway store. The Center has the only Nordstrom in the
west San Fernando Valley and attracts a high-income customer base. The two-level
Center has approximately 1.1 million square feet of Total GLA on a 63-acre site,
with 130 Mall Stores and four Anchors: Nordstrom, Robinsons-May, Sears and
Montgomery Ward. The Company believes the Center has redevelopment potential
with up to two additional department stores and additional Mall GLA. Mall Store
sales per square foot (based on Mall Store tenants reporting sales) were $340,
$338 and $332 for 1994, 1995 and 1996, respectively.
The Company is a 42% general partner in Topanga Plaza; the Outside Partner
is a 58% general partner. Under the terms of the partnership agreement, which
expires December 31, 2035, until December 31, 1998, the Company's joint venture
partner has the sole right to cause the Center to be sold, subject to a right of
first refusal by the Company; after January 1, 1999, either partner may cause
the Center to be sold subject to a right of first refusal by the other. The
Company may transfer its interest in the Center to certain affiliates without
the consent of the Outside Partner.
CALIFORNIA REGIONAL CENTER
EAGLE ROCK PLAZA. Eagle Rock Plaza is located southeast of Glendale,
California in Los Angeles County at Colorado Boulevard and the Glendale Freeway.
The two-level Center, which opened in 1973, has 474,230 square feet of Total GLA
on a 22-acre site, with 63 Mall Stores and two Anchors: Robinsons-May and
Montgomery Ward. Future redevelopment and repositioning may include an
additional anchor and a Category Killer. The Company owns 100% of the Center.
Mall Store sales per square foot (based on Mall Store tenants reporting sales)
were $166, $186 and $177 for 1994, 1995 and 1996, respectively.
CALIFORNIA POWER CENTERS
EASTLAND CENTER. Eastland Center is located on Interstate 10 in Los Angeles
County. Redevelopment of the Center, which opened in 1957, is substantially
complete. The Center has been repositioned as a power center and offers
value-oriented shopping with Ross Dress for Less, Office Depot, Old Navy,
Marshall's and a Babies 'R Us. The Center has 819,244 square feet of Total GLA
on a 58-acre site with 29 Mall Stores and is anchored by Mervyn's and a new
Target. The Center also has a major grocery store and drugstore. The Company
owns 100% of the Center. There were no reported sales by Mall Store tenants for
1994-1996 as the Center was under redevelopment.
MISSION VALLEY CENTER-WEST. The Center is a strip center, located on and
visible from Interstate 8, adjacent to the super regional Mission Valley Center.
The Center, which opened in 1961, has 178,624 square feet of Total GLA, 34 Mall
Stores and several value tenants, offices and outparcels. The Company plans to
build a new power center with value-oriented retailers complementing the newly,
repositioned Mission Valley Center and strengthening the retail hub created by
the two Centers. Mall Store sales per square foot (based on Mall Store tenants
reporting sales and computed on an aggregate basis for Mission Valley Center and
Mission Valley Center-West) were $239, $246 and $283 for 1994, 1995 and 1996,
respectively.
Mission Valley Center-West is owned by the same partnership that owns
Mission Valley Center.
75
<PAGE>
WEST VALLEY
West Valley is located in Canoga Park, California, and is adjacent to
Topanga Plaza. The property is predominantly vacant land with a few outparcels
that have been developed. The Company plans to redevelop the property into a
power center with value-oriented retailers. The property has 36.6 acres with
excellent visibility and position in Warner Center.
The Company is a 42.5% general and limited partner in West Valley under the
terms of the partnership agreement which terminates on December 31, 2015; the
Outside Partners have a 57.5% limited partnership interest.
WASHINGTON SUPER REGIONAL CENTERS
VANCOUVER MALL. Vancouver Mall, is located in Vancouver, Washington in
Clark County, a growing suburb of the Portland, Oregon metropolitan area. The
Center, which opened in 1977, was recently renovated and redeveloped by adding a
food court in 1993. The two-level Center has 870,141 square feet of Total GLA on
a 97-acre site, with 156 Mall Stores and five Anchors: Meier & Frank, Nordstrom,
Sears, J.C. Penney and Mervyn's. Expansion of current department stores is
planned to solidify the Center's position within its market. Mall Store sales
per square foot (based on Mall Store tenants reporting sales) were $196, $218
and $243 for 1994, 1995 and 1996, respectively.
The Company is a 50% general partner in Vancouver Mall; the Outside Partner
is also a 50% general partner. Under the terms of the partnership agreement,
terminating September 28, 2074, the Company's joint venture partner may only
sell its interest (other than through a right of first refusal) to a corporate
affiliate or in connection with a merger, consolidation or reorganization.
Notwithstanding any other provision, the partners together may not sell more
than 50% of the partnership interest in a year. There are buy-sell provisions
regarding the property, the price being set by the offeror. The Company's joint
venture partner may buy out the Company in certain circumstances (such as
bankruptcy) at the fair market value, which is determined by appraisal
procedures. Neither partner may mortgage its partnership interest.
ANCHORS
Anchors generally are department stores whose merchandise appeals to a broad
range of shoppers and traditionally have been a major factor in the public's
perception of a shopping center. Although the Centers receive a smaller
percentage of their operating income from Anchors than from Mall Stores, the
Company believes that the Anchors at a Center help to generate customer traffic
and therefore make a Center a desirable location for Mall Store tenants.
Anchors and the owner of a shopping center usually enter into agreements,
generally referred to as "reciprocal easement agreements" or "REAs," covering,
among other things, operational matters, initial construction and future
expansion. Anchors generally retain certain rights to approve or disapprove
future renovations or expansions of the shopping center, and the REAs usually
are recorded as encumbrances on all of the real property within the shopping
center. Many of the Anchors own their stores, the land under them and adjacent
parking areas. Others enter into long-term leases at rents that are lower than
the rents generally charged to Mall Store tenants.
Anchors at the Centers occupy approximately 11.5 million square feet of
Total GLA, or 59.9% of Total GLA, and accounted for less than 8.2% of the
Company's total revenue in 1996 (including North County Fair, 7.6% of the
Company's total revenues in 1996). Anchors range in size from approximately
72,000 to 363,000 square feet, with an average of approximately 156,000 square
feet. The Centers have 74 Anchors operating under 18 trade names. Excellent
relationships have been established with major Anchors, including
Dayton-Hudson's, Dillard's, Federated, J.C. Penney, May Company, Montgomery
Ward, Nordstrom and Sears. These relationships, combined with Westfield
Holdings's experience in management and development, enhance the Company's
development activities by permitting substantial pre-leasing of new projects,
lease-up of existing space and releasing opportunities.
76
<PAGE>
The following table indicates the parent company of each Anchor, the number
of stores owned or leased by each Anchor in the Centers, Total GLA and the
percentage of Total GLA as of December 31, 1996.
<TABLE>
<CAPTION>
1996
TOTAL GLA TOTAL ANNUALIZED
NUMBER OF (SQUARE FEET) PERCENTAGE OF BASE RENT
NAME ANCHOR STORES (IN THOUSANDS) TOTAL GLA (IN THOUSANDS)
- ----------------------------------------------- --------------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
May Department Stores
Robinsons-May................................ 8 1,520 7.9% $ 113
Famous-Barr.................................. 4 693 3.6 264
Filene's..................................... 4 705 3.7 479
Hecht's...................................... 2 416 2.2 --
Meier & Frank................................ 1 118 0.6 --
Lord & Taylor................................ 1 118 0.6 --
--
------ --- ------
Sub-Total...................................... 20 3,570 18.6 856
--
------ --- ------
J.C. Penney.................................. 16 2,415 12.6 1,653
Sears........................................ 11 1,657 8.6 60
Macy's....................................... 7 1,269 6.6 1,546
Montgomery Ward.............................. 5 790 4.1 207
Nordstrom.................................... 5 730 3.8 777
Dayton Hudson
Mervyn's................................... 3 248 1.3 --
Target Discount............................ 1 122 0.6 63
--
------ --- ------
Sub-Total.................................... 4 370 1.9 63
--
------ --- ------
Dillard's.................................... 2 290 1.5 15
Caldor....................................... 1 86 0.4 210
Venture...................................... 1 81 0.4 --
AMC Theater.................................. 1 76 0.4 761
Kmart........................................ 1 191 1.0 1,517
--
------ --- ------
Total........................................ 74 11,525 59.9% $ 7,665
--
--
------ --- ------
------ --- ------
</TABLE>
No single Anchor accounted for more than 10% of Total GLA as of December 31,
1996 at the Centers, except for the May Company which accounted for 18.6% of
Total GLA and J.C. Penney which accounted for 12.6% of Total GLA.
MALL STORES
The Centers have approximately 2,500 Mall Stores. As of December 31, 1996,
national or regional chains leased approximately 90% of the Mall GLA. The five
Mall Stores retailers accounting for the largest percentage of Mall Store
effective rent in 1996 were: The Limited Stores (Abercrombie & Fitch, The
Limited, Limited Express, Lane Bryant, Lerner's, Structure, Victoria Secret),
The Woolworth Corporation (Footlocker, Kinney Shoes and others), The Gap (The
Gap, Gap Kids, Banana Republic), Barnes and Noble, and Casual Corner.
In 1996, the Centers under Westfield Holdings's management (excluding
Eastland Center which is under redevelopment) reported average Mall Store sales
psf of $297 (including North County Fair, sales psf of $300) as compared to an
industry average of $278 psf for the same period (Source: ICSC Monthly Mall
Merchandiser Index, February 1997).
In 1996, the Centers derived approximately 95% of their base rents from Mall
Stores, which occupied approximately 40.1% of the Total GLA. No Mall Store
retailer accounted for more than 5% of Mall GLA or more than 6% of the Company's
1996 annualized effective rent (I.E., base plus percentage) at the
77
<PAGE>
Centers, except for The Limited Stores, a clothing retailer, which occupied 10%
of Mall GLA, and accounted for 11% of the 1996 total Mall Store annualized
effective rent as of December 31, 1996.
The following table sets forth, as of December 31, 1996, certain information
with respect to the ten largest Mall Store tenants (through their various
operating divisions) in terms of Mall GLA.
<TABLE>
<CAPTION>
TOTAL 1996
NUMBER OF MALL GLA EFFECTIVE PERCENTAGE OF
MALL STORES (SQUARE PERCENTAGE OF RENT TOTAL MALL STORE
TENANT LEASED FEET) MALL GLA (THOUSANDS) EFFECTIVE RENT
- ---------------------- --------------- ------------ ----------------- ------------- ---------------------
<S> <C> <C> <C> <C> <C>
Limited Stores........ 102 771,119 10% $ 15,941 11%
Woolworth............. 119 384,211 5 8,325 6
The Gap............... 17 131,030 2 3,054 2
Casual Corner......... 28 104,230 1 2,369 2
Barnes and Noble...... 27 84,545 1 2,492 2
Edison Brothers....... 38 77,163 1 1,845 1
Trans World........... 12 75,859 1 1,793 1
Eddie Bauer........... 12 73,530 1 2,173 1
Musicland............. 18 71,887 1 2,129 1
Kay Bee Toys &
Hobby................ 18 69,509 1 1,711 1
-- --
--- ------------ -------------
Total................. 391 1,843,083 24% $ 41,832 28%
-- --
-- --
--- ------------ -------------
--- ------------ -------------
</TABLE>
SALES
"Total sales" accounts for a portfolio's ability to generate sales over its
total square footage and is affected by occupancy. Total sales for Mall Stores
(including North County Fair) was in excess of $1.5 billion in 1996 and
represented a compound annual growth rate of 6.7% between 1994 (when Westfield
Holdings began managing the Company) and 1996.
The table below sets forth Mall Store sales for Centers in the East Coast,
the Mid West and the West Coast regions of the United States.
<TABLE>
<CAPTION>
EAST COAST CENTERS MID WEST CENTERS WEST COAST CENTERS TOTAL CENTERS
------------------------------ ---------------------------- -------------------------- --------------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
SALES(1) INCREASE SALES(1) INCREASE SALES(1) INCREASE SALES(1) INCREASE
YEAR (MILLIONS) (DECREASE) (MILLIONS) (DECREASE) (MILLIONS) (DECREASE) (MILLIONS) (DECREASE)
- ---------- ----------- ----------------- ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994...... $ 667 -- $ 168 -- $ 652 -- $ 1,487 --
1995...... 699 4.8% 174 3.6% 660 1.2% 1,533 3.1%
1996...... 700 -- 177 1.7 714 8.2 1,591 3.8
</TABLE>
- --------------
(1) Sales are based on reports of Mall Store tenants reporting sales and
excludes Centers under redevelopment.
78
<PAGE>
LEASING
Leased percentages are calculated on the basis of signed leases under which
the Company at the time of determination will be receiving rents for a period of
12 consecutive months starting on the date of calculation. The following table
sets forth leased status for the Centers in the East Coast, the Mid West and the
West Coast regions of the United States (excluding Centers under redevelopment).
<TABLE>
<CAPTION>
WEST COAST WEST COAST TOTAL TOTAL
CENTERS CENTERS CENTERS CENTERS
EAST COAST MID WEST (INCLUDING NORTH (EXCLUDING NORTH (INCLUDING NORTH (EXCLUDING NORTH
DECEMBER 31 CENTERS CENTERS COUNTY FAIR) COUNTY FAIR) COUNTY FAIR) COUNTY FAIR)
- ------------------- ------------- ----------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
1992............... 91% 88% 91% 90% 90% 90%
1993............... 93 89 90 90 91 91
1994............... 94 88 84 83 88 88
1995............... 92 92 88 89 90 90
1996............... 92 93 90 92 91 92
</TABLE>
Since Westfield Holdings acquired an interest in the Company and began to
provide development services with respect to the Centers, Eastland Center, West
Covina, California; Enfield Square, Enfield, Connecticut; Mid Rivers Mall, St.
Peters, Missouri; and Mission Valley Center, San Diego, California, have
undergone redevelopment, expansion and/or repositioning. It is the Company's
policy to minimize, to the extent consistent with the redevelopment plan, the
impact on existing tenants and revenues. In the case of Eastland Center and
Mission Valley Center, the areas targeted for redevelopment were substantially
vacant at the time the properties were acquired by the Company, and existing
tenants and revenues were not materially affected during redevelopment. The
projects at Enfield Square and Mid Rivers Mall involved expansion and did not
materially affect the existing tenants or revenues. The current redevelopment at
South Shore Mall is not expected to have a material affect during redevelopment.
COSTS OF OCCUPANCY
Management believes that in order to continue to increase Funds from
Operations, Mall Store tenants must be able to operate profitably. A major
factor contributing to tenant profitability is cost of occupancy. Management
believes that the occupancy costs for Mall Stores in the Centers are competitive
within the respective markets serviced by the Centers, thereby giving the
Company an opportunity to increase minimum rents.
The following table sets forth certain information relating to occupancy
costs in the Centers (including all Mall Store tenants reporting sales).
<TABLE>
<CAPTION>
(INCLUDING NORTH (EXCLUDING NORTH
COUNTY FAIR) COUNTY FAIR)
FOR THE YEARS ENDED FOR THE YEARS ENDED
DECEMBER 31, DECEMBER 31,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Occupancy Costs as a Percentage of Sales:
Base Rents.............................................. 8.6% 8.9% 8.5% 8.7%
Expense Recoveries...................................... 4.6 4.8 4.7 4.9
--- --- --- ---
Total................................................. 13.2% 13.7% 13.2% 13.6%
--- --- --- ---
--- --- --- ---
</TABLE>
LEASES
Generally the Mall Store leases are for ten-year terms at inception and the
leases provide for tenants to pay rent comprised of two elements. The first
element is fixed "base" or "minimum" rent, often subject to step increases
according to a schedule agreed upon at the time of lease inception. The second
element of rent is additional rent based upon a percentage of a tenant's gross
sales in excess of a minimum annual amount. Although both elements are
immaterial in the aggregate, in some cases, tenants only pay a fixed base rent
and, in a few cases, tenants only pay percentage rent.
79
<PAGE>
Virtually all of the leases for Mall Stores contain provisions that allow
the Centers to recover certain operating costs and expenses (including certain
capital expenditures) with respect to the common areas (including parking
facilities), all buildings, roofs and facilities within the Centers, as well as
insurance and property taxes. As a result of the foregoing, the Centers
recovered approximately 102% (including North County Fair) of these costs and
expenditures in 1996.
LEASE EXPIRATIONS
The expiration of leases presents shopping center owners with the
opportunity to increase base and percentage rents, modify lease terms and
conditions, improve tenant mix, relocate existing tenants, reconfigure or expand
tenant spaces and introduce new retailers and retail concepts to the shopping
center. The Company endeavors to increase base rent levels in the Centers in
part through negotiating terminations of leases of under performing tenants and
renegotiating existing leases. Where indicated, the Company has excluded
outparcels from various calculations set forth below. Outparcels include one or
more free standing buildings generally located along the perimeter of a Center.
The outparcels have been excluded because they are typically ground leased to
the tenants who own their own buildings and because such buildings are typically
restaurants, banks and similar service facilities.
The following table shows scheduled lease expirations as of December 31,
1996 for the next ten years for the Centers' Mall Stores (excluding outparcels).
<TABLE>
<CAPTION>
APPROXIMATE
MALL GLA OF PERCENTAGE AVERAGE ANNUALIZED PERCENTAGE OF
EXPIRING OF MALL GLA BASE RENT BASE RENT BASE RENT
NUMBER LEASES REPRESENTED (PSF) OF OF EXPIRING REPRESENTED
OF LEASES (SQUARE BY EXPIRING EXPIRING LEASES BY EXPIRING
YEAR ENDING DECEMBER 31, EXPIRING FEET) LEASES LEASES (THOUSANDS) LEASES
- ------------------------- ------------- ------------ ------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1997..................... 84 177,853 3.48% $ 25.27 $ 4,494 3.27%
1998..................... 217 460,672 9.01 25.35 11,676 8.49
1999..................... 186 321,180 6.28 25.98 8,344 6.07
2000..................... 194 334,433 6.54 29.55 9,881 7.18
2001..................... 190 378,982 7.41 30.80 11,673 8.49
2002..................... 215 482,845 9.45 30.59 14,771 10.74
2003..................... 198 467,827 9.33 26.93 12,843 9.34
2004..................... 234 681,311 13.33 27.24 18,561 13.49
2005..................... 192 582,274 11.39 26.82 15,619 11.36
2006..................... 164 465,071 9.1 28.35 13,184 9.59
</TABLE>
MALL STORE RENTAL RATES
The following table contains certain information regarding per square foot
average base rent of the Mall Stores that have been open since January 1, 1994
(excluding outparcels and North County Fair).
<TABLE>
<CAPTION>
ALL ALL
EXISTING LEASES EXISTING LEASES
(EXCLUDING (INCLUDING
NORTH COUNTY NORTH COUNTY
AS OF DECEMBER 31 FAIR) FAIR)
- ------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
1992............................................................... $ 20.32 $ 20.76
1993............................................................... 21.51 21.88
1994............................................................... 24.62 24.86
1995............................................................... 25.89 26.07
1996............................................................... 26.88 26.99
</TABLE>
As leases have expired, the Company has generally sought to rent the
available space, either to the existing tenant or a new tenant, at rental rates
that are higher than those of the expired leases, in part since the average rent
for leases in place is generally less than the market rate for such space.
The average effective (base plus percentage) annual rent per square foot at
Mall Stores was $27.62 psf at December 31, 1996 (excluding outparcels and North
County Fair) (excluding outparcels and including North County Fair, $27.50 psf
at December 31, 1996).
80
<PAGE>
The following table illustrates increases in Mall Store rental rates
(excluding outparcels).
<TABLE>
<CAPTION>
LEASES LEASES LEASES LEASES
EXPIRING EXECUTED EXPIRING EXECUTED
DURING THE DURING THE DURING THE DURING THE
PERIOD(1) PERIOD(2) PERIOD(1) PERIOD(2)
(EXCLUDING (EXCLUDING (INCLUDING (INCLUDING
NORTH NORTH NORTH NORTH
YEAR COUNTY FAIR) COUNTY FAIR) COUNTY FAIR) COUNTY FAIR)
- ------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
1994............... $ 20.63 $ 28.63 $ 21.26 $ 28.88
1995............... 22.89 26.06 23.03 26.68
1996............... 21.48 28.16 22.88 28.62
</TABLE>
- --------------
(1) Includes scheduled expirations, early termination, abandonments and
negotiated buyouts. Represents average base rent for the final year of
occupancy.
(2) Includes renewals. Represents average base rent for the initial year of
occupancy.
Minimum rents at Mall Stores are expected to grow based upon contractual
increases in base rent in existing leases, although there can be no assurance
that such contractual increases will be realized or that such contractual
increases are indicative of possible future increases in base rent. In the
aggregate, base rent is expected to increase by approximately $16,456,089 over
the next five years through these contractual increases (excluding outparcels).
<TABLE>
<CAPTION>
EXISTING CUMULATIVE EXISTING
CONTRACTUAL RENT CONTRACTUAL RENT
YEAR INCREASES INCREASES
- -------------------------------------------------------- ------------------- -------------------------
<S> <C> <C>
1997.................................................... $ 4,650,210 $ 4,650,210
1998.................................................... 4,889,631 9,539,841
1999.................................................... 2,775,982 12,315,823
2000.................................................... 2,223,276 14,539,099
2001.................................................... 1,916,990 16,456,089
</TABLE>
As required by GAAP, contractual rent increases are recognized as rental
income using the straight line method over the respective lease term which may
result in the recognition of income not evidenced by cash receipts. The amount
of contractual rent increases not represented by cash receipts for the year
ended December 31, 1996 was $2.3 million.
In addition to the increase in existing leases, the Company endeavors to
increase base rent levels in the Centers in part through negotiating
terminations of leases of under performing tenants and renegotiating existing
leases.
COMPETITION
All of the Centers are located in developed retail and commercial areas.
With respect to certain of such Centers, other malls or neighborhood and
community shopping centers may compete within the Primary Trade Area of each of
the Centers. The amount of rentable space in the relevant Primary Trade Area,
the quality of facilities and the nature of stores at such competing shopping
centers could each have a material adverse effect on the Company's ability to
lease space and on the level of rents the Company can obtain. In addition,
retailers at the Centers face increasing competition from other forms of
retailing, such as discount shopping centers, outlet malls, catalogues, discount
shopping clubs and telemarketing. Other development companies, including other
REITs, compete for acquisition of new retail shopping centers. See "Business and
Properties--The Shopping Center Business."
Although the Company believes the Centers can compete effectively within
their trade areas, the Company must also compete with other owners, managers and
developers of retail shopping centers and malls. Those competitors that are not
REITs may be at an advantage to the extent they can utilize working capital to
finance projects, while the Company (and its competitors that are REITs) will be
required by the annual distribution provisions under the Code to distribute
significant amounts of cash from operations to its shareholders. In addition,
the Company intends to distribute more cash to its shareholders than is required
by the Code because of WAT's distribution policies. See "Distributions." If the
Company should
81
<PAGE>
require funds, it may have to borrow when the cost of capital is high. Moreover,
increased competition could adversely affect the Company's revenues and Funds
from Operations.
CERTAIN TAX INFORMATION
The aggregate real estate property tax obligations for the Centers during
calendar 1996 was approximately $21.1 million. Substantially all leases for Mall
Stores contain provisions requiring tenants to pay as additional rent their
proportionate share of any real estate taxes.
At December 31, 1996, the Properties' gross Federal income tax basis was
approximately $1,182.9 million. The Company computes depreciation on the Centers
for Federal income tax purposes generally using the straight line method based
on useful lives ranging from 3 to 40 years and for accounting purposes using the
straight-line method based on useful lives of 3 to 50 years for buildings and
improvements and 10 years for equipment and fixtures.
ADDITIONAL INFORMATION REGARDING CONNECTICUT POST MALL, MONTGOMERY MALL, THE
PLAZA AT WEST COVINA, SOUTH SHORE MALL AND TRUMBULL SHOPPING PARK
The following section provides certain additional information with respect
to Montgomery Mall, The Plaza at West Covina, Connecticut Post Mall, South Shore
Mall and Trumbull Shopping Park. Montgomery Mall and The Plaza at West Covina
are the only Centers which had gross revenues which amounted to 10% or more of
the aggregate gross revenues of the Company during 1996. In addition, Montgomery
Mall also had a book value which amounted to 10% or more of the total assets of
the Company in 1996. Each of Connecticut Post Mall, South Shore Mall and
Trumbull Shopping Park, which were acquired by the Company in July, 1996 and for
which the Company's book value is based on the acquisition cost, had a book
value which amounted to 10% or more of the total assets of the Company in 1996.
Each of Montgomery Mall, The Plaza at West Covina, Connecticut Post Mall, South
Shore Mall and Trumbull Shopping Park is 100% owned by the Company.
The following table sets forth the Total GLA, number of Mall Stores, Anchors
and date of last redevelopment relating to Montgomery Mall, The Plaza at West
Covina, Connecticut Post Mall, South Shore Mall and Trumbull Shopping Park.
<TABLE>
<CAPTION>
NUMBER OF MALL DATE OF LAST
CENTER TOTAL GLA STORES ANCHORS REDEVELOPMENT
- ------------------------------------------------- ---------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Connecticut Post Mall ........................... 831,707 133 Filene's 1991
Milford, Connecticut J.C. Penney
Caldor
Montgomery Mall ................................. 1,253,482 178 Nordstrom 1991
Bethesda, Maryland Hecht's
J.C. Penney
Sears
The Plaza at West Covina 1,233,582 184 Robinson's- May 1993
West Covina, California......................... Macy's
Sears
J.C. Penney
South Shore Mall ................................ 1,108,111 129 Macy's Currently under
Bayshore, New York J.C. Penney redevelopment
Sears
Trumbull Shopping Park ......................... 1,160,716 175 Macy's 1992
Trumbull, Connecticut Filene's
J.C. Penney
Lord & Taylor
</TABLE>
The Company is currently redeveloping South Shore Mall, including the
addition of a Sears store and 40,000 square feet of Total GLA. Total project
cost are estimated at $30.4 million and are expected to be funded through the
Company's unsecured line of credit. Project completion is scheduled for Fall
1997. The Company is planning for the addition of up to two Anchors and
specialty stores at Connecticut Post Mall over the next five years. The Company
believes that there is further redevelopment potential for
82
<PAGE>
Montgomery Mall, The Plaza at West Covina, and Trumbull Shopping Park during the
next five to ten years although such redevelopment is not currently planned.
The following chart sets forth the Mall Store sales per square foot for
Connecticut Post Mall, Montgomery Mall, The Plaza at West Covina, South Shore
Mall and Trumbull Shopping Park. Sales are based on Mall Stores reporting sales:
<TABLE>
<CAPTION>
CENTER 1996 1995 1994
- ------------------------------------------------------------------------------------------ --------- --------- ---------
<S> <C> <C> <C>
Connecticut Post Mall..................................................................... $ 298 $ 297 $ 297
Montgomery Mall........................................................................... 405 397 384
The Plaza at West Covina.................................................................. 256 220 218
South Shore Mall.......................................................................... 292 282 265
Trumbull Shopping Park.................................................................... 314 307 271
</TABLE>
No tenant leased 10% or more of the rentable square footage at The Plaza at
West Covina. The following table sets forth the principal provisions of leases
for tenants that leased 10% or more of the rentable square footage of
Connecticut Post Mall, Montgomery Mall, South Shore Mall and Trumbull Shopping
Park as of December 31, 1996:
<TABLE>
<CAPTION>
BASE RENTAL SQUARE LEASE
PER ANNUM FOOTAGE EXPIRATION OPTIONS PERCENTAGE RENT(7)
----------- ----------- ----------- ---------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONNECTICUT POST MALL
J.C. Penney.............. $ 832,500 156,848 8/31/17 (1) 1% of sales over
$37,500,000
Caldor................... 209,675 86,454 1/31/03 (2) 1% of sales over
$10,000,000
----------- ----------- 2% of sales over
$12,000,000
Total Anchors............ 1,042,175 243,302
----------- -----------
Limited
Abercrombie & Fitch...... 154,000 7,700 1/31/06 None 5% of sales over
$3,080,000
Express.................. 450,000 18,000 8/31/04 None 5% of sales over
$9,000,000
Lane Bryant.............. 75,296 4,706 1/31/97 None 5% of sales over
$1,505,920
Lerner New York.......... 260,000 13,000 7/31/02 None 5% of sales over
$5,200,000
The Limited.............. 416,025 16,641 7/31/04 None 4% of sales over
$10,400,625
Victoria Secret.......... 213,875 8,555 1/31/02 None 5% of sales over
$4,277,500
----------- -----------
Total Limited.......... 1,569,196 68,602
----------- -----------
Total Connecticut Post $2,611,371 311,904
Mall...................
----------- -----------
----------- -----------
MONTGOMERY MALL
Limited
Abercrombie & Fitch...... $ 347,270 12,628 1/31/07 None 5% of sales over
$8,681,751
Express.................. 307,896 11,978 1/31/00 None 5% of sales over
$6,157,920
Lane Bryant.............. 117,220 5,861 1/31/98 None 5% of sales over
$2,344,402
Lerner New York.......... 133,364 6,062 1/31/99 None 5% of sales over
$2,667,281
The Limited.............. 829,715 29,116 1/31/07 None 4% of sales over
$13,830,100
Victoria Secret.......... 109,893 5,233 1/31/99 None 5% of sales over
$2,197,860
----------- -----------
Total Montgomery Mall.. $1,845,358 70,878
----------- -----------
----------- -----------
SOUTH SHORE MALL
Macy's................... $1,310,286 318,804 1/31/12 (3) 3% of sales up to
$100,000,000
2% of sales over
$100,000,000
but less than
$150,000,000
1% of sales over
$150,000,000
J.C. Penney.............. 155,263 202,116 4/30/02 (4) 2% of sales over
$12,542,890
----------- -----------
Total South Shore...... $1,465,549 520,920
----------- -----------
----------- -----------
TRUMBULL SHOPPING PARK
Macy's................... $ 236,500 215,000 1/31/15 (5) 2% of sales over
$12,900,000 and
2.5% of sales up to
$12,900,000
Filene's................. 479,391 213,081 1/31/04 (6) 0.75% of sales over
$23,250,000
----------- -----------
1% of sales over
$17,250,000
2% of sales over
$10,250,000
Total Trumbull Shopping
Park................. $ 715,891 428,081
----------- -----------
----------- -----------
</TABLE>
- ------------------------------
(1) One 10 year option and three 5 year options
(2) Five 5 year options
(3) Nine 7 year options
(4) Two 5 year options
(5) One 20 year option
(6) Five options, 1st is 6 years and 11 months, 2nd is 4 years, 3rd is 10 years,
4th and 5th are 5 years.
(7) Percentage rent is calculated based upon sales in excess of stipulated
minimums which vary from lease to lease.
83
<PAGE>
Mall Stores leased at Connecticut Post Mall, Montgomery Mall, The Plaza at
West Covina, South Shore Mall and Trumbull Shopping Park were as follows:
<TABLE>
<CAPTION>
CENTER 1996 1995 1994 1993 1992
- ----------------------------------------------------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Connecticut Post Mall...................................... 91% 91% 92% 93% 82%
Montgomery Mall............................................ 97 98 99 95 93
The Plaza at West Covina................................... 91 83 80 82 77
South Shore Mall........................................... 92 88 91 93 90
Trumbull Shopping Park..................................... 86 92 96 97 97
</TABLE>
The following table shows scheduled lease expirations as of December 31,
1996 for the next ten years for Mall Stores at Connecticut Post Mall (excluding
outparcels):
<TABLE>
<CAPTION>
APPROXIMATE AVERAGE BASE ANNUALIZED PERCENTAGE OF
MALL GLA OF PERCENTAGE OF RENT (PSF) BASE RENT BASE ANNUALIZED
NUMBER OF EXPIRING LEASED MALL GLA UNDER OF EXPIRING RENT
YEAR ENDING LEASES LEASES REPRESENTED BY EXPIRING LEASES REPRESENTED BY
DECEMBER 31, EXPIRING (SQUARE FEET) EXPIRING LEASES LEASES (THOUSANDS) EXPIRING LEASES
- ------------ --------- ------------- --------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1997 5 15,667 5.9% $ 22.90 $ 359 4.5%
1998 11 23,567 8.9 28.02 660 8.3
1999 5 10,734 4.0 27.04 290 3.6
2000 12 17,804 6.7 36.42 648 8.1
2001 14 16,587 6.2 50.56 839 10.5
2002 21 60,882 22.9 26.93 1,640 20.6
2003 12 23,125 8.7 31.10 719 9.0
2004 6 32,939 12.4 30.44 1,003 12.6
2005 4 18,768 7.1 23.01 432 5.4
2006 4 15,435 5.8 25.24 389 4.9
</TABLE>
The following table shows scheduled lease expirations as of December 31,
1996 for the next ten years for Mall Stores at Montgomery Mall (excluding
outparcels):
<TABLE>
<CAPTION>
PERCENTAGE OF
APPROXIMATE PERCENTAGE OF BASE
MALL GLA OF LEASED MALL AVERAGE ANNUALIZED ANNUALIZED
YEAR EXPIRING GLA BASE RENT BASE RENT RENT
ENDING NUMBER OF LEASES REPRESENTED (PSF) UNDER OF EXPIRING REPRESENTED
DECEMBER LEASES (SQUARE BY EXPIRING EXPIRING LEASES BY EXPIRING
31, EXPIRING FEET) LEASES LEASES (THOUSANDS) LEASES
- ---------- --------- ----------- ------------- ----------- ----------- -------------
1997 1 3,720 0.8% $ 30.00 $ 112 0.7%
<S> <C> <C> <C> <C> <C> <C> <C>
1998 13 24,602 5.5 32.96 811 4.9
1999 17 32,254 7.2 32.35 1,043 6.3
2000 11 20,191 4.5 39.71 802 4.7
2001 13 31,671 7.1 40.44 1,281 7.7
2002 38 68,180 15.2 50.34 3,432 20.7
2003 15 31,038 6.9 42.19 1,309 7.9
2004 19 81,671 18.2 33.02 2,696 16.3
2005 12 35,333 7.9 33.10 1,170 7.1
2006 14 26,997 6.0 40.26 1,087 6.6
</TABLE>
84
<PAGE>
The following table shows scheduled lease expirations as of December 31,
1996 for the next ten years for Mall Stores at The Plaza at West Covina
(excluding outparcels):
<TABLE>
<CAPTION>
APPROXIMATE AVERAGE BASE ANNUALIZED PERCENTAGE OF
MALL GLA OF PERCENTAGE OF RENT (PSF) BASE RENT BASE ANNUALIZED
NUMBER OF EXPIRING LEASED MALL GLA UNDER OF EXPIRING RENT
YEAR ENDING LEASES LEASES REPRESENTED BY EXPIRING LEASES REPRESENTED BY
DECEMBER 31, EXPIRING (SQUARE FEET) EXPIRING LEASES LEASES (THOUSANDS) EXPIRING LEASES
- ------------ --------- ------------- --------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1997 5 11,299 2.9% $ 11.47 $ 130 1.5%
1998 3 3,028 0.8 28.37 86 1.0
1999 12 20,050 5.1 33.37 669 7.7
2000 20 31,504 8.0 30.64 965 11.2
2001 14 28,011 7.2 25.83 723 8.4
2002 13 24,313 6.2 24.12 587 6.8
2003 4 9,348 2.4 21.18 198 2.3
2004 41 96,594 24.7 25.00 2,415 27.9
2005 19 44,253 11.3 22.38 990 11.5
2006 13 35,854 9.2 19.91 714 8.3
</TABLE>
The following table shows scheduled lease expirations as of December 31,
1996 for the next ten years for Mall Stores at South Shore Mall (excluding
outparcels):
<TABLE>
<CAPTION>
APPROXIMATE AVERAGE BASE ANNUALIZED PERCENTAGE OF
MALL GLA OF PERCENTAGE OF RENT (PSF) BASE RENT BASE ANNUALIZED
NUMBER OF EXPIRING LEASED MALL GLA UNDER OF EXPIRING RENT
YEAR ENDING LEASES LEASES REPRESENTED BY EXPIRING LEASES REPRESENTED BY
DECEMBER 31, EXPIRING (SQUARE FEET) EXPIRING LEASES LEASES (THOUSANDS) EXPIRING LEASES
- ------------ --------- ------------- --------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1997 7 6,145 3.4% $ 53.56 $ 329 5.4%
1998 10 17,764 9.7 40.11 712 11.6
1999 3 8,043 4.4 38.68 311 5.1
2000 6 2,754 1.5 83.99 231 3.8
2001 6 19,724 10.8 36.08 712 11.6
2002 5 12,139 6.7 33.51 407 6.6
2003 9 26,877 14.7 33.33 896 14.6
2004 7 30,318 16.6 32.30 979 16.0
2005 6 27,728 15.2 25.26 700 11.4
2006 3 8,852 4.9 30.62 271 4.4
</TABLE>
The following table shows scheduled lease expirations as of December 31,
1996 for the next ten years for Mall Stores at Trumbull Shopping Park (excluding
outparcels):
<TABLE>
<CAPTION>
PERCENTAGE OF
APPROXIMATE PERCENTAGE OF BASE
MALL GLA OF LEASED MALL AVERAGE ANNUALIZED ANNUALIZED
YEAR EXPIRING GLA BASE RENT BASE RENT RENT
ENDING NUMBER OF LEASES REPRESENTED (PSF) UNDER OF EXPIRING REPRESENTED
DECEMBER LEASES (SQUARE BY EXPIRING EXPIRING LEASES BY EXPIRING
31, EXPIRING FEET) LEASES LEASES (THOUSANDS) LEASES
- ---------- --------- ----------- ------------- ----------- ----------- -------------
1997 11 19,374 5.4% $ 34.58 $ 670 5.9%
<S> <C> <C> <C> <C> <C> <C> <C>
1998 13 13,948 3.9 48.48 676 5.9
1999 12 16,109 4.5 25.58 412 3.6
2000 6 18,324 5.1 17.78 326 2.9
2001 12 18,893 5.2 47.19 892 7.8
2002 13 40,274 11.1 29.87 1,203 10.6
2003 14 41,222 11.4 25.10 1,035 9.1
2004 14 74,851 20.7 27.83 2,083 18.3
2005 9 37,548 10.4 30.15 1,132 9.9
2006 8 29,925 8.3 39.43 1,180 10.4
</TABLE>
85
<PAGE>
Minimum rents are expected to grow based upon contractual increases in base
rent in the Company's existing leases, although there can be no assurance that
such contractual increases will be realized or that such contractual increases
are indicative of possible future increases in base rent. In the aggregate, base
rent is expected to increase by approximately $5,528,702 over the next five
years through these contractual rent increases as illustrated below:
<TABLE>
<CAPTION>
EXISTING CONTRACTUAL RENT INCREASES
- ------------------------------------------------------------------------ CUMULATIVE
TRUMBULL EXISTING
CONNECTICUT MONTGOMERY PLAZA AT SOUTH SHOPPING RENT
YEAR POST MALL MALL WEST COVINA SHORE MALL PARK INCREASES
- --------- ----------- ----------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
1997 $ 372,912 $ 608,608 $ 506,441 $ 267,975 $ 757,582 $ 2,513,518
1998 289,472 317,623 324,373 58,444 233,315 3,736,745
1999 96,262 221,970 146,754 72,863 99,187 4,373,781
2000 81,674 247,964 174,427 72,803 124,047 5,074,696
2001 7,124 145,672 230,592 28,768 41,850 5,528,702
</TABLE>
The average effective (base rent plus percentage rent) annual rent per
square foot is set forth in the table below:
<TABLE>
<CAPTION>
CENTER 1996 1995 1994 1993 1992
- ----------------------------------------------------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Connecticut Post Mall...................................... $ 30 $ 29 $ 30 $ 29 $ 28
Montgomery Mall............................................ 38 36 34 32 31
The Plaza at West Covina................................... 25 24 23 14 17
South Shore Mall........................................... 34 30 30 27 26
Trumbull Shopping Park..................................... 32 31 31 29 26
</TABLE>
86
<PAGE>
The Company was generally able to increase base rent psf for leases expiring
during the past three years as illustrated below:
<TABLE>
<CAPTION>
LEASES LEASES
EXPIRING EXECUTED
EXISTING DURING THE DURING THE
CENTER AND YEAR BASE RENTS PERIOD(1) PERIOD(2)
- ----------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Connecticut Post Mall:
1994..................................................... $ 29.34 $ 23.00 $ 25.64
1995..................................................... 28.96 27.55 27.03
1996..................................................... 29.96 26.03 27.90
Montgomery Mall:
1994..................................................... $ 33.40 $ 34.08 $ 37.31
1995..................................................... 35.50 37.35 60.39
1996..................................................... 36.98 42.26 49.25
The Plaza at West Covina:
1994..................................................... $ 21.55 $ 16.32 $ 24.09
1995..................................................... 23.18 20.28 26.04
1996..................................................... 24.10 17.72 16.30
South Shore Mall:
1994..................................................... $ 28.82 $ 20.29 $ 28.04
1995..................................................... 29.10 24.90 26.34
1996..................................................... 33.61 22.80 23.90
Trumbull Shopping Park:
1994..................................................... $ 30.37 $ 29.37 $ 33.32
1995..................................................... 30.61 26.69 27.92
1996..................................................... 31.48 24.70 36.68
</TABLE>
- ------------------------
(1) Includes scheduled expirations, early termination, abandonments and
negotiated buyouts. Represents average base rent for the final year of
occupancy.
(2) Includes renewals. Represents average base rent for the initial year of
occupancy.
Connecticut Post Mall, Montgomery Mall, The Plaza at West Covina, South
Shore Mall and Trumbull Shopping Park are the largest shopping centers in their
respective trade areas. South Shore Mall in Bay Shore, New York serves the
southern Long Island market in Suffolk County and has one competing regional
center in its Primary Trade Area. Trumbull Shopping Park, in Trumbull,
Connecticut serves the Fairfield County, Connecticut market and there is no
competitive regional shopping center. Connecticut Post Mall in Milford,
Connecticut is the only super regional shopping center serving the greater New
Haven market. Connecticut Post and Trumbull Shopping Park are eleven miles apart
and a portion of their trade areas overlap. There is a regional center proposed
to be developed in the greater New Haven area that would, if eventually
developed, compete with Connecticut Post. The Plaza at West Covina, in West
Covina, California is one of three super regional centers serving the San
Gabriel Valley market. Three other regional shopping centers complete with
Montgomery Mall's Primary Trade Area. However, Montgomery Mall has the largest
total gross leasable area of any center within this trade area.
87
<PAGE>
Annual real estate taxes for the year ended December 31, 1996 and gross
Federal income tax basis at December 31, 1996 for Connecticut Post Mall,
Montgomery Mall, The Plaza at West Covina, South Shore Mall and Trumbull
Shopping Park were as follows:
<TABLE>
<CAPTION>
CENTER
- ------------------------------------------------------------------- REAL ESTATE FEDERAL
TAXES INCOME TAX
--------------- BASIS
(IN MILLIONS) -------------
(IN MILLIONS)
<S> <C> <C>
Connecticut Post Mall.............................................. $ 1.9 $ 151
Montgomery Mall.................................................... 2.2 151
The Plaza at West Covina........................................... 2.3 124
South Shore Mall................................................... 3.9 77
Trumbull Shopping Park............................................. 1.7 99
</TABLE>
The Company believes that Connecticut Post Mall, Montgomery Mall, The Plaza
at West Covina, South Shore Mall and Trumbull Shopping Park are adequately
covered by existing insurance.
For information concerning indebtedness and mortgages relating to
Connecticut Post Mall, Montgomery Mall, The Plaza at West Covina, South Shore
Mall and Trumbull Shopping Park, see"--Debt Summary."
ADDITIONAL INFORMATION REGARDING ANNAPOLIS MALL
Annapolis Mall is located in Annapolis, Maryland and is owned by Annapolis
Mall Limited Partnership. RREEF USA Fund--III/Annapolis, Inc. is a 70% partner
in such partnership and CenterMark Properties of Annapolis, Inc., a wholly owned
subsidiary of the Company, is a 30% partner in such partnership. The Company has
entered into a letter of intent with RREEF USA Fund--III/Annapolis, Inc. to
acquire its 70% interest in the partnership. Although no assurance can be given
that such acquisition will occur, upon such acquisition Annapolis Mall would
have a book value which amounted to 10% or more of the total assets of the
Company in 1996. Annapolis Mall has over 990,000 square feet of Total GLA, with
148 Mall Stores and four Anchors: Hecht's, Montgomery Ward, J.C. Penney and
Nordstrom.
The Limited is the only tenant at the Center that leased 10% or more of
Total GLA as of December 31, 1996. The principal terms of The Limited's leases
are set forth below:
<TABLE>
<CAPTION>
BASE RENTAL SQUARE LEASE
TENANT PER ANNUM FEET EXPIRATION OPTIONS PERCENTAGE RENT(1)
- ---------------------------------- ------------ --------- ---------- --------- --------------------------------
<S> <C> <C> <C> <C> <C>
Express........................... $ 303,862 11,687 1/31/07 None 5% of sales over $ 6,077,240
Lane Bryant....................... 164,832 9,696 1/31/09 None 5% of sales over $ 3,296,640
Lerner New York................... 216,988 13,312 1/31/09 None 5% of sales over $ 4,339,760
Limited Too....................... 147,648 4,614 1/31/06 None 5% of sales over $ 2,952,960
Limited, The...................... 409,890 15,765 1/31/10 None 4% of sales over $ 10,247,250
Structure......................... 163,930 6,305 1/31/06 None 5% of sales over $ 3,278,600
Victoria's Secret................. 186,914 7,189 1/31/07 None 5% of sales over $ 3,738,280
------------ ---------
$ 1,594,064 68,568
------------ ---------
------------ ---------
</TABLE>
- --------------
(1) Percentage rent is calculated based upon sales in excess of stipulated
minimums which may vary from lease to lease.
The following charts sets forth the Mall Store sales for Annapolis Mall:
<TABLE>
<CAPTION>
YEAR MALL STORE SALES (PSF)(1)
- -------------------------------------------------------------------- ---------------------------
<S> <C>
1994................................................................ $ 280
1995................................................................ 336
1996................................................................ 371
</TABLE>
- --------------
(1) Sales are based on Mall Stores reporting sales.
88
<PAGE>
Mall Stores leased at Annapolis Mall were 96% in 1996, 97% in 1995, 98% in
1994, 90% in 1993 and 76% in 1992 at December 31 of each such year.
The following table sets forth certain information with respect to the
expiration of leases at Annapolis Mall as of December 31, 1996:
<TABLE>
<CAPTION>
APPROXIMATE AVERAGE BASE ANNUALIZED PERCENTAGE OF
MALL GLA OF PERCENTAGE OF RENT (PSF) BASE RENT BASE ANALIZED
NUMBER OF EXPIRING MALL GLA UNDER OF EXPIRING RENT
LEASES LEASES REPRESENTED BY EXPIRING LEASES REPRESENTED BY
YEAR ENDING DECEMBER 31 EXPIRING (SQUARE FEET) EXPIRING LEASES LEASES (THOUSANDS) EXPIRING LEASES
- -------------------------------- ------------- ------------- --------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1997............................ 2 4,438 1.2% $ 37.79 $ 168 1.3%
1998............................ 5 2,503 0.7 90.68 227 1.8
1999............................ 7 9,192 2.5 35.95 330 2.6
2000............................ 11 16,151 4.5 44.63 721 5.6
2001............................ 15 25,169 6.9 37.48 943 7.4
2002............................ 2 503 0.1 135.19 68 0.5
2003............................ 13 28,082 7.7 38.96 1,094 8.5
2004............................ 37 58,833 16.2 45.23 2,661 20.8
2005............................ 19 54,578 15.0 38.10 2,080 16.2
2006............................ 15 52,885 14.6 33.15 1,753 13.7
</TABLE>
Minimum rents at Annapolis Mall are expected to grow based upon contractual
increases in base rent in the existing leases, although there can be no
assurance that such contractual increases will be realized or that such
contractual increases are indicative of possible future increases in base rent.
In the aggregate, base rent is expected to increase by approximately $1,795,429
over the next five years through these contractual increases.
<TABLE>
<CAPTION>
EXISTING CUMULATIVE EXISTING
CONTRACTUAL RENT CONTRACTUAL RENT
YEAR INCREASES INCREASES
- ---------------------------------------------- ------------------- -------------------------
<S> <C> <C>
1997.......................................... $ 351,686 $ 351,686
1998.......................................... 667,270 1,018,956
1999.......................................... 350,251 1,369,207
2000.......................................... 160,195 1,529,402
2001.......................................... 266,027 1,795,429
</TABLE>
The average effective (base plus percentage rent) annual rent per square
foot was $36 psf for 1996, $33 psf for 1995, $32 psf for 1994, $26 psf for 1993
and $24 psf for 1992.
Annapolis Mall in Annapolis, Maryland has one regional shopping center in
its Primary Trade Area. Annapolis Mall with four anchors and total GLA of
990,702 square feet in the largest super regional shopping center in its trade
area.
As a result of the expansion and renovation of Annapolis Mall and the
favorable market position of Annapolis Mall in the Annapolis, Maryland trade
area, management was able to increase base rent psf for leases expiring during
the past three years as illustrated below.
<TABLE>
<CAPTION>
LEASES LEASES
ALL EXPIRING EXECUTED
EXISTING DURING THE DURING THE
YEAR LEASES PERIOD (1) PERIOD (2)
- ----------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
1994....................................................... $ 30.90 $ 20.69 $ 39.09
1995....................................................... 32.73 30.30 44.11
1996....................................................... 35.31 24.17 47.67
</TABLE>
- --------------
(1) Includes scheduled expirations, early terminations, abandonments and
negotiated buyouts. Represents average base rent for the final year of
occupancy.
(2) Includes renewals. Represents average base rent for the initial year of
occupancy.
89
<PAGE>
Annual real estate taxes for Annapolis Mall in 1996 were $1.1 million. At
December 31, 1996, Annapolis Mall's gross Federal income tax basis was
approximately $103 million. The Company intends to compute depreciation on
Annapolis Mall for Federal income tax purposes the straight line method based on
useful lives ranging from 3 to 40 years for accounting purposes using the
straight-line method based on useful lives of 7 to 20 years for buildings and
improvements and 5 to 14 years for equipment and fixtures. See "Federal Income
Tax Considerations--Taxation of the Company."
The Company believes that Annapolis Mall is adequately covered by existing
insurance.
Annapolis Mall is not encumbered by any mortgage debt.
ADDITIONAL INFORMATION REGARDING GARDEN STATE PLAZA
Garden State Plaza is located in Paramus, New Jersey and is 50% indirectly
owned by Westland Realty, Inc., a wholly owned subsidiary of Westfield Holdings
Limited, and 50% by HRE Garden State Plaza, Inc., an affiliate of Rodamco North
America B.V. Garden State Plaza has over 2.0 million square feet of Total GLA,
with 294 Mall Stores and five Anchors: Nordstrom, Macy's, Neiman Marcus, Lord
and Taylor and J.C. Penney. The center is currently under redevelopment.
At any time after January 1, 2000, either Westfield Holdings or HRE Garden
State Plaza, Inc. can force a sale of the property. The partner initiating the
sale must allow the other partner 150 days to accept the offer for sale. If the
noninitiating partner does not accept the offer, the initiating partner shall
have the right during the succeeding 12 month period to sell the entire property
for a price not less than 95% of the proposed price.
The Company has an option to acquire the stock of Westland Realty, Inc. and,
thus, the indirect 50% interest in Garden State Plaza. The Garden State Plaza
Option is exercisable following the completion of an independent valuation of
the property to determine its fair market value. Contemporaneously with the
closing of the Offerings, the Garden State Plaza Option will be amended to
provide that the valuation procedure may be commenced by the Company upon the
earliest to occur of (x) any time after completion and stabilization of the
current expansion of the property, defined to mean the leasing of 95% of the
mall gross leasable area for the expansion, (y) any time after the date which is
18 months after completion of the current expansion of the property and (z) no
later than January 3, 2000. The valuation is to be performed by an independent
appraiser approved by the Company and Westfield Holdings within 30 days after
the Company elects to commence the valuation procedure. The purchase price under
the Garden State Plaza Option is equal to 50% of such fair market valuation,
subject to adjustment for the mortgage debt of Garden State Plaza, the Garden
State Plaza Loan and the amount by which current assets exceed current
liabilities. The exercise of the Garden State Plaza Option will require the
approval of at least 75% of the Independent Directors and, if the purchase price
(which is payable in Common Stock) will exceed $55 million (net of the $145
million Garden State Plaza Loan), the approval of a majority of the holders of
the Common Stock voting at a meeting on such issue other than Westfield Holdings
and its affiliates (including, without limitation, WAT) and interests associated
with the Lowy Family. The Garden State Plaza Option must be exercised within 120
days after delivery of the determination of the fair market value of the
property. The Company believes that the conditions to the exercise of Garden
State Plaza Option will first be satisfied in the summer of 1999 based on the
right to exercise 18 months after substantial completion; however, the option
may first be satisfied at an earlier date if the property is 95% leased. The
Board of Directors (including at least 75% of the Independent Directors) and, if
the purchase price exceeds $55 million (net of the $145 million Garden State
Plaza Loan) as described above, the shareholders of the Company will determine
whether to exercise the Garden State Plaza Option. The book value of Westfield
Holdings' interest in Garden State Plaza, calculated in accordance with
Australian generally accepted accounting principles, is approximately $200
million.
The Company is using $145.0 million of the proceeds of the Offerings and
concurrent transactions to make the Garden State Plaza Loan. The amount of this
loan, as well as the book value of Garden State Plaza if the Company elects to
exercise the Garden State Plaza Option, would amount to 10% or more of the total
assets of the Company in 1996.
90
<PAGE>
Macy's, Nordstrom and J.C. Penney are the only tenants at the center that
leased 10% or more of the rentable square footage as of December, 31 1996. The
principal terms of Macy's, Nordstrom's and J.C. Penney's leases are set forth
below.
<TABLE>
<CAPTION>
BASE RENTAL SQUARE LEASE % RENT
ANCHORS PER ANNUM FEET EXPIRATION OPTIONS PROVISION
- ------------------------------------------------- ------------ --------- ------------ --------- --------------
<S> <C> <C> <C> <C> <C>
Macy's........................................... $ 6,183,704 439,632 7/31/21 (a) none
Nordstrom........................................ 2,614,295 245,348 7/31/06 (b) none
J.C. Penney...................................... 1,200,000 180,000 10/31/20 (c) 1.5% of sales
in excess of
$60 million
------------ --------- --------------
Total.......................................... $ 9,997,999 864,980 --
------------ ---------
------------ ---------
</TABLE>
- ------------------------
(a) Eight self-existing successive options. The first option is for a 5-year
period and thereafter each option is for a period of 7 years
(b) Eight 10-year options
(c) Two 10-year options and two 5-year options
The following charts sets forth the Mall Store sales for Garden State Plaza:
<TABLE>
<CAPTION>
MALL STORE SALES
YEAR (PSF) (1)
- ------------------------------------------------------------------- -----------------
<S> <C>
1994............................................................... $ 450
1995............................................................... 433
1996............................................................... 467
</TABLE>
- ------------------------
(1) Sales are based on Mall Stores reporting sales.
Mall Stores leased at Garden State Plaza were 92% in 1996, 94% in 1995, 98%
in 1994, 99% in 1993 and 95% in 1992 at December 31 of each such year. During
1995 and 1996 the Garden State Plaza was under redevelopment.
The following table sets forth certain information with respect to the
expiration of leases at Garden State Plaza as of December 31, 1996:
<TABLE>
<CAPTION>
APPROXIMATE
MALL GROSS PERCENTAGE OF AVERAGE BASE ANNUALIZED PERCENTAGE OF
LEASABLE AREA MALL GROSS RENT (PSF) BASE RENT BASE ANNUALIZED
NUMBER OF OF EXPIRING LEASABLE AREA UNDER OF EXPIRING RENT
LEASES LEASES REPRESENTED BY EXPIRING LEASES REPRESENTED BY
YEAR ENDING DECEMBER 31 EXPIRING (SQUARE FEET) EXPIRING LEASES LEASES (THOUSANDS) EXPIRING LEASES
- ----------------------------------- ------------- ------------- --------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1997............................... 20 25,690 4.9 % $ 48.07 $ 1,248 4.7%
1998............................... 13 20,171 3.8 52.61 1,061 4.0
1999............................... 28 65,076 12.25 47.45 3,088 11.5
2000............................... 7 12,724 2.40 51.34 653 2.4
2001............................... 13 33,590 6.32 43.75 1,469 5.5
2002............................... 7 37,770 7.11 62.33 2,354 8.8
2003............................... 11 29,296 5.52 49.32 1,445 5.4
2004............................... 9 22,924 4.32 52.85 1,212 4.5
2005............................... 14 81,251 15.30 38.06 3,092 11.6
2006............................... 18 24,331 4.58 71.61 1,742 6.5
</TABLE>
Minimum rents at Garden State Plaza are expected to grow based upon
contractual increases in base rent in the existing leases, although there can be
no assurance that such contractual increases will be realized or that such
contractual increases are indicative of possible future increases in base rent.
In the
91
<PAGE>
aggregate, base rent is expected to increase by approximately $1,174,369 over
the next five years through these contractual increases.
<TABLE>
<CAPTION>
EXISTING CUMULATIVE EXISTING
CONTRACTUAL RENT CONTRACTUAL RENT
YEAR INCREASES INCREASES
- ---------------------------------------------- ------------------- -------------------------
<S> <C> <C>
1997.......................................... $ 401,290 $ 401,290
1998.......................................... (65,874) 335,416
1999.......................................... 25,056 360,472
2000.......................................... 416,072 776,544
2001.......................................... 397,825 1,174,369
</TABLE>
The average effective (base plus percentage) annual rent per square foot was
$51 psf for 1996, $44 psf for 1995, $39 psf for 1994, $38psf for 1993 and $34
psf for 1992.
Four other regional shopping centers compete with Garden State Plaza in its
Primary Trade Area. Garden State Plaza has five department stores and a larger
number of mall stores than any other regional shopping center within its trade
area.
As a result of the expansion and renovation of Garden State Plaza and the
favorable market position of Garden State Plaza in the Paramus, New Jersey trade
area, management was able to increase base rent psf for leases expiring during
the past three years as illustrated below.
<TABLE>
<CAPTION>
LEASES LEASES
ALL EXPIRING EXECUTED
EXISTING DURING THE DURING THE
YEAR LEASES PERIOD(1) PERIOD(2)
- ----------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
1994....................................................... $ 36.32 $ 40.70 $ 46.86
1995....................................................... 41.71 29.91 64.35
1996....................................................... 50.40 32.11 53.74(3)
</TABLE>
- ------------------------
(1) Includes scheduled expirations, early terminations, abandonments and
negotiated buyouts. Represents average base rent for the final year of
occupancy.
(2) Includes renewals. Represents average base rent for the initial year of
occupancy.
(3) Comprised of leases executed by 28 tenants covering approximately 71,270
square feet (3% of total gross leasable area), of which one lease was signed
by Abercrombie & Fitch consisting of 11,155 square feet at $42.00 psf.
Annual real estate taxes for Garden State Plaza in 1996 were $4.1 million.
At December 31, 1996, Garden State Plaza's gross Federal income tax basis was
approximately $540.0 million. The partnership which owns Garden State Plaza
computes depreciation for income tax purposes using the straight line method of
depreciation based on 5 to 40 years, and for accounting purposes using the
straight line method based on useful lives of 3 to 35 years.
The Company believes that Garden State Plaza is adequately covered by
existing insurance.
Prudential has a first mortgage on Garden State Plaza totaling $260.02
million. This loan bears interest at 8.23% per annum, matures in May 2005 and is
a non-recourse obligation of the owner of Garden State Plaza.
ADDITIONAL INFORMATION REGARDING WHEATON PLAZA
Wheaton Plaza is located in Wheaton, Montgomery County, Maryland and serves
a populous, urban/ suburban trade area that includes the towns of Kensington,
Wheaton, Silver Springs, the northern Washington D.C. suburbs and parts of
Montgomery County. The center's Trade Area has a population of 410,600 with an
average household income of $70,500.
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<PAGE>
The enclosed, one level (with a two level connection to Hecht's) center
opened in 1960 and has approximately 1.1 million square feet of total gross
leasable area, with 120 mall stores and three anchors: J.C. Penney (which in
1996 replaced Woodward & Lothrop), Montgomery Ward and Hecht's; and two free
standing office buildings of approximately 107,000 square feet and approximately
73,000 square feet, on an 80-acre site. The site is 100% owned by Wheaton Plaza
Regional Shopping Center, LLP, in which the Company intends to acquire a 70%
general partnership interest, and will be the sole general partner.
Under the terms of the partnership agreement which terminates on December
31, 2047, (i) the Company, as managing partner, will have authority and
discretion to make all decisions affecting the business and affairs of the
partnership; however, the limited partners shall have consent rights with
respect to certain matters, including the annual operating budget, financing,
sale of the project and certain leasing matters, (ii) management and development
services will be provided by Westfield Holdings, and (iii) under certain
circumstances the limited partners will have the right to transfer their
partnership interests to the Company for cash or operating partnership units if
the Company forms an operating partnership, or shares in the Company if the
Company's shares are listed on a national stock exchange and the Company has not
formed an operating partnership.
There are no regional shopping centers in the center's Primary Trade Area;
however, three regional shopping centers compete with the center. J.C. Penney
and Montgomery Ward are the only tenants at the center that leased 10% or more
of rentable square footage as of December 31, 1996. The principal terms of J.C.
Penney and Montgomery Ward leases are set forth below.
<TABLE>
<CAPTION>
BASE RENTAL SQUARE LEASE
ANCHORS PER ANNUM FOOTAGE EXPIRATION OPTIONS % RENT PROVISION
- ------------------------------ ----------- --------- ----------- --------- ------------------------------------------
<S> <C> <C> <C> <C> <C>
J.C. Penney $ 20,000 218,667 8/31/09 (A) 1.5% of sales up to and including
$6,500,000
1.25% of sales in excess of $6,500,000
1.0% of sales in excess of $7,500,000
0.75% of sales in excess of $10,000,000
Montgomery Ward 240,810 227,700 2/28/00 (B) 2.25% of sales up to and including
$13,460,000 less minimum rent
1.75% of sales in excess of $13,460,000
----------- ---------
Total $ 260,810 446,367
----------- ---------
----------- ---------
</TABLE>
- ------------------------
(A) Three successive options for 20 years each.
(B) One 10 year option.
The following charts sets forth the Mall Store sales for Wheaton Plaza:
<TABLE>
<CAPTION>
MALL STORE SALES (PSF)
YEAR (1)
- ------------------------------------ ----------------------
<S> <C>
1994................................ 247
1995................................ 266
1996................................ 281
</TABLE>
- ------------------------
(1) Sales are based on Mall Stores reporting sales.
Mall Stores leased at Wheaton Plaza were 92% in 1996, 94% in 1995, 94% in
1994, 92% leased in 1993 and 93% leased in 1992 at December 31 of each such
year.
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<PAGE>
The following table sets forth certain information with respect to the
expiration of Mall Store leases (excluding outparcels) at Wheaton Plaza as of
December 31, 1996:
<TABLE>
<CAPTION>
APPROXIMATE AVERAGE BASE ANNUALIZED PERCENTAGE OF
MALL GLA OF RENT (PSF) BASE RENT BASE ANNUALIZED
NUMBER OF EXPIRING PRECENTAGE OF MALL UNDER OF EXPIRING RENT
YEAR ENDING LEASES LEASES GLA REPRESENTED BY EXPIRING LEASES REPRESENTED BY
DECEMBER 31 EXPIRING (SQUARE FEET) EXPIRING LEASES LEASES (THOUSANDS) EXPIRING LEASES
- ------------------------------ ------------- ------------- ------------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1997.......................... 21 42,431 18.8% $ 25.68 $ 1,090 19.3%
1998.......................... 20 32,249 14.3% 32.11 1,036 18.3%
1999.......................... 8 10,508 4.7% 26.87 282 5.0%
2000.......................... 8 24,000 10.7% 26.76 642 11.3%
2001.......................... 10 18,365 8.2% 23.18 425 7.5%
2002.......................... 7 14,808 6.6% 27.74 411 7.3%
2003.......................... 4 14,449 6.4% 22.94 331 5.9%
2004.......................... 5 11,417 5.1% 20.38 233 4.1%
2005.......................... 5 15,949 7.1% 19.34 308 5.4%
2006.......................... 5 31,703 14.1% 22.16 702 12.4%
</TABLE>
Minimum rents at Wheaton Plaza are expected to grow based upon contractual
increases in base rent in the existing leases although there can be no assurance
that such contractual increases will be realized or that such contractual
increases are indicative of possible future increases in base rent. In the
aggregate, base rent is expected to increase by approximately $274,399 over the
next five years through these contractual increases.
<TABLE>
<CAPTION>
EXISTING CUMULATIVE EXISTING
CONTRACTUAL RENT CONTRACTUAL RENT
YEAR INCREASES INCREASES
------------------- -------------------------
<S> <C> <C>
1997.................. $ 13,498 $ 13,498
1998.................. 110,719 124,217
1999.................. 59,023 183,240
2000.................. 72,425 255,665
2001.................. 18,734 274,399
</TABLE>
The average effective (base plus percentage) annual rent per square foot was
$25 psf for 1996, $26 psf for 1995, $26 psf for 1994, $26 psf for 1993 and $27
psf for 1992.
Annual real estate taxes for Wheaton Plaza in 1996 were $1.8 million.
Federal income tax basis cannot be determined until the acquisition of the
center is consummated.
The Company believes that Wheaton Plaza is adequately covered by existing
insurance. Wheaton Plaza is unencumbered.
MAY PROPERTIES
The Company holds interests in 13 department store properties (12 of which
are owned in fee and one of which is ground leased) that were net leased to the
May Company in 1988 under financing leases. Each lease has an original term of
29 years, ending on September 21, 2017, with 14 consecutive five-year options
exercisable by the May Company. Upon termination of each lease, the May Company
has an option to acquire the Company's interest in each of the May Properties
for their respective fair market value as determined by appraisal. The leases
are at fixed rental rates that do not increase over the terms of the leases and
provide that the tenant is to pay for all taxes, maintenance, repair and other
expenses. Eleven of the May Properties are operated by various divisions of the
May Company. Two of the May Properties have been assigned to other operators,
but the May Company remains liable for the performance of the tenant's
obligations thereunder. One of these properties is for a store that is currently
vacant, although rent is being paid on it. The leased properties are located in
Buena Park, Oxnard, San Bernardino, El
94
<PAGE>
Cajon, Redondo Beach, Costa Mesa, Riverside, Westminster and West Los Angeles,
California; Waterbury, Connecticut; Salem, Oregon; Elyria, Ohio; and
Springfield, Missouri. The May Properties generated rent of $8.4 million in
1996, and the Company paid $7.7 million of interest and principal in 1996 on the
loans associated with the financing of the May Properties. See "--Debt Summary."
OTHER REAL ESTATE INTERESTS
The Company owns interests in Properties other than the Centers, which
represented less than 1.0% of 1996 Funds from Operations.
The Company owns a 42.5% partnership interest in the West Valley
Partnership, which is the fee owner of a 36-acre tract of land in Canoga Park,
California, directly across from Topanga Plaza. There are currently six
free-standing stores on the Property, representing a total of 89,128 square feet
of rentable area. In addition, West Valley Partnership is a limited partner in
an entity that owns two office buildings located on such land which is ground
leased by West Valley Partnership to such entity.
The Company is the holder of a $2,850,000 promissory note, which is secured
by a first deed of trust on property known as Northland Shopping Center in St.
Louis, Missouri. The loan is recourse to the borrower and bears interest at a
rate of 7% per annum. Interest only is receivable under the note until June 7,
1997, when the entire principal balance will become due. The borrower has five
one-year options to extend the maturity date of the loan.
The Company also owns indirect interests in a certain office building and
land adjacent to the Mid Rivers Mall and is the owner of a 116-unit apartment
complex in La Jolla, California.
INSURANCE ARRANGEMENTS
As part of its management services for the Properties under Westfield
Holdings's management, the Manager is responsible for arranging insurances for
such Properties to cover fire, flood, earthquake, comprehensive liability and
other appropriate risks. The Company's insurance advisors/brokers have reported
that these insurances are adequate having regard to the insurance risks and
insured limits customarily carried for similar properties. The Company will
continue fire, business interruption, flood, earthquake, comprehensive liability
and other appropriate insurance with respect to such Properties and believes
that such Properties are adequately covered by existing insurance. The Company
carries earthquake insurance on all Centers under Westfield Holdings's
management. Such policies are subject to a deductible equal to 5% of the total
insured value of each Center managed by Westfield Holdings and a combined annual
aggregate loss limit of $100 million on the Centers. See "Advisory, Management
and Development Services to the Company."
EMPLOYEES
The Company has engaged the Manager to provide the property management and
leasing services, the Advisor to provide advisory services and the Developer to
provide development and redevelopment planning and implementation. All of the
employees of the Manager, the Advisor and the Developer are employees of
Westfield Holdings. The Company has no employees. See "Advisory, Management and
Development Services to the Company."
DEBT SUMMARY
The following table reflects indebtedness of the Company that will remain
outstanding following the consummation of the Offerings and concurrent
transactions.
95
<PAGE>
WESTFIELD AMERICA, INC.
OUTSTANDING MORTGAGE DEBT AFTER THE OFFERINGS AND CONCURRENT TRANSACTIONS
<TABLE>
<CAPTION>
COMPANY'S PRO
RATA SHARE
PRINCIPAL -------------
LIBOR AT BALANCE AS PRINCIPAL
ANNUAL REPRICING OF BALANCE AS OF
LENDER INTEREST RATE (A) DATE 3/31/97(B) 3/31/97(B)
-------------------- ------------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
($ IN THOUSANDS)
Corporate Debt:
Unsecured Corporate Line of Credit
($600,000)......................... Various (1) LIBOR + 1.00% (2) 5.69% $ 210,343 $ 210,343
Property Debt:
Wholly Owned
Various (3)........................ Prudential 6.15% 172,000 172,000
Various (3)........................ Prudential 6.51% 167,000 167,000
Mid Rivers Mall (3)................ Prudential 8.09% 15,000 15,000
Trumbull Shopping Park............. Equitable 7.07% 143,960 143,960
General Partnerships Interests
Meriden Square..................... Hypo Bank LIBOR + 1.50% (2) 5.44% 50,000 25,000
Mission Valley Center.............. Bank of America LIBOR + 1.45% (4) 5.39% 38,899 29,485
Plaza Camino Real.................. John Hancock 9.50% 37,073 14,829
Topanga Plaza...................... Cigna 10.125% 57,579 24,183
Vancouver Mall..................... AEW 9.78% 31,820 15,910
Limited Partnership interest
North County Fair.................... Teachers Insurance 12.25% (5) 49,827 22,422
------------ -------------
763,158 629,789
------------ -------------
Finance Lease Debt..................... Various (10) 6.39% 20,576 20,576
Various (11) 7.33% 55,834 55,834
------------ -------------
76,410 76,410
------------ -------------
Total Debt............................. $1,049,911 $ 916,542
------------ -------------
------------ -------------
<CAPTION>
EARLIEST
ANNUAL ANNUAL BALANCE NOTES MAY
INTEREST DEBT DUE AT MATURITY BE PREPAID
PAYMENT SERVICE MATURITY DATE W/O PENALTY
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Corporate Debt:
Unsecured Corporate Line of Credit
($600,000)......................... $ 14,067 $ 14,067 210,343 5/2000 now
Property Debt:
Wholly Owned
Various (3)........................ 10,578 10,578 172,000 2/1999 2/1999(6)
Various (3)........................ 10,872 10,872 167,000 2/2001 2/2001(6)
Mid Rivers Mall (3)................ 1,214 1,214 15,000 2/1999 2/1999(6)
Trumbull Shopping Park............. 10,005 10,896 130,063 7/2000 4/2000(7)
General Partnerships Interests
Meriden Square..................... 1,735 1,735 25,000 3/1999 now
Mission Valley Center.............. 2,105 2,105 28,786 8/2000 now
Plaza Camino Real.................. 1,404 1,515 14,427 6/2000 6/2000(8)
Topanga Plaza...................... 2,440 2,637 23,014 1/2002 1/2002(8)
Vancouver Mall..................... 1,549 1,701 14,917 5/2002 5/2002(9)
Limited Partnership interest
North County Fair.................... 2,739 2,879 238 6/2022 6/2022(5)
----------- ----------- -----------
44,641 46,132 590,445
----------- ----------- -----------
Finance Lease Debt..................... 1,287 3,108 0 2/2004 2/2004
4,057 4,724 0 2/2014 2/2014
----------- ----------- -----------
5,344 7,832 0
----------- ----------- -----------
Total Debt............................. $ 64,052 $ 68,031 $ 800,788
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ----------------------------------
(a) All loans are at a fixed interest rate unless stated as LIBOR plus a spread.
(b) All balances reflect additional borrowings of principal on the Company's
unsecured corporate credit line. See "Use of Proceeds."
(1) Participating revolving credit facility that is expected to close
concurrently with the Offerings. Participant lenders include National
Australia Bank Limited, Commonwealth Bank of Australia, Australia and New
Zealand Banking Group Limited and Union Bank of Switzerland.
(2) The Company generally reprices these LIBOR contracts every 30 days.
(3) Includes cross collateralized first mortgage covering the following
properties: Mid Rivers Mall, West Park Mall, Plaza Bonita Mall, The Plaza at
West Covina, Montgomery Mall, South County Center and West County Center.
(4) Borrowings totaling $22,073 have been fixed at 7.5% through August 1997,
with the remaining debt balance at LIBOR plus 1.75% for which the LIBOR
contract is repriced every 30 days.
(5) Lender is entitled to contingent interest equal to 30% of annual applicable
receipts in excess of $8.3 million. Beginning June 1, 2004, the loan may be
prepaid for a 6% premium; this declines to a minimum of 1% plus ten times
contingent interest.
(6) May be prepaid with a premium equal to the greater of Yield Maintenance
Premium or a declining 1% premium.
(7) May be prepared in entirety with 60 day irrevocable notice subject premium
equal to greater of Yield Maintenance Premium or 1% of balance until April
1, 2000. Thereafter, no prepayment premium.
(8) May be prepaid for greater of 1% of outstanding principal balance or Yield
Maintenance Premium.
(9) May be prepaid for greater of 2% of outstanding principal balance or Yield
Maintenance Amount.
(10) Nationwide Life Insurance Co. and EBENCO--Farmer's Insurance Exchange.
(11) Phoenix Home Life Mutual Insurance Company, American United Life Insurance
Co., GALICO, Central Life Insurance Company, Physicians Life Insurance
Company, Guarantee Trust Life Insurance Company Annuity Portfolio Pocket #2,
INCE & Co.--Equitable, INCE & Co.--Kanawah, Physicians Mutual Insurance
Company, The Franklin Life Insurance Company, EBENCO-- Truck Insurance
Exchange, EBENCO--Farmers New World Life, EBENCO--Ohio State Life Insurance
Company.
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<PAGE>
The Company has entered into a letter of intent with National Australia Bank
Limited, Australia and New Zealand Banking Group Limited, Commonwealth Bank of
Australia and Union Bank of Switzerland for a new $600.0 million loan facility.
A portion of the proceeds of the facility would be used by the Company to repay
existing mortgage loans in the aggregate amount of approximately $163.0 million.
The remaining portion of the loan would be used by the Company to fund its
acquisition and redevelopment activities and as a revolving working capital
facility. The loan will have a three-year 'evergreen' term (with the evergreen
being exercised every year with the approval of the bank lenders so that if the
evergreen is not exercised there is a two-year period prior to maturity) and
will have an interest rate of LIBOR plus 100 basis points. The Company will
agree to a negative pledge with respect to substantially all of the Company's
wholly-owned properties that are presently unencumbered and the loan facility
will include customary financial covenants, including, without limitation, the
maintenance of certain debt service coverage ratios, the maintenance of minimum
shareholder equity, limitations on additional indebtedness, limitations on the
payment of distributions in any calender year in excess of 100% of Funds from
Operations for such year and limitations on the changing the Advisor and Manager
of the Company. Borrowings under the loan facility are limited to 60% of the
value of the negative pledged properties. On a pro forma basis, the current
availability under the loan facility is approximately $385 million. Borrowings
under the facility are expected to be guaranteed by subsidiaries that own the
negative pledge properties. There can be no assurance that a definitive credit
agreement with respect to this loan facility will be entered into or that any
definitive agreement will be as described above.
At December 31, 1996, the Company had two swap agreements with respect to
interest currently payable by the Company. Interest rate swaps are contractual
agreements between the Company and third parties to exchange fixed and floating
interest payments periodically without the exchange of the underlying principal
amounts (notional amounts). In the unlikely event that a counterparty fails to
meet the terms of an interest rate swap contact, the Company's exposure is
limited to the interest rate differential on the notional amount. The Company
does not anticipate non-performance by any of the counterparties. Under one of
the swap agreements, which has a notional amount of $125.0 million, the Company
is credited interest at LIBOR and incurs interest at a fixed rate of 5.75%.
Under the second swap agreement, which has a notional amount of $11.4 million,
the Company incurs interest at LIBOR and is credited interest at a fixed rate of
6.23%. Both swap agreements expire in 2000.
The Company has also entered into interest rate exchange agreements with a
counterparty to manage future interest rates. These agreements consist of swaps
and involve the future receipt, corresponding with the expiration of existing
fixed rate mortgage debt, of a floating rate based on LIBOR and the payment of a
fixed rate. At December 31, 1996, the Company had interest rate exchange
agreements beginning February 11, 1999 and expiring after three years with
notional principal amounts totaling $90 million which provide that the Company
will pay 6.125% per annum. Subsequently, the Company entered into interest rate
exchange agreements beginning in February 1999 and April 2000 and expiring at
various dates in 2002 with notional principal amounts totaling $227 million
which provide that the Company will pay 6.25% per annum. These exchange rate
agreements ensure that, upon the expiration of certain of the Company's mortgage
debt, if the Company refinances such debt with new LIBOR based loans, the
interest rate on such loans will be no more than 6.125% or 6.25%, plus the
applicable spread of the loan at such time.
ENVIRONMENTAL MATTERS
Various Federal, state and local laws, ordinances and regulations impose
liability on present and former property owners and operators for the cost of
cleaning up or removing hazardous or toxic materials that are present on or
emanated from such property. Such laws often impose liability without regard to
whether the owner knew of, or was responsible for, the presence of such
hazardous or toxic materials. The presence of contamination on, or even adjacent
to or near, a property may impact the valuation of that property or the ability
of the owner to sell, lease or finance it. In addition, persons who arrange for
the disposal or treatment of hazardous or toxic materials may be liable for the
costs of cleaning up contamination that results from the effort to dispose of or
treat those materials at another site.
97
<PAGE>
The Company's independent consultant has reviewed certain existing
environmental reports, including "Phase I" site assessments (which generally
include a visual site inspection, interviews and a records review) of the
Centers and certain formerly owned properties. The environmental reports were
prepared in 1993 for all of the Centers other than the Acquired Properties and
in 1996 for the Acquired Properties. Although all of the environmental reports
were made available to the Company, a majority of the reports were prepared for
parties other than the Company and the Company does not have recourse against
the preparer of such reports in the event such reports are inaccurate. On the
basis of this review and other environmental investigations of various outside
consultants commissioned by the Company and Management's operation of the
Properties, the Company believes that certain properties have had or currently
have operations (primarily gas stations and tire, battery and auto centers) that
may have or have resulted in soil or groundwater contamination. In that regard,
many of the properties contain, or at one time contained, underground storage
tanks and/or above-ground storage tanks that are or were used to store waste
oils or other petroleum products. At certain properties, underground storage
tanks have been abandoned in place (i.e., their use has been discontinued but
the structures were not removed from the ground) or removed. In some instances,
the Company is not aware whether such actions complied with laws or regulations
that mandate or regulate the manner of such abandonment or removal. In certain
instances, current or former underground storage tanks have been the sources of
known soil or groundwater contamination.
The Properties also could be negatively impacted, either through physical
contamination or by virtue of an adverse effect on value, from contamination
that has or may have emanated from other properties. Most of the adjacent or
nearby properties of concern are or were operated as gas stations containing
underground storage tanks, though some have been the sites of other types of
industrial operations. Several Properties are located in areas that are known to
have regional groundwater contamination. Such contamination could impact the
Properties.
Certain laws and regulations also impose liability for the release of
certain materials, including asbestos in the environment, and such releases can
form the basis for liability to third persons for personal injury, property or
other damages. Some of the Properties contain asbestos-containing materials.
Procedures have been adopted by the Company to monitor and maintain the
condition of such asbestos-containing materials.
Although there can be no assurances, the Company does not believe that
environmental conditions at any of the Properties will have a material adverse
effect on the Company's business, financial condition or results of operations.
There can be no assurance that environmental laws and regulations will not
become more stringent in the future or that the environmental conditions on or
near the Properties, presently known or unknown, will not have a material
adverse effect on individual Properties or the Company in the future.
LEGAL PROCEEDINGS
The Company is involved in routine litigation and administrative proceedings
arising in the ordinary course of business. Based on consultation with counsel,
management believes that such matters will not have a material adverse effect on
the Company's business, financial position or results of operations.
98
<PAGE>
POLICIES AND OBJECTIVES WITH RESPECT TO INVESTMENTS, FINANCING AND OTHER
ACTIVITIES
The following is a discussion of the Company's investment objectives and
policies, financing policies and policies with respect to certain other
activities. These policies may be amended or revised from time to time at the
discretion of the Board of Directors unilaterally and without a vote of the
Company's shareholders. Any such change would be made by the Board of Directors,
however, only after a review and analysis of such change, in light of then
existing business and other circumstances, and then only if, in the exercise of
their business judgment, they believe that it is advisable to do so in the best
interests of the Company. NO ASSURANCE CAN BE GIVEN THAT THE COMPANY'S
INVESTMENT OBJECTIVES WILL BE ATTAINED OR THAT THE VALUE OF THE COMPANY WILL NOT
DECREASE.
INVESTMENT OBJECTIVES AND POLICIES
In general, the Company's investment objectives are: (i) to increase the
value of the Company through increases in the cash flows and values of the
Centers (and any shopping centers or related properties hereafter acquired,
developed or expanded); (ii) to achieve long-term capital appreciation, and
preserve and protect the value of its interests in the Centers (and any shopping
centers or related properties hereafter acquired, developed or expanded); and
(iii) to provide quarterly or other periodic cash distributions, a portion of
which is expected to constitute a nontaxable return of capital because it will
exceed the Company's current and accumulated earnings and profits, as well as to
provide growth in distributions over time.
REAL ESTATE INVESTMENT POLICIES AND CRITERIA
The Company plans to invest primarily in super regional and regional
shopping centers and power centers in major metropolitan areas in the United
States and Canada. In connection with future acquisitions, the Company will
analyze other factors, including, but not limited to:
<TABLE>
<C> <S>
(i) the location and accessibility,
(ii) demographic profile,
(iii) redevelopment potential of the property,
(iv) the purchase price,
(v) the current and historical occupancy levels of the shopping centers and of
comparable properties in comparable locations,
(vi) the characteristics of tenants, including anchor tenants, and the terms of
their leases,
(vii) the quality of the construction and design of improvements, and
(viii) the relationship or fit of the shopping center with the other assets owned by
the Company.
</TABLE>
The Company plans to invest in properties both for income and for capital
appreciation. Subject to certain asset requirements necessary for REIT
qualification, the Company does not presently have a policy with respect to the
amount or percentage of assets which may be invested in any specific property or
other investment.
Even though super regional and regional shopping centers will be the
Company's primary focus, the Company also intends to evaluate, on a selective
basis, power center developments that, in the Company's opinion, will provide
acceptable rates of return. The Company has recently completed or substantially
completed the redevelopment of Eastland Center and Westland Towne Center into
power centers, and is planning for the redevelopment of Mission Valley
Center-West, one of the Company's existing power centers, and the land located
adjacent to Topanga Plaza into power centers.
ACQUIRING ADDITIONAL PROPERTIES
During the past three years, the Company has acquired an indirect interest
in the Acquired Properties and additional interests in one of the Centers. In
April 1994, the Company acquired the former May Company department store at
Eastland Center from the May Company pursuant to an option to purchase which was
acquired by the Company at the time the May Company store was relocated to The
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Plaza at West Covina. On January 27, 1995, the Company exchanged its interest in
the May Company department store located at University Hills, Denver, Colorado,
for an interest in the May Company department store located at Elyria Mall,
Elyria, Ohio pursuant to a tax-free exchange under Section 1031 of the Code. On
January 13, 1995, the Company acquired the Steiger's store at Enfield Square
from the May Company in anticipation of the redevelopment of Enfield Square. On
August 4, 1995, the Company purchased the Sak's Fifth Avenue store at Mission
Valley Center in San Diego, California, from Cal SFA, Inc. On September 5, 1995,
the Company acquired an additional 25.8% interest in the Mission Valley
Partnership, the owner of Mission Valley Center and Mission Valley Center--West.
On July 1, 1996, the Company acquired substantially all of the capital stock of
WPI, the owner of Connecticut Post Mall, South Shore Mall and Trumbull Shopping
Park, as part of the Recapitalization described in "Company Structure and
History." In addition, the Company has entered into a letter of intent to
purchase the remaining 70% interest in Annapolis Mall as well as an agreement to
acquire approximately 70% of the partnership interests in Wheaton Plaza Regional
Shopping Center LLP.
DISPOSITIONS
Shortly before the Company was acquired from Prudential, the Company's
interests in one shopping center were distributed to Prudential.
During the past three years the Company has disposed of its interest in a
few non-core properties. On December 24, 1995, the Company transferred its
interest in the May Company department store at University Hills Mall to the May
Company pursuant to the Section 1031 exchange. See "--Acquiring Additional
Properties" above. In addition to the above transfers, the Company has
transferred its interest in certain land pursuant to condemnation and eminent
domain proceedings or transfers of interest in lieu of condemnation. Other than
such dispositions, the Company has not disposed of interests in any shopping
centers since December 31, 1993. The Company has no current intention to dispose
of any of the Centers or its other related Properties, but does reserve the
right to do so if, based upon its periodic review of the Company's portfolio, it
determines that such action would be in the best interests of the Company. If
the Company does sell certain assets within ten years of the first day of the
first taxable year for which the Company qualified as a REIT (February 12,
1994), a corporate level tax would be imposed upon the Company with respect to
certain Built-In Gain. See "Federal Income Tax Considerations--Taxation of the
Company." Many of the Properties have significant Built-In Gain and this may
affect whether the Company decides to sell such Properties within such ten-year
period.
PARTNERSHIP RESTRUCTURING
On January 1, 1994, the Company restructured its partnership and management
rights in Plaza Camino Real, the limited partnership which owns Plaza Camino
Real, to increase its interest from a 5% general partnership interest to a 40%
general partnership interest and to provide for a separate management agreement,
which was subsequently assigned to the Manager. As of January 1, 1994, the
limited partnership interest in Tishman Warner Center Joint Venture held by the
West Valley Partnership was substantially reduced to a 1% interest as a result
of a restructuring of Tishman Warner Center Joint Venture. The 1% interest was
transferred in 1995. The Tishman Warner Center Joint Venture owns an office
building located on a tract of land adjacent to Topanga Plaza.
OTHER INVESTMENTS
Subject to the percentage of ownership limitations and gross income and
asset tests necessary for REIT qualification (see "Federal Income Tax
Considerations"), the Company may also invest in securities of concerns engaged
in real estate activities, including mortgages, stock of other REITs and other
real estate interests of other issuers. The Company may also invest in the
securities of other issuers in connection with acquisitions of indirect
interests in properties (normally general or limited partnership interests in
special purpose partnerships owning properties). The Company may in the future
acquire all or substantially all of the securities or assets of other REITs or
similar entities where such investments would be consistent with the Company's
investment policies as in its 1996 acquisition of substantially all the capital
stock of WPI. However, the Company does not anticipate investing in issuers of
securities (other than REITs in order to acquire interests in real property,
such as the stock of Westland Realty, Inc., a
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REIT, which owns an indirect 50% interest in Garden State Plaza, and its
interest in Westfield Holdings Limited through its holding of the Westfield
Holdings Warrants or any ordinary shares received upon the exercise thereof) for
the purpose of exercising control or acquiring any investments primarily for
sale in the ordinary course of business or holding any investments with a view
to making short-term profits from their sale. In any event, the Company does not
intend that its investments in securities will require the Company to register
as an "investment company" under the Investment Company Act of 1940, and the
Company intends to divest securities before any such registration would be
required. Over the past three years the Company has not and does not intend to
engage in material trading, underwriting, agency distribution or sale of
securities of other issuers.
FINANCING
The Company currently intends to adhere to a policy of maintaining a
debt-to-Total Market Capitalization ratio of not more than 50%. No assurance can
be given in this regard, however, and the organizational documents of the
Company do not limit the amount or percentage of indebtedness that it may incur.
On a pro forma basis at March 31, 1997, after giving effect to the consummation
of the Offerings and concurrent transactions and the application of the proceeds
as set forth in "Use of Proceeds", the Company would have a ratio of
debt-to-Total Market Capitalization of approximately 41%. The debt-to-Total
Market Capitalization ratio, which is based upon the market value of the
Company's equity and, accordingly, fluctuates with changes in the price of the
Common Stock, differs from debt-to-total asset ratio, which is based upon book
values. The consolidated pro forma debt-to-total asset ratio at March 31, 1997
was 49%. See "Capitalization" and The Company's Pro Forma Condensed Consolidated
Financial Information. The debt-to-total asset ratio may not reflect the current
income potential of the assets and the operating business. The Company believes
that debt-to-Total Market Capitalization provides a more appropriate indication
of leverage for a company whose assets are primarily operating real estate and
of its ability to repay debt. The Company may from time to time reevaluate its
debt policy in light of current economic conditions, relative costs of debt and
equity capital, changes in the Company's market capitalization, growth and
acquisition opportunities and other factors, and modify its debt financing
policy accordingly. As a result, the Company may increase its debt-to-Total
Market Capitalization ratio beyond the limits described above. See "Risk
Factors--Risks Associated with Debt Financing--No Limitation on Debt." If the
Board of Directors (or, in the case of certain Joint Ventures in which the
Company does not act as managing general partner, an Outside Partner) determines
that additional funding is required, the Company or the Joint Ventures may raise
such funds through additional equity offerings, debt financing or retention of
cash flow (subject to provisions in the Code concerning taxability of
undistributed income), or a combination of these methods.
Indebtedness incurred by the Company may be in the form of purchase money
obligations to the sellers of properties, or in the form of publicly or
privately placed debt instruments, financing from banks, institutional
investors, or other lenders, any of which indebtedness may be unsecured or may
be secured by mortgages or other interests in the Property. Such indebtedness
may be recourse, non-recourse or cross-collateralized and, if recourse, such
recourse may include the Company's general assets and, if non-recourse, may be
limited to the particular property to which the indebtedness relates. In
addition, the Company may invest in properties subject to existing loans secured
by mortgages, deeds of trust or similar liens on the properties, or may
refinance properties acquired on a leveraged basis. The proceeds from any
borrowings by the Company, or the Joint Ventures may be used for working
capital, to purchase additional partnership interests in the Joint Ventures or
other partnerships or joint ventures in which the Company participates, to
refinance existing indebtedness or to finance acquisitions, expansions or
development of new properties. The Company may also incur indebtedness for other
purposes when, in the opinion of the Board of Directors, it is advisable to do
so. In addition, the expected size of the Company's distributions may not allow
the Company, using only cash flow from operations, to fund 100% of (i) the
tenant allowances associated with renewal or replacement of current tenants as
their leases expire and (ii) the retirement of all of its debt when due, and
therefore, the Company may be required to seek periodic debt or equity
financings to cover such items. For example, the Company may borrow to meet the
taxable
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income distribution requirements under the Code if the Company does not have
sufficient cash available to meet those distribution requirements.
The Company intends to finance acquisitions with the most appropriate
sources of capital, which may include undistributed Funds from Operations, the
issuance of equity securities including through the operation of any dividend
reinvestment plan adopted by the Company, the sale of assets, bank and other
institutional borrowings and the issuance of debt securities.
The Company does not have a policy limiting the number or amount of
mortgages that may be placed on any particular property, but mortgage financing
instruments may, and usually do, limit additional indebtedness on such
properties.
A chart showing the debt of the Company is set forth above in "--Debt
Summary". During the past three years, the Company has engaged in the following
borrowing transactions. In September 1996 and February 1997, the Company
increased its mortgage loan with Prudential by $15.0 million, bringing the total
mortgage financing with Prudential to $354.0 million. This additional loan was
used to finance the expansion of Mid Rivers Mall. The original loan was part of
the acquisition financing for the purchase of the Company by Westfield Holdings
and other investors in February 1994. In July 1996, WPI extended its mortgage
loan facilities aggregating $146.8 million with National Australia Bank Limited.
These loans are secured by separate first mortgages on South Shore Mall and
Connecticut Post Mall. On August 7, 1996, the Company closed the refinance of an
existing Mello-Roos tax bond financing which were secured by taxes levied on The
Plaza at West Covina. The refinanced bonds totaled $51.2 million.
In December 1995, the Company entered into a $100.0 million unsecured
revolving credit/secured project loan with Bank of America National Trust and
Savings Association, Wells Fargo Bank, N.A., Dresdner Bank AG, and Fleet
National Bank. Portions of this loan were used to refinance a prior secured
revolving credit facility from The Boatmen's National Bank and Trust Company, to
finance the redevelopment of Eastland Center and for other corporate purposes.
As a result of the Company's election to convert a portion of such facility into
a $34.5 million secured project loan on Eastland Center, the unsecured revolving
credit facility is currently $50.0 million. On August 25, 1995, the Company
entered into a $48.0 million secured project loan with Bank of America National
Trust and Savings Association relating to the redevelopment of Mission Valley
Center. In March 1994, Meriden Square Partnership, a Joint Venture in which the
Company has a 50% interest, borrowed $50.0 million from Hypo Bank secured by a
first mortgage on Meriden Square.
EQUITY CAPITAL
The Board of Directors has the authority, without shareholder approval, to
issue additional shares of Common Stock and Preferred Stock or otherwise raise
capital, including through the issuance of senior securities, in any manner (and
on such terms and for such consideration) it deems appropriate, including in
exchange for property. Existing shareholders will have no preemptive right to
shares of Common Stock or other shares of capital stock issued in any offering,
and any such offering might cause a dilution of a shareholder's investment in
the Company. In 1995, the Company issued 105 shares of Senior Preferred Shares
at a purchase price of $500 per share. In connection with the Recapitalization,
the Company issued $94.0 million of Series A Preferred Shares. Simultaneously
with the closing of the Offerings, the Company expects to issue $30.15 million
(based on the mid-point of the price range) of Series B Preferred Shares to ABP.
Although it has no current plans to do so, the Company may in the future issue
securities in connection with acquisitions.
WORKING CAPITAL RESERVES
The Company will maintain working capital reserves (and when not sufficient,
access to borrowings) in amounts that the Board of Directors determines to be
adequate to meet normal contingencies in connection with the operation of the
Company's business and investments. Under an Unsecured Revolving Credit/Secured
Project Loan Agreement, dated December 19, 1995, between the Company, certain
banks and the Bank of America National Trust and Savings Association, as Agent,
the Company has been
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provided with a loan facility of up to $100.0 million, which may be drawn as
either secured or unsecured loans. The agreement currently provides the Company
with an unsecured revolving working capital facility of up to $50.0 million for
general corporate purposes. The agreement also provides the Company with a
secured facility in an amount up to $70.0 million for the rehabilitation of
Eastland Center and Enfield Square (if the remaining $35.5 million is borrowed
in connection with Enfield Square, the working capital facility will be reduced
to $30.0 million). The revolving facility is secured by negative pledges on
Eagle Rock Plaza, Westland Towne Center, Eastland Center and Enfield Square. In
1996, the Company elected to obtain a project loan of $34.5 million in
connection with the redevelopment of Eastland Center. This project loan is
secured by a Deed of Trust on Eastland Center. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources."
ANNUAL REPORTS
Over the last three years, the Company has not issued annual reports to
shareholders. Following the Offerings, the Company will make annual reports, and
other reports to shareholders, as required by the United States securities laws
and New York Stock Exchange rules, and will include financial statements
certified by independent public accountants.
OTHER POLICIES
The Company may, under certain circumstances, purchase shares of Common
Stock in the open market or in private transactions with its shareholders, if
such purchases are approved by the Board of Directors. The Board of Directors
has no present intention of causing the Company to repurchase any such shares
(other than the Senior Preferred Shares), and any such action would only be
taken in conformity with applicable Federal and state laws and the applicable
requirements for qualifying as a REIT. As part of the Recapitalization, the
Company repurchased 21,767,645 shares of Common Stock held by investors other
than Westfield Holdings and its affiliates.
The Company has adopted certain policies to reduce or eliminate potential
conflicts of interest. Following consummation of the Offerings, any transaction
between the Company and Westfield Holdings (including the decision by the
Company to proceed with any development project, the fixed price or construction
schedule for any development project, but excluding decisions relating to the
operation of the Properties in the ordinary course of business) must be approved
by at least 75% of the Independent Directors except that all decisions relating
to the exercise of any rights under the Garden State Plaza Loan or the exercise
of the Westfield Holdings Warrants must be approved by only a majority of the
Independent Directors. Any decision to terminate the Management Agreements, the
Advisory Agreement or the Master Development Framework Agreement, as well as any
decision to exercise the Garden State Plaza Option, must be approved by at least
75% of the Independent Directors and, so long as WAT owns at least 10% of the
outstanding capital stock of the Company, the WAT Trustee. See "Management,
Advisory and Development Services to the Company." Except as set forth above and
the other transactions described herein between the Company and such parties,
any transaction between the Company and any officer or director or principal
shareholder (including any loan to or borrowing from any such officer, director
or principal shareholder or any acquisition of assets or other property from or
sale of assets or other property to any such officer, director or principal
shareholder) must be approved by a majority of the disinterested directors.
The Company's policies with respect to all activities described may be
reviewed and modified from time to time by the Board of Directors without the
vote of the shareholders and the Board of Directors may, without the approval of
shareholders, alter the Company's investment, acquisition, financing and other
policies if it determines in the future that such a change is in the best
interests of the Company and its shareholders.
At all times, however, the Company intends to make investments in such a
manner as to be consistent with the requirements of the Code to qualify as a
REIT unless, because of circumstances or changes in the Code (or in the Treasury
Regulations), the Board of Directors, with the consent of holders of a majority
of each of the Common Stock and the Series A Preferred Shares and Series B
Preferred Shares, voting as a single class, determines to revoke the Company's
REIT election.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Following the completion of the Offerings, the Board of Directors will be
comprised of ten directors, six of whom will be Independent Directors, and two
associate directors. Associate directors of the Company will attend meetings of
the Board but will not vote on matters before the Board.
The Board of Directors is responsible for the general policies of the
Company and the general supervision of the Company's activities conducted by its
officers, agents, advisors, managers or independent contractors, including the
Advisor, Manager and Developer, as may be necessary in the course of the
Company's business.
The directors and executive officers of the Company are as set forth below:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ------------------------------ --- -------------------------------------------------------
<S> <C> <C>
Frank P. Lowy................. 66 Director and Chairman of the Board
Roy L. Furman................. 57 Director
Frederick G. Hilmer........... 52 Director
David H. Lowy................. 42 Director
Herman Huizinga............... 63 Director
Larry A. Silverstein.......... 66 Director
Francis T. Vincent, Jr........ 59 Director
George Weissman............... 78 Director
Peter S. Lowy................. 38 Director and Co-President
Richard E. Green.............. 54 Associate Director and Co-President
Stephen P. Johns.............. 49 Associate Director
Robert P. Bermingham.......... 52 General Counsel and Secretary
Roger D. Burghdorf............ 49 Executive Vice President
Mark A. Stefanek.............. 43 Chief Financial Officer and Treasurer
Randall J. Smith.............. 47 Executive Vice President
Dimitri Vazelakis............. 43 Executive Vice President
</TABLE>
An additional Independent Director will be elected within 90 days following
completion of the Offerings.
BIOGRAPHIES OF DIRECTORS AND EXECUTIVE OFFICERS
FRANK P. LOWY
Frank P. Lowy was appointed director of the Company in 1994. Frank P. Lowy
has been Chairman of the Company since 1994. He is Chairman of the Board of
Directors and co-founder of Westfield Holdings Limited. He is a Member of the
Board of the Reserve Bank of Australia, former President of the Board of
Trustees of the Art Gallery of New South Wales and a Director of the Daily Mail
and General Trust plc (U.K.). Frank P. Lowy is the father of David H. Lowy and
Peter S. Lowy. In 1993, Frank P. Lowy was acknowledged as one of six "pioneers"
of the shopping center industry worldwide by the ICSC.
ROY L. FURMAN
Roy L. Furman was appointed director of the Company in 1996. Mr. Furman is
vice chairman of Furman Selz, which he co-founded in 1973. He oversees the
Investment Banking Division of Furman Selz and has extensive experience in the
media and communications industry. Mr. Furman currently serves as a Vice
Chairman of Lincoln Center for the Performing Arts, Chairman of The Film Society
of Lincoln Center, and Vice President of the New York City Opera. Mr. Furman is
a graduate of Brooklyn College and Harvard Law School.
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FREDERICK G. HILMER
Frederick G. Hilmer was appointed director of the Company in 1996. Professor
Frederick Hilmer was appointed a director of Westfield Holdings in 1991. He
holds a degree in Law from the University of Sydney, a Master in Law from the
University of Pennsylvania and an MBA from the Wharton School of Finance. Since
1989 he has been Professor of Management at the Australian Graduate School of
Management. Prior to that he spent 19 years with McKinsey & Co., including three
years in the United States where he consulted to various retailers and nine
years as head of McKinsey & Co.'s Australian practice and was Chairman of the
National Competition Policy Review conducted on behalf of the Commonwealth
Government of Australia in 1993. He is a director of Fosters Brewing Group, Port
Jackson Partners Limited and Chairman of Pacific Power.
DAVID H. LOWY
David H. Lowy was appointed director of the Company in 1996. David H. Lowy
joined Westfield Holdings Limited in 1977, was appointed Managing Director of
Westfield Holdings Limited in 1987, and a director of Westfield Holdings Limited
in 1982. He worked for Westfield Holdings in the United States from 1977 to
1981. He holds a Bachelor of Commerce degree from the University of NSW. He is a
member of the Business Council of Australia, a member of the Royal Alexandra
Children's Hospital Fund Executive Committee and a Founding Governor and
Director of Air Services Australia Limited and the Australian Naval Aviation
Museum. David H. Lowy is a son of Frank P. Lowy and a brother of Peter S. Lowy.
HERMAN HUIZINGA
Herman Huizinga was appointed a director of the Company in May 1997. Mr.
Huizinga until recently was a member of the Executive Board of ING Group, the
major international banking and insurance group, headquartered in the
Netherlands. He is a former Executive Director of Mercantile Mutual (Group) of
Australia, (a subsidiary of ING) and was also a member of the Executive Board of
Nationale-Nederlanden, Chairman of "Mandeville" (Erasmus University Award
Committee), a member of the Board of Club Rotterdam (Chairman 1995-1996),
Rotterdam Morgen (Vice Chairman 1995-1997), and he was a member of the Committee
Financing Infrastructure (ORI, which advised the Netherlands Government in
1996). He has recently been appointed as a member of the Board of Industrial
Tunnel Methology in Rotterdam.
LARRY A. SILVERSTEIN
Larry A. Silverstein was appointed a director of the Company in May 1997.
Larry A. Silverstein is President of Silverstein Properties, Inc., a
Manhattan-based real estate investment and development firm which owns interests
and operates over 10 million square feet of office space. Mr. Silverstein is a
member of the New York Bar, and governor of the Real Estate Board of New York,
having served as its Chairman. He is a trustee of New York University and is the
founder and Chairman Emeritus of the New York University Real Estate Institute.
He is Chairman of the Realty Foundation, Vice Chairman of the South Street
Seaport Museum, and board member of the Museum of Jewish Heritage.
FRANCIS T. VINCENT, JR.
Francis T. Vincent, Jr. was appointed a director of the Company in May 1997.
Francis T. Vincent, Jr. served as the eighth Commissioner of Major League
Baseball from September 13, 1989 to September 7, 1992. Prior to 1992, Mr.
Vincent was President and Chief Executive Officer of Columbia Pictures
Industries, Inc., Chairman and CEO of Coca Cola Company Entertainment Business
Sector and Executive Vice President of the Coca-Cola Company. Mr. Vincent also
served as Associate Director of the Division of Corporation Finance of the U.S.
Securities and Exchange Commission. Mr. Vincent received his law degree from
Yale Law School in 1963 and is a member of the Bar in New York, Connecticut and
the
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District of Columbia. Mr. Vincent is a member of the Board of Directors of Time
Warner, Inc., Culbro Corporation, Horizon and Oakwood Homes Corporation.
GEORGE WEISSMAN
George Weissman was appointed a director of the Company in May 1997. George
Weissman served as Chairman and Chief Executive Officer of Philip Morris
Companies Inc. from November 1978 until his retirement in July 1984. From March
1984 to 1994, he was a member of the Board of Directors of Paramount
Communications, Inc. From 1973 to 1994, he was on the Board of Directors of
Avnet, Inc. He also served on the Board of Directors of Chemical Bank from 1978
to 1990. Mr. Weissman was formerly a member of the Council of the Brookings
Institute, the Board of Trustees of the Committee for Economic Development
(CED), and The Business Roundtable. From 1980 to 1987, Mr. Weissman was a
director of the New York Chamber of Commerce and Industry, and a member of the
Policy Committee of the New York City Partnership. From 1986 to 1994, Mr.
Weissman served as Chairman of the Board of Directors of Lincoln Center for the
Performing Arts, Inc. From 1979 to 1990, he served as a Trustee of the Whitney
Museum of American Art.
PETER S. LOWY
Peter S. Lowy was appointed director of the Company in 1994. Peter S. Lowy
was an Executive Vice President of the Company from 1994 until March 1997 and is
currently a co-President of the Company. He has been responsible for Westfield
Holdings's U.S. operations since 1990 after nearly a decade with Westfield
Holdings and its affiliates in Sydney. He was appointed a director of Westfield
Holdings Limited in 1987 and a managing director in 1997. Prior to joining
Westfield Holdings, he worked in investment banking in New York and London. He
holds a Bachelor of Commerce degree from the University of NSW. Peter S. Lowy is
a son of Frank P. Lowy and a brother of David H. Lowy.
RICHARD E. GREEN
Richard E. Green was appointed an associate director of the Company in May
1997. Mr. Green served as a director from 1996 to May 1997. He has been
President of the Company since 1994. He has held the position of President of
Westfield Holdings's U.S. operations from 1980 to 1988 and from 1993 to today.
In the interval from 1988 until 1993, he served as President of the entity
acquired in the Recapitalization. See "Certain Transactions." From 1968 to 1980
he was employed by the Company which was then owned by the May Company, and
obtained the title of Executive Vice President. He is a Past Trustee of the
ICSC. Richard E. Green holds a Bachelor of Accounting and Finance from San Jose
State University.
STEPHEN P. JOHNS
Stephen P. Johns was appointed an associate director in May 1997. Stephen P.
Johns is a director of Westfield Holdings Limited. Mr. Johns joined Westfield
Holdings Limited in 1970 and was appointed Secretary and subsequently General
Manager, Finance, prior to becoming Finance Director in 1985. In 1997, Mr. Johns
was appointed Group Finance Director for Westfield Holdings Limited and its
subsidiaries. Mr. Johns holds a Bachelor of Economic degree from the University
of Sydney and is an Associate of the Institute of Chartered Accountants in
Australia.
ROBERT P. BERMINGHAM
Robert P. Bermingham was appointed as General Counsel, a Senior Vice
President and Secretary of the Company in February 1995 and is currently General
Counsel and Secretary of the Company. He joined Westfield Holdings's U.S.
operations to take responsibility for all legal functions relating to the
Company and the Developer. Robert P. Bermingham holds a B.A. in English from the
University of Southern California and a J.D. from Loyola Law School. Between
1993 and 1994, he was Vice President, General
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Counsel and Secretary of Food 4 Less/Alpha Beta Corporation. Prior to that, Mr.
Bermingham was in private legal practice in Los Angeles.
ROGER D. BURGHDORF
Roger D. Burghdorf was appointed a Senior Executive Vice President of
Leasing and Center Management of the Company in 1994 and became an Executive
Vice President of the Company in 1997. Prior to joining Westfield Holdings in
1995, Roger D. Burghdorf was, for five years, the director of leasing at the
Company. He is responsible for all leasing and management services for the
Centers throughout the United States.
RANDALL J. SMITH
Randall Smith is an Executive Vice President of the Company. With over 20
years of experience in the field, Mr. Smith was with May Centers, Inc., the
Company's predecessor, for nine years, before joining Westfield Holdings in
1995. Mr. Smith has a Bachelor of Arts in Art and Architecture and a Master in
Business Administration in Marketing from Miami University. He is a member of
the ICSC's Research Advisory Task Force.
MARK A. STEFANEK
Mark Stefanek was appointed Treasurer of the Company in 1994 and became
Chief Financial Officer in 1997. Mark Stefanek has extensive experience in real
estate finance and development. He began his career at Arthur Andersen. He holds
a Bachelor of Business Administration-Accounting from the University of Notre
Dame and is a certified public accountant. From 1985 to 1991 he was Chief
Financial Officer of Western Development Corporation and for three years before
that he was with Cadillac Fairview Urban Development, Inc. From 1991 to 1994 he
served as Vice President, Finance and Administration for Disney Development
Company.
DIMITRI VAZELAKIS
Dimitri Vazelakis was appointed a Senior Executive Vice President of the
Company in 1994 and is currently an Executive Vice President of the Company. He
holds a Bachelor of Science in Civil Engineering and a Masters in Business
Administration and Finance from New South Wales Institute of Technology. Dimitri
Vazelakis joined Westfield Holdings Limited in 1972, came to Westfield
Holdings's U.S. operations in 1986 and in 1989 he began heading activities in
development, design and construction activities. Between 1979 and 1986, he
worked with Westfield Holdings in Australia, obtaining the position of Deputy
General Manager of Design and Construction.
CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board of Directors expects to hold meetings at least quarterly, and it
may take action on behalf of the Company without a meeting by unanimous written
consent. Directors may participate in meetings by means of telephone conference
calls or other telecommunications equipment.
Upon consummation of the Offerings, the Board of Directors will be divided
into three classes of directors. The terms of the classes will expire in 1998,
1999, and 2000 respectively. Beginning in 1998, as the term of each class
expires, directors for that class will be elected for a three-year term and the
directors for the other two classes will continue in office.
COMMITTEES OF THE BOARD OF DIRECTORS
EXECUTIVE COMMITTEE. The Executive Committee has such authority as is
delegated by the Board of Directors, including authority to execute certain
contracts and agreements with unaffiliated parties. The Executive Committee
consists of three members, at least one of whom is an Independent Director.
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AUDIT COMMITTEE. Upon consummation of the Offerings, the Audit Committee
will consist of Independent Directors. It makes recommendations concerning the
engagement of independent public accountants, reviews with the independent
public accountants the plans and results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of the Company's internal
accounting controls.
NOMINATING COMMITTEE. Upon consummation of the Offerings, the Nominating
Committee will consist of the Chairman and two Independent Directors. It shall
make recommendations to the Board of Directors for the election of directors of
the Company.
SPECIAL POWERS OF THE INDEPENDENT DIRECTORS. In addition to the review and
approval of transactions in which Westfield Holdings has a material interest,
the Independent Directors will retain certain special powers with respect to the
Company's relationship with the Manager, Advisor and Developer. Upon
consummation of the Offerings, by the agreement of the WAT Trustee (so long as
it owns at least 10% of the outstanding capital stock of the Company) and at
least 75% of the Independent Directors, the Company may terminate the Advisory
and Management Agreements upon certain, specific determinations after the
initial three-year term, and thereafter on an annual basis. The Master
Development Framework Agreement may be terminated by the vote of the WAT Trustee
and at least 75% of the Independent Directors if the Advisory and Management
Agreements have been terminated. In addition, upon consummation of the
Offerings, the decision for the Company to proceed with a development project
and the fixed price or construction schedule for any development project will
require approval of at least 75% of the Independent Directors. The exercise of
the Garden State Plaza Option will require the approval of at least 75% of the
Independent Directors. All decisions relating to the exercise of any rights
under the Garden State Plaza Loan or the exercise of the Westfield Holdings
Warrants shall require the approval of at least a majority of the Independent
Directors.
COMPENSATION OF DIRECTORS
Each Independent Director will receive from the Company an annual fee of
$40,000, payable one-half in cash and one-half in Common Stock and reimbursement
of expenses incurred in attending meetings and as a result of other work
performed for the Company.
EXECUTIVE COMPENSATION
The Company has no employees and none of the executive officers named above
receive any compensation for services rendered to the Company. The Company does
not have any other retirement, incentive, bonus, stock based or other employee
benefit plans. All of the Company's executive officers are compensated by
Westfield Holdings. See "Advisory, Management and Development Services to the
Company."
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ADVISORY, MANAGEMENT AND
DEVELOPMENT SERVICES TO THE COMPANY
The Company has no employees and relies on Westfield Holdings for the
management of the Company and the Properties. These services are provided under
a series of agreements between the Company and subsidiaries of Westfield
Holdings. For a description of Westfield Holdings, see "The Company--Westfield
Holdings."
The Board of Directors monitors the performance under the advisory,
management and development agreements with Westfield Holdings. Such financial
arrangements and any other transactions in which Westfield Holdings has a
material interest must be approved by the Independent Directors and, in certain
instances, WAT. The Independent Directors may seek the advice of independent
experts in carrying out their duties.
The agreements were negotiated by the Company and Westfield Holdings. The
Company believes that, although these agreements were negotiated between
associated parties, they reflect market terms. The following summaries of
certain provisions of the advisory, management and development agreements do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of such agreements, copies of which are
exhibits to the Registration Statement of which this Prospectus is a part. See
"Additional Information."
THE ADVISOR AND THE ADVISORY AGREEMENT
The Advisor, Westfield U.S. Advisory, L.P., a Delaware limited partnership
wholly-owned by Westfield Corporation, Inc., a subsidiary of Westfield Holdings
Limited, provides a variety of asset management and investment services for the
Company. These services include (i) preparation of an annual strategic plan,
including: a specific business strategy, annual operating budget, investment and
disposition objectives, capitalization and funding strategies, (ii) coordination
of asset management in connection with the Manager and the Developer, (iii)
general administrative duties for the Company and the Centers, including:
financial reporting, shareholder relations, property accounting, (iv) real
estate investment advice, (v) the investment and reinvestment of any moneys and
securities of the Company in short-term investments and (vi) maintenance of the
Company books and preparation of financial reports.
Under an advisory agreement, dated as of July 1, 1996, as amended (the
"Advisory Agreement"), the Advisor receives an annual fee determined as follows.
The annual advisory fee shall be equal to 25% of the annual Funds From
Operations in excess of the "Advisory FFO Amount", but shall not exceed 55 basis
points on the "Net Equity Value" of the Company's assets. As of the date of and
after giving effect to the Offerings and concurrent transactions, the "Advisory
FFO Amount" will equal $114.6 million (based upon the mid-point of the price
range). The "Advisory FFO Amount" shall thereafter be increased as set forth
below whenever the Company issues additional Common Stock (the "New Issuance"),
as follows. The Advisory FFO Amount shall be the sum of the then applicable
Advisory FFO Amount and the "FFO Adjustment Factor." The "FFO Adjustment Factor"
is equal to 103% (except that 100% shall be used with respect to Common Stock
issued under any distribution reinvestment plan adopted by the Company)
multiplied by (a) a fraction the numerator of which is the aggregate "Funds From
Operations Available for Common Stock" of the Company for each of the four full
calendar quarters immediately preceding the date of the New Issuance and the
denominator of which is the aggregate number of shares of Common Stock (on a
fully diluted basis as required by GAAP) of the Company then outstanding
immediately prior to the date of the New Issuance multiplied by (b) the number
of shares of Common Stock issued in the New Issuance (on a fully diluted basis
as required by GAAP). "Funds From Operations Available for Common Stock" means
Funds from Operations less dividends paid or accrued on the preferred shares
during the applicable four full calendar quarter period. The advisory fee shall
be paid quarterly on the last business day of each calendar quarter based on the
annual budget for Funds from Operations for the Company and shall be subject to
year end adjustment based on actual Funds From Operations Available for Common
Stock for the year. The advisory fee is not payable for the period through
December 31, 1997. "Net Equity Value" will be based on shareholders' equity as
reflected in the Company's most recent
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quarterly financial statements, as adjusted to reflect the most recent appraised
value of the Properties (which appraisals will be performed on a rolling three
year basis).
Upon consummation of the Offerings, the Advisory Agreement will be amended
to have an initial term of three years commencing on the consummation of the
Offerings and will automatically be renewed for additional one-year terms. After
the initial three-year term, the Advisor's performance will be reviewed annually
and the Advisory Agreement may be terminated annually upon the agreement of the
WAT Trustee (so long as it owns at least 10% of the outstanding capital stock to
the Company) and at least 75% of the Independent Directors based on
unsatisfactory performance that is materially detrimental to the Company or if
the compensation payable to the Advisor is not fair, subject to the Advisor's
right to prevent a compensation termination by accepting a mutually acceptable
reduction of its fees. In addition, the Advisory Agreement may be terminated at
any time, for cause, which is defined as fraud, misappropriation of funds or
willful violation of the Advisory Agreement or if an event of default has
occurred and is continuing under the Garden State Plaza Loan.
The Advisor can terminate the Advisory Agreement if the Advisor notifies the
Company that advisory services shall cease to be one of the major business
undertakings of Westfield Holdings in the United States, except that the
Advisory Agreement will continue for a period of 180 days thereafter so long as
the Company is reasonably satisfied with the Advisor's ability to provide the
required services during such period.
The principal executive officers of the general partner of the Advisor are
Richard E. Green and Peter S. Lowy, both of whom are co-Presidents of the
Company. For at least the last five years Richard E. Green has worked for
Westfield Holdings or the entity acquired in the Recapitalization. Peter S. Lowy
has worked for Westfield Holdings for at least the last five years. The Advisor
is located at 11601 Wilshire Boulevard, 12th Floor, Los Angeles, California
90025.
THE MANAGER AND THE MANAGEMENT AGREEMENTS
The Manager, CenterMark Management Company, a Delaware partnership
wholly-owned by Westfield Holdings Limited, manages the Properties (other than
North County Fair). Under separate management agreements (each individually a
"Management Agreement" and collectively the "Management Agreements"), the
Manager has managed each wholly-owned Center in the Company's portfolio and the
Centers owned by the Joint Ventures for which the Company has management
responsibility, since January 1995. Prior to January 1995, Westfield Holdings
provided management services to the Company from and after its acquisition by
Westfield Holdings and others in February 1994. The Manager provides management
and leasing services including, among other duties, (i) paying expenses of the
Center to the extent that the Company has provided the funds, (ii) negotiating,
administering and enforcing leases, (iii) administering and enforcing service,
maintenance and other agreements made by or on behalf of the Company or Center,
(iv) employing, paying and supervising the employees necessary to operate and
maintain the Center, (v) cleaning, maintaining, servicing and repairing the
Center, (vi) notifying the Company of any tax assessments, reassessments or
other impositions and handling any relevant appeals at the request and cost of
the Company, (vii) formulating and implementing an insurance plan, (viii)
locating and endeavoring to secure suitable tenants, and (ix) performing other
activities necessary for running a Center. For each of the wholly-owned Centers,
the Manager receives a property management fee from the Company equal to 5% of
all minimum, fixed and percentage rents payable with respect to the wholly-owned
Centers, a lease preparation fee of $750 per lease, and a tenant plan review fee
of $1,000 per tenant. The property management fee payable by the Company to the
Manager for the wholly-owned Centers is identical to the fee paid by the Company
to Westfield Holdings prior to the Recapitalization. For the Joint Venture
properties managed by the Manager, the fees payable to the Manager are based on
the terms of the Joint Venture agreements but the Company's share thereof is
subject to adjustment so that the aggregate fees payable by the Company with
respect to such properties are the same as payable with respect to the
wholly-owned Centers. Fees paid for the year ended December 31, 1996 to the
Manager under these agreements totaled $5.2 million, including $1.7 million of
which was capitalized.
Upon consummation of the Offerings, each Management Agreement will be
amended to have an initial three-year term commencing upon the consummation of
the Offerings followed by automatic one-
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year renewals. After the initial three-year term, the Manager's performance will
be reviewed annually and the Management Agreements may be terminated annually
upon the agreement of the WAT Trustee (so long as it owns at least 10% of the
outstanding capital stock of the Company) and at least 75% of the Independent
Directors based on unsatisfactory performance that is materially detrimental to
the Company or if the compensation to the Manager is not fair, subject to the
Manager's right to prevent a compensation termination by accepting a mutually
acceptable reduction of its fees. In addition, each of the Management Agreements
may be terminated at any time for cause, which is defined as fraud,
misappropriation of funds or willful violation of the respective Management
Agreements or if an event of default has occurred and is continuing under the
Garden State Plaza Loan.
Pursuant to a separate letter agreement, the Company and Manager have also
agreed that so long as the Manager is managing the Centers under the Management
Agreements, the Manager will manage all wholly-owned properties acquired by the
Company in the future and that the Company will use its reasonable efforts to
have the Manager appointed as the manager with respect to any future joint
venture properties controlled by the Company.
The Manager can terminate the Management Agreements if the Manager notifies
the Company that management of regional shopping centers shall cease to be one
of the principal business undertakings of Westfield Holdings Limited in the
United States, except that the Management Agreements will continue for a period
of 180 days thereafter so long as the Company is reasonably satisfied with the
Manager's ability to provide the required services during such period.
The principal executive officers of the general partner of the Manager are
Richard E. Green and Peter S. Lowy, both of whom are co-Presidents of the
Company. For at least the last five years Richard E. Green has worked for
Westfield Holdings or the entity acquired in the Recapitalization. Peter S. Lowy
has worked for Westfield Holdings for at least the last five years. The Manager
is located at 11601 Wilshire Boulevard, 12th Floor, Los Angeles, California
90025.
THE DEVELOPER AND THE DEVELOPMENT AGREEMENT
The Developer, Westfield Corporation, Inc., a Delaware corporation
wholly-owned by Westfield Holdings Limited, carries out planning and
pre-development work to determine feasible and economically viable developments
of properties within the Company's portfolio. Under the Master Development
Framework Agreement, dated July 1, 1996, the Developer is reimbursed for costs,
subject to the work being performed in accordance with an annual plan or
redevelopment budget previously approved by the Board of Directors. If the
Company in its sole discretion (based on feasibility and other appropriate
studies) decides to proceed with a particular development, the Developer
provides the necessary development services pursuant to a separate Development
Agreement to be entered into by the parties. The Developer provides (i) such
development services for a fixed fee equal to 5% of the final gross project
price, (ii) architectural, design and engineering services for a fixed fee equal
to 10% of the construction costs and (iii) other related services in
consideration of agreed fees. The construction portion of the development
project is performed on a fixed price basis. The Master Development Framework
Agreement provides that the Company may engage an independent representative to
advise the Company with respect to the proposed fixed price and the construction
schedule. If the Company desires to engage such an independent representative,
the Company shall consult with Westfield Holdings in good faith as to the
selection of the independent representative. If the Company and the Developer
cannot agree as to the fixed price or the construction schedule for the project,
and the parties' respective independent representatives cannot negotiate a
resolution, an independent expert will determine the appropriate price and
construction schedule. The Developer may then either accept the independent
expert's proposal or agree to perform the work on a "cost plus" basis in which
case the Developer will (i) be paid for the actual cost of performing the
services plus a percentage of those costs as agreed between the Company and the
Developer and (ii) the Company may designate the schedule, but the Developer
will not be liable if the construction schedule is not achieved. The Company has
no obligation to proceed with any development project. The decisions to proceed
with a development project and the fixed price and construction schedule with
respect thereto requires the approval of at least 75% of the Independent
Directors. Fees paid and capitalized for the year ended December 31, 1996 to the
Developer under these agreements totaled $2.7 million.
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Upon consummation of the Offerings, the Master Development Framework
Agreement will be amended to provide that it may be terminated by the Company by
agreement of at least 75% of the Independent Directors and the WAT Trustee (so
long as it owns at least 10% of the outstanding capital stock of the Company) if
the Advisory Agreement and the Management Agreements have been terminated in
accordance with their terms. In such event, the Developer and the Company will
remain bound by the Master Development Framework Agreement for the remaining
term with respect to any development projects for which the Developer has
commenced to provide substantial predevelopment services to the Company. In
addition, the Master Development Framework Agreement may be terminated at any
time for cause, which is defined as fraud, misappropriation of funds or willful
violation of the Master Development Framework Agreement. Similarly, any
Development Agreement may be terminated for cause, which is defined as fraud,
misappropriation of funds or willful violation of the Development Agreement or
if an event of default has occurred and is continuing under the Garden State
Plaza Loan.
The Developer can terminate the Master Development Framework Agreement if
the Developer notifies the Company that property development services shall
cease to be one of the principal business undertakings of Westfield Holdings
Limited in the United States, except that the Master Development Framework
Agreement will continue for a period of 180 days thereafter so long as the
Company is reasonably satisfied with the Developer's ability to provide the
required services during such period and except that any such termination shall
not affect any Development Agreement previously entered into by the Developer
and the Company.
The principal executive officers of the Developer are Richard E. Green and
Peter S. Lowy, both of whom are co-Presidents of the Company. For the last five
years Richard E. Green has worked for Westfield Holdings or the entity acquired
in the Recapitalization. Peter S. Lowy has worked for Westfield Holdings for at
least the last five years. The Developer is located at 11601 Wilshire Boulevard,
12th Floor, Los Angeles, California 90025.
WESTFIELD HOLDINGS MANAGEMENT
All of the officers of the Company are employed by Westfield Holdings and
receive compensation and fringe benefits from such entities and not from the
Company. Several of the officers serve as directors of Westfield Holdings
Limited and certain of such officers and associates beneficially own shares of
Westfield Holdings and units of WAT. See "Principal Shareholders." As a result
of such employment and interests, the officers of the Company receive an
indirect benefit from the advisory, management and development arrangements
described above.
CERTAIN TRANSACTIONS
RELATIONSHIPS AND TRANSACTIONS WITH WESTFIELD HOLDINGS
SERVICES
Westfield Holdings provides advisory services to the Company and management
and development services to the Centers, for which it receives fees. All of the
officers of the Company and certain of its directors are officers and directors
of Westfield Holdings. The Company has no employees and relies solely on
Westfield Holdings for management services. As such, the Company is not
currently able to operate without Westfield Holdings. See "Advisory, Management
and Development Services to the Company." Westfield Holdings Limited is an
independent company from the Company, and except for the Company's interest in
the Westfield Holdings Warrants, the purchasers of the Shares will not acquire
any interest in Westfield Holdings Limited.
STOCK OWNERSHIP
In 1994, Westfield Holdings acquired a 40% interest in the Company from
Prudential. In 1995, Westfield Holdings purchased an additional 10% of the
Company from certain other investors. Westfield Holdings currently owns
10,930,672 shares of Common Stock. Westfield Holdings received in connection
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with the Recapitalization WAT ordinary options, which permit it to exchange each
share of Common Stock owned by Westfield Holdings for ordinary units of WAT. The
ordinary options will expire upon consummation of the Offerings. Westfield
Holdings has informed the Company that it does not intend to exercise such
options prior to the consummation of the Offerings. Westfield Holdings has
placed an order to purchase up to 2,300,000 Shares at the price to public in the
Offerings and may, from time to time, purchase additional shares of Common Stock
in the market or otherwise. Westfield Holdings has certain demand registration
rights for its shares of Common Stock. The Company has been informed that none
of the proceeds of the Offerings will be used by the offerees to acquire the
Common Stock under the Orders. Westfield Holdings has advised the Company that
it will utilize currently available cash or credit facilities to acquire such
Common Stock under the Orders. Interests associated with the Lowy family and
Richard Green have also notified the Company that they will utilize currently
available cash or credit facilities to acquire such Common Stock. Based on
current conditions which may change, Merrill Lynch currently intends to fill the
Orders in their entirety even if the Offerings are oversubscribed. See "Shares
Eligible for Future Sale--Registration Rights."
WPI ACQUISITION
In connection with the Recapitalization, the Company acquired from interests
associated with the Lowy family indirect ownership of three additional regional
shopping centers, Connecticut Post Mall, Trumbull Shopping Park and South Shore
Mall. The acquisition was made and the price was determined based on a due
diligence investigation, review of the books, records and properties and receipt
of an independent appraisal of the three Centers. The Company paid $62.8
million, after adjustments, plus the assumption of debt, as the purchase price
for the acquisition which closed on July 1, 1996. The sellers remain liable for
certain liabilities, including certain income taxes imposed on WPI and its
subsidiaries with respect to periods prior to the closing of the purchase.
Although there is no assurance that the continuing undertaking of the sellers
(including credit support for such indemnity of not less than $20 million) will
be adequate to discharge any such liabilities, the Company believes that no such
liability would be material to the Company. The Company believes that, although
this acquisition was negotiated between associated parties, it reflects market
terms.
GARDEN STATE PLAZA OPTION
In July 1996, the Company acquired from Westfield Holdings an option to
acquire at fair market value the stock of Westland Realty, Inc., the holder of
an indirect 50% interest in the Garden State Plaza located in Paramus, New
Jersey.
The Garden State Plaza Option is exercisable following the completion of an
independent valuation of the property to determine its fair market value.
Contemporaneously with the closing of the Offerings, the Garden State Plaza
Option will be amended to provide that the valuation procedure may be commenced
by the Company upon the earliest to occur of (x) any time after completion and
stabilization of the current expansion of the property, defined to mean the
leasing of 95% of the mall gross leasable area for the expansion, (y) any time
after the date which is 18 months after completion of the current expansion of
the property and (z) no later than January 3, 2000. The valuation is to be
performed by an independent appraiser approved by the Company and Westfield
Holdings within 30 days after the Company elects to commence the valuation
procedure. The purchase price under the Garden State Plaza Option is equal to
50% of such fair market valuation, subject to adjustment for the mortgage debt
of Garden State Plaza, the Garden State Plaza Loan and the amount by which
current assets exceed current liabilities. The Garden State Plaza Option must be
exercised within 120 days after delivery of the determination of the fair market
value of the property. The Company believes that the conditions to the exercise
of Garden State Plaza Option will first be satisfied in the summer of 1999 based
on the right to exercise 18 months after substantial completion; however, the
option may first be exercised at an earlier date if the property is 95% leased.
The Board of Directors (including at least 75% of the Independent Directors)
will determine whether the exercise of the Garden State Option is in the best
interests of the Company. In the event that the purchase price exceeds $55
million (net of the $145 million Garden State Plaza Loan), the exercise of
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the Garden State Plaza Option will be subject to an affirmative vote of a
majority of the holders of Common Stock voting at a meeting on such issue other
than Westfield Holdings and its affiliates (including, without limitation, WAT)
and interests associated with the Lowy family. The purchase price shall be
payable by the delivery of shares of Common Stock, valued at the average of the
closing sale price for the Common Stock on the 20 trading days prior to the date
the option is exercised.
Although the Garden State Plaza Option is not currently exercisable, the
Company will acquire a substantial economic interest in the revenues to be
received from the Garden State Plaza by using a portion of the proceeds of the
Offerings and concurrent transactions to make a $145 million participating
secured loan to the subsidiaries of Westfield Holdings Limited which own the
indirect 50% interest in Garden State Plaza. The loan will bear interest at a
fixed annual rate of 8.5% per annum, will be secured by a pledge of Westfield
Holdings' 50% partnership interest in the limited partnership which owns Garden
State Plaza and will be on a nonrecourse basis. The Company will also receive
participating interest based on 80% of the borrowers' share of the adjusted cash
flow (after payment of the fixed interest and after calculating Westfield
Holdings's share of cash flow from Garden State Plaza as if the mortgage loan
encumbering such property had a fixed interest rate of 7.25% per annum) from
Garden State Plaza subject to an aggregate limit for fixed interest and
participating interest in an amount equal to 11% per annum. The Company has been
advised by Westfield Holdings that the loan proceeds are not expected to be
invested in Garden State Plaza. The loan will mature in 10 years, may be prepaid
with a yield maintenance premium (based on the payment of the maximum amount of
participating interest) after the expiration of the Garden State Plaza Option in
connection with the sale of Garden State Plaza (or Westfield Holdings' interest
therein) to an unaffiliated third party and may not otherwise be prepaid for
five years. If an event of default shall occur under the Garden State Plaza
Loan, the Company will be entitled to a yield maintenance premium (based on the
payment of the maximum amount of participating interest) and will have the right
to terminate the Management Agreements, the Advisory Agreement and the Master
Development Framework Agreement. Prior to the consummation of the Offerings, the
board of directors of Westfield Holdings will represent to the U.S.
Underwriters, the International Managers and the holders of the Shares that
Westfield Holdings will not prepay the Garden State Plaza Loan for seven years
except under the circumstances and with a yield maintenance premium as set forth
above.
The other 50% interest in Garden State Plaza is owned by affiliates of
Rodamco North America B.V., a Netherlands corporation.
WESTFIELD HOLDINGS WARRANTS
Contemporaneously with the Offerings, the Company will purchase from
Westfield Holdings Limited for an aggregate of $15.3 (equal to Aus.$19.6
million) the non-transferable Westfield Holdings Warrants to acquire 9.8 million
ordinary shares of Westfield Holdings Limited, which would as of the date hereof
equal approximately 9% of the ordinary shares of Westfield Holdings Limited
outstanding after the exercise of the options. The term of the Westfield
Holdings Warrants is five years but will be seven years if Australian law is
changed to permit such longer term. The Westfield Holdings Warrants may be
exercised in whole or in part following the third anniversary of the grant of
the Westfield Holdings Warrant. Each Westfield Holdings Warrant will have an
exercise price equal to the weighted average of the sale prices of ordinary
shares of Westfield Holdings Limited on the ASX for the 20 business days
immediately preceding the consummation of the Offerings, and, subject to certain
anti-dilution adjustments, will entitle the Company to receive one ordinary
share of Westfield Holdings Limited. In addition, the Company has the right to
exercise the option for no cash payment, in which event the Company would be
entitled to receive, at the option of Westfield Holdings Limited, either the
number of Westfield Holdings Limited ordinary shares equal in value to, or cash
in an amount equal to, the amount by which the market price of the ordinary
shares of Westfield Holdings Limited exceeds on that date the exercise price of
such Westfield Holdings Warrants. For these purposes, the market price of an
ordinary share of Westfield Holdings Limited will be equal to the weighted
average of the sale prices of such shares on the ASX for the 20 business days
immediately preceding the exercise date. On April 18, 1997 the closing sale
price on the ASX of the Westfield Holdings Limited ordinary shares was
Aus.$21.35.
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For a description of the Westfield Holdings Warrants, see "The
Company--Westfield Holdings." The Westfield Holdings Warrants were negotiated
between associated parties and there can be no assurance that either the price
or the terms of the Westfield Holdings Warrant are fair.
RELATIONSHIPS AND TRANSACTIONS WITH WAT
WAT is an Australian public property trust which was established pursuant to
a Trust Deed, dated March 28, 1996, as amended (the "Trust Deed"), to acquire a
majority interest in the Company. WAT is managed by Westfield America Management
Limited ("WAM"), a wholly-owned subsidiary of Westfield Holdings Limited. WAT
units are traded on the ASX.
The WAT Trustee is Perpetual Trustee Company Limited which is Australia's
largest independent trustee organization and has extensive experience in acting
as trustee of unit trusts, including listed property trusts. Although under the
Trust Deed, WAM and the WAT Trustee have the power to make other investments,
WAT has informed the Company that it presently intends only to invest in the
Company.
The WAT Trustee generally exercises all of the voting rights over the shares
of Common Stock held by WAT as directed by WAM, the manager of WAT, subject to
certain exceptions contained in the WAT Trust Deed and applicable Australian
law, including an exception under current Australian law in relation to the
designation and election of the directors of the Company as set forth below.
Subject to the foregoing, so long as Westfield Holdings owns shares of Common
Stock and WAT and Westfield Holdings together hold more than 50% of the Common
Stock of the Company, the WAT Trustee has the power to vote in its absolute
discretion the number of shares of Common Stock held by WAT equal to the
difference between the number of shares of Common Stock held by WAT and
Westfield Holdings and 50% of the shares of Common Stock. Any additional shares
held by WAT will be voted by the WAT Trustee as directed by WAM.
Under current Australian law, the WAT Trustee must solicit approval of the
WAT unitholders before voting in the election of directors with respect to
shares of other corporations held by WAT. For this purpose, a general meeting of
WAT unitholders must be convened with each WAT unitholder having one vote for
each unit held. The WAT Trustee votes all shares of Common Stock as a block in
the manner approved by a majority of the units voting on the matter at such
meeting of unitholders. The WAT Trustee will agree to call a meeting of WAT
unitholders to obtain approval for voting for the election of directors.
In July 1996, the Company sold WAT 19,631,543 shares of Common Stock and the
1996 WAT Warrant for cash consideration of $314.3 million and WAT's agreement to
issue certain ordinary options and special options to the Company or, at the
direction of the Company, to certain shareholders of the Company. As a result,
13,429,110 ordinary options were issued to the holders of Common Stock
(including 10,930,672 ordinary options issued to Westfield Holdings) and 940,000
special options were issued to the holder of Series A Preferred Shares (ABP).
Each ordinary option permits the holder to exchange one share of Common Stock
for ordinary units of WAT. Each special option permits the holder to purchase
124.92 ordinary units of WAT (subject to adjustment in certain events) for $100
or for one Series A Preferred Share. The ordinary options, which are currently
exercisable, will expire upon consummation of the Offerings. The Company
understands that one of its existing shareholders intends to exercise ordinary
options with respect to 1,623,985 shares of Common Stock and all ownership
calculations set forth herein assume that such ordinary options have been
exercised. The special options become exercisable on July 1, 1998 and expire on
July 1, 2011. Concurrently with the Offerings, WAT expects to sell to ABP
301,500 special options (based on the mid-point of the price range and subject
to adjustment based on the gross proceeds of the Offerings). Each such special
option will permit the holder to purchase 119.4 ordinary units (based on the
mid-point of the price range) of WAT (subject to adjustment in certain events)
for $100 or one Series B Preferred Share. The special options become exercisable
on May , 1999 and will expire on May , 2012. WAT has no right to cause the
exercise of the options. If ordinary options are exercised prior to the
consummation of the Offerings or special options are exercised with Series A
Preferred Shares, WAT's equity ownership of the Company will increase. There can
be no assurance that ordinary options will not be exercised prior to
consummation of the Offerings or that special options will not be
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<PAGE>
exercised with shares of Series A Preferred Shares or Series B Preferred Shares
on or after July 1, 1998 or May , 1999.
Under the 1996 WAT Warrant, WAT has the right to purchase at any time and
from time to time, in whole or in part, 6,246,096 shares of Common Stock at an
exercise price (as well as the sales price for the Common Stock sold to WAT) of
$16.01 per share, subject to adjustment in certain events. The exercise price
was determined based on the initial public offering price of the WAT units. The
1996 WAT Warrant will expire on July 1, 2016. In connection with the Offerings,
the Company will issue to WAT the 1997 WAT Warrant pursuant to which WAT will
have the right to purchase at any time and from time to time, in whole or in
part, $35.0 million (or 2,089,552 shares based on the mid-point of the price
range) of Common Stock at an exercise price equal to the initial public offering
price for the Shares, subject to adjustment in certain events. The 1997 WAT
Warrant will expire on the twentieth anniversary of its issuance. The sale price
for the 1997 WAT Warrant will be $2.9 million. Westfield Holdings Limited has a
right of first refusal if WAT wishes to sell the WAT Warrants.
In January 1997, the Company sold to WAT 8,151,155 shares of Common Stock
for $130.5 million and repurchased the same number of shares from an existing
investor for the same amount.
Upon consummation of the Offerings, WAT will own 62.4% of the outstanding
Common Stock on a fully-diluted basis. WAT also has the right to acquire
6,246,096 shares of Common Stock upon the exercise of the 1996 WAT Warrant and
$35.0 million (or 2,089,552 shares based on the mid-point of the price range) of
Common Stock upon the exercise of the 1997 WAT Warrant. Upon the consummation of
the Offerings, Westfield Holdings will own an approximately 24% equity interest
in WAT on a fully diluted basis.
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PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial
ownership (as defined under Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended) of shares of Common Stock and WAT units by (1) each
person known by the Company to be the beneficial owner of more than a five
percent interest in the Company, (2) each director, (3) the Chief Executive
Officers of the Company and (4) the directors and executive officers of the
Company as a group. No executive officers of the Company other than the Chairman
and the co-Presidents beneficially own shares of Common Stock or WAT units.
Unless otherwise indicated in the footnotes, all of the interests are owned
directly, and the indicated person or entity has sole voting and investment
power.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OF PERCENT OF ALL SHARES PERCENT OF
COMMON ALL SHARES NUMBER OF OF COMMON ALL WAT PERCENT OF
STOCK OF COMMON SHARES OF STOCK UNITS ALL WAT UNITS
BENEFICIALLY STOCK COMMON STOCK BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED BENEFICIALLY BENEFICIALLY OWNED NUMBER OF OWNED OWNED
PRIOR TO OWNED PRIOR OWNED SUBSEQUENT WAT UNITS PRIOR TO SUBSEQUENT
NAME AND ADDRESS OF THE TO THE SUBSEQUENT TO TO BENEFICIALLY THE TO
BENEFICIAL OWNER OFFERINGS OFFERINGS OFFERINGS OFFERINGS OWNED OFFERINGS(6) OFFERINGS(7)
- ------------------------- ----------- ------------ -------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Perpetual Trustee Company
Limited,
as Trustee for Westfield
America Trust............ 45,740,221 77.3% 49,453,758 62.4% -- -- --
The National Manager (1) (1) (4) (4)
Property Trusts
Perpetual Trustees of
Australia Limited
Level 7
1 Castlereagh Street
Sydney, Australia
Westfield Holdings
Limited................. 56,670,893 95.8% 62,684,430 79.1% 234,228,709 29.7% 28.5%
Level 24 Westfield (2)(3) (2)(3) (2)(3)(9) (2)(3) (2)(3)
Towers
100 William Street
Sydney, NSW 2011
Australia
Frank P. Lowy............ 56,670,893 95.8% 63,284,430.... 79.8% 302,935,768 38.4% 36.8%
c/o Westfield Holdings (3) (3) (3)(9) (3) (3)(5) (3)(5) (3)(5)
Limited
Level 24 Westfield
Towers
100 William Street
Sydney, NSW 2011
Australia
David H. Lowy............ 56,670,893 95.8% 63,284,430 79.8% 301,805,268 38.2% 36.7%
c/o Westfield Holdings (3) (3) (3)(9) (3) (3)(5) (3)(5) (3)(5)
Limited
Level 24 Westfield
Towers
100 William Street
Sydney, NSW 2011
Australia
Peter S. Lowy............ 56,670,893 95.8% 63,284,430 79.8% 301,800,768 38.2% 36.7%
c/o Westfield America, (3) (3) (3)(9) (3) (3)(5) (3)(5) (3)(5)
Inc.
11601 Wilshire
Boulevard
Los Angeles, CA 90025
Roy L. Furman............ -- -- 30,000(8) * 250,000 * *
Frederick G. Hilmer...... -- -- -- -- -- -- --
Larry A. Silverstein..... -- -- -- -- -- -- --
Francis T. Vincent,
Jr...................... -- -- 10,000(8) * -- -- --
George Weissman.......... -- -- 10,000(8) * -- -- --
Richard E. Green......... -- -- 100,000(9) -- 300,000 * *
Herman Huizinga.......... -- -- -- -- -- -- --
All directors and
executive officers as a
group (11 persons)...... 56,670,893 95.8% 63,434,430 80.0% 303,565,168 38.4% 36.9%
(3) (3) (3)(9) (3)(5) (3)(5) (3)(5) (3)(5)
</TABLE>
- --------------
* Less than 1%.
(1) Includes 6,246,096 shares issuable upon exercise of the 1996 WAT Warrant.
All of the shares are held by the WAT Trustee as trustee of Westfield
America Trust. Except with respect to the election of
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directors, the WAT Trustee has the power to vote 23,960,029.5 (27,083,077.5
assuming exercise of the WAT Warrants) of such shares in its absolute
discretion and the remaining shares held by the WAT Trustee are voted by the
WAT Trustee as directed by WAM, a subsidiary of Westfield Holdings Limited.
The WAT Trustee may only vote the shares for the election of directors as
approved by the holders of WAT units. The WAT Trustee disclaims beneficial
ownership of such shares. References to beneficial ownership are made herein
solely with respect to U.S. securities laws and are not intended to refer or
apply in any respect to Australian legal matters. Certain shareholders of
the Company hold options granted by WAT permitting such holders to exchange
Common Stock for ordinary units of WAT. If such options were exercised prior
to consummation of the Offerings, WAT's beneficial ownership of the Common
Stock would increase. See "Certain Transaction--Relationships and
Transactions with WAT."
(2) 10,930,672 of the shares of Common Stock are held by wholly-owned
subsidiaries of Westfield Holdings Limited. The balance represents shares of
Common Stock held in the name of the WAT Trustee which solely for purposes
of U.S. securities laws may be deemed to be beneficially owned by Westfield
Holdings by virtue of its ownership of WAM, which currently has the power to
direct the vote of 15,534,095.5 (18,657,143.5 assuming exercise of the 1996
WAT Warrant) of such shares, other than for the election of directors and
upon consummation of the Offerings (assuming 1,623,985 shares of Common
Stock are acquired by WAT in exchange for WAT units upon the anticipated
exercise of outstanding options by an existing shareholder prior to the
consummation of the Offerings). WAM will have the power to direct the vote
of 24,534,095.5 (28,701,919.5 assuming exercise of the WAT Warrants), other
than for the election of directors. WAM and the WAT Trustee share the
investment power over such shares. See footnote (1) above and footnote (4)
below. References to beneficial ownership are made herein solely with
respect to U.S. securities laws and are not intended to refer or apply in
any respect to Australian legal matters. See "Certain Transactions."
(3) Messrs. Frank P. Lowy, David H. Lowy and Peter S. Lowy (each of whom is a
member of the Board of Directors, are directors and officers of Westfield
Holdings Limited) and interests associated with the Lowy family beneficially
own approximately 44% of the outstanding ordinary shares of Westfield
Holdings Limited and, as such, Messrs. Frank, David and Peter Lowy may be
deemed solely for purposes of U.S. securities laws to beneficially own the
securities indicated as owned and deemed beneficially owned by Westfield
Holdings Limited as set forth in footnote (2) above. Messrs. Frank, David
and Peter Lowy disclaim beneficial ownership of such securities. References
to beneficial ownership are made herein solely with respect to U.S.
securities laws and are not intended to refer or apply in any respect to
Australian legal matters.
(4) Includes 6,246,096 shares issuable upon exercise of the 1996 WAT Warrant,
2,089,552 shares (based on the mid-point of the price range) issuable upon
exercise of the 1997 WAT Warrant and 1,623,985 shares which are expected be
exchanged for units in WAT upon exercise by an existing shareholder of
ordinary options prior to consummation of the Offerings. The Company
understands that one of its existing shareholders intends to exercise
1,623,985 of such options prior to consummation of the Offerings. All of the
shares are held by the WAT Trustee as trustee of Westfield America Trust.
Except with respect to the election of directors, the WAT Trustee has the
power to vote 23,960,029.5 (27,083,077.5 assuming exercise of the WAT
Warrants) of such shares in its absolute discretion and the remaining shares
held by the WAT Trustee are voted by the WAT Trustee as directed by WAM, a
subsidiary of Westfield Holdings Limited. The WAT Trustee may only vote the
shares for the election of directors as approved by the holders of WAT
units. The WAT Trustee disclaims beneficial ownership of such shares.
References to beneficial ownership are made herein solely with respect to
U.S. securities laws and are not intended to refer or apply in any respect
to Australian legal matters.
(5) Interests associated with the Lowy family beneficially own 68,711,559 WAT
units. Messrs. Frank, David and Peter Lowy may be deemed solely for purposes
of the U.S. securities laws to beneficially own 68,707,059, 67,576,559 and
67,572,059 of the WAT units, respectively, benefically owned by such
interests. Messrs. Frank, David and Peter Lowy disclaim beneficial ownership
of such WAT units. References to beneficial ownership are made herein solely
with respect to U.S. securities laws and are not intended to refer or apply
in any respect to Australian legal matters.
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(6) Excludes WAT units issuable in exchange for shares of Common Stock upon
exercise of WAT ordinary options that expire upon consummation of the
Offerings. Excludes WAT units issuable upon exercise of WAT special options,
which are not currently exercisable.
(7) Includes 32,479,700 WAT units which are expected to be issued upon exercise
of 1,623,985 ordinary options by an existing shareholders prior to the
consummation of the Offerings. Excludes WAT units issuable upon exercise of
WAT special options, which are not currently exercisable.
(8) Includes 30,000, 10,000 and 10,000 shares expected to be purchased by
Messrs. Furman, Vincent and Weissman in the Offerings. See "Underwriting."
(9) Takes account of the maximum number of Shares which may be acquired under
the Orders (up to 2,300,000 for Westfield Holdings, 600,000 for interests
associated with the Lowy family and 100,000 for Richard E. Green).
Except as set forth above, no director or executive officer of the Company
will beneficially own shares of Common Stock as of completion of the Offerings.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following summaries of certain provisions of the Articles and By-Laws,
as amended prior to consummation of the Offerings and concurrent transactions,
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all of the provisions of the proposed Articles and By-
Laws, forms of which are exhibits to the Registration Statement of which this
Prospectus is a part, and by the provisions of the General Business and
Corporation Law of Missouri ("GBCL"). See "Additional Information."
CAPITAL STOCK
Upon the consummation of the Offerings and concurrent transactions, the
Articles will authorize the issuance of 410,000,200 shares of stock, consisting
of (i) two hundred (200) shares of non-voting senior preferred stock, par value
$1.00 per share (the "Senior Preferred Shares"), of which one hundred five (105)
shares are currently outstanding, (ii) five million (5,000,000) shares of
preferred stock, par value $1.00 per share (the "Preferred Stock"), of which
nine hundred forty thousand (940,000) shares are designated Series A cumulative
redeemable preferred stock (the "Series A Preferred Shares"), and of which nine
hundred forty thousand (940,000) are currently outstanding, and of which up to
400,000 shares will be designated Series B preferred stock (the "Series B
Preferred Shares") and of which 301,500 (based on the mid-point of the price
range and subject to adjustment based on the gross proceeds of the Offerings)
will be outstanding, (iii) 200,000,000 shares of common stock, par value $.01
per share (the "Common Stock"), of which 52,929,535 are currently outstanding
(without giving effect to the Offerings, or the exercise of the WAT Warrants),
and (iv) 205,000,000 shares of excess stock, par value $.01 per share, of which
none are currently outstanding. Excess Shares, if any, that are exchanged
pursuant to the Articles (i) for Common Stock, are sometimes referred to herein
as "Excess Common Shares" and, together with the Common Stock, the "Common
Shares" and (ii) for Preferred Shares, are sometimes referred to herein as
"Excess Preferred Shares" and togehter with the Preferred Shares, as
"Preferred-Equity Shares."
SENIOR PREFERRED SHARES
The holders of Senior Preferred Shares shall be entitled to receive, when
and as declared by the Board of Directors, but only out of funds legally
available therefor, cash dividends at the annual rate of $35.00 per share, and
no more, payable quarterly. No dividend shall be paid on any Preferred Stock or
Common Shares unless the full dividend has been paid on Senior Preferred Shares.
In the event of any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company, the holders of Senior Preferred Shares shall
be entitled, before any distribution or payment is made to the holders of any
Preferred Stock or Common Shares, to be paid in full an amount equal to $550.00
per share, together with the full dividend thereon for the then current
quarterly-yearly dividend period. The Company, at the option of the Board of
Directors, may redeem in whole, but not in part, the Senior Preferred Shares at
the time outstanding at any time from and after February 20, 1999, upon notice,
at a redemption price for each Senior Preferred Share equal to $550.00, together
with the full dividend thereon for the then current quarterly-yearly dividend
period. Except as required by applicable law, the holders of Senior Preferred
Shares shall have no voting rights in the Company. The Company may repurchase
the outstanding Senior Preferred Shares after the consummation of the Offerings.
PREFERRED STOCK
Preferred Stock may be issued, from time to time, in one or more series as
authorized by the Board of Directors. Prior to issuance of a series, the Board
of Directors by resolution shall designate that series to distinguish it from
other series and classes of stock of the Company, shall specify the number of
shares to be included in the series, and shall fix the terms, rights,
restrictions and qualifications of the shares of the series, including any
preferences, voting powers, dividend rights and redemption, sinking fund and
conversion rights. Subject to the express terms of any other series of Preferred
Stock outstanding at the time, the Board of Directors may increase or decrease
the number of shares or alter the designation or classify or reclassify any
unissued shares of a particular series of Preferred Stock by fixing or altering
in any one or more respects from time to time before issuing the shares any
terms, rights, restrictions and qualifications of the shares.
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SERIES A PREFERRED SHARES
The holders of Series A Preferred Shares shall be entitled to receive, when
and as declared by the Board of Directors, but only out of funds legally
available therefor, per share cumulative cash dividends equal to the greater of
(i) $8.50 per annum and (ii) an amount currently equal to 6.2461 times the
dollar amount declared on Common Shares for such period, subject to certain
adjustments. Holders of Series A Preferred Shares are entitled to dividends
before dividends can be distributed to holders of Common Shares. In the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Company, the holders of Series A Preferred Shares shall be
entitled, before any distribution or payment is made to the holders of any
Common Shares, to be paid in full an amount per share equal to $100.00, together
with all accrued and unpaid dividends through the end date of the calendar
quarter most recently completed prior to the date of liquidation, dissolution or
winding up of the affairs of the Company plus $2.125 times a fraction equal to
the actual number of days elapsed from the end date of the calendar quarter most
recently completed to the relevant liquidation date over 90 days. From and after
July 1, 2003, the Company, at the option of the Board of Directors, with
approval of a majority of the Independent Directors, may redeem in whole, or in
part, the outstanding Series A Preferred Shares at a redemption price of $100.00
per share, together with all accrued and unpaid dividends through the end date
of the calendar quarter most recently completed prior to the redemption date
plus $2.125 times a fraction equal to the actual number of days elapsed from the
end date of the calendar quarter most recently completed to the relevant
redemption date over 90 days, plus a right to receive on the payment date for
the next quarterly dividend declared on the Common Stock an amount equal to the
proportionate additional amount, if any, of dividends the holder of such Series
A Preferred Share would have been entitled to receive had such share been held
on the record date for such Common Stock dividend.
The holders of Series A Preferred Shares shall have no voting rights in the
Company except: (i) in the event that the Board of Directors has not declared a
dividend payable to holders of Series A Preferred Shares or any series of
Preferred Shares authorized with the consent of the holders of Series A
Preferred Shares ranking PARI PASSU with the Series A Preferred Shares ("Ranking
Preferred Shares") for four quarterly dividend periods, the number of directors
constituting the Board of Directors shall, without further action, be increased
by one and the holders of a majority of the Series A Preferred Shares together
with all series of Ranking Preferred Shares shall have the exclusive right to
elect one director to fill such newly created directorship until such time as
all such dividends in arrears are made current and paid in full, at which time
the director so elected shall cease to be a director, and the number of
directors constituting the Board of Directors shall be reduced by one, (ii) a
majority vote of the holders of Series A Preferred Shares voting together as a
class shall be required to approve any amendment to the Articles that materially
and adversely affects their rights, PROVIDED, that (x) except where a unanimous
vote is required under clause (y) below, where the amendment adversely affects
the rights of any series of Ranking Preferred Shares, then such amendment shall
be approved by the vote of the Series A Preferred Shares and the Ranking
Preferred Shares affected thereby voting together as a class and (y) the
unanimous approval of the holders of Series A Preferred Shares shall be required
for any amendment to the Articles that would decrease the rate or change the
time of payment of any dividend or distribution on the Series A Preferred
Shares, decrease the amount payable upon redemption of the Series A Preferred
Shares or upon liquidation of the Company, advance the date on which the Series
A Preferred Shares may be redeemed by the Company or amend the number of shares
of Series A Preferred Shares required to effect amendments to the Articles,
(iii) the affirmative vote of the holders of a majority of the Series A
Preferred Shares and any series of Ranking Preferred Shares affected thereby
voting together as a class shall be required to approve any merger or
consolidation of the Company and another entity in which the Company is not the
surviving corporation and each holder of the Series A Preferred Shares and such
Ranking Preferred Shares do not receive shares of the surviving corporation with
substantially similar rights, preferences and powers in the surviving
corporation as such Preferred Shares have with respect to the Company, (iv) the
affirmative vote of the holders of a majority of the Series A Preferred Shares
and the Ranking Preferred Shares voting together as a class shall be required to
approve any voluntary action by the Board of Directors intended to cause the
Company to cease to have the status as a REIT and (v) as otherwise required by
applicable law.
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SERIES B PREFERRED SHARES
The holders of Series B Preferred Shares have the same rights as the holders
of Series A Preferred Shares and the terms of the Series B Preferred Shares are
substantially the same as those of the Series A Preferred Shares, except that
the amount of cumulative cash distributions will be equal to the greater of (i)
$8.50 per annum and (ii) an amount equal to the product of (x) 100 divided by
the Price to Public and (y) the dollar amount declared on the Common Shares for
the applicable period, subject to certain adjustments.
COMMON SHARES
DISTRIBUTION RIGHTS
The holders of Common Shares shall be entitled to receive such distributions
as may be declared by the Board of Directors out of funds legally available
therefor. In order to qualify as a REIT, the Company is required to distribute
at least 95% of its taxable income. The Company currently intends to continue to
pay regular quarterly distributions to its shareholders with the distribution in
respect of the quarter ending June 30, 1997 to be paid on or about July 31,
1997. Under the Articles, holders of the Senior Preferred Shares and Preferred
Shares will continue to have a preference with respect to dividends relative to
the holders of Common Shares. The Company expects that regular quarterly
distributions of the Company will be declared for the three month periods ending
March 31, June 30, September 30 and December 31 each year. All distributions
will be at the discretion of the Board of Directors and will depend on the
actual Funds from Operations, the Company's financial condition, the annual
distribution requirements under the REIT Requirements and such other factors as
the Board of Directors deems relevant and will be subject to the prior payment
of preferred stock dividends.
LIQUIDATION RIGHTS
In the event of liquidation, dissolution, winding up of, or any distribution
of the assets of the Company, each holder of Common Shares shall be entitled to
receive ratably with each holder of Common Shares, in that portion of the assets
of the Company available for distribution to holders of Common Shares as the
number of Common Shares held by such holder bears to the total number of Common
Shares then outstanding.
VOTING RIGHTS
At all meetings of the shareholders of the Company, each holder of Common
Shares shall be entitled to one vote for each Common Share entitled to vote at
such meeting. The affirmative vote of a majority of the holders of Common Shares
voting together as a class shall be required to approve: (1) an election to
change the Company's status as a REIT, and (2) other matters as required by
applicable law.
ELECTION AND REMOVAL OF DIRECTORS
The Board of Directors will be divided into three classes with the terms of
office of directors of each class ending in different years. The Class I, II and
III directors are to serve until the Annual Meeting of Shareholders in 1998,
1999 and 2000, respectively, or until their successors are elected. Following
such initial term, the directors will serve three-year terms, or until their
successors are elected.
Directors will be elected by a plurality of the Common Shares entitled to
vote on the election of directors represented in person or by proxy at a meeting
at which a quorum is present, subject to any rights of holders of the Preferred
Stock to elect directors. There are no cumulative voting rights. The Articles
will provide that directors may be removed from office only for cause and with
the vote of 66 2/3% of the outstanding Common Shares then entitled to vote for
the election as directors.
PREEMPTIVE RIGHTS
No holder of Common Shares shall be entitled as a matter of right to
subscribe for or purchase, or have any preemptive right with respect to, any
part of any new or additional issue of stock of any class whatsoever, or of
securities convertible into any stock of any class whatsoever, whether now or
hereafter authorized and whether issued for cash or other consideration or by
way of dividend.
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REDEMPTION RIGHTS
No holder of Common Shares is entitled to redemption rights.
SHAREHOLDER LIABILITY
Under Missouri corporate law, no shareholder of the Company will be liable
personally for any obligation of the Company solely as a result of their status
as a shareholder.
RESTRICTIONS ON OWNERSHIP AND TRANSFER
In order for the Company to qualify as a REIT under the Code, not more than
50% in value of its outstanding capital stock may be owned, directly or
indirectly, by or for five or fewer individuals, including certain entities (as
set forth in the Code and referred to herein as "Individuals") during the last
half of a taxable year, and the shares of capital stock must be beneficially
owned by 100 or more persons during at least 335 days of a taxable year of 12
months, or during a proportionate part of a shorter taxable year. Because the
Board of Directors believes that it is essential for the Company to continue to
qualify as a REIT, the Board of Directors has adopted, and the shareholders have
approved, provisions of the Articles restricting the acquisition and ownership,
directly and indirectly, of shares of the Company's capital stock.
The Company's Articles provide, subject to certain exceptions specified
therein, that after the Closing of the Offering no Individual may own, or be
deemed to own by virtue of various attribution and constructive ownership
provisions of the Code, more than 5.5% (except for Frank P. Lowy and the members
of his family who are prohibited from owning, directly or indirectly, more than
26.0%) of the outstanding shares of capital stock of the Company, as measured by
value (the "Ownership Limit"). The Articles authorize the Board of Directors to
increase the Ownership Limit on a case by case basis if evidence satisfactory to
the Board of Directors, based upon the advice of the Company's tax counsel or
other evidence or undertakings acceptable to it, is presented that such
ownership will not then or in the future jeopardize the Company's status as a
REIT. As a condition of such increase, the Board of Directors in its discretion
may require opinions of counsel satisfactory to it, and/or undertakings from the
applicant with respect to preserving the REIT status of the Company. The
restrictions on ownership will not apply if the holders of the Company's capital
stock determine that it is no longer in the best interest of the Company to
attempt to qualify, or to continue to qualify, as a REIT by resolution duly
adopted by a majority of the holders of each of the Common Stock and the
Preferred Stock.
If shares of capital stock in violation of the Ownership Limit or shares of
capital stock which would cause the Company to be beneficially owned by less
than 100 persons, or which would result in it being "closely held" within the
meaning of Section 856(h) of the Code, or which would otherwise result in the
Company failing to qualify as a REIT, are issued or transferred to any person or
Individual, such issuance or transfer will be null and void to the intended
transferee, and the intended transferee would acquire no rights to the capital
stock. If, notwithstanding the preceding sentence, shares of capital stock are
transferred in violation of the rules set forth therein or the Ownership Limit,
such shares will automatically be converted into Excess Shares and transferred
to one or more trusts for the benefit of a designated charitable organization,
and if required by the Articles, such other charitable organizations as may be
designated from time to time by the Board of Directors (each a "Charitable
Trust"). In addition, if any other event occurs which would result in any person
or Individual directly or indirectly holding shares of capital stock in
violation of the Ownership Limit, then shares of capital stock directly or
indirectly held by such person or Individual will be transferred to a Charitable
Trust to the extent of such excess. Shares transferred to a Charitable Trust
will remain outstanding, and the trustee of the trust will have all voting and
dividend rights pertaining to such shares. Dividends made after violation of the
Ownership Limit but prior to discovery of such violation shall be returned to
the Company and thereafter turned over to the trustee of the Charitable Trust.
The trustee of such trust shall transfer such shares to a person whose ownership
of such shares does not violate the Ownership Limit or other applicable
limitations. Upon a sale of such shares by the trustee, the interest of the
charitable beneficiary will terminate, the Excess Shares will automatically be
converted into shares of capital stock of the same type and class as the shares
from which they were converted, and the sales proceeds would be paid, first, to
the original intended transferee, to the extent of the lesser of (a) such
transferee's original purchase price (or the original market value of such
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shares if originally transferred to such person without having value for such
shares) and (b) the price received by the trustee. Any remaining proceeds will
be paid to the charitable beneficiary. In addition, the Company may, for a 90
day period, designate the person to whom the trustee will sell the capital stock
held in the Charitable Trust. The 90-day period commences on the date of the
transfer in violation of the foregoing provisions that gave rise to the issuance
of Excess Shares, or the date that the Company first becomes aware of such
transfer, whichever is later.
All certificates representing shares of Common Stock will bear a legend
referring to the restrictions described above, as follows:
The Common Shares represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended. No Individual may Beneficially
Own Shares in excess of the then applicable Ownership Limit, which may
decrease or increase from time to time, unless such Individual is an
Existing Holder. In general, any Individual who attempts to Beneficially Own
Shares in excess of the Ownership Limit must immediately notify the
Corporation. All capitalized terms used in this legend have the meanings set
forth in the Articles of Incorporation, a copy of which, including the
restrictions on ownership and transfer, will be sent without charge to each
shareholder who so requests. If the restrictions on ownership and transfer
are violated, the Common Shares represented hereby may be automatically
exchanged for Excess Shares and deemed transferred to a Special Trust as
provided in the Articles of Incorporation.
Each shareholder shall upon demand be required to disclose to the Company in
writing such information with respect to the direct, indirect and constructive
ownership of shares as the Board of Directors deems necessary to comply with the
provisions of the Code applicable to a REIT or to comply with the requirements
of any taxing authority or governmental agency.
The ownership limitations may have the effect of precluding acquisition of
control of the Company by a third party unless the Board of Directors and the
shareholders determine that maintenance of REIT status is no longer in the best
interests of the Company.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is American Stock
Transfer Company.
LISTING
Prior to the Offerings, there has been no public trading market for shares
of Common Stock. The Common Stock has been approved for listing on the NYSE,
subject to official notice of issuance, under the trading symbol "WEA."
CERTAIN PROVISIONS OF THE COMPANY'S
ARTICLES OF INCORPORATION AND BY-LAWS AND OF MISSOURI LAW
Certain provisions of the Articles and By-Laws of the Company that will be
in effect upon consummation of the Offerings and the General Business and
Corporation Law of Missouri (the "GBCL"), as well as the substantial influence
of WAT and Westfield Holdings may delay or make more difficult unsolicited
acquisitions or changes in control of the Company. It is believed that such
provisions will enable the Company to develop its business in a manner that will
foster its long-term growth without disruption caused by the threat of a
takeover not deemed by its Board of Directors to be in the best interests of the
Company and its shareholders. Such provisions could have the effect of
discouraging third parties from making proposals involving an unsolicited
acquisition or change of control of the Company, although such proposals, if
made, might be considered desirable by the holders of the Shares. Such
provisions may also have the effect of making it more difficult for third
parties to cause the replacement of the current management of the Company
without the concurrence of the Board of Directors. These provisions include
among others, (i) the Ownership Limit, (ii) the availability of capital stock
for issuance from time to time at the discretion of the Board of Directors (see
"Description of Capital Stock--Capital Stock" and "Description of Capital
Stock--Preferred Shares"), (iii) a classified board of directors, (iv) inability
of the shareholders to take action by written consent, (v) prohibitions against
shareholders calling a special
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meeting of shareholders, (vi) requirements for advance notice for raising
business or making nominations at shareholders' meetings, and (vii) additional
requirements for certain business combination transactions. The descriptions set
forth herein of such provisions do not purport to be complete and are qualified
in their entirety by reference to the Articles and By-Laws, which have been
filed as exhibits to the Registration Statement of which this Prospectus is a
part, and to the provisions of the GBCL.
OWNERSHIP LIMIT
The Articles contain the Ownership Limit which may discourage a change in
control of the Company, and may also deter tender offers for Common Stock that
might otherwise be advantageous to holders of the Common Stock. The Ownership
Limit may limit the opportunities of holders to receive a premium for their
Common Stock that might otherwise exist if an investor were attempting to
assemble a block of shares or otherwise effect a change in control of the
Company.
ADDITIONAL CLASSES AND SERIES OF PREFERRED STOCK
The Board of Directors is authorized to issue additional authorized but
unissued shares of Common Stock and to establish one or more series of Preferred
Stock and establish the number of shares to be included in the series and the
terms of such series, including any preferences, voting powers, dividend rights
and redemption, sinking fund and conversion rights, and issue such Common Stock
and Preferred Stock, without any further vote or action by the shareholders,
unless such action is required by applicable law or the rules of any stock
exchange or automated quotation system on which the Company's securities are
listed. The issuance of additional capital stock may have the effect of
delaying, deferring or preventing a change in control of the Company. The
issuance of additional series of Preferred Stock with voting or conversion
rights may adversely affect the voting power of the holders of Common Stock. The
ability of the Board of Directors to issue additional capital stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company.
SIZE OF BOARD, ELECTION OF DIRECTORS, CLASSIFIED BOARD, REMOVAL OF DIRECTORS AND
FILLING VACANCIES
The Articles and By-Laws will provide that the Board of Directors be divided
into three classes as nearly equal in number as possible, with directors having
three-year terms of office that expire at different times in annual succession.
The Articles will provide that directors may not be removed from office prior to
the expiration of their term without cause and the vote of 66 2/3% of the
outstanding Common Shares. A classified board makes it more difficult for
shareholders to change a majority of the directors.
The By-Laws will limit the total number of directors to 14 and provide that
newly created directorships resulting from any increase in the authorized number
of directors (or any vacancy) may be filled by a vote of a majority of directors
then in office. Accordingly, the Board of Directors may be able to prevent any
shareholder from obtaining majority representation on the Board of Directors by
increasing the size of the board and filling the newly created directorships
with its own nominees.
LIMITATIONS ON SHAREHOLDER ACTION BY WRITTEN CONSENT; ABILITY TO CALL SPECIAL
MEETINGS
As required by the GBCL, the Articles and the By-Laws provide that an action
by written consent of shareholders in lieu of a meeting must be unanimous. The
By-Laws will provide that, unless otherwise prescribed by statute or the
Articles, special meetings of the shareholders can be called only by the
Chairman of the Board of Directors, any President or by resolution of the Board
of Directors. Furthermore, as required by the GBCL, the By-Laws will provide
that only such business as is specified in the notice of any such special
meeting of shareholders may come before such meeting.
These provisions may have an adverse effect on the ability of shareholders
to influence the governance of the Company and the possibility of shareholders
receiving a premium above market price for their securities from a potential
acquiror who is unfriendly to management.
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ADVANCE NOTICE FOR RAISING BUSINESS OR MAKING NOMINATIONS AT MEETINGS
The By-Laws will establish an advance notice procedure for shareholder
proposals to be brought before an annual meeting of shareholders and for
nominations by shareholders of candidates for election as directors at an annual
or special meeting at which directors are to be elected. Only such business may
be conducted at an annual meeting of shareholders as has been brought before the
meeting by, or at the direction of, the Board of Directors, or by a shareholder
who has given to the Secretary of the Company timely written notice, in proper
form, of the shareholder's intention to bring that business before the meeting.
The Chairman of such meeting will have the authority to make such
determinations. Only persons who are nominated by, or at the direction of, the
Board of Directors, or who are nominated by a shareholder who has given timely
written notice, in proper form, to the Secretary prior to a meeting at which
directors are to be elected will be eligible for election as directors of the
Company.
To be timely, notice of business to be brought before an annual meeting or
nominations of candidates for election as directors at an annual meeting is
required to be received by the Secretary of the Company not less than 60 nor
more than 90 days in advance of the meeting (or, in the event that less than 70
days' notice or prior public disclosure of the date of the meeting is given or
made to shareholders, not later than 10 days after the first public notice or
disclosure of the date of such annual meeting).
The notice of any nomination for election as a director is required to set
forth the name and address of the shareholder who intends to make the nomination
and of the person or persons to be nominated, the age and the principal
occupation or employment of each nominee, the class and number of shares
beneficially owned by such shareholder and by each nominee, such other
information regarding each nominee proposed by such shareholder required to be
included in a proxy statement filed pursuant to the proxy rules of the
Commission, and the consent of each nominee to be named as a nominee who would
serve as a director if so elected.
BUSINESS COMBINATION AND CONTROL SHARE ACQUISITION STATUTES AND RELATED
PROVISIONS
The Company is subject to the GBCL which contains certain provisions which
may be deemed to have an anti-takeover effect. Such provisions include
Missouri's Business Combination Statute and the control share acquisition
statute.
The Missouri Business Combination Statute prohibits certain transactions
between corporations subject to the statute and certain shareholders of such
corporations. In particular, the statute restricts certain "Business
Combinations" between a corporation and an "Interested Shareholder" or
affiliates of the Interested Shareholder unless certain conditions are met. A
"Business Combination" includes a merger or consolidation, certain sales,
leases, exchanges, pledges and similar dispositions of corporate assets or stock
and certain reclassifications and recapitalizations. An "Interested Shareholder"
includes any person or entity which beneficially owns or controls 20% or more of
the outstanding voting shares of the corporation.
During the five-year restricted period after a person or entity becomes an
Interested Shareholder, no Business Combination may occur unless such Business
Combination or the transaction in which the person or entity become an
Interested Shareholder (the "Acquisition Transaction") was approved by the board
of directors of the corporation on or before the date of the Acquisition
Transaction. Business Combinations may occur after the five-year period
following the Acquisition Transaction only if: (i) prior to the Acquisition
Transaction, the board of directors approved the Acquisition Transaction or
approved the Business Combination in question; (ii) the holders of a majority of
the outstanding voting stock, other than stock owned by the Interested
Shareholder, approve the Business Combination; or (iii) the Business Combination
satisfies certain detailed fairness and procedural requirements.
The statute applies only to Missouri corporations which have either their
principal place of business or substantial assets in Missouri. In addition, the
corporation must have at least 100 shareholders, and (i) more than 10% of the
shareholders must be resident in Missouri, (ii) more than 10% of the outstanding
shares must be owned by Missouri residents, or (iii) more than 10,000
shareholders must be residents in Missouri (certain shares, such as shares held
by nominees, are disregarded in applying these tests). It will not be known
whether this latter requirement is met and whether the statute will be
applicable to the Company until after the Offerings has been completed.
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The GBCL exempts from the statute: (i) corporations not having a class of
voting stock registered under Section 12 of the Exchange Act; (ii) corporations
which adopt provisions in their articles of incorporation or by-laws expressly
electing not to be covered by the statute; and (iii) certain circumstances in
which a shareholder inadvertently becomes an Interested Shareholder. The
Company's Articles and By-Laws do not contain an election to "opt out" of the
Missouri Business Combination Statute.
Because the Missouri Business Combination Statute may not apply to the
Company, the Articles will contain a similar provision which will provide that,
during the five-year restricted period after a person or entity becomes an
Interested Shareholder, no Business Combination may occur unless such Business
Combination or the transaction in which the person or entity becomes an
Interested Shareholder was approved by the Board of Directors on or before the
date of the Acquisition Transaction or such person or entity was an Interested
Shareholder on the date the provision was adopted by the shareholders of the
Company. Business Combinations may occur after the five-year period following
the Acquisition Transaction only if (i) prior to the Acquisition Transaction,
the board of directors approved the Acquisition Transaction or approved the
Business Combination in question; (ii) the holders of a majority of the
outstanding voting stock, other than stock owned by the Interested Shareholder,
approve the Business Combination; or (iii) the Business Combination satisfies
certain detailed fairness and procedural requirements.
This provision may make it more difficult for a 20% beneficial owner to
effect transactions with the Company and may encourage persons interested in
acquiring the Company to negotiate in advance with the Board of Directors prior
to acquiring a 20% interest. It is possible that such a provision could make it
more difficult to accomplish a transaction which shareholders may otherwise deem
to be in their best interest.
The GBCL also contains a "Control Share Acquisition Statute" which may,
under some circumstances, limit the voting rights of certain shareholders. The
statute provides that an "Acquiring Person" who after any acquisition of shares
of certain publicly traded Missouri corporations has the voting power, when
added in all shares of the corporation previously owned or controlled by the
Acquiring Person, to exercise or direct the exercise of: (i) 20% but less than
33 1/3%, (ii) 33 1/3% or more but less than a majority or (iii) a majority, of
the voting power of outstanding stock of such corporation, will lose the right
to vote some or all of such shares unless the shareholder approval for the
purchase of the "Control Shares" is obtained. To obtain such approval, certain
disclosure requirements must be met and the retention or restoration of voting
rights approved by both: (i) a majority of the outstanding voting stock, and
(ii) a majority of the outstanding voting stock after exclusion of "Interested
Shares." Interested Shares are defined as shares owned by the Acquiring Person,
by directors who are also employees, and by officers of the corporation.
Shareholders are given dissenters' rights with respect to the vote on Control
Share Acquisitions and may demand payment of the fair value of their shares.
Certain acquisitions of shares are deemed not to constitute Control Share
Acquisitions, including good faith gifts, transfers pursuant to wills, purchases
pursuant to an issuance by the corporation, mergers involving the corporation
which satisfy the other requirements of the GBCL, transactions with a person who
owned a majority of the voting power of the corporation within the prior year,
or purchases from a person who has previously satisfied the provisions of the
Control Share Acquisition Statute so long as the transaction does not result in
the purchasing party having voting power after the purchase in a percentage
range (such ranges are as set forth in the immediately preceding paragraph)
beyond the range for which the selling party previously satisfied the provisions
of the statute. The statute applies only to Missouri corporations which satisfy
requirements as to their place of business or assets and the residence of the
shareholders similar to those applicable to the Business Combination Statute, as
described above. Consequently, it will not be known whether these requirements
are met and thus whether the statute will be applicable to the Company until
after the Offerings has been completed. Additionally, a corporation may exempt
itself from application of the statute by inserting a provision in its articles
of incorporation or by-laws expressly electing not to be covered by the statute.
The Company's Articles and By-Laws do not contain an election to "opt out" of
the Control Share Acquisition Statute.
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TERMINATION OF REIT STATUS
The Articles permit the directors, with the approval of a majority of each
of the holders of the Common Stock and the Preferred Shares, to terminate the
status of the Company as a REIT under the Code at any time.
LIMITATION ON LIABILITY OF DIRECTORS; INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles limit the liability of directors of the Company, in their
capacity as such, whether to the Company, its shareholders or otherwise, to the
fullest extent permitted by Missouri law.
The Articles also contain provisions indemnifying the Company's directors
and officers to the maximum extent permitted by Missouri law. Section 355.1 of
the GBCL provides that the Company may indemnify its directors, officers,
employees and agents in any action, suit or proceeding other than an action by
or in the right of the Company, against expenses (including attorneys' fees),
judgments, fines and settlement amounts actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner that such person reasonably believed to be in or
not opposed to the best interests of the Company and, with respect to any
criminal action, had no reasonable cause to believe his conduct was unlawful.
Section 355.2 of the GBCL provides that the Company may indemnify any such
person in any action or suit by or in the right of the Company against expenses
(including attorneys' fees) and settlement amounts actually and reasonably
incurred by him in connection with the defense or settlement of the action or
suit if such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company, except that such
person may not be indemnified in respect of any matter in which such person has
been adjudged liable for negligence or misconduct in the performance of his duty
to the Company, unless authorized by the court. Section 355.1 of the GBCL
provides that the Company shall indemnify any such person against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the action, suit or proceeding if such person has been
successful in defending such action, suit or proceeding and if such action, suit
or proceeding is one for which the Company may indemnify him under Section 355.1
or 355.2. Section 355.7 of the GBCL provides that the Company shall have the
power to give any further indemnity to any such person, in addition to the
indemnity otherwise authorized under Section 355, provided such further
indemnity is either (i) authorized, directed or provided for in the Articles or
any duly adopted amendment thereof or (ii) is authorized, directed or provided
for in any By-Law or agreement of the Company which has been adopted by a vote
of the shareholders of the Company, provided that no such indemnity shall
indemnify any person from or on account of any conduct of such person which was
finally adjudged to have been knowingly fraudulent or deliberately dishonest or
to constitute willful misconduct.
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SHARES AVAILABLE FOR FUTURE SALE
GENERAL
Upon consummation of the Offerings, there will be 70,929,535 shares of
Common Stock issued and outstanding (73,629,535 shares if the Underwriters'
over-allotment options are exercised in full). Upon consummation of the
Offerings and concurrent transactions, WAT will hold the 1996 WAT Warrants
entitling it to purchase at any time and from time to time, in whole or in part,
6,246,096 shares of Common Stock, at an exercise price of $16.01 per share
(which is the same price paid by WAT for the Common Stock it purchased in
connection with the Recapitalization), and the 1997 WAT Warrant, entitling it to
purchase at any time and from time to time, in whole or in part, $35.0 million
(or 2,089,552 shares of Common Stock based on the mid-point of the price range),
in each case subject to adjustment in certain events. See "Certain
Transactions--Relationships and Transactions with WAT" and "Principal
Shareholders." No prediction can be made as to the effect, if any, that future
sales of shares of Common Stock, the availability of shares of Common Stock for
future sale, or future issuances of shares upon the exercise of the WAT Warrants
will have on the market price of the Common Stock prevailing from time to time.
All of the Shares sold in the Offerings will be freely tradeable by persons
other than "affiliates" of the Company without restriction under the Securities
Act, subject to the limitations on ownership set forth in the Articles. See
"Description of Capital Stock--Restrictions on Ownership and Transfer." There
are 52,055,082 shares of outstanding Common Stock owned by Westfield Holdings,
WAT and certain other shareholders, as well as the shares issuable upon exercise
of the WAT Warrants (the "Restricted Shares"), which will be "restricted"
securities within the meaning of Rule 144 promulgated under the Securities Act
("Rule 144") and may not be sold in the absence of registration under the
Securities Act unless an exemption from registration is available, including
exemptions contained in Rule 144. As described below under "--Registration
Rights," the Company has granted Westfield Holdings certain registration rights
with respect to its shares of Common Stock.
Of the 41,118,110 outstanding shares of Common Stock held by WAT, 31,342,970
shares may be eligible for sale in the public market 90 days after the effective
date of the Registration Statement of which this Prospectus is a part, 8,151,155
shares may become eligible for sale in the public market on January 2, 1998 and
1,623,985 shares of Common Stock (that are currently held by unaffiliated
investors that are expected to be exchanged for WAT Units prior to the Offerings
and that otherwise become eligible for sale in the public market 90 days after
completion of the Offerings and will become freely tradeable on July 1, 1998)
may become eligible for sale in the public market on the first anniversary of
the consummation of the Offerings in each case subject to compliance with the
volume limitations under Rule 144. All of the 10,930,692 shares of Common Stock
held by Westfield Holdings prior to consummation of the Offerings (and any
Shares which may be acquired under the Orders) may be eligible for sale in the
public market 90 days after the completion of the Offerings, subject to
compliance with the volume limitations under Rule 144.
In general, under Rule 144, if one year has elapsed since the later of the
date of acquisition of restricted shares from the Company or any affiliate of
the Company, the acquiror or subsequent holder thereof is entitled to sell, and
any affiliate is entitled to sell, within any three-month period commencing 90
days after the date of the effectiveness of the Registration Statement of which
this Prospectus is a part, a number of shares that does not exceed the greater
of (i) 1% of the then outstanding shares of Common Stock (709,295 shares upon
consummation of the Offerings) or (ii) the average weekly trading volume in the
Common Stock during the four calendar weeks preceding such sale, subject to the
filing of a Form 144 with respect to such sale and certain other limitations and
restrictions. In addition, if two years have elapsed since the later of the date
of acquisition of restricted shares from the Company or from any affiliate of
the Company, and the acquiror or any subsequent holder thereof is not deemed to
have been an affiliate of the Company at any time during the 90 days preceding a
sale, such person would be entitled to sell such shares under Rule 144(k)
without regard to the above-described requirements.
In addition, the Commission has recently proposed further revisions to the
holding periods and volume limitations contained in Rule 144. The adoption of
amendments effecting such proposed revisions
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may result in resales of restricted securities sooner than would be the case
under Rules 144 and 144(k) as currently in effect. However, there can be no
assurance of when, if ever, such amendments will be proposed or adopted.
Prior to the Offerings, there has been no public market for the shares of
Common Stock in the United States. The Common Stock has been approved for
listing on the NYSE, subject to official notice of issuance, under the symbol
"WEA". No prediction can be made as to the effect, if any, that future sales of
Common Stock, or the availability of Common Stock for future sale or any
exercise of the WAT Warrant, will have on the market price of the shares of
Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock, or any exercise of the WAT Warrants, or the perception that such
sales or exercise could occur, could adversely affect prevailing market prices
of the shares of Common Stock. See "Risk Factors--Absence of Public Market for
Shares; Possible Volitility of Stock Price."
REGISTRATION RIGHTS
The Company, Westfield Holdings, interests associated with the Lowy family
and Richard E. Green, a Co-President of the Company, will each agree, subject to
certain exceptions (including the concurrent transactions and the exercise of
the WAT Warrants), not to (i) sell, grant any option, right or warrant for the
sale of, or to purchase or otherwise transfer or dispose of any Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock or
file a registration statement under the Securities Act with respect to the
foregoing or (ii) enter into any swap or other agreement or transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock, for a period of 90 days from the date of this
Prospectus in the case of the Company and any Shares which may be acquired under
the Orders, and 36 months from the date of this Prospectus in the case of shares
held by Westfield Holdings prior to consummation of the Offerings, without the
prior written consent of Merrill Lynch. Pursuant to a registration rights
agreement (the "Registration Rights Agreement"), after 36 months from the
closing of the Offerings, Westfield Holdings will have demand registration
rights that would require the Company to promptly effect the registration of
their shares held prior to the consummation of the Offerings. In addition, 90
days after the closing of the Offerings Westfield Holdings will have demand
registration rights for any other shares of Common Stock. In addition, the
Company has agreed that, upon the request of Westfield Holdings, it will use its
reasonable efforts to have a shelf registration statement filed after the
expiration of such 36-month period referred to above (after 12 months for any
shares not held prior to consummation of the Offerings) and declared and kept
continuously effective, pursuant to which Westfield Holdings will be able to
sell Common Stock in ordinary course brokerage or dealer transactions. However,
these rights allow the Company to postpone the filing of a demand registration
statement (and an amendment or supplement to a shelf registration statement) or
to suspend the use of any previously filed registration statement for a
reasonable period of time (not to exceed 60 days) if the Board of Directors
determines in good faith that it would be significantly disadvantageous to the
Company and its shareholders for such a registration statement (or amendment or
supplement) to be filed on or before the date filing otherwise would be
required. In addition, if the Company proposes to register any of its Common
Stock, either for its own account or for the account of other shareholders, the
Company is required, with certain exceptions, to provide the parties to the
Registration Rights Agreement with notice of the registration and to include in
such registration all of the shares of Common Stock requested to be included by
such persons. Any exercise of such registration rights may result in dilution in
the interest of the Company's shareholders, hinder efforts by the Company to
arrange future financings of the Company and/or have an adverse effect on the
market price of the Common Stock.
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FEDERAL INCOME TAX CONSIDERATIONS
THE FOLLOWING SUMMARY OF MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
REGARDING AN INVESTMENT IN THE COMMON STOCK IS BASED ON CURRENT LAW, IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. THIS DISCUSSION DOES NOT PURPORT
TO DEAL WITH ALL ASPECTS OF TAXATION THAT MAY BE RELEVANT TO PARTICULAR
INVESTORS IN LIGHT OF THEIR PERSONAL INVESTMENT OR TAX CIRCUMSTANCES, OR, EXCEPT
TO THE EXTENT DISCUSSED UNDER "--TAXATION OF TAX-EXEMPT SHAREHOLDERS" AND
"--TAXATION OF FOREIGN SHAREHOLDERS," TO CERTAIN TYPES OF INVESTORS (INCLUDING
INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, FINANCIAL INSTITUTIONS OR
BROKER-DEALERS, FOREIGN CORPORATIONS AND PERSONS WHO ARE NOT CITIZENS OR
RESIDENTS OF THE UNITED STATES) THAT ARE SUBJECT TO SPECIAL TREATMENT UNDER THE
FEDERAL INCOME TAX LAWS NOR DOES IT GIVE A DETAILED DISCUSSION OF ANY STATE,
LOCAL OR FOREIGN TAX CONSIDERATIONS.
EACH PROSPECTIVE PURCHASER SHOULD CONSULT WITH ITS TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND SALE OF THE SHARES AND
OF THE COMPANY'S ELECTION TO BE TAXED AS A REAL ESTATE INVESTMENT TRUST,
INCLUDING THE FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX
CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION, AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY
GENERAL
The REIT provisions of the Code are highly technical and complex. The
following sets forth the material aspects of the provisions of the Code that
govern the Federal income tax treatment of a REIT and its shareholders. This
summary is based on current U.S. law, including the applicable Code provisions,
rules and regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all of which are subject to change which may apply
retroactively.
OPINION OF COUNSEL
The Company elected to be taxed as a REIT under the Code, commencing with
its taxable year ending December 31, 1994, and the Company intends to continue
to operate in a manner consistent with such election and all rules with which a
REIT must comply. Skadden, Arps, Slate, Meagher & Flom LLP, has issued its
opinion that, commencing with the Company's taxable year ended December 31,
1994, the Company was organized in conformity with the requirements for
qualification as a REIT, and its planned method of operation, and its actual
method of operation from February 12, 1994, will enable it to meet the
requirements for qualification and taxation as a REIT under the Code. In
addition, the Company will qualify as a REIT only if WPI qualifies as a REIT and
satisfies each of the requirements for qualification as a REIT as set forth
below in this section with respect to the Company. WPI will elect to be taxed as
a REIT under the Code commencing with its taxable year ended December 31, 1996,
and WPI intends to continue to operate in a manner consistent with such election
and all rules with which a REIT must comply. Skadden, Arps, Slate, Meagher &
Flom LLP, has issued its opinion that, commencing with WPI's taxable year ending
December 31, 1996, WPI was organized in conformity with the requirements for
qualification as a REIT, and its planned method of operation, and its actual
method of operation from January 1, 1996, will enable WPI to meet the
requirements for qualification and taxation as a REIT under the Code.
Each of the foregoing opinions are based and conditioned upon certain
assumptions and representations made by the Company and WPI as of the date
thereof regarding factual matters. The opinions are expressed as of the date
thereof, and Skadden, Arps, Slate, Meagher & Flom LLP will have no obligation to
advise holders of the Shares of any subsequent change in the matters stated,
represented or assumed or any subsequent change in the applicable law. Moreover,
such qualification and taxation as a REIT depends upon the Company and WPI
having met and continuing to meet through, among other things, actual annual
operating results, distribution levels and diversity of stock ownership, the
various qualification tests imposed under the Code as discussed below, the
results of which will not be reviewed by Skadden, Arps, Slate, Meagher & Flom
LLP. Accordingly, no assurance can be given that the actual results of the
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Company's and WPI's operations for any particular taxable year have satisfied or
will satisfy such requirements. See "--Failure to Qualify." An opinion of
counsel is not binding on the IRS, and no assurance can be given that the IRS
will not challenge the Company's and WPI's eligibility for taxation as a REIT.
TAXATION OF THE COMPANY
If the Company continues to qualify for taxation as a REIT, it generally
will not be subject to Federal corporate income tax on its net income that is
currently distributed to shareholders. This treatment substantially eliminates
the "double taxation" (at the corporate and shareholder levels) that generally
results from investment in a corporation. However, the Company will be subject
to Federal income tax as follows: First, the Company will be taxed at regular
corporate rates on any undistributed REIT taxable income, including
undistributed net capital gains. Second, under certain circumstances, the
Company may be subject to the "alternative minimum tax" on its items of tax
preference. Third, if the Company has net income from prohibited transactions
(which are, in general, certain sales or other dispositions of property, other
than certain foreclosure property, held primarily for sale to customers in the
ordinary course of business), such net income will be subject to a 100% tax.
Fourth, if the Company should fail to satisfy the 75% gross income test or the
95% gross income test (as discussed below), but has nonetheless maintained its
qualification as a REIT because certain other requirements have been met, it
will be subject to a 100% tax on an amount equal to (i) the gross income
attributable to the greater of the amount by which the Company fails the 75% or
95% test multiplied by (ii) a fraction intended to reflect the Company's
profitability. Fifth, if the Company should fail to distribute during each
calendar year at least the sum of (i) 85% of its REIT ordinary income for such
year, (ii) 95% of its REIT capital gain net income for such year, and (iii) any
undistributed taxable income from prior periods, the Company would be subjected
to a 4% excise tax on the excess of such required distribution over the amounts
actually distributed. Sixth, if during the ten-year period beginning on the
first day of the first taxable year for which the Company and WPI each qualified
as a REIT (the "Recognition Period"), the Company or WPI recognizes gain on the
disposition of any property (including, any partnership interest) held by the
Company or WPI or any partnership in which an interest was held as of the
beginning of such Recognition Period, then, to the extent of the excess of (i)
the fair market value of such property as of the beginning of such Recognition
Period over (ii) the adjusted tax basis of the Company or WPI or the
partnerships in such property as of the beginning of such Recognition Period
(the "Built-in Gain"), such gain will be subject to tax at the highest corporate
tax rate pursuant to IRS regulations that have not yet been promulgated.
Seventh, if the Company or WPI acquires any asset from a C corporation (I.E.,
generally a corporation subject to full corporate level tax) in a transaction in
which the adjusted tax basis of the asset in the hands of the Company or WPI is
determined by reference to the adjusted tax basis of the asset (or any other
property) in the hands of the C corporation, and the Company or WPI recognizes
gain on the disposition of such asset during the Recognition Period beginning on
the date on which such asset was acquired by the Company, then, to the extent of
the Built-in Gain, such gains will be subject to tax at the highest regular
corporate tax rate pursuant to IRS regulations that have not yet been
promulgated. In addition, the Company could also be subject to tax in certain
situations and on certain transactions not presently contemplated.
REQUIREMENTS FOR QUALIFICATION
The Code defines a REIT as a corporation, trust or association (i) that is
managed by one or more trustees or directors; (ii) the beneficial ownership of
which is evidenced by transferable shares, or by transferable certificates of
beneficial interest; (iii) which would be taxable as a domestic corporation, but
for the special Code provisions applicable to REITs; (iv) that is neither a
financial institution nor an insurance company subject to certain provisions of
the Code; (v) the beneficial ownership of which is held by 100 or more persons;
(vi) in which not more than 50% in value of the outstanding stock is owned,
directly or indirectly, by five or fewer individuals (as defined in the Code to
include certain entities); and (vii) which meets certain other tests described
below (including with respect to the nature of its income and assets). The Code
provides that conditions (i) through (iv) must be met during the entire taxable
year, that
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condition (v) must be met during at least 335 days of a taxable year of 12
months, or during a proportionate part of a taxable year of less than 12 months,
and that condition (vi) must be met during the last half of each taxable year.
The Company believes that it satisfies all of the conditions, including
conditions (v) and (vi) above. In order to comply with the share ownership tests
described in conditions (v) and (vi) above, the Articles provide certain
restrictions on the transfer of its capital stock to prevent concentration of
stock ownership. These restrictions may not ensure that the Company will, in all
cases, be able to satisfy the share ownership tests set forth above. If the
Company fails to satisfy such requirements, the Company's status as a REIT will
terminate.
To monitor the Company's compliance with the share ownership requirements,
the Company is required to maintain records regarding the actual ownership of
its shares. To do so, the Company must demand written statements each year from
the record holders of certain percentages of its stock in which the record
holders are to disclose the actual owners of the shares (I.E., the persons
required to include in gross income the REIT dividends). A list of those persons
failing or refusing to comply with this demand must be maintained as part of the
Company's records. A shareholder who fails or refuses to comply with the demand
must submit a statement with its U.S. Federal income tax return disclosing the
actual ownership of the shares and certain other information.
OWNERSHIP OF PARTNERSHIP INTERESTS
In the case of a REIT that is a partner in a partnership, regulations
provide that the REIT is deemed to own its proportionate share of the
partnership's assets and to earn its proportionate share of the partnership's
income. In addition, the assets and gross income of the partnership retain the
same character in the hands of the REIT for purposes of the gross income and
asset tests applicable to REITs as described below. Thus, the Company's
proportionate share of the assets, liabilities and items of income of the
partnership will be treated as assets, liabilities and items of income of the
Company for purposes of applying the REIT requirements described herein. A
summary of certain rules governing the Federal income taxation of partnerships
and their partners is provided below in "--Tax Aspects of the Company's
Investments in Partnerships."
INCOME TESTS
In order to maintain qualification as a REIT, the Company annually must
satisfy three gross income requirements. First, at least 75% of the Company's
gross income (excluding gross income from "prohibited transactions," I.E.,
certain sales of property held primarily for sale to customers in the ordinary
course of business) for each taxable year must be derived directly or indirectly
from investments relating to real property or mortgages on real property
(including "rents from real property" and, in certain circumstances, interest)
or from certain types of temporary investments. Second, at least 95% of the
Company's gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived from such real property investments, and from
other dividends, interest and gain from the sale or disposition of stock or
securities (or from any combination of the foregoing). Third, short-term gain
from the sale or other disposition of stock or securities, gain from certain
sales of property held primarily for sale, and gain on the sale or other
disposition of real property held for less than four years (apart from
involuntary conversions and sales of foreclosure property) must, in the
aggregate, represent less than 30% of the Company's gross income for each
taxable year.
Rents received by the Company directly, through partnerships in which it has
a direct or indirect ownership interest (collectively, the "Partnerships"), or
through its wholly-owned subsidiary corporations ("qualified REIT subsidiaries,"
as described below) will qualify as "rents from real property" in satisfying the
gross income requirements described above, only if several conditions are met,
including the following. If rent attributable to personal property leased in
connection with a lease of real property is greater than 15% of the total rent
received under the lease, then the portion of rent attributable to such personal
property will not qualify as "rents from real property." Moreover, for rents
received to qualify as "rents from real property," the REIT generally must not
operate or manage the property or furnish or render services to the tenants of
such property, other than through an "independent contractor" from which the
REIT derives no revenue. However, the Company (or its affiliates) are permitted
to, and do directly
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perform services that are "usually or customarily rendered" in connection with
the rental of space for occupancy only and are not otherwise considered rendered
to the occupant of the property. Because certain Centers are managed by third
parties, the ability to treat amounts from such property as "rents from real
property" will be dependent on the actions of others and will not be within the
control of the Company. In addition, the Company generally may not and will not
charge rent that is based in whole or in part on the income or profits of any
person (except by reason of being based on a percentage of the tenant's gross
receipts or sales). Finally, rents derived from tenants that are at least 10%
owned, directly or constructively, by the Company or WPI do not qualify as
"rents from real property" for purposes of the gross income requirements. While
the Company regularly attempts to monitor such requirements, no assurance can be
given that the Company will not realize income that does not qualify as "rents
from real property," and that such amounts when combined with other
nonqualifying income, may exceed 5% of the Company's taxable income and thus
disqualify the Company as a REIT.
The Company has derived and continues to derive income from certain sources
that are not described above and that generally do not constitute qualifying
income for purposes of the gross income requirements. While no assurance can be
given that the IRS would not successfully assert otherwise, the Company believes
that the aggregate amount of such income in any taxable year will not exceed the
limits on non-qualifying income under the gross income tests.
If the Company fails to satisfy one or both of the 75% or 95% gross income
tests (though not the 30% gross income test) for any taxable year, it may
nevertheless qualify as a REIT for such year if it is entitled to relief under
certain provisions of the Code. These relief provisions will be generally
available if the Company's failure to meet such tests was due to reasonable
cause and not due to willful neglect, the Company attaches a schedule of the
sources of its income to its return, and any incorrect information on the
schedule was not due to fraud with intent to evade tax. It is not possible,
however, to state whether in all circumstances the Company would be entitled to
the benefit of these relief provisions. If these relief provisions are
inapplicable to a particular set of circumstances involving the Company, the
Company will not qualify as a REIT. As discussed above, even where these relief
provisions apply, a tax is imposed with respect to the excess of the actual
amount of non-qualifying income over the amount permitted under the gross income
tests.
ASSET TESTS
The Company, at the close of each quarter of its taxable year, must also
satisfy three tests relating to the nature of its assets. First, at least 75% of
the value of the Company's total assets must be represented by real estate
assets (including its allocable share of real estate assets held by the
Partnerships), stock in other REITs (such as WPI), stock or debt instruments
held for not more than one year purchased with the proceeds of a stock offering
or long-term (at least five years) debt offering of the Company, cash, cash
items and U.S. government securities. Second, not more than 25% of the Company's
total assets may be represented by securities other than those in the 75% asset
class. Third, of the investments included in the 25% asset class, the value of
any one issuer's securities owned by the Company may not exceed 5% of the value
of the Company's total assets, and the Company may not own more than 10% of any
one issuer's outstanding voting securities.
The Company's indirect interests in certain of the Partnerships and certain
properties are held through wholly owned corporate subsidiaries of the Company
organized and operated as "qualified REIT subsidiaries" within the meaning of
the Code. Qualified REIT subsidiaries are not treated as separate entities from
their parent REIT for Federal income tax purposes. Instead, all assets,
liabilities and items of income, deduction and credit of each qualified REIT
subsidiary are treated as assets, liabilities and items of the Company. Each
qualified REIT subsidiary therefore will not be subject to Federal corporate
income taxation, although it may be subject to state or local taxation.
In addition, the Company's ownership of stock of each qualified REIT
subsidiary and its interest in the Partnerships do not violate either the 5%
value restriction or the restriction against ownership of more than 10% of the
voting securities of any issuer. Similarly, the ownership by the Company of any
other REIT (such as WPI) will not violate these restrictions.
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WESTFIELD HOLDINGS WARRANTS
ASSET AND INCOME TESTS. The Westfield Holdings Warrants will be treated as
assets that fall within the 25% asset class for purposes of determining the
Company's compliance with the REIT asset tests discussed above. See "--Taxation
of the Company--Asset Tests." Accordingly, the value of the Westfield Holdings
Warrants owned by the Company generally may not exceed 5% of the Company's gross
assets ("Total Assets"), as determined in accordance with GAAP. The Company
believes that the value of the Westfield Holdings Warrants will not constitute
more than 5% of the Total Assets on the date such warrants are received by the
Company. Although the Total Assets must be revalued for purposes of the 5% asset
test at the end of any quarter in which any security is acquired, Treasury
regulations provide that the Company is not required to perform such a
revaluation with respect to the securities of any particular issuer at the end
of any quarter during which there has been no acquisition of any security of
that issuer. Therefore, the mere change in market value of a security held by
the Company will not, of itself, affect the status of the Company as a REIT.
Thus, although it is possible that subsequent fluctuations in the value of the
Westfield Holdings Warrants, the Total Assets, or both, could cause the value of
such warrants to exceed 5% of the Total Assets, such fluctuations should not
cause the Company to fail to meet the 5% asset test in the absence of an
acquisition of additional securities of Westfield Holdings by the Company during
such quarter. In addition, the Company's ability to realize upon the value of
the Westfield Holdings Warrants above certain thresholds may be limited by the
REIT gross income tests.
EXERCISE OF WARRANTS. It is possible that on the exercise date, the value
of the shares of Westfield Holdings Limited which the Company is entitled to
receive upon exercise of the Westfield Holdings Warrants would constitute more
than 5% of the Total Assets if such warrants were exercised in full. Because the
exercise of the Westfield Holdings Warrants will constitute the acquisition of
Westfield Holdings Limited shares, and such an exercise will necessitate a
revaluation of the Total Assets for purposes of determining the Company's
compliance with the 5% asset test, the terms of the Westfield Holdings Warrants
provide the Company with the right to exercise such warrants in whole or in
part. The Company will not retain the shares of Westfield Holdings Limited to
the extent that the Company determines that retention would cause the Company to
violate the 5% asset test. The Company's ability to sell such shares also may be
limited by the REIT gross income tests. Except as described below, no gain or
loss will be recognized by the Company upon exercise of the Westfield Holdings
Warrants for ordinary shares of Westfield Holdings Limited. The Company's
adjusted tax basis in the Westfield Holdings Limited shares received upon
exercise will equal the sum of the Company's adjusted tax basis in the Westfield
Holdings Warrants immediately prior to exercise plus the exercise price paid by
the Company.
Pursuant to the terms of the Westfield Holdings Warrants agreement, the
Company has the right to elect to exercise the option without making a cash
payment of the exercise price (a "Cashless Exercise"), in which event the
Company would be entitled to receive, at the option of Westfield Holdings
Limited, either the number of Westfield Holdings Limited ordinary shares equal
in value to, or cash in an amount equal to, the amount by which the then market
price of the ordinary shares of Westfield Holdings Limited exeeds the exercise
price of such options. If upon a Cashless Exercise, Westfield Holdings Limited
pays cash to the Company in lieu of issuing Westfield Holdings Limited shares,
the Company will recognize gain or loss equal to the difference between the
amount of cash received and the Company's adjusted tax basis in the Westfield
Holdings Warrants exercised. Any such gain or loss should be long-term capital
gain or loss.
The tax consequences of such a Cashless Exercise is uncertain where the
Company receives shares of Westfield Holdings Limited upon exercise. There is no
authority directly on point, and several alternative characterizations of the
Cashless Exercise are possible, including characterizations that could result in
short-term capital gains or dividend treatment.
LAPSE OF WARRANTS. The lapse or expiration without exercise of the
Westfield Holdings Warrants generally will result in a capital loss to the
Company equal to the Company's tax basis in such warrants, and this capital loss
will be a long-term capital loss if the holding period with respect to such
warrants is more than one year.
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BASIS AND HOLDING PERIOD OF WESTFIELD HOLDINGS LIMITED SHARES. Except in
the case where the Company makes a Cashless Exercise, (i) the Company's tax
basis in Westfield Holdings Limited shares received upon exercise of a Westfield
Holdings Warrant will equal the sum of the Company's tax basis in the exercised
warrants plus the cash paid upon exercise, and (ii) the holding period for
Westfield Holdings Limited shares received upon exercise of a Westfield Holdings
Warrant will begin on the date the warrant is exercised and will not include the
period during which the warrant was held.
As discussed above, the tax consequences to the Company of making a Cashless
Exercise (including the tax basis of Westfield Holdings Limited shares received
upon exercise) are uncertain. If, for example, a Cashless Exercise is treated as
if the withheld Westfield Holdings Limited shares are constructively issued and
then immediately redeemed for cash, then the adjusted tax basis in the Westfield
Holdings Limited shares actually received generally would equal the sum of the
Company's tax basis in the exercised warrants that is allocable to the Westfield
Holdings Limited shares actually received plus the exercise price deemed paid in
respect of such Westfield Holdings Limited shares actually received.
ADJUSTMENTS TO THE WESTFIELD HOLDINGS WARRANTS. Pursuant to the terms of
the Westfield Holdings Warrants, the Exercise Price and the number of Westfield
Holdings Limited ordinary shares purchasable upon exercise of the Westfield
Holdings Warrants is subject to adjustments from time to time upon the
occurrence of specified events. These adjustments should not be treated as a
taxable exchange of the Westfield Holdings Warrants to the extent that such
adjustments are pursuant to the original terms of the warrants. However, under
certain circumstances, a change in conversion ratio or any transaction having a
similar effect on the interest of the Company may be treated as a taxable
distribution if the Company's proportionate interest in the earnings and profits
of Westfield Holdings Limited is increased by such change or transaction (even
though no cash is received).
AUSTRALIAN WITHHOLDING TAX ON DIVIDENDS. Under the income tax convention
presently in force between Australia and the United States, dividends paid on
any Westfield Holdings Limited shares held by the Company may be subject to a
15% Australian withholding tax.
ANNUAL DISTRIBUTION REQUIREMENTS
In order to qualify as a REIT, the Company is required to distribute
dividends (other than capital gain dividends) to its shareholders in an amount
at least equal to (i) the sum of (a) 95% of the Company's "REIT taxable income"
(computed without regard to the dividends paid deduction and the Company's net
capital gain) and (b) 95% of the net income (after tax), if any, from
foreclosure property, minus (ii) the sum of certain items of noncash income.
Such distributions must be paid in the taxable year to which they relate, or in
the following taxable year if declared before the Company timely files its tax
return for such year and if paid with or before the first regular dividend
payment after such declaration. To the extent that the Company does not
distribute all of its net capital gain or distributes at least 95%, but less
than 100%, of its "REIT taxable income," as adjusted, it will be subject to tax
thereon at the capital gains or ordinary corporate tax rates, as the case may
be. Furthermore, if the Company should fail to distribute during each calendar
year at least the sum of (i) 85% of its REIT ordinary income for such year, (ii)
95% of its REIT capital gain income for such year, and (iii) any undistributed
taxable income from prior periods, the Company would be subject to a 4% excise
tax on the excess of such required distribution over the amounts actually
distributed. The Company believes that it has made, and intends to make, timely
distributions sufficient to satisfy this annual distribution requirement.
It is possible that the Company, from time to time, may not have sufficient
cash or other liquid assets to meet the 95% distribution requirement due to
timing differences between (i) the actual receipt of income and actual payment
of deductible expenses and (ii) the inclusion of such income and deduction of
such expenses in arriving at the Company's REIT taxable income. In the event
that such timing differences occur, in order to meet the 95% distribution
requirement, the Company may find it necessary to arrange for short-term, or
possibly long-term, borrowings (on terms that may not be favorable to the
Company) or to pay dividends in the form of taxable distributions of property.
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Under certain circumstances, the Code permits the Company to rectify a
failure to meet the distribution requirement for a year by paying "deficiency
dividends" to shareholders in a later year, which may be included in the
Company's deduction for dividends paid for the earlier year. Thus, the Company
may avoid being taxed on amounts distributed as deficiency dividends. The
Company would, however, be required to pay interest based on the amount of any
deduction taken for deficiency dividends.
ABSENCE OF EARNINGS AND PROFITS
The Code provides that, in the case of a corporation such as the Company
that was formerly a taxable C corporation, it may qualify as a REIT for a
taxable year only if, as of the close of the such year, it has no "earnings and
profits" accumulated in any non-REIT year. This requirement applies to each of
the Company and WPI. The Company and its former owners retained independent
certified public accountants to determine the Company's earnings and profits as
of February 11, 1994 (and, December 31, 1994) for purposes of the distribution
requirement. The determination by the independent certified public accountants
was based upon the Company's tax returns as filed with the IRS and other
assumptions and qualifications set forth in the reports issued by such
accountants. Based upon a report of certified public accountants, the Company
also believes that WPI has satisfied this requirement.
Any adjustments to the Company's or WPI's taxable income for taxable years
ending on or before the effective date of their respective REIT election,
including as a result of an examination of its returns by the IRS, could affect
the calculation of their respective earnings and profits as of the appropriate
measurement date. Furthermore, the determination of earnings and profits
requires the resolution of certain technical tax issues with respect to which
there is no authority directly on point and, consequently, the proper treatment
of these issues for earnings and profits purposes is not free from doubt. There
can be no assurance that the IRS will not examine the tax returns of the Company
or WPI for prior years and propose adjustments to increase its taxable income.
In this regard, the IRS can consider all taxable years of a corporation as open
for review for purposes of determining the amount of such earnings and profits.
FAILURE TO QUALIFY
If the Company fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Company will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to shareholders in any year in which the
Company fails to qualify will not be deductible by the Company nor will they be
required to be made. In such event, to the extent of current and accumulated
earnings and profits, all distributions to shareholders will be taxable as
ordinary income, and, subject to certain limitations of the Code, corporate
distributees may be eligible for the dividends received deduction. Unless
entitled to relief under specific statutory provisions, the Company will also be
disqualified from taxation as a REIT for the four taxable years following the
year during which qualification was lost. It is not possible to state whether in
all circumstances the Company would be entitled to such statutory relief. In
addition, a recent Federal budget proposal contains language which, if enacted
in its present form, would result in the immediate taxation of all gain inherent
in a C corporation's assets upon an election by the corporation to become a
REIT, and thus would effectively preclude the Company from re-electing REIT
status following a termination of its REIT qualification.
TAX ASPECTS OF THE COMPANY'S INVESTMENTS IN PARTNERSHIPS
GENERAL
Certain of the Company's investments are held indirectly through
partnerships. In general, partnerships are "pass-through" entities that are not
subject to Federal income tax. Rather, partners are allocated their
proportionate shares of the items of income, gain, loss, deduction and credit of
a partnership, and are potentially subject to tax thereon, without regard to
whether the partners receive a distribution from the partnership. The Company
will include in its income its proportionate share of the foregoing partnership
items for purposes of the various REIT income tests and in the computation of
its REIT taxable income.
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Moreover, for purposes of the REIT asset tests, the Company will include its
proportionate share of assets held by such partnerships. See "--Taxation of the
Company--Ownership of Partnership Interests."
ENTITY CLASSIFICATION
The Company's direct and indirect investment in partnerships involves
special tax considerations, including the possibility of a challenge by the IRS
of the status of any of the partnerships as a partnership (as opposed to an
association taxable as a corporation) for Federal income tax purposes. If
certain of these entities were treated as an association for Federal income tax
purposes, it would be taxable as a corporation and therefore subject to an
entity-level tax on its income. In such a situation, the character of the
Company's assets and items of gross income would change, which could preclude
the Company from satisfying the asset tests and/or the income tests (see
"--Taxation of the Company--Asset Tests" and "--Taxation of the Company--Income
Tests"), and in turn could prevent the Company from qualifying as a REIT. See
"--Taxation of the Company--Failure to Qualify" above for a discussion of the
effect of the Company's failure to meet such tests for a taxable year. In
addition, any change in the status of any of the partnerships for tax purposes
might be treated as a taxable event, in which case the Company might incur a tax
liability without any related cash distributions.
TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES
Pursuant to the Code and the regulations thereunder, income, gain, loss and
deduction attributable to appreciated or depreciated property that is
contributed to a partnership in exchange for an interest in the partnership must
be allocated in a manner such that the contributing partner is charged with, or
benefits from, respectively, the unrealized gain or unrealized loss associated
with the property at the time of the contribution. The amount of such unrealized
gain or unrealized loss is generally equal to the difference between the fair
market value of contributed property at the time of contribution, and the
adjusted tax basis of such property at the time of contribution (a "Book-Tax
Difference"). Such allocations are solely for Federal income tax purposes and do
not affect the book capital accounts or other economic or legal arrangements
among the partners. Where a partner contributes cash to a partnership that holds
appreciated property, the Treasury regulations provide for a similar allocation
of such items to the other partners. These rules would apply to the contribution
by the Company to an existing partnership of the cash proceeds received in any
offerings of its stock.
With respect to any property purchased or to be purchased by any of the
partnerships (other than through the issuance of partnership units), such
property will initially have a tax basis equal to its fair market value and the
special allocation provisions described above will not apply.
SALE OF THE PROPERTIES
The Company's share of any gain realized by any partnership, in which it
holds a direct or indirect interest, on the sale of any property held as
inventory or primarily for sale to customers in the ordinary course of business
will be treated as income from a prohibited transaction that is subject to a
100% penalty tax. See "--Requirements for Qualification--Income Tests." Such
prohibited transaction income may also have an adverse effect on the Company's
ability to satisfy the income tests for status as a REIT. Under existing law,
whether property is held as inventory or primarily for sale to customers in the
ordinary course of a partnership's trade or business is a question of fact that
depends on all the facts and circumstances with respect to the particular
transaction. The Company intends to hold its interests in the subject
partnerships, and such partnerships intend to hold their properties for
investment with a view to long-term appreciation, to engage in the business of
acquiring, developing, owning, and operating the properties and to make such
occasional sales of the properties, including peripheral land, as are consistent
with the Company's investment objectives. Accordingly, the Company believes that
its interests in the subject partnerships, and such partnerships' interests in
the properties will not be treated as inventory or as property held primarily
for sale to customers in the ordinary course of a trade or business.
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TAXATION OF TAXABLE DOMESTIC SHAREHOLDERS
As long as the Company qualifies as a REIT, distributions made to the
Company's taxable domestic shareholders out of current or accumulated earnings
and profits (and not designated as capital gain dividends) will be taken into
account by them as ordinary income and will not be eligible for the dividends
received deduction for corporations. Distributions that are designated as
capital gain dividends will be taxed as long-term capital gain (to the extent
that they do not exceed the Company's actual net capital gain for the taxable
year) without regard to the period for which the shareholder has held its stock.
However, corporate shareholders may be required to treat up to 20% of certain
capital gain dividends as ordinary income.
Distributions in excess of current and accumulated earnings and profits will
not be taxable to a shareholder to the extent that they do not exceed the
adjusted tax basis of the shareholder's shares, but rather will reduce the
adjusted tax basis of such shares. To the extent that such distributions exceed
the adjusted tax basis of a shareholder's shares, they will be included in
income as long-term capital gain (or short-term capital gain if the shares have
been held for one year or less) provided that the shares are a capital asset in
the hands of the shareholder. In addition, any dividend declared by the Company
in October, November or December of any year and payable to a shareholder of
record on a specified date in any such month shall be treated as both paid by
the Company and received by the shareholder on December 31 of such year,
provided that the dividend is actually paid by the Company during January of the
following calendar year. Shareholders may not include in their individual income
tax returns any net operating losses or capital losses of the Company.
In general, any loss upon a sale or exchange of shares by a shareholder who
has held such shares for six months or less (after applying certain holding
period rules) will be treated as a long-term capital loss to the extent that
distributions from the Company are required to be treated by such shareholder as
long-term capital gain.
TAXATION OF TAX-EXEMPT SHAREHOLDERS
Based upon a published ruling by the IRS, distributions by the Company to a
shareholder that is a tax-exempt entity will not constitute "unrelated business
taxable income" ("UBTI"), provided that the tax-exempt entity has not financed
the acquisition of its shares with "acquisition indebtedness" within the meaning
of the Code and the shares are not otherwise used in an unrelated trade or
business of the tax-exempt entity.
Notwithstanding the preceding paragraph, however, a portion of the dividends
paid by the Company may be treated as UBTI to certain U.S. private pension
trusts if the Company is treated as a "pension-held REIT." The Company is not,
and does not expect to become, a "pension-held REIT." If the Company were to
become a pension-held REIT, these rules generally would only apply to certain
U.S. pension trusts that hold more than 10% of the Company's stock.
TAXATION OF FOREIGN SHAREHOLDERS
The following is a discussion of certain anticipated U.S. Federal income and
estate tax consequences of the ownership and disposition of the Company's stock
applicable to Non-U.S. Holders of such stock. A "Non-U.S. Holder" is any person
other than (i) a citizen or resident of the United States, (ii) a corporation or
partnership created or organized in the United States or under the laws of the
United States or of any state thereof, or (iii) an estate or trust whose income
is includable in gross income for U.S. Federal income tax purposes regardless of
its source. The discussion is based on current law and is for general
information only. The discussion addresses only certain and not all aspects of
U.S. Federal income and estate taxation.
ORDINARY DIVIDENDS
The portion of dividends received by Non-U.S. Holders payable out of the
Company's earnings and profits which are not attributable to capital gains of
the Company and which are not effectively connected
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with a U.S. trade or business of the Non-U.S. Holder will be subject to U.S.
withholding tax at the rate of 30% (or lower rate, if so provided by an
applicable income tax treaty). In general, Non-U.S. Holders will not be
considered engaged in a U.S. trade or business solely as a result of their
ownership of stock of the Company. In cases where the dividend income from a
Non-U.S. Holder's investment in stock of the Company is (or is treated as)
effectively connected with the Non-U.S. Holder's conduct of a U.S. trade or
business, the Non-U.S. Holder generally will be subject to U.S. tax at graduated
rates, in the same manner as U.S. shareholders are taxed with respect to such
dividends (and may also be subject to the 30% branch profits tax in the case of
a Non-U.S. Holder that is a foreign corporation).
NON-DIVIDEND DISTRIBUTIONS
Distributions by the Company to a Non-U.S. Holder who holds 5% or less of
the Common Stock (after application of certain constructive ownership rules)
which are not dividends out of the earnings and profits of the Company will not
be subject to U.S. income or withholding tax. If it cannot be determined at the
time a distribution is made whether or not such distribution will be in excess
of current and accumulated earnings and profits, the distribution will be
subject to withholding at the rate applicable to dividends. However, the
Non-U.S. Holder may seek a refund of such amounts from the IRS if it is
subsequently determined that such distribution was, in fact, in excess of
current and accumulated earnings and profits of the Company.
CAPITAL GAIN DIVIDENDS
Under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), a
distribution made by the Company to a Non-U.S. Holder, to the extent
attributable to gains from dispositions of United States Real Property Interests
("USRPIs") such as the properties beneficially owned by the Company ("USRPI
Capital Gains"), will be considered to be income effectively connected with a
U.S. trade or business of the Non-U.S. Holder and subject to U.S. income tax at
the rate applicable to U.S. individuals or corporations, without regard to
whether such distribution is designated as a capital gain dividend. In addition,
the Company will be required to withhold tax equal to 35% of the amount of
dividends to the extent such dividends constitute USRPI Capital Gains.
Distributions subject to FIRPTA may also be subject to a 30% branch profits tax
in the hands of a foreign corporate shareholder that is not entitled to treaty
exemption.
DISPOSITION OF STOCK OF THE COMPANY
Unless the Company's stock constitutes a USRPI, a sale of such stock by a
Non-U.S. Holder generally will not be subject to U.S. taxation under FIRPTA. The
stock will not constitute a USRPI if the Company is a "domestically controlled
REIT." A domestically controlled REIT is a REIT in which, at all times during a
specified testing period, less than 50% in value of its shares is held directly
or indirectly by Non-U.S. Holders. Immediately following the Offerings, the
Company will not be a domestically controlled REIT. A Non-U.S. Holder's sale of
stock generally nevertheless will not be subject to tax under FIRPTA as a sale
of a USRPI provided that (i) the stock is "regularly traded" (as defined by
applicable Treasury regulations) on an established securities market (e.g., the
NYSE, on which the regularly traded Common Stock will be listed) and (ii) the
selling Non-U.S. Holder (after application of certain constructive ownership
rules) held 5% or less of the Company's outstanding stock or the regularly
traded class at all times during a specified testing period.
If gain on the sale of stock of the Company were subject to taxation under
FIRPTA, the Non-U.S. Holder would be subject to the same treatment as a U.S.
shareholder with respect to such gain (subject to applicable alternative minimum
tax and a special alternative minimum tax in the case of nonresident alien
individuals) and the purchaser of the stock could be required to withhold 10% of
the purchase price and remit such amount to the IRS.
Capital gains not subject to FIRPTA will nonetheless be taxable in the
United States to a Non-U.S. Holder in two cases: (i) if the Non-U.S. Holder's
investment in the stock of the Company is effectively connected with a U.S.
trade or business conducted by such Non-U.S. holder, the Non-U.S. Holder will be
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subject to the same treatment as a U.S. shareholder with respect to such gain,
or (ii) if the Non-U.S. Holder is a nonresident alien individual who was present
in the United States for 183 days or more during the taxable year and has a "tax
home" in the United States, the nonresident alien individual will be subject to
a 30% tax on the individual's capital gain.
ESTATE TAX
Stock of the Company owned or treated as owned by an individual who is not a
citizen or resident (as specially defined for U.S. Federal estate tax purposes)
of the United States at the time of death will be includable in the individual's
gross estate for U.S. Federal estate tax purposes, unless an applicable estate
tax treaty provides otherwise. Such individual's estate may be subject to U.S.
Federal estate tax on the property includable in the estate for U.S. Federal
estate tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. SHAREHOLDERS
The Company will report to the U.S. Shareholders and the IRS the amount of
distributions paid during each calendar year and the amount of tax withheld, if
any. Under the backup withholding rules, a U.S. Shareholder may be subject to
backup withholding at the rate of 31% with respect to distributions paid unless
such holder (i) is a corporation or comes within certain other exempt categories
and, when required, demonstrates this fact, or (ii) provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. A U.S. Shareholder that does not provide the Company with his
correct taxpayer identification number may also be subject to penalties imposed
by the IRS. Any amount paid as backup withholding will be creditable against the
U.S. Shareholder's income tax liability. In addition, the Company may be
required to withhold a portion of capital gain distributions to any U.S.
Shareholders who fail to certify their nonforeign status to the Company. See
"Federal Income Tax Considerations--Taxation of Foreign Shareholders."
FOREIGN SHAREHOLDERS
The Company must report annually to the IRS and to each Non-U.S. Holder the
amount of dividends (including any capital gain dividends) paid to, and the tax
withheld with respect to, such Non-U.S. Holder. These reporting requirements
apply regardless of whether withholding was reduced or eliminated by an
applicable tax treaty. Copies of these returns may also be made available under
the provisions of a specific treaty or agreement with the tax authorities in the
country in which the Non-U.S. Holder resides.
U.S. backup withholding (which generally is imposed at the rate of 31% on
certain payments to persons that fail to furnish the information required under
the U.S. information reporting requirements) and information reporting generally
will not apply to dividends (including any capital gain dividends) paid on stock
of the Company to a Non-U.S. Holder at an address outside the United States.
The payment of the proceeds from the disposition of stock of the Company to
or through a U.S. office of a broker will be subject to information reporting
and backup withholding unless the owner, under penalties of perjury, certifies,
among other things, its status as a Non-U.S. Holder, or otherwise establishes an
exemption. The payment of the proceeds from the disposition of stock to or
through a non-U.S. office of a non-U.S. broker generally will not be subject to
backup withholding and information reporting.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-U.S.
Holder's U.S. Federal income tax liability, provided that the required
information is furnished to the IRS.
These information reporting and backup withholding rules are under review by
the U.S. Treasury and their application to the Common Stock could be changed by
future regulations. On April 15, 1996, the IRS issued proposed Treasury
Regulations concerning the withholding of tax and reporting for certain amounts
paid to non-resident individuals and foreign corporations. The proposed Treasury
Regulations, if adopted
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in their present form, would be effective for payments made after December 31,
1997. Prospective purchasers should consult their tax advisors concerning the
potential adoption of such proposed Treasury Regulations and the potential
effect on their ownership of Common Stock.
OTHER TAX CONSEQUENCES
POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING TAX CONSEQUENCES
Prospective investors should recognize that the present Federal income tax
treatment of an investment in the Company may be modified by legislative,
judicial or administrative action at any time, and that any such action may
affect investments and commitments previously made. The rules dealing with
Federal income taxation are constantly under review by persons involved in the
legislative process and by the IRS and the U.S. Treasury Department, resulting
in revisions of regulations and revised interpretations of established concepts
as well as statutory changes. Revisions in Federal tax laws and interpretations
thereof could adversely affect the tax consequences of an investment in the
Company. For example, a recent Federal budget proposal contains language which,
if enacted in its present form, would result in the immediate taxation of all
gain inherent in a C corporation's assets upon an election by the corporation to
become a REIT, and thus would effectively preclude the Company from re-electing
REIT status following a termination of its REIT qualification.
STATE AND LOCAL TAXES
The Company and its shareholders may be subject to state or local income and
other taxation in various state or local jurisdictions, including those in which
it or they transact business or reside. The state and local tax treatment of the
Company and its shareholders may not conform to the Federal income tax
consequences discussed above. Consequently, prospective shareholders should
consult their own tax advisors regarding the effect of state and local tax laws
on an investment in the Company.
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ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing, retirement or other employee
benefit plan (the "Plan") subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") should consider the fiduciary standards under
ERISA in the context of the Plan's particular circumstances before authorizing
an investment in the Shares. Among other factors, the fiduciary should consider
whether such an investment is in accordance with the documents governing the
Plan and whether an investment is appropriate for the Plan in view of its
overall investment policy and the composition and diversification of its
portfolio. Other provisions of ERISA and the Code prohibit an employee benefit
plan from engaging in certain transactions involving "Plan assets" with parties
which are "parties in interest" under ERISA or "disqualified persons" under the
Code with respect to the Plan. Therefore, a fiduciary of a Plan should also
consider whether an investment in the Shares might constitute or give rise to a
prohibited transaction under ERISA and the Code.
If the assets of the Company were deemed to be Plan assets of employee
benefit Plans that are shareholders, the Plan's investment in the Shares might
be deemed to constitute a delegation under ERISA of the duty to manage Plan
assets by a fiduciary investing in Shares, and certain transactions involving
the operation of the Company might be deemed to constitute prohibited
transactions under ERISA and the Code.
The U.S. Department of Labor (the "DOL") has issued a final regulation with
regard to whether the underlying assets of an entity in which employee benefit
plans acquire equity interests would be deemed to be Plan assets. The regulation
provides that the underlying assets of an entity will not be considered to be
Plan assets if the equity interests acquired by employee benefit plans are
"publicly-offered securities" that is, they are (i) widely held (I.E., owned by
more than 100 investors), (ii) freely transferable and (iii) sold as part of an
offering pursuant to an effective registration statement under the Securities
Act and then timely registered under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended. It is expected that the Shares will meet the
criteria of "publicly-offered securities" above. The Underwriters expect
(although no assurances can be given) that the Shares will be held by at least
100 independent investors at the conclusion of the Offerings; except as
discussed in "Description of Capital Stock--Restrictions on Transfer and Excess
Shares," there are no restrictions imposed on the transfer of the Shares and the
Shares will be sold as part of an offering pursuant to an effective registration
statement under the Securities Act, and then will be timely registered under the
Securities Exchange Act of 1934, as amended.
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is important that an employee benefit
plan considering the purchase of Shares consult with its counsel regarding the
consequences under ERISA of the acquisition and ownership of Shares. Employee
benefit plans which are governmental plans (as defined in Section 3(32) of
ERISA) and certain church plans (as defined in Section 3(33) of ERISA) generally
are not subject to ERISA requirements. Individual retirement accounts and
certain employee benefit plans of self-employed individuals are subject to the
prohibited transaction provisions of the Code but not ERISA's fiduciary
standards.
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UNDERWRITING
The underwriters named below (the "U.S. Underwriters"), acting through their
respective representatives, Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Furman Selz LLC, Goldman, Sachs & Co., Morgan Stanley & Co.
Incorporated, Prudential Securities Incorporated, Smith Barney Inc. and BT
Securities Corporation (collectively, the "U.S. Representatives" and, together
with the International Representatives, the "Representatives"), have severally
agreed, subject to the terms and conditions contained in a U.S. purchase
agreement relating to the Common Stock (the "U.S. Purchase Agreement") and
concurrently with the sale of 2,700,000 shares of Common Stock to certain
underwriters outside the United States and Canada (the "International Managers"
and, together with the U.S. Underwriters, the "Underwriters"), to purchase from
the Company the number of shares of Common Stock set forth opposite their
respective names below. Under certain circumstances, the commitments of certain
non-defaulting U.S. Underwriters or International Managers may be increased.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................................................
Furman Selz LLC...........................................................................
Goldman, Sachs & Co. .....................................................................
Morgan Stanley & Co. Incorporated.........................................................
Prudential Securities Incorporated........................................................
Smith Barney Inc..........................................................................
BT Securities Corporation ................................................................
------------
Total........................................................................... 15,300,000
------------
------------
</TABLE>
The Company has also entered into a purchase agreement (the "International
Purchase Agreement") with the International Managers. Subject to the terms and
conditions set forth in the International Purchase Agreement, and concurrently
with the sale of 15,300,000 shares of Common Stock to the U.S. Underwriters
pursuant to the U.S. Purchase Agreement, the Company has agreed to sell to the
International Managers, and the International Managers have severally agreed to
purchase from the Company, an aggregate of 2,700,000 shares of Common Stock. The
initial public offering price per share of the Common Stock and the total
underwriting discount per share of the Common Stock are identical under the U.S.
Purchase Agreement and the International Purchase Agreement.
In the U.S. Purchase Agreement and the International Purchase Agreement, the
U.S. Underwriters and the International Managers, respectively, have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of Common Stock being sold pursuant to each such Purchase Agreement if
any of such shares of Common Stock being sold pursuant to each such Purchase
Agreement are purchased. The closings with respect to the sale of the shares to
be purchased by the U.S. Underwriters and the International Managers are
conditioned upon one another.
The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Under the terms of the Intersyndicate
Agreement, the U.S. Underwriters and the International Managers are permitted to
sell shares of Common Stock to each other for purposes of resale at the initial
public offering price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and any
dealer to whom they sell shares of Common Stock will not offer to sell or sell
shares of Common Stock to persons who are non-United States or non-Canadian
persons or to persons they believe intend to resell to persons who are
non-United States or non-Canadian persons, and the International Managers and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to United States or Canadian persons or to persons
they believe intend to resell to persons who are United States or Canadian
persons, except in each case for transactions pursuant to the Intersyndicate
Agreement.
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The U.S. Representatives have advised the Company that the U.S. Underwriters
propose initially to offer the shares of Common Stock to the public at the
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per share. The
U.S. Underwriters may allow, and such dealers may reallow, a discount not in
excess of $ per share on sales to certain other dealers. After the public
offering, the initial offering price, the concession and discount may be
changed.
The Company has granted to the U.S. Underwriters an option exercisable for a
period of 30 days from the date of this Prospectus to purchase up to an
additional 2,295,000 shares of Common Stock to cover over-allotments, if any, at
the initial offering price less the underwriting discount. If the U.S.
Underwriters exercise this option, each U.S. Underwriter will have a firm
commitment, subject to certain conditions, to purchase approximately the same
percentage thereof which the number of shares of Common Stock to be purchased by
it shown in the foregoing table bears to the 15,300,000 shares of Common Stock
initially offered hereby.
At the request of the Company, the U.S. Underwriters have reserved for sale,
at the initial public offering price, up to 5% of the shares to be sold and
offered hereby by the Company to certain employees, officers and family members
of such officers of U.S. affiliates of Westfield Holdings Limited. The number of
shares of Common Stock available for sale to the general public will be reduced
to the extent such persons purchase such reserved shares. Any reserved shares
which are not orally confirmed for purchase within one day of the pricing of the
Offerings will be offered by the U.S. Underwriters to the general public on the
same terms as the other shares offered hereby.
The Company has been informed that none of the proceeds of the Offerings
will be used by the offerees to acquire the Common Stock under the Orders.
Westfield Holdings has advised the Company it will utilize currently available
cash or credit facilities to acquire such Common Stock under the Orders.
Interests associated with the Lowy family and Richard Green have also notified
the Company that they will utilize currently available cash or credit facilities
to acquire such Common Stock. Based on current conditions which may change,
Merrill Lynch currently intends to fill the Orders in their entirety even if the
Offerings are oversubscribed.
In the Purchase Agreements, the Company has agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the Underwriters may be required to
make in respect thereof.
The Company, Westfield Holdings, interests associated with the Lowy family
and Richard E. Green, a Co-President of the Company, will each agree, subject to
certain exceptions (including the issuance of the 1997 WAT Warrant and the
Series B Preferred Shares and the exercise of the WAT Warrants), not to (i)
sell, grant any option, right or warrant for the sale of, or to purchase or
otherwise transfer or dispose of any Common Stock or securities convertible into
or exchangeable or exercisable for Common Stock or file a registration statement
under the Securities Act with respect to the foregoing or (ii) enter into any
swap or other agreement or transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, for a period of 90 days from the date of this Prospectus in the case of
the Company and any Shares which may be acquired under the Orders and 36 months
from the date of this Prospectus in the case of shares held by Westfield
Holdings immediately prior to consummation of the Offerings, without the prior
written consent of Merrill Lynch. See "Shares Available for Future Sale."
The Underwriters have informed the Company that the Underwriters do not
intend to confirm sales accounts over which they exercise discretionary
authority in excess of 5%.
Prior to the Offerings, there has been no public market for the Common
Stock. The initial public offering price has been determined by negotiations
among the Company and the Underwriters. Among the factors considered in such
negotiations, in addition to the prevailing market conditions in the equity
securities market, the price at which the WAT units have been traded on the ASX,
dividend yields, price-earnings ratios and price-Funds from Operations ratios of
publicly traded REITs that the Company and the Underwriters believe to be
comparable to the Company, an assessment of the recent results of the operations
of the Company (which are based on the results of the operations of the
Properties), estimates
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of the future prospects of the Company, the present state of the Company's
development projects, the current state of the real estate markets in the
geographic area in which the Company operates and the economics of the Company's
principal markets as a whole. The initial public offering price set forth on the
cover page of this Prospectus should not, however, be considered as indication
of the actual value of the Common Stock. Such price is subject to change as a
result of market conditions and other factors. There can be no assurance that an
active trading market will develop for the Common Stock or that the Common Stock
will trade in the public market subsequent to the Offerings at or above the
initial offering price.
The Common Stock has been approved for listing on the NYSE, subject to
official notice of issuance, under the symbol "WEA." In order to meet the
requirements for listing of the Common Stock on such exchange, the Underwriters
have undertaken to sell lots of 100 or more shares to a minimum of 2,000
beneficial owners.
Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase the Common Stock. As an exception to these
rules, the Representatives are permitted to engage in certain transactions that
stabilize the price of the Common Stock. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the Representatives may
reduce that short position by purchasing Common Stock in the open market. The
Representatives may also elect to reduce any short position by exercising all or
part of the over-allotment options described above.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the Offerings.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
Roy Furman, the Vice Chairman of Furman Selz LLC, one of the U.S.
Representatives, is a director of the Company. Goldman, Sachs & Co., one of the
U.S. Representatives and an affiliate of Goldman Sachs International which is
one of the International Managers, is the owner and/or manager of several
investment funds that currently are investors in the Company and such investors
will receive a pro-rata portion of the Special Distribution.
In 1994, in connection with Prudential's sale of the Company to Westfield
Holdings and certain other investors, Prudential, an affiliate of Prudential
Securities Incorporated which is one of the U.S. Representatives and
Prudential-Bache Securities (U.K.) Inc. which is one of the International
Managers, made secured loans in the aggregate amount of $339.0 million to
certain subsidiaries of the Company. In 1996, these loans were increased by
$15.0 million to $354.0 million. See "Business and Properties--Debt Summary."
Under the terms of the loan agreement, Prudential is entitled to receive a
transfer fee of $1.77 million from the Company on such mortgage loan upon the
sale of the Company's Common Stock in an intial public offering. Upon
consummation of the Offerings, the Company will pay such fees to Prudential.
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In 1995, Prudential made a $260.02 million secured loan to Westland Garden
State Plaza Limited Partnership, the owner of Garden State Plaza. In connection
with the making of the Garden State Plaza loan by the Company to Westfield
Holdings, Prudential is entitled to receive a transfer fee of $130,000. Upon
consummation of the Offerings, Westfield Holdings will pay such fee to
Prudential.
In July 1996, an affiliate of BT Securities Corporation, one of the U.S.
Representatives and Bankers Trust International PLC, one of the International
Managers, received customary underwriting fees from WAT as a co-manager in
connection with the initial public offering of 402 million WAT units.
Robert A. Ferguson, Managing Director at Bankers Trust Australia Limited, an
affiliate of BT Securities Corporation which is one of the U.S. Representatives,
is a member of the Board of Directors of Westfield Holdings Limited. Elliot
Slade, III, Senior Managing Director at BT Wolfensohn, a division of BT
Securities Corporation, resigned in March 1997 as a member of the Board of
Directors of the Company and its subsidiaries.
In the ordinary course of their business, certain of the Underwriters have
engaged in transactions with and performed services for the Company, Westfield
Holdings Limited and WAT and their respective subsidiaries for which they have
received customary fees.
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EXPERTS
The consolidated financial statements and schedules of the Company at
December 31, 1996 and for the year then ended included in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, and at December 31, 1995 and for the year ended December 31, 1995 and
the periods from February 12, 1994 through December 31, 1994 and from January 1,
1994 through February 11, 1994, by Coopers & Lybrand LLP independent auditors,
as set forth in their respective reports thereon appearing elsewhere herein, and
included in reliance upon such reports given upon the authority of such firms as
experts in accounting and auditing.
The combined statements of revenues and certain expenses of the Acquired
Properties for the years ended June 30, 1996, 1995, and 1994, included in this
Prospectus and Registration Statement have been audited by BDO Seidman LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and included in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The statement of revenue and certain expenses of Annapolis Mall for the year
ended December 31, 1996, included in the Prospectus and Registration Statement
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere herein and included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered pursuant
to this Prospectus will be passed upon by Debevoise & Plimpton, New York, New
York on behalf of the Company, and certain legal matters and tax matters as
described under "Federal Income Tax Considerations" will be passed upon by
Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles, California. Certain legal
matters related to the Offerings will be passed upon for the Underwriters by
Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles, California. Debevoise &
Plimpton will rely upon the opinion of Bryan Cave LLP, as to matters of Missouri
law.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part) on
Form S-11 under the Securities Act with respect to the securities offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. Statements contained in this
Prospectus as to the content of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference and the
exhibits and schedules hereto. For further information regarding the Company and
the shares offered hereby, reference is hereby made to the Registration
Statement and such exhibits and schedules.
The Registration Statement, the exhibits and schedules forming a part
thereof filed by the Company with the Commission can be inspected and copies
obtained from the Commission at Room 1204, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following regional offices of the
Commission: 7 World Trade Center, 13th Floor, New York, New York 10048 and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a site on the world web at http://www.sec.gov that
contains information filed electronically by the Company.
The Company intends to furnish its shareholders with annual reports
containing consolidated financial statements audited by its independent
certified public accountants and with quarterly reports containing unaudited
condensed consolidated financial statements for each of the first three quarters
of each fiscal year.
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GLOSSARY
Unless the context otherwise requires, the following terms shall have the
meanings set forth below for the purposes of this Prospectus:
"ABP" means Stichting Pensioenfonds ABP, a Dutch pension fund established
under the laws of the Kingdom of the Netherlands.
"ACCREDITED INVESTOR" has the meaning defined in Rule 501 under the
Securities Act.
"ACQUISITION" means the 1994 acquisition of the Company from Prudential by
Westfield Holdings and certain other investors.
"ACQUIRED PROPERTIES" means Connecticut Post Mall, Trumbull Shopping Park
and South Shore Mall.
"ACQUISITION TRANSACTION" means the transaction in which a person or entity
became an Interested Shareholder.
"ADA" means the Americans with Disabilities Act of 1990.
"ADVISOR" means Westfield U.S. Advisory, L.P., a Delaware limited
partnership wholly-owned by Westfield Holdings that provides advisory services
to the Company.
"ADVISORY AGREEMENT" means the agreement dated July 1, 1996 as amended
between the Advisor and the Company.
"ADVISORY FFO AMOUNT" means, as of the date of, and after giving effect to,
the Offerings and concurrent transactions, an amount equal to $114.6 million
(based upon a mid-point of the price range). After any New Issuance, the
Advisory FFO Amount shall be the sum of the then applicable Advisory FFO Amount
and the FFO Adjustment Factor.
"ANCHOR" means the Centers' full line department stores or other large
retail stores generally occupying more than 50,000 square feet or a large
entertainment complex.
"ANNAPOLIS ACQUISITION" means the proposed acquisition by the Company to
purchase the remaining 70% interest in Annapolis Mall, together with an
adjoining parcel of real property leased to Montgomery Ward & Co., for an
aggregate purchase price of $133.0 million.
"ARTICLES" mean the Third Restated Articles of Incorporation of the Company
as in effect upon consummation of the Offerings.
"ASX" means the Australian Stock Exchange Limited.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, codified at 11
U.S.C. SectionSection 101-1330, as amended.
"BASE RENT PER SQUARE FOOT (PSF)" means, when referring to the Centers, the
minimum or base rent per square foot payable by Mall Store tenants under leases
at the Centers excluding outparcels.
"BIG BOX RETAILER" means a discount retailer similar to a Category Killer,
but with a wider product offering, e.g. Loehmann's and Michael's.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BOOK-TAX DIFFERENCE" means the unrealized gain or loss equal to the
difference between the fair market value, at the time of contribution, of
property contributed to a partnership in exchange for a partnership interest and
the adjusted tax basis of such property at the time of contribution.
"BUILT-IN GAIN" means the difference between the fair market value and the
adjusted basis of a Property as of the beginning of the Recognition Period.
"BUILT-IN GAIN RULES" mean guidelines issued by the IRS relating to taxation
of Built-in Gain in IRS Notice 88-19.
G-1
<PAGE>
"BUSINESS COMBINATION" means, for purposes of the Missouri Business
Combination Statute, any person or entity which beneficially owns or controls
20% or more of the outstanding voting shares of the Company.
"BY-LAWS" means the Second Amended and Restated By-Laws of the Company as in
effect upon consummation of the Offerings.
"CASHLESS EXERCISE" means that the Company, pursuant to the terms of the
Westfield Holdings Warrants, elected to apply a number of shares of Westfield
Holdings Limited that otherwise would be issuable upon exercise of the Westfield
Holdings Warrants toward payment of the exercise price.
"BUSINESS COMBINATION" includes, for the purpose of the purposes of the
Missouri Business Combination Statute, a merger or consolidation, certain sales,
leases, exchanges, pledges and similar dispositions of corporate stock and
certain reclassifications and recapitalizations.
"CATEGORY KILLER" means a discount retailer in a specific product niche,
e.g., Toys R' Us.
"CENTERS" means the 19 Regional Centers and three Power Centers.
"CODE" means the United States Internal Revenue Code of 1986, as amended.
"COMMISSION" means the United States Securities and Exchange Commission.
"COMMON STOCK" means the common stock, par value $.01 per share, of the
Company.
"COMMON SHARES" means the Common Stock and the Excess Common Shares.
"COMPANY" means Westfield America, Inc., a Missouri corporation, together
with each of its subsidiaries and Joint Venture interests.
"CONCURRENT TRANSACTIONS" means the sale of the 1997 WAT Warrant by the
Company to WAT, the sale of the Series B Preferred Shares by the Company to ABP
and the exercise by certain existing investors of ordinary options granted by
WAT to exchange 1,623,985 shares of Common Stock for 32,479,700 units in WAT.
"DEVELOPER" means Westfield Corporation, Inc., a Delaware corporation and a
wholly-owned subsidiary of Westfield Holdings Limited that provides development
services to the Company.
"DOL" means the United States Department of Labor.
"EBITDA" means the Company's share of net income before interest, taxes,
depreciation and amortization.
"EFFECTIVE RENT PER SQUARE (PSF)" means, when referring to the Centers, the
minimum or base rent per square foot plus percentage rent per square foot
payable by Mall Store tenants under leases at the Centers excluding outparcels.
"ERISA" means the United States Employee Retirement Income Security Act of
1974, as amended.
"EXCESS COMMON SHARES" means shares of Common Stock owned, or deemed to be
owned, or transferred to a shareholder in excess of the Ownership Limit.
"EXCESS PREFERRED SHARES" means shares of Preferred Stock owned, or deemed
to be owned, or transferred to a shareholder in excess of the Ownership Limit.
"EXCESS SHARES" means the Excess Common Shares and the Excess Preferred
Shares.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FIRPTA" means the United States Foreign Investment in Real Property Tax Act
of 1980, as amended.
G-2
<PAGE>
"FULLY DILUTED" means with respect to the Company, the ownership of Common
Stock assuming the exercise of the WAT Warrants and with respect to WAT, the
ownership of units in WAT assuming the exercise of certain options to acquire
additional units in WAT.
"FFO ADJUSTMENT FACTOR" means 103% (except that 100% shall be used with
respect to Common Stock issued under any distribution reinvestment plan adopted
by the Company) multipled by (a) a fraction the numerator of which is the
aggregate Funds from Operations Available for Common Stock of the Company for
each of the four full calendar quarters immediately preceeding the date of the
New Issuance and the denominator of which is the aggregate number of shares of
Common Stock (on a fully diluted basis as required by GAAP) of the Company then
outstanding immediately prior to the date of the New Issuance multipled by (b)
the number of shares of Common Stock issued in the New Issuance (on a fully
diluted basis as required by GAAP).
"FUNDS FROM OPERATIONS" means net income (loss) (computed in accordance with
GAAP) excluding gains (or losses) from debt restructurings and sales of
property, plus real estate related depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures except for years
ended December 31, 1993 and 1992 for which income taxes are not included. This
definition is in accordance with standards established by the White Paper on
Funds from Operations approved by the Board of Governors of NAREIT in March
1995.
"FUNDS FROM OPERATIONS AVAILABLE FOR COMMON STOCK" means Funds from
Operations less dividends paid or accrued on the preferred shares during the
applicable four full calendar quarter period.
"GAAP" means generally accepted accounting principles in the United States.
"GARDEN STATE PLAZA LOAN" means the $145.0 million participating secured
loan that will be made by the Company to Westfield Holdings, secured by a pledge
of a 50% partnership interest in the limited partnership that owns Garden State
Plaza.
"GARDEN STATE PLAZA OPTION" means the Company's option to acquire an
indirect 50% interest in Garden State Plaza at fair market value.
"GBCL" means Chapter 351 of the Revised Statutes of Missouri, entitled The
General Business and Corporation Law of Missouri.
"ICSC" means the International Council of Shopping Centers.
"INCOME TESTS" means three requirements relating to the Company's gross
income that must be satisfied annually for qualification as a REIT: (i) at least
75% of the Company's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived directly or indirectly from
investments relating to real property or mortgages on real property (including
"rents from real property" (as defined by the Code) and, in certain
circumstances, interest) or from certain types of temporary investments; (ii) at
least 95% of the Company's gross income (excluding gross income from prohibited
transactions) for each taxable year must be derived from such real property
investments, and from other dividends, interest and gain from the sale or
disposition of stock or securities (or from any combination of the foregoing);
and (iii) short-term gain from the sale or other disposition of stock or
securities, gain from certain sales of property held primarily for sale, and
gain on the sale or other disposition of real property held for less than four
years (apart from involuntary conversions and sales of foreclosure property)
must, in the aggregate, represent less than 30% of the Company's gross income
for each taxable year.
"INDEPENDENT DIRECTORS" means those members of the Board of Directors who
(i) are not, and have not for the last 12 months been, directors, officers or
employees of Westfield Holdings or the WAT Trustee, (ii) is not an affiliate of
Westfield Holdings or the WAT Trustee or an officer or employee of such an
affiliate, (iii) are not members of the immediate family of any natural person
described in clause (i) or (ii) above and (iv) are free from any relationship
that would interfere with the exercise of independent judgment as a director.
G-3
<PAGE>
"INDIVIDUAL" means an individual and certain entities as provided in Section
542(a)(2) of the Code.
"INTERESTED SHAREHOLDER" includes, for the purposes of the Missouri Business
Combination Statute, any person or entity which beneficially owns or controls
20% or more of the outstanding voting shares of the Company.
"INTERNATIONAL MANAGERS" means the International Managers named in the
International Prospectus.
"INTERNATIONAL OFFERING" means the offering of 2,700,000 Shares offered
initially outside the United States and Canada by the International Managers.
"INTERNATIONAL PROSPECTUS" means the prospectus to be used in connection
with the International Offering.
"INTERNATIONAL PURCHASE AGREEMENT" means the purchase agreement between the
International Managers and the Company.
"INTERNATIONAL REPRESENTATIVES" means Merrill Lynch International, Furman
Selz, Goldman Sachs International, Morgan Stanley & Co. International,
Prudential-Bache Securities (U.K.) Inc., Smith Barney Inc. and Bankers Trust
International PLC.
"INTERSYNDICATE AGREEMENT" means the agreement between the International
Managers and the U.S. Underwriters, providing for the coordination of their
activities.
"IRS" means the United States Internal Revenue Service.
"JOINT VENTURE CENTERS" means, collectively, the seven Regional Centers and
one Power Center owned or ground leased by Joint Ventures (partnership interests
which are owned by the Company and the Joint Venture partners), and includes:
Annapolis Mall, Annapolis, Maryland; Meriden Square, Meriden, Connecticut;
Mission Valley Center, San Diego, California; Mission Valley Center-West, San
Diego, California; North County Fair, Escondido, California; Plaza Camino Real,
Carlsbad, California; Topanga Plaza, Canoga Park, California and Vancouver Mall,
Vancouver, Washington.*
"JOINT VENTURES" means, collectively, the partnerships through which the
Company owns interests in Annapolis Mall, Meriden Square, Mission Valley Center,
Mission Valley Center-West, North County Fair, Plaza Camino Real, Topanga Plaza,
Vancouver Mall, the land adjacent to Topanga Plaza known as West Valley and
certain other real estate interests.
"MALL GLA" means gross leasable area for Mall Stores.
"MALL STORES" means stores smaller than Anchors and kiosks permanently
located within the corridors of the Centers that are typically specialty
retailers and free standing buildings generally located along the perimeter of a
Center's parking area.
"MANAGEMENT AGREEMENTS" mean the separate management agreements, as amended,
between the Company and the Manager, relating to the management of the
Properties (other than North County Fair).
"MANAGER" means CenterMark Management Company, a Delaware limited
partnership wholly owned by Westfield Holdings that provides management services
to the Centers (other than North County Fair).
"MASTER DEVELOPMENT FRAMEWORK AGREEMENT" means the Master Development
Framework Agreement, dated July 1, 1996, as amended, between the Company and the
Developer.
"MAY COMPANY" means The May Department Stores Company, a New York
corporation.
"MAY PROPERTIES" means the 13 department store properties, located at
Springfield, Missouri; Salem, Oregon; Waterbury, Connecticut; Elyria, Ohio; and
Oxnard, West Los Angeles, Westminster, San Bernardino, El Cajon, Redondo Beach,
Costa Mesa, Riverside and Buena Park, California, in each case currently
- ------------------------
*The Company has signed a letter of intent with its Joint Venture partner to
acquire the remaining 70% interest in Annapolis Mall.
G-4
<PAGE>
owned or ground leased by the Company, together with the department store
facility on each, which is net leased, to the May Company or assignees until
2017.
"MERRILL LYNCH" means Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"MISSION VALLEY PARTNERSHIP" means the Joint Venture that owns Mission
Valley Center and Mission Valley Center--West.
"NAREIT" means the National Association of Real Estate Investment Trusts.
"NASD" means the National Association of Securities Dealers, Inc.
"NEW ISSUANCE" means any additional issuance by the Company of Common Stock.
"NON-U.S. SHAREHOLDERS" means nonresident alien individuals, foreign
corporations, foreign partnerships and other foreign shareholders.
"NOTICE 88-19" means the notice issued by the IRS which generally permits a
REIT to elect to defer recognition of Built-In Gain if certain conditions are
met.
"NYSE" means the New York Stock Exchange.
"OFFERINGS" means the offering of Shares pursuant to the U.S. Offering and
the International Offering.
"ORDER" means the orders placed by Westfield Holdings, interests associated
with the Lowy family and Richard E. Green, a Co-President of the Company, to
purchase 2,300,000, 600,000 and 100,000 Shares, respectively, at the price to
public in the Offerings.
"OPERATING PARTNERSHIP" means Westfield America, L.P., which the Company
intends to form following the consummation of the Offerings and prior to January
1, 1998.
"OUTPARCELS" means one or more free standing buildings generally located
along the perimeter of a Center's parking area.
"OUTSIDE PARTNERS" means one or more individuals or entities having no
interest in the Company or Westfield Holdings which are partners with the
Company in one or more of the Joint Ventures.
"OWNERSHIP LIMIT" means 5.5%, by value, of the outstanding capital stock
held directly or indirectly by any individual (except for Frank P. Lowy and the
members of his family, who are prohibited from owning directly or indirectly
more than 26.0% of the outstanding capital stock of the Company).
"PLAN" means a pension, profit sharing, retirement or other employee benefit
plan.
"PHASE I" means an investigation intended to identify areas or issues of
potential environmental concern with respect to a property conducted in
accordance with a standardized scope of work that directs the investigator to
investigate certain predetermined sources of information about environmental
conditions on and near the subject property, to examine the subject property and
to identify publicly known conditions in respect of properties in the vicinity
of the subject property that have had, might have had or might have
environmental impacts on the subject property.
"POWER CENTERS" means centers whose major tenants are large discount
department stores or Category Killers.
"POWER CENTERS" means Eastland Center, Mission Valley Center-West and
Westland Towne Center.
"PREFERRED SHARES" means the Preferred Stock, the Senior Preferred Shares
and the Excess Preferred Shares.
"PREFERRED STOCK" means the preferred stock, par value $1.00 per share, of
the Company of which 940,000 shares of Series A Preferred Shares and 301,500
shares of Series B Preferred Shares (assuming the mid-point of the price range
as set forth on the cover page of this Prospectus) will be issued and
outstanding upon the closing of the Offerings and concurrent transactions.
G-5
<PAGE>
"PRIMARY TRADE AREA" means the geographic market from which a Center draws a
majority of its sales, as determined by the Company by taking into account
competing shopping centers, access, available sales data and on-site geographic
research.
"PROPERTIES" means, collectively, the respective interests of the Company as
applicable, in the Centers, the May Properties, the land adjacent to Topanga
Plaza known as West Valley and other minor real estate investments held directly
or indirectly by any of the foregoing entities.
"PRUDENTIAL" means The Prudential Insurance Company of America.
"PURCHASE AGREEMENTS" means the purchase agreements between the Company and
the Underwriters entered into in connection with the Offerings.
"PSF" means per square foot.
"QUALIFICATION DATE" means the first day of the first taxable year of which
an entity qualifies as a REIT (February 12, 1994 for the Company and January 1,
1996 for WPI).
"RANKING PREFERRED SHARES" means the Series A Preferred Shares or any series
of Preferred Shares authorized with the consent of the holders of Series A
Preferred Shares ranking PARI PASSU with the Series A Preferred Shares.
"RBC" means the risk based capital requirements of the National Association
of Insurance Commissioners governing regulatory capital.
"REA" means a reciprocal easement agreement.
"RECAPITALIZATION" means the series of transactions in 1996 and 1997 by
which WAT acquired a majority interest in the Company and other transactions.
"RECOGNITION PERIOD" means the recognition period pertaining to Built-In
Gain as defined in Notice 88-19.
"REGIONAL SHOPPING CENTERS" means mall facilities built around one or two
anchors and containing from 400,000 to 800,000 square feet of total gross
leasable area.
"REGIONAL CENTERS" means, collectively, the six regional and 13 super
regional shopping centers in which the Company has ownership interests.
"REGISTRATION RIGHTS AGREEMENT" means the agreement between Westfield
Holdings and the Company whereby Westfield Holdings will have the right, 12
months after the closing of the Offerings, to require the Company to promptly
effect the registration of their shares.
"REGULAR QUARTERLY DISTRIBUTION" means the regular quarterly distributions
payable by the Company during each fiscal year.
"REIT" means a real estate investment trust as defined pursuant to Sections
856 through 860 of the Code.
"REIT REQUIREMENTS" means the applicable Treasury Regulations relating to
REIT qualification.
"REPRESENTATIVES" means the U.S. Representatives and the International
Representatives.
"RESTRICTED SHARES" means the Common Stock owned by Westfield Holdings, WAT
and certain other investors which are subject to Rule 144.
"RULE 144" means the rule promulgated under the Securities Act that permits
holders of restricted securities as well as affiliates of an issuer of the
securities, pursuant to certain conditions and subject to certain restrictions,
to sell their securities publicly without registration under the Securities Act.
"SALES PER SQUARE FOOT" means when referring to the Centers, the sales per
square foot for Mall Stores at Stabilized Centers reporting sales for 12 months,
excluding North County Fair.
G-6
<PAGE>
"SECURITIES ACT" means the United States Securities Act of 1933, as amended.
"SENIOR PREFERRED SHARES" means the Company's senior non-voting preferred
stock, par value $1.00 per share.
"SERIES A PREFERRED SHARES" means a designated portion of the Company's
preferred stock, par value $1.00 per share.
"SERIES B PREFERRED SHARES" means a designated portion of the Company's
preferred stock, par value $1.00 per share, to be issued concurrently with the
Offerings.
"SHARES" means the shares of Common Stock issued in the Offerings.
"SPECIAL DISTRIBUTION" means the special distribution intended to be
declared and paid by the Company to the shareholders of the Company immediately
preceding the Closing of the Offerings in the amount of $13.0 million.
"STABILIZED CENTERS" means Centers (other than North County Fair) not under
redevelopment for the relevant period.
"SUPER REGIONAL SHOPPING CENTER" means mall facilities built around three or
more anchors and containing greater than 800,000 square feet of total gross
leasable area.
"TOTAL ASSETS" means the Company's gross assets as defined in accordance
with GAAP.
"TOTAL EBITDA" means the Company's total EBITDA before minority interest
plus its pro-rata shares of EBITDA of unconsolidated real estate partnerships.
"TOTAL GLA" means total gross leasable area, including Anchors and Mall
Stores at the Centers.
"TOTAL MARKET CAPITALIZATION" means the sum of (i) the aggregate market
value of the outstanding shares of Common Stock (based on the mid-point of the
range as set forth on the cover page of this Prospectus), plus (ii) the total
debt of the Company consolidated with the subsidiaries, including its
proportionate share of any indebtedness on property held by Joint Ventures plus
(iii) the total liquidation value of the Company's Preferred Shares.
"TRADE AREA POPULATION" means the number of people that reside in a
geographically defined area surrounding the shopping center that equates to
approximately 70% to 80% of the Centers' customer draw.
"TREASURY REGULATIONS" means the income tax regulations that have been
promulgated under the Code.
"TRUST DEED" means the trust deed dated March 28, 1996 pursuant to which WAT
was established.
"UBTI" means "unrelated business taxable income" as defined in Section
512(a) of the Code.
"UNDERWRITERS" means the U.S. Underwriters and the International Managers.
"U.S. OFFERING" means the offering of 15,300,000 shares Common Stock offered
initially in the United States and Canada by the U.S. Underwriters.
"U.S. PROSPECTUS" means the prospectus used in connection with the U.S.
Offering.
"U.S. PURCHASE AGREEMENT" means the purchase agreement between the Company
and the U.S. Underwriters.
"U.S. REPRESENTATIVES" means Merrill Lynch, Furman Selz LLC, Goldman, Sachs
& Co., Morgan Stanley & Co. Incorporated, Prudential Securities Incorporated,
Smith Barney Inc. and BT Securities Corporation.
"U.S. UNDERWRITERS" means the U.S. Underwriters named in the U.S.
Prospectus.
"USRPIS" means United States Real Property Interests as defined at Section
897 of the Code.
G-7
<PAGE>
"WAM" means Westfield America Management Limited, a wholly-owned subsidiary
of Westfield Holdings that manages WAT.
"WAT" means Westfield America Trust.
"WAT OFFERING" means the offering of WAT Units to the Australian public
which closed on June 27, 1996.
"WAT TRUSTEE" means Perpetual Trustee Company Limited.
"WAT WARRANTS" means the 1996 WAT Warrant and the 1997 WAT Warrant.
"1996 WAT WARRANT" means the warrant acquired by WAT in July 1996 entitling
it to purchase, in whole or in part, 6,246,096 shares of Common Stock at the
exercise price of $16.01, subject to adjustment in certain events.
"1997 WAT WARRANT" means the warrant that will be issued by the Company to
WAT, in connection with the Offerings, entitling it to purchase, in whole or in
part, $35.0 million (or 2,089,552 shares assuming the mid-point of the price
range as set forth on the cover page of this Prospectus) of additional Common
Stock at an exercise price of the mid-point of the price range as set forth on
the cover page of this Prospectus.
"WCI" means the Developer, Westfield Corporation, Inc., a Delaware
corporation and a wholly-owned subsidiary of Westfield Holdings Limited.
"WEST VALLEY PARTNERSHIP" means the limited partnership consisting of the
Company, as a general partner, and Outside Partners, as limited partners, which
owns the land adjacent to Topanga Plaza known as West Valley.
"WESTFIELD AMERICA TRUST" means an Australian public property trust listed
on the ASX.
"WESTFIELD HOLDINGS" means Westfield Holdings Limited and its subsidiaries.
"WESTFIELD HOLDINGS LIMITED" means Westfield Holdings Limited, an Australian
public corporation listed on the ASX.
"WESTFIELD HOLDINGS WARRANTS" means the options granted to the Company to
purchase 9.8 million ordinary shares of Westfield Holdings Limited.
"WESTFIELD TRUST" means an Australian publicly traded property unit trust
listed on the ASX and managed by Westfield Holdings.
"WESTLAND REALTY, INC" means a subsidiary of Westfield Holdings which holds
an indirect 50% partnership interest in the Garden State Plaza.
"WHEATON ACQUISITION" means the proposed acquisition by the Company of
approximately 70% of the partnership interests in Wheaton Plaza Regional
Shopping Center LLP, the entity that owns Wheaton Plaza Regional Shopping Center
located in Wheaton, Montgomery County, Maryland, for a purchase price of $52.5
million.
"WPI" means Westland Properties, Inc, a Delaware corporation.
G-8
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Financial Information (Unaudited):
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1997................ F-2
Pro Forma Condensed Consolidated Statements of Income for the three months ended
March 31, 1997 and the year ended December 31, 1996.............................. F-5
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
Consolidated Financial Statements
Report of Independent Auditors..................................................... F-9
Report of Independent Auditors..................................................... F-10
Consolidated Balance Sheets as of March 31, 1997 (unaudited) December 31, 1996 and
1995............................................................................. F-11
Consolidated Statements of Income for the three months ended March 31, 1997 and
1996 (unaudited) and for the years ended December 31, 1996 and 1995, the period
from February 12, 1994 through December 31, 1994 and the period from January 1,
1994 through February 11, 1994................................................... F-12
Consolidated Statements of Changes in Shareholders' Equity for the three months
ended March 31, 1997 and 1996 (unaudited) and for the years ended December 31,
1996 and 1995, the period from February 12, 1994 through December 31, 1994 and
the period from January 1, 1994 through February 11, 1994........................ F-13
Consolidated Statements of Cash Flows for the three months ended March 31, 1997 and
1996 (unaudited) and for the years ended December 31, 1996 and 1995, the period
from February 12, 1994 through December 31, 1994 and the period from January 1,
1994 through February 11, 1994................................................... F-14
Notes to Consolidated Financial Statements......................................... F-16
Schedule III:
Real Estate Investment and Accumulated Depreciation................................ F-34
All other schedules have been omitted since the required information is either
included in the Consolidated Financial Statements, not present, or not present in
amounts sufficient to require submission of the schedule.
THE ACQUIRED PROPERTIES
Report of Independent Certified Public Accountants................................. F-35
Combined Statements of Revenues and Certain Expenses............................... F-36
Notes to Combined Statements of Revenues and Certain Expenses...................... F-37
ANNAPOLIS MALL (AN ENTITY FOR WHICH WESTFIELD AMERICA, INC. HAS A LETTER OF INTENT TO
ACQUIRE A 70% INTEREST)
Report of Independent Auditors..................................................... F-39
Statement of Revenues and Certain Expenses......................................... F-40
Notes to Statement of Revenues and Certain Expenses................................ F-41
GARDEN STATE PLAZA LIMITED PARTNERSHIP (THE OWNER OF GARDEN STATE PLAZA AND THE
ENTITY IN WHICH WESTFIELD AMERICA, INC. WILL HAVE AN INDIRECT 50% SECURITY INTEREST
IN BY WAY OF MAKING A $145 MILLION PARTICIPATING SECURED LOAN)
Report of Independent Certified Public Accountants................................. F-43
Statements of Revenues and Certain Expenses........................................ F-44
Notes to Statements of Revenues and Certain Expenses............................... F-45
</TABLE>
F-1
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED)
(IN THOUSANDS)
The unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as
if the net proceeds of Westfield America, Inc.'s (the "Company") initial public
offering of 18,000 shares of common stock par value $.01 per share (the "Common
Stock"), the sale of 301.5 shares of Series B Preferred Shares and the proceeds
from the Company's sale of the 1997 WAT Warrants were applied as described in
"Use of Proceeds" as of March 31, 1997, assuming for this purpose that (i) the
Outside Partner's interest in Annapolis Mall is acquired for $133,000, (ii) the
Wheaton Acquisition is made for $52,500, (iii) the Garden State Plaza Loan in
the amount of $145,000 is made, (iv) options to purchase ordinary shares are
purchased from Westfield Holdings Limited, an affiliate, for $15,300 (Aus. $19.6
million), (v) 40,327 is borrowed under the Company's unsecured line of credit,
(vi) the Common Stock is sold in the Offerings at an assumed price of $16.75 per
share, and the over-allotment options for the Offerings are not exercised, the
Series B Preferred Shares are issued and the 1997 WAT Warrants are sold and
(vii) the Company is recapitalized and the Acquired Properties are acquired as
of March 31, 1997 as described in Notes 1 and 9 to the Consolidated Financial
Statements.
The unaudited Pro Forma Condensed Consolidated Balance Sheet should be read
in conjunction with the Consolidated Financial Statements of Westfield America,
Inc. and Subsidiaries and Notes thereto included elsewhere herein. In the
Company's opinion, all adjustments necessary to reflect the effects of the
consummation of the Offerings, the application of the net proceeds therefrom and
from the concurrent transactions have been made.
The unaudited Pro Forma Condensed Consolidated Balance Sheet is not
necessarily indicative of what the actual financial position of the Company
would have been at March 31, 1997, nor does it purport to present the future
financial position of the Company.
F-2
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, 1997
---------------------------------------
PRO FORMA PRO FORMA
HISTORICAL(A) ADJUSTMENTS CONSOLIDATED
------------ ----------- ------------
<S> <C> <C> <C>
ASSETS:
Net investment in real estate....................................... $ 1,305,462 $ 330,500(b) $1,635,962
Cash and cash equivalents........................................... 2,647 2,647
Tenant accounts receivable.......................................... 21,768 -- 21,768
Deferred expenses and other assets, net............................. 9,125 15,300(c) 24,425
------------ ----------- ------------
Total assets.................................................... $ 1,339,002 $ 345,800 $1,684,802
------------ ----------- ------------
------------ ----------- ------------
LIABILITIES:
Mortgage notes payable.............................................. $ 783,285 $ 40,327(d) $ 823,612
Accounts payable, accrued expenses and other liabilities............ 29,681 -- 29,681
Distribution payable................................................ 1,952 -- 1,952
Minority interest................................................... -- -- --
------------ ----------- ------------
Total liabilities 814,918 40,327 855,245
------------ ----------- ------------
SHAREHOLDERS' EQUITY:
Common stock........................................................ 529 180(e) 709
Preferred stock..................................................... 94,000 30,150(e) 124,150
Paid-in-capital..................................................... 424,001 275,143(e) 699,144
Retained earnings................................................... 5,554 -- 5,554
------------ ----------- ------------
Total equity........................................................ 524,084 305,473 829,557
------------ ----------- ------------
Total liabilities and shareholders' equity...................... $ 1,339,002 $ 345,800 $1,684,802
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
NOTES (IN THOUSANDS)
(a) Reflects the Westfield America, Inc. and Subsidiaries Consolidated Balance
Sheet at March 31, 1997.
(b) Increase reflects
<TABLE>
<S> <C>
Garden State Plaza Loan....................................... $ 145,000
Annapolis Acquisition......................................... 133,000
Wheaton Acquisition........................................... 52,500
---------
$ 330,500
---------
---------
</TABLE>
(c) Increase reflects investment in Westfield Holdings Warrants.
(d) Increase reflects additional borrowing under the unsecured corporate line of
credit.
(e) Increase reflects the issuance of 18,000 shares of Common Stock, the 1997
WAT Warrant and 301.5 shares of Series B Preferred Shares (at its
liquidation amount) offset by $26,177 of estimated underwriting costs and
other expenses.
F-3
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS)
The unaudited Pro Forma Condensed Consolidated Statements of Income are
presented as if the net proceeds of Westfield America, Inc.'s (the "Company")
initial public offering of 18,000 shares of common stock par value $0.01 per
share (the "Common Stock"), the sale of 301.5 shares of Series B Preferred
Shares and the proceeds from the Company's sale of the 1997 WAT Warrants were
applied as described in "Use of Proceeds" as of the beginning of the period
presented, assuming for this purpose that (i) the Outside Partner's interest in
Annapolis Mall is acquired for $133,000 (ii) the Wheaton Acquisition is made for
$52,500, (iii) the Garden State Plaza Loan in the amount of $145,000 is made,
(iv) options to purchase ordinary shares are purchased from Westfield Holdings
Limited, an affiliate, for $15,300 (Aus $19.6 million) (v) $40,327 is borrowed
under the Company's unsecured line of credit (vi) the Common Stock is sold in
the Offerings at an assumed price of $16.75 per share, and the over-allotment
option for the Offerings is not exercised, the Series B Preferred Shares and the
1997 WAT Warrants are sold and (vii) the Company is recapitalized and the
Acquired Properties are acquired as of January 1, 1996, as described in Notes 1
and 9 to the Consolidated Financial Statements.
The unaudited Pro Forma Condensed Consolidated Statement of Income should be
read in conjunction with the Consolidated Financial Statements of Westfield
America, Inc. and Subsidiaries and Notes thereto included elsewhere herein. In
the Company's opinion, all adjustments necessary to reflect the effects of the
consummation of the Offerings, the application of the net proceeds therefrom and
from the concurrent transactions, have been made.
The unaudited Pro Forma Condensed Consolidated Statement of Income is not
necessarily indicative of what the actual results of operations of the Company
would have been assuming the Offering and related application of net Offering
proceeds had been consummated as of the beginning of the year presented, nor do
they purport to present the future operations of the Company.
F-4
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
---------------------------------------
PRO FORMA PRO FORMA
HISTORICAL(A) ADJUSTMENTS CONSOLIDATED
------------ ----------- ------------
<S> <C> <C> <C>
REVENUES:
Minimum rents and percentage rents.................................. $ 32,728 $ 6,899(b) $ 39,627
Tenant recoveries and service fee income............................ 14,175 2,232(b) 16,407
------------ ----------- ------------
Total revenue..................................................... 46,903 9,131 56,034
EXPENSES:
Operating........................................................... 14,763 2,337(b) 17,100
Management fees..................................................... 928 345(b) 1,273
Advisory fee (not payable) (c)...................................... -- -- (c) --
General and administrative.......................................... 236 -- 236
Depreciation and amortization....................................... 11,539 1,289(b) 12,828
------------ ----------- ------------
OPERATING INCOME...................................................... 19,437 5,160 24,597
Interest expense, net............................................... (12,860) (706)(d) (13,566)
Equity in income of unconsolidated real estate partnerships......... 1,293 (792)(e) 501
Interest and other income........................................... 312 3,325(f) 3,637
------------ ----------- ------------
Income before minority interest..................................... 8,182 6,987 15,169
Minority interest in earnings of unconsolidated real estate
partnerships...................................................... (218) (713)(g) (931)
------------ ----------- ------------
NET INCOME............................................................ $ 7,964 $ 6,274 $ 14,238
------------ ----------- ------------
------------ ----------- ------------
Income allocable to preferred shares................................ $ 1,998 $ 2,638
Income allocable to common shares................................... 5,966 11,600
------------ ------------
$ 7,964 $ 14,238
------------ ------------
------------ ------------
EARNINGS PER SHARE (H)................................................ $ 0.11 $ 0.16
------------ ------------
------------ ------------
</TABLE>
F-5
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
---------------------------------------
PRO FORMA PRO FORMA
HISTORICAL(A) ADJUSTMENTS CONSOLIDATED
------------ ----------- ------------
<S> <C> <C> <C>
REVENUES:
Minimum rents and percentage rents.................................. $ 110,384 $ 45,534(b) $ 155,918
Tenant recoveries and service fee income............................ 45,705 18,449(b) 64,154
------------ ----------- ------------
Total revenue..................................................... 156,089 63,983 220,072
EXPENSES:
Operating........................................................... 49,000 22,783(b) 71,783
Management fees..................................................... 3,495 2,067(b) 5,562
Advisory fee (not payable) (c)...................................... 2,600 (2,600)(c) --
General and administrative.......................................... 808 -- 808
Depreciation and amortization....................................... 38,033 10,254(b) 48,287
------------ ----------- ------------
OPERATING INCOME...................................................... 62,153 31,479 93,632
Interest expense, net............................................... (40,233) (12,807)(d) (53,040)
Equity in income of unconsolidated real estate partnerships......... 3,063 (3,008)(e) 55
Interest and other income........................................... 776 12,736(f) 13,512
------------ ----------- ------------
Income before minority interest..................................... 25,759 28,400 54,159
Minority interest in earnings of unconsolidated real estate
partnerships...................................................... (1,063) (1,943)(g) (3,006)
------------ ----------- ------------
NET INCOME............................................................ $ 24,696 $ 26,457 $ 51,153
------------ ----------- ------------
------------ ----------- ------------
Income allocable to preferred shares................................ $ 4,264 $ 10,553
Income allocable to common shares................................... 20,432 40,600
------------ ------------
$ 24,696 $ 51,153
------------ ------------
------------ ------------
EARNINGS PER SHARE (H)................................................ $ 0.42 $ 0.57
------------ ------------
------------ ------------
</TABLE>
F-6
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
NOTES (IN THOUSANDS EXCEPT PER SHARE AMOUNTS):
(a) Reflects the Westfield America, Inc. and Subsidiaries Consolidated Statement
of Income for the three months ended March 31, 1997 and the year ended
December 31, 1996.
(b) Reflects the operations of (i) Acquired Properties, which were acquired on
July 1, 1996, for the period January 1, 1996 through June 30, 1996, and (ii)
the operations of Annapolis Mall and Wheaton Acquisition as if these
properties were acquired at the beginning of each period presented as
follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Revenues:
Minimum rents and percentage rents...................... $ 6,899 $ 45,534
Tenant recoveries....................................... 2,232 18,449
Expenses:
Operating............................................... 2,337 22,783
</TABLE>
Additionally, management fees were adjusted to reflect a payment equal to 5%
of the minimum rent and percentage rent, and depreciation expense was
adjusted to reflect the new basis of the properties based on purchase price.
(c) Effective July 1996, in conjunction with a reorganization of the Company, a
separate Advisory Agreement was entered into between the Company and the
Advisor which provided for an Advisory Fee. The Advisory Fee was calculated
as 55 basis points of the Company's net assets and was waived for the period
July 1, 1996 through December 31, 1997. In connection with the Offerings,
the Advisory Agreement will be amended and the Advisory Fee will be modified
to be the lower of (i) 55 basis points of the Company's net assets or (ii) a
base amount of 25% of the Company's FFO, as defined, in excess of $114.6
million. Since the Company's pro forma FFO are below the $114.6 million base
amount, no Advisory Fee was earned on a pro forma basis.
(d) Reflects the increase in interest expense resulting from the following:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Additional interest expense related to adjusted debt
balances of Acquired Properties......................... $ -- $ (9,984)
Increase in interest expense resulting from borrowings
under the unsecured corporate line of credit at 7%...... (706) (2,823)
------- --------
Net increase in interest expense........................ $ (706) $ (12,807)
------- --------
------- --------
</TABLE>
(e) Reflects reduction in equity in income of unconsolidated real estate
partnerships due to consolidation of Annapolis Mall.
(f) Reflects interest and other income from:
<TABLE>
<S> <C> <C>
Garden State Plaza Loan........................ $ 3,082 $ 12,325
Annapolis Mall and Wheaton Acquisition......... 243 411
------------- -------
$ 3,325 $ 12,736
------------- -------
------------- -------
</TABLE>
(g) Represent increase in minority interest in earnings of unconsolidated real
estate partnerships related to 30% interest in the Wheaton Acquisition not
owned by the Company.
(h) Earnings per share are computed assuming the Offerings and the
Recapitalization of the Company were effective at the beginning of each
period presented. Weighted average number of shares outstanding during the
three months ended March 31, 1997 and the year ended December 31, 1996 for
the purpose of computing pro forma earnings per share were 71,206 shares and
71,481 shares respectively.
F-7
<PAGE>
REPORT OF INDEPENDENT AUDITORS
-------------------
To the Board of Directors
of Westfield America, Inc.:
We have audited the accompanying consolidated balance sheet of Westfield
America, Inc. and Subsidiaries formerly CenterMark Properties, Inc. (the
"Company") as of December 31, 1996 and the related consolidated statement of
income, shareholders' equity and cash flows for the year then ended (our audit
also includes the financial statement schedule on page F-33). These consolidated
financial statements and financial statement schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects the consolidated financial position of
Westfield America, Inc. and Subsidiaries as of December 31, 1996 and the
consolidated results of operations and cash flows for the year then ended in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth thereof.
Ernst & Young LLP
Los Angeles, California
February 28, 1997
F-8
<PAGE>
REPORT OF INDEPENDENT AUDITORS
-------------------
To the Board of Directors
of Westfield America, Inc.:
We have audited the accompanying consolidated balance sheet of Westfield
America, Inc. and Subsidiaries (the "Company") as of December 31, 1995 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the year ended December 31, 1995 and the periods from February
12, 1994 through December 31, 1994 and from January 1, 1994 through February 11,
1994. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects the consolidated financial position of
Westfield America, Inc. and Subsidiaries as of December 31, 1995 and the
consolidated results of its operations and its cash flows for the year ended
December 31, 1995 and the periods from February 12, 1994 through December 31,
1994 and from January 1, 1994 through February 11, 1994 in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Los Angeles, California
February 13, 1996, except for information as to
earnings per share, dividends per share and average shares outstanding,
for which the date is March 3, 1997.
F-9
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
MARCH 31, ------------ ----------
------------
1997
------------
(UNAUDITED)
<S> <C> <C> <C>
INVESTMENT IN REAL ESTATE:
Land.................................................................... $ 196,810 $ 196,810 $ 143,851
Buildings, improvements and equipment................................... 1,001,768 975,224 503,125
Less accumulated depreciation and amortization.......................... (121,533) (110,260) (52,657)
------------ ------------ ----------
Net property and equipment............................................ 1,077,045 1,061,774 594,319
Construction in progress................................................ 33,135 49,821 5,447
Investments in unconsolidated real estate partnerships.................. 103,422 106,488 135,484
Direct financing leases receivable...................................... 91,860 92,351 94,234
------------ ------------ ----------
Net investment in real estate......................................... 1,305,462 1,310,434 829,484
CASH AND CASH EQUIVALENTS................................................. 2,647 6,729 --
RESTRICTED CASH........................................................... -- -- 100
ACCOUNTS AND NOTES RECEIVABLE (net of allowance of $6,305, $6,441 and
$4,187 in 1997, 1996 and 1995, respectively)............................ 21,768 19,716 9,661
DEFERRED EXPENSES AND OTHER ASSETS, NET................................... 9,125 7,691 5,461
------------ ------------ ----------
Total assets.......................................................... $ 1,339,002 $ 1,344,570 $ 844,706
------------ ------------ ----------
------------ ------------ ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Notes payable........................................................... $ 783,285 $ 770,625 $ 426,781
Accounts payable and accrued expenses................................... 29,681 33,380 23,903
Distribution payable.................................................... 1,952 21,981 13,603
Minority interest....................................................... -- 54 --
------------ ------------ ----------
Total liabilities..................................................... 814,918 826,040 464,287
------------ ------------ ----------
COMMITMENTS AND CONTINGENCIES............................................. -- -- --
SHAREHOLDERS' EQUITY (NOTE 9):
Common stock............................................................ 529 529 453
Preferred stock......................................................... 94,000 94,000 --
Additional paid-in capital.............................................. 424,001 424,001 379,966
Retained earnings....................................................... 5,554 -- --
------------ ------------ ----------
Total shareholders' equity............................................ 524,084 518,530 380,419
------------ ------------ ----------
Total liabilities and shareholders' equity............................ $ 1,339,002 $ 1,344,570 $ 844,706
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-10
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
-------------------
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
THREE MONTHS ENDED YEAR ENDED FEBRUARY 12, JANUARY 1,
------------------------ ---------------------------- 1994 THROUGH 1994 THROUGH
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, FEBRUARY 11,
1997 1996 1996 1995 1994 1994
----------- ----------- ------------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Minimum rents................ $ 30,742 $ 20,967 $ 106,393 $ 75,154 $ 58,750 $ 7,309
Tenant recoveries............ 14,055 8,987 44,423 32,335 32,023 4,036
Percentage rents............. 1,986 1,572 3,991 1,690 2,470 467
Service fee income from
unconsolidated real estate
partnerships............... 120 475 1,282 2,148 6,213 957
----------- ----------- ------------- ------------- ------------- -------------
Total revenues............. 46,903 32,001 156,089 111,327 99,456 12,769
----------- ----------- ------------- ------------- ------------- -------------
EXPENSES:
Operating--recoverable....... 13,771 8,916 44,487 31,184 29,477 4,326
Other operating.............. 992 721 4,513 3,061 -- --
Management fees.............. 928 728 3,495 1,828 -- --
Advisory fee (not payable)... -- -- 2,600 -- -- --
General and administrative... 236 153 808 776 7,129 2,543
Depreciation and
amortization............... 11,539 8,027 38,033 28,864 24,897 3,605
----------- ----------- ------------- ------------- ------------- -------------
Total expenses............. 27,466 18,545 93,936 65,713 61,503 10,474
----------- ----------- ------------- ------------- ------------- -------------
OPERATING INCOME............... 19,437 13,456 62,153 45,614 37,953 2,295
INTEREST EXPENSE, NET.......... (12,860) (7,482) (40,233) (27,916) (24,156) (481)
OTHER INCOME:
Equity in income (losses) of
unconsolidated real estate
partnerships............... 1,293 733 3,063 3,359 (386) (2,151)
Interest and other income.... 312 230 776 789 1,830 340
----------- ----------- ------------- ------------- ------------- -------------
INCOME BEFORE MINORITY
INTEREST..................... 8,182 6,937 25,759 21,846 15,241 3
MINORITY INTEREST IN EARNINGS
OF CONSOLIDATED REAL ESTATE
PARTNERSHIP.................. (218) (230) (1,063) -- -- --
----------- ----------- ------------- ------------- ------------- -------------
NET INCOME..................... $ 7,964 $ 6,707 $ 24,696 $ 21,846 $ 15,241 $ 3
----------- ----------- ------------- ------------- ------------- -------------
----------- ----------- ------------- ------------- ------------- -------------
Net Income allocable to
preferred shares............. $ 1,998 $ 1 $ 4,264 $ 3 $ -- $ --
Net Income allocable to common
shares....................... 5,966 6,706 20,432 21,843 15,241 3
----------- ----------- ------------- ------------- ------------- -------------
$ 7,964 $ 6,707 24,696 21,846 15,241 3
----------- ----------- ------------- ------------- ------------- -------------
----------- ----------- ------------- ------------- ------------- -------------
Earnings per share............. $ 0.11 $ 0.15 $ 0.42 $ 0.48 $ 0.34
DISTRIBUTIONS DECLARED PER
COMMON SHARE................. $ 0.01 $ 0.06 $ 1.51 $ 1.68 $ 0.81
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES................ 53,481 45,109 49,383 44,978 44,902
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-11
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
-------------------
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PREFERRED PAID-IN RETAINED SHAREHOLDERS'
STOCK STOCK CAPITAL EARNINGS EQUITY
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1994............................. $ 5,200 $ -- $ 657,630 $ 7,137 $ 669,967
Net income for the period from January 1, 1994 through
February 11, 1994................................... -- -- -- 3 3
Capital contributions from Prudential................. -- -- 48,000 -- 48,000
Distributions paid to Prudential...................... -- -- (460,558) (7,140) (467,698)
Distribution of partnership interest to Prudential.... -- -- (4,888) -- (4,888)
Capital contributions from GWG........................ -- -- 32,030 -- 32,030
----------- ----------- ----------- ----------- -------------
BALANCES, FEBRUARY 12, 1994........................... 5,200 -- 272,214 -- 277,414
Adjustment to reflect cost allocated to GWG's
investment in CenterMark Properties, Inc............ (5,200) -- 179,826 -- 174,626
----------- ----------- ----------- ----------- -------------
BALANCES, FEBRUARY 12, 1994, as adjusted.............. -- -- 452,040 -- 452,040
Stock split, 8980.3983 shares to 1.................... 451 -- (451) -- --
Net income for the period from February 12, 1994
through December 31, 1994........................... -- -- -- 15,241 15,241
Distributions on common stock......................... -- -- (21,258) (15,241) (36,499)
----------- ----------- ----------- ----------- -------------
BALANCES, DECEMBER 31, 1994........................... 451 -- 430,331 -- 430,782
Net income for the year ended December 31, 1995....... -- -- -- 21,846 21,846
Issuance of common stock.............................. -- -- 3,170 -- 3,170
Issuance of preferred stock........................... 2 -- 50 -- 52
Distributions on common stock......................... -- -- (53,585) (21,843) (75,428)
Distributions on preferred stock...................... -- -- -- (3) (3)
----------- ----------- ----------- ----------- -------------
BALANCES, DECEMBER 31, 1995........................... 453 -- 379,966 -- 380,419
Net income for the year ended December 31, 1996....... -- -- -- 24,696 24,696
Issuance of common stock.............................. 212 -- 342,109 -- 342,321
Cost of issuance of stock............................. -- -- (29,000) -- (29,000)
Repurchase of common stock............................ (136) -- (217,864) -- (218,000)
Issuance of preferred stock........................... -- 94,000 -- -- 94,000
Advisory fee (not payable)............................ -- -- 2,600 -- 2,600
Distributions on common stock......................... -- -- (53,810) (20,432) (74,242)
Distributions on preferred stock...................... -- -- -- (4,264) (4,264)
----------- ----------- ----------- ----------- -------------
BALANCES, DECEMBER 31, 1996........................... 529 94,000 424,001 -- 518,530
Net income for the three months ended March 31, 1997
(unaudited)......................................... -- -- -- 7,964 7,964
Distributions on common stock (unaudited)............. -- -- -- (412) (412)
Distributions on preferred stock (unaudited).......... -- -- -- (1,998) (1,998)
----------- ----------- ----------- ----------- -------------
BALANCES, MARCH 31, 1997 (UNAUDITED)................ $ 529 $ 94,000 $ 424,001 $ 5,554 $ 524,084
----------- ----------- ----------- ----------- -------------
----------- ----------- ----------- ----------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-12
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
-------------------
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
THREE MONTHS ENDED FEBRUARY 12, JANUARY 1,
------------------------ YEAR ENDED 1994 THROUGH 1994 THROUGH
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, FEBRUARY 11,
1997 1996 1996 1995 1994 1994
----------- ----------- ------------ ------------ ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income................... $ 7,964 $ 6,707 $ 24,696 $ 21,846 $ 15,241 $ 3
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation............... 11,273 7,828 37,130 28,296 24,405 3,421
Amortization............... 349 393 1,466 854 492 184
Equity in (income) losses
of unconsolidated real
estate partnership....... (1,293) (733) (3,063) (3,359) 386 2,151
Minority interest in
earnings of consolidated
real estate
partnership.............. 218 230 1,063 -- -- --
Advisory fee (not
payable)................. -- 2,600 -- -- --
Changes in assets and
liabilities:
Accounts receivable, net... (2,079) (2,162) (5,510) 2,525 41 (1,464)
Deferred expenses and other
assets................... (1,375) (387) (580) (605) (795) (3,473)
Accounts payable and
accrued expenses......... (3,479) (62) (1,914) (6,567) (19,105) 11,804
Deferred income taxes...... (8) (6) -- -- -- (7,332)
----------- ----------- ------------ ------------ ------------- -------------
Net cash flows provided by
operating activities....... 11,570 11,808 55,888 42,990 20,665 5,294
----------- ----------- ------------ ------------ ------------- -------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures......... (10,266) (5,522) (44,084) (12,787) (26,782) (5,304)
Purchase of unconsolidated
partnership interest....... -- -- -- (2,000) -- --
Purchase of WPI, net of cash
acquired................... -- -- (62,794) -- -- --
Cash distributions received
from unconsolidated real
estate partnerships........ 4,359 1,717 10,786 16,558 29,961 267
Cash and cash equivalents of
consolidated real estate
partnership................ -- 2,389 2,389 -- -- --
Repayment of direct financing
leases receivable.......... 491 459 1,883 1,786 1,360 --
Notes receivable advances.... -- -- -- (268) (40) --
Notes receivable
repayments................. 27 24 107 186 815 119
Decrease (increase) in
investments................ -- -- -- 248 6,432 (709)
Decrease (increase) in
restricted cash............ -- 100 100 1,318 15,612 (17,030)
Repayment of advances made to
unconsolidated real estate
partnerships............... -- -- -- 435 300 --
Capital contribution to
unconsolidated real estate
partnerships............... -- -- -- -- (4,102) (844)
----------- ----------- ------------ ------------ ------------- -------------
Net cash flows (used in)
provided by investing
activities................. (5,389) (833) $ (91,613) $ 5,476 $ 23,556 $ (23,501)
----------- ----------- ------------ ------------ ------------- -------------
</TABLE>
F-13
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
-------------------
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
THREE MONTHS ENDED FEBRUARY 12, JANUARY 1,
------------------------ YEAR ENDED 1994 THROUGH 1994 THROUGH
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, FEBRUARY 11,
1997 1996 1996 1995 1994 1994
----------- ----------- ------------ ------------ ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of
common stock............... $ -- $ -- $ 340,405 $ -- $ -- $ 32,030
Proceeds from issuance of
preferred stock............ -- -- 94,000 52 -- --
Purchase stock from common
stockholders............... -- -- (218,000) -- -- --
Stock issuance costs......... -- -- (29,000) -- -- --
Cash distributions paid to
preferred shareholders..... (2,241) (1) (2,070) (3) -- --
Cash distributions paid to
common stockholders........ (20,198) (17,595) (69,568) (61,825) (36,499) --
Shareholder recontribution of
distributions.............. -- 1,759 3,426 3,170 -- --
Decrease in minority interest
in consolidated real estate
partnership................ (484) -- (316) -- -- --
Proceeds from notes
payable.................... 22,755 23,381 114,172 16,700 -- 413,681
Principal payments on notes
payable.................... (10,095) (17,054) (190,595) (20,816) (31,489) --
Capital contributions from
Prudential................. -- -- -- -- -- 48,000
Cash distributions paid to
Prudential................. -- -- -- -- -- (467,698)
----------- ----------- ------------ ------------ ------------- -------------
Net cash flows (used in)
provided by financing
activities................. (10,263) (9,510) 42,454 (62,722) (67,988) 26,013
----------- ----------- ------------ ------------ ------------- -------------
Net (decrease) increase in
cash and cash
equivalents................ (4,082) 1,465 6,729 (14,256) (23,767) 7,806
CASH AND CASH EQUIVALENTS,
beginning of period.......... 6,729 -- -- 14,256 38,023 30,217
----------- ----------- ------------ ------------ ------------- -------------
CASH AND CASH EQUIVALENTS, end
of period.................... $ 2,647 $ 1,465 $ 6,729 $ -- $ 14,256 $ 38,023
----------- ----------- ------------ ------------ ------------- -------------
----------- ----------- ------------ ------------ ------------- -------------
</TABLE>
Supplemental cash flow information provided in Note 10.
The accompanying notes are an intergral part of the consolidated financial
statements
F-14
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
1. ORGANIZATION AND CHANGE IN OWNERSHIP:
Westfield America, Inc. ("WEA" or the "Company"), formerly CenterMark
Properties, Inc., is primarily in the business of owning, operating, leasing,
developing, redeveloping and acquiring super regional and regional retail
shopping centers in major metropolitan areas in the United States. On February
11, 1994, 100% of the stock of WEA, formerly May Centers, Inc., and
subsidiaries, was acquired from the Prudential Insurance Company of America
("Prudential") through a stock purchase agreement ("Stock Purchase Agreement")
between Prudential and GGP Limited Partnership ("GGP"), Westfield U.S.
Investments Pty. Limited ("WUSI"), a wholly owned subsidiary of Westfield
Holdings Limited ("WHL"), and five real estate investment funds sponsored by
Goldman Sachs & Co. ("Goldman"). The purchasers are collectively referred to as
"GWG." The cash purchase price including transaction costs of $14,830 was
approximately $420,000. In conjunction with the closing GWG contributed $32,030
to WEA, a portion of which was used to pay off revolving credit borrowings.
Also, in conjunction with the acquisition, the Company entered into an
agreement with CenterMark Management Company ("CMC"), a 50/50 partnership
between General Growth CMP, L.P. and Westfield Services, Inc., a wholly owned
subsidiary of WHL, to manage the properties in WEA's portfolio. Commencing
January 1, 1995, CMC subcontracted such management rights to Westfield
Corporation, Inc. ("WCI"), a wholly owned subsidiary of WHL. In July 1996, WCI
purchased General Growth CMP L.P.'s partnership interest in CMC. In
consideration for providing these management services, CMC will be reimbursed
certain recoverable property operating costs and receive gross fees of 5% of
minimum and percentage rents.
As part of the Stock Purchase Agreement, the Company elected Real Estate
Investment Trust ("REIT") status for income tax purposes.
The above acquisition was accounted for as a purchase. Accordingly, the cost
of the acquisition was allocated to the assets acquired and liabilities assumed
based upon their respective fair values. The results of operations and the
financial position of the Company reflect the revaluation of the assets and
liabilities of CMP to equal GWG's cost at February 11, 1994.
In 1995, WUSI and WCI, both wholly owned subsidiaries of WHL acquired 25% of
GGP's interest in the Company and concurrently acquired options to purchase the
remaining combined 50% interest in the Company held by GGP and Goldman.
On July 1, 1996, the Company was recapitalized (the "Recapitalization")
whereby the Company's common stock split 8,980.3983 shares to one and the
Company sold additional shares of both common and preferred stock to U.S. and
foreign investors (see Note 9) for $434,405.
In conjunction with the Recapitalization, the Company acquired the options
to acquire GGP and Goldman's interest in the Company and agreed to exercise such
options at two separate closing dates. On the first closing date, July 1, 1996,
the Company used $218,000 of the Recapitalization proceeds to repurchase 40% of
GGP's interest and 90% of Goldman's interest in the Company. On the second
closing date, January 2, 1997, the Company purchased GGP's remaining interest in
the Company for $130,500 from proceeds received from the sale of shares to an
affiliate of WHL. The Recapitalization does not result in a sufficient change in
ownership to warrant purchase accounting.
On July 1, 1996, the Company used $62,794 of the Recapitalization proceeds
to acquire indirect ownership of three regional shopping centers, Connecticut
Post Mall, South Shore Mall and Trumbull
F-15
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
1. ORGANIZATION AND CHANGE IN OWNERSHIP: (CONTINUED)
Shopping Park (the "Acquired Properties") through the acquisition of
substantially all the outstanding stock of Westland Properties, Inc., a company
whose business consisted of operating the Acquired Properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION:
The Company conducts its business through its divisions, wholly-owned
subsidiaries and affiliates. The consolidated financial statements include the
accounts of the Company and all subsidiaries over which the Company is able to
exercise significant control. The Company does not consider itself to be in
control when the other partners have important approval rights over major
actions. Investments as general and limited partner in non-controlled
partnerships are accounted for using the equity method. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The accompanying unaudited financial statements for the three month periods
ended March 31, 1997 and 1996 have been prepared in accordance with generally
accepted accounting principles. In the opinion of management, such financial
statements reflect all adjustments considered necessary for a fair presentation
of the results of the respective interim periods and all such adjustments are of
a normal, recurring nature.
INVESTMENT IN REAL ESTATE:
Buildings, improvements and equipment are stated at cost. Costs related to
the acquisition, development, construction and improvement of properties are
capitalized. Interest costs and real estate taxes incurred during construction
periods are capitalized and amortized on the same basis as the related assets.
Expenditures for repairs and maintenance are charged to expense when incurred.
Certain repair and maintenance costs are chargeable to the tenants as provided
in their leases. Such reimbursements are included in recoverable expenses in the
Consolidated Statements of Income. Depreciation of property is computed on the
straight-line method over the estimated useful lives of the property, which
generally range from 3 to 50 years.
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," which requires impairment of losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. In this case an impairment loss is
recognized to the extent that the carrying amount exceeds the fair value of the
assets. Statement 121 also addresses the accounting for long-lived assets that
are expected to be disposed of. Such assets are reported at the lower of their
carrying amount or fair value, less cost to sell. The Company adopted Statement
121 in 1996 and the adoption had no effect.
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid investments with an original
maturity of three months or less at date of purchase to be cash equivalents.
F-16
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
RESTRICTED CASH:
Restricted cash at December 31, 1995 represented remaining funds for the
completion of the Westland Center redevelopment.
REVENUE RECOGNITION:
Shopping center space is generally leased to specialty retail tenants under
leases which are accounted for as operating leases. Minimum rent revenues are
recognized on a straight-line basis over the respective lease term. Percentage
rents are recognized on an accrual basis as earned. Recoveries from tenants are
recognized as income in the period the applicable costs are accrued.
INTEREST RATE SWAP CONTRACTS
In the normal course of business the Company enters into interest rate swap
contracts to reduce its exposure to fluctuations in interest rates. Net interest
differentials to be paid or received related to these swap contracts are accrued
as incurred or earned. Any gain or loss from terminating swap contract
transactions will be deferred and recognized over the original swap contract
term as a yield adjustment to interest expense of the underlying debt. There
were no terminations of swap contracts during the year ended December 31, 1996.
When the underlying debt matures or is extinguished any unamortized gain or loss
is recognized at that time.
ACCOUNTS AND NOTES RECEIVABLE:
Accounts and notes receivable include amounts billed to tenants, deferred
rent receivables arising from straight-lining of rents and accrued recoveries
from tenants. Management periodically evaluates the collectibility of these
receivables and adjusts the allowance for doubtful accounts to reflect the
amounts estimated to be uncollectible.
DEFERRED EXPENSES AND OTHER ASSETS:
Deferred expenses and other assets include costs associated with notes
payable, tenant leases and prepaid expenses. Costs associated with obtaining
notes payable are amortized on a straight-line basis over the term of the
related notes payable, which approximates the effective interest rate method.
Direct costs related to leasing activities are capitalized and amortized over
the initial term of the new lease.
LEASE TERMINATIONS:
Included in accounts payable and accrued expenses are lump sum payments
received from tenants to terminate their lease. Income received from tenants for
early lease termination is deferred and amortized over the term of the original
lease unless the space is re-leased to a new tenant, at which time the remaining
deferred income is recognized. The unamortized costs of improvements pertaining
to terminated leases are expensed in the period of termination unless the
improvements can be used by the replacement tenant.
F-17
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
EARNINGS PER SHARE:
Net income and dividend declared per common share is calculated by dividing
net income applicable to common stock (net income less dividend requirements of
preferred stock) by the weighted average number of shares of common stock and
common stock equivalents outstanding. Common stock equivalents are represented
by a warrant to purchase common stock at $16.01 per share (Note 9). Net income
and dividends per share for the period January 1, 1994 through February 11, 1994
have not been presented as they are not meaningful given the change in capital
structure that occurred in conjunction with the February 11, 1994 acquisition.
INCOME TAXES:
In conjunction with the February 11, 1994 acquisition, the Company elected
REIT status for income tax purposes. As a REIT, the Company is required to
distribute at least 95% of its taxable income to shareholders and meet certain
asset and income tests as well as certain other requirements. As a REIT, the
Company will generally not be liable for federal and state income taxes,
provided it satisfies the necessary requirements.
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
3. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE PARTNERSHIPS:
As of December 31, 1996, the Company is a general and managing partner in
five real estate partnerships, a limited partner in one real estate partnership
and both a general and limited partner in one real estate partnership. As a
result of the February 11, 1994 acquisition, the carrying amount of investments
in unconsolidated real estate partnerships was adjusted to reflect the purchase
accounting adjustments described in Note 1. This adjustment is being amortized
on a straight-line basis over the useful life of the associated asset which
ranges from 15 to 24 years. The Company's interest in each partnership as of
December 31, 1996 is as follows:
<TABLE>
<CAPTION>
PERCENT
PROPERTY LOCATION INTEREST
- -------------------------------------------------------- -------------------------- -----------
<S> <C> <C>
Annapolis Mall.......................................... Annapolis, MD 30.0%
Meriden Square.......................................... Meriden, CT 50.0
Plaza Camino Real....................................... Carlsbad, CA 40.0
Topanga Plaza........................................... Canoga Park, CA 42.0
Vancouver Mall.......................................... Vancouver, WA 50.0
West Valley............................................. Canoga Park, CA 42.5
North County Fair....................................... Escondido, CA 45.0
</TABLE>
F-18
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
3. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE PARTNERSHIPS: (CONTINUED)
A summary of the condensed balance sheet and income statement information
for all unconsolidated real estate partnerships on a combined basis follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
CONDENSED BALANCE SHEET INFORMATION 1996 1995
- ------------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
Investment in real estate:
Land, building and improvements, at cost.................................... $ 487,571 $ 516,710
Less accumulated depreciation and amortization.............................. (167,020) (160,220)
Construction in progress.................................................... 1,115 6,984
----------- -----------
Net investment in real estate................................................. 321,666 363,474
Notes payable to affiliate.................................................... (1,156) --
Other notes payable........................................................... (226,619) (260,241)
Other assets and liabilities, net, and interest of other partners............. (50,977) (56,811)
----------- -----------
Net equity investment in unconsolidated real estate partnerships.............. 42,914 46,422
Adjustments to reflect cost allocated to GWG's investment..................... 63,574 78,100
Cost in excess of basis in the Mission Valley partnership interest acquired... -- 10,962
----------- -----------
Investments in unconsolidated real estate partnerships.................... $ 106,488 $ 135,484
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
FEBRUARY 12, JANUARY 1,
YEAR ENDED YEAR ENDED 1994 THROUGH 1994 THROUGH
CONDENSED STATEMENTS OF DECEMBER 31, DECEMBER 31, DECEMBER 31, FEBRUARY 11,
INCOME (LOSS) INFORMATION 1996 1995 1994 1994
- ---------------------------------------------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Total revenue....................................... $ 85,767 $ 95,359 $ 74,661 $ 13,734
Costs and expenses:
Operating, general and administrative expenses.... 27,975 32,549 30,537 9,156
Interest expense, net............................. 22,342 24,844 19,885 3,570
Depreciation and amortization..................... 21,263 22,525 20,081 3,766
------------ ------------ ------------- -------------
Net income (loss)................................. 14,187 15,441 4,158 (2,758)
Other partners' share of (income) loss.............. (7,049) (7,177) (2,647) 1,627
Adjustments to reflect the amortization of cost
allocated to GWG's and Prudential's investment in
CMP............................................... (4,075) (4,905) (1,897) (1,020)
------------ ------------ ------------- -------------
Equity in income (losses) of unconsolidated real
estate partnerships............................... $ 3,063 $ 3,359 $ (386) $ (2,151)
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
</TABLE>
Significant accounting policies used by unconsolidated real estate partnerships
are similar to those used by the Company.
F-19
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
3. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE PARTNERSHIPS: (CONTINUED)
On September 1, 1995, the Company increased its ownership interest in
Mission Valley Partnership from 50 percent to 75.8 percent.
On January 17, 1994, an earthquake occurred near Topanga Plaza. The cost of
the repairs was approximately $11,500 of which $865 remains to be spent at
December 31, 1996. The majority of this cost was recovered under the
Partnership's earthquake insurance policy after payment of the required
deductible of approximately $2,100. The Company's share of this deductible and
uninsured expenses along with the write off of certain leasehold improvements
was $1,512 and is included in equity in income (losses) of unconsolidated real
estate partnerships in 1994. In 1995, the Topanga Plaza Partnership received
insurance proceeds for business interruption caused by the 1994 earthquake. The
Company's share of these proceeds, previously unrecognized due to uncertainty,
was $1,358, and is included in equity in income (losses) of unconsolidated
partnerships in 1995. During 1996, the Topanga Plaza Partnership was reimbursed
by two of its major department store tenants for their pro-rata share of the
cost of repairs caused by the earthquake. The Company's share of these proceeds,
previously unrecognized due to uncertainty, is $216, and is included in equity
in income (losses) of unconsolidated partnerships in 1996.
In January 1994, the Company increased its ownership interest in Plaza
Camino Real from 5 percent to 40 percent and changed its management and leasing
fee agreements.
4. LEASES:
DIRECT FINANCING LEASES RECEIVABLE:
The Company owns certain properties that are leased to May Department Stores
Company ("May") under direct financing leases. The leases' initial terms expire
in September 2017, and may be renewed for up to 14 additional five year terms.
May has the option to purchase the property under these leases at fair market
value during the last 16 months of the initial term or any of the renewal option
terms.
As a result of the changes in ownership described in Note 1, the direct
financing leases receivable at February 11, 1994 were revalued based upon future
cash flows for these leases discounted at seven percent.
The direct financing leases receivable are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Minimum lease payments receivable..................................... $ 177,030 $ 185,460
Less unearned revenue................................................. (84,679) (91,226)
---------- ----------
Direct financing leases receivable.................................. $ 92,351 $ 94,234
---------- ----------
---------- ----------
</TABLE>
F-20
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
4. LEASES: (CONTINUED)
The future minimum rentals to be received by the Company on the direct
financing leases as of December 31, 1996, are as follows:
<TABLE>
<S> <C>
1997.............................................................. $ 8,430
1998.............................................................. 8,430
1999.............................................................. 8,430
2000.............................................................. 8,430
2001.............................................................. 8,430
Thereafter........................................................ 134,880
---------
$ 177,030
---------
---------
</TABLE>
In connection with the redevelopment plan at Eastland Shopping Center, the
Company exercised its option to purchase May's leasehold interest in its store
at Eastland in 1994.
PROPERTY RENTAL:
Substantially all of the property owned by the Company is leased to
third-party tenants under operating leases as of December 31, 1996. Lease terms
vary between tenants and some leases include percentage rental payments based on
sales volume.
Future minimum rental revenues under noncancelable operating leases as of
December 31, 1996, are as follows:
<TABLE>
<S> <C>
1997.............................................................. $ 93,229
1998.............................................................. 87,842
1999.............................................................. 83,394
2000.............................................................. 79,131
2001.............................................................. 71,550
Thereafter........................................................ 235,405
---------
$ 650,551
---------
---------
</TABLE>
These amounts do not include percentage rentals that may be received under
certain leases on the basis of tenant sales in excess of stipulated minimums.
5. ACCOUNTS AND NOTES RECEIVABLE:
At December 31, 1996 and December 31, 1995, accounts and notes receivable
include $367 and $429 of tenant notes receivable and $5,192 and $5,281 of other
notes receivable which primarily relate to property sales and which bear
interest at rates ranging from 7.0% to 8.5% and are due at various dates ranging
from 1997 to 2004.
F-21
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
6. DEFERRED EXPENSES AND OTHER ASSETS:
Deferred expenses and other assets are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Lease costs, net of accumulated amortization of $2,100 and $560 in 1996 and
1995, respectively....................................................... $ 4,354 $ 2,406
Loan costs, net of accumulated amortization of $881 and $286 in 1996 and
1995, respectively....................................................... 1,668 1,520
Other assets............................................................... 1,669 1,535
--------- ---------
$ 7,691 $ 5,461
--------- ---------
--------- ---------
</TABLE>
7. NOTES PAYABLE AND LINES OF CREDIT:
A summary of notes payable is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Collateralized nonrecourse notes to an insurance company, interest only payable monthly,
at 6.15% due in 1999.................................................................... $ 172,000 $ 172,000
Collateralized nonrecourse notes to an insurance company, interest only payable monthly,
at 6.51% due in 2001.................................................................... 167,000 167,000
Senior collateralized nonrecourse notes, interest only payable quarterly at 6.39% until
1997, thereafter principal and interest payable quarterly, due in 2004.................. 20,576 20,576
Senior collateralized nonrecourse notes bearing interest at 7.33%, $1,620 principal and
interest payable quarterly until 1997, interest only payable from 1997 until 2004,
principal and interest payable thereafter, due in 2014.................................. 56,429 58,705
Unsecured line of credit/collateralized project loan from a bank with a maximum commitment
of $50,000, interest only at LIBOR + 1.5% ($1,500 is at 8.25% and $3,500 is at 7.156% at
December 31, 1996) payable monthly, due in 1998......................................... 5,000 --
Collateralized recourse note to an insurance company, interest only payable monthly at
8.09%, due in 1999...................................................................... 15,000 --
Collateralized recourse construction loan payable to a bank, interest only at LIBOR + 1.5%
($1,000 is at 7.156% and $3,885 is at 7.094% at December 31, 1996) payable monthly, due
in 1998 with an option to extend to 2001................................................ 4,885 --
Collateralized non-recourse note payable to an insurance company interest at an effective
rate of 7.07%, $1,182 principal and interest payable monthly, due in 2000............... 144,959
Collateralized non-recourse note payable to a bank, interest only at LIBOR + 1% (6.5% at
December 31, 1996) payable quarterly, due in 2001....................................... 73,350 --
Collateralized non-recourse note payable to a bank, interest only at LIBOR + 1% (6.5% at
December 31, 1996) payable quarterly, due in 2001....................................... 73,450 --
</TABLE>
F-22
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
7. NOTES PAYABLE AND LINES OF CREDIT: (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Collateralized non-recourse construction loan payable to a bank with a maximum commitment
of $48,000, interest only payable monthly at LIBOR + 1.75% ($2,050 at 7.44% and $13,853
at 7.32% December 31, 1996) with borrowings totaling $22,073 fixed at 7.5% through
maturity, due in 1997 with an option to extend to 2000.................................. 37,976 --
Line of credit with a total commitment of $30,000 collateralized by a shopping center
property. Interest only payable monthly at prime or a LIBOR based rate. This line of
credit was repaid in 1996 and replaced with a $50 million line of credit from a bank as
previously disclosed.................................................................... -- 1,000
Collateralized non-recourse note, interest only payable monthly at the lower of prime + 1%
or 12% (9.5% at December 31, 1995), repaid in 1996...................................... -- 1,500
Collateralized note, principal of $3,000 plus accrued interest at prime due quarterly,
repaid in 1996.......................................................................... -- 6,000
---------- ----------
$ 770,625 $ 426,781
---------- ----------
---------- ----------
</TABLE>
Interest costs capitalized for the years ended December 31, 1996 and 1995
were $1,503 and $52, respectively. There was no capitalized interest in 1994.
Senior collateralized non-recourse notes totaling $77,005 and $79,281 at
December 31, 1996 and 1995, respectively, are collateralized by the related
direct financing leases receivable from The May Company.
The unsecured portion of the Company's line of credit, initially totaling
$50,000 is for general corporate purposes.
The annual maturities of notes payable as of December 31, 1996 are as
follows:
<TABLE>
<S> <C>
1997.............................................................. $ 6,539
1998.............................................................. 12,022
1999.............................................................. 194,542
2000.............................................................. 172,633
2001.............................................................. 321,842
Thereafter........................................................ 63,047
---------
$ 770,625
---------
---------
</TABLE>
Certain note payable agreements above provide restrictive covenants relating
to the maintenance of specified financial performance ratios such as minimum net
worth, debt service coverage ratio, loan to value, ownership percentages and
restrictions on future dividend payments. As of December 31, 1996, the Company
was in compliance with these covenants.
F-23
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
8. INTEREST RATE SWAP CONTRACTS:
At December 31, 1996, the Company had two swap agreements. Interest rate
swaps are contractual agreements between the Company and third parties to
exchange fixed and floating interest payments periodically without the exchange
of the underlying principal amounts (notional amounts). Notional amounts are
used to express the volume of interest rate swap contracts. In the unlikely
event that a counterparty fails to meet the terms of an interest rate swap
contact, the Company's exposure is limited to the interest rate differential on
the notional amount. The Company does not anticipate non-performance by any of
the counterparties. Under one of the swap agreements, which has a notional
amount of $125,000, the Company is credited interest at LIBOR and incurs
interest at a fixed rate of 5.75%. Under the second swap agreement, which has a
notional amount of $11,400, the Company incurs interest at LIBOR and is credited
interest at a fixed rate of 6.23%. Both swap agreements expire in 2000.
On November 27, 1996 and November 29, 1996, the Company completed structured
deferred interest rates swaps totaling $90 million notional amount, where the
Company will receive LIBOR and pay 6.125% for three years beginning February 11,
1999. Additionally, the counterparty received an option to extend the swaps for
an additional two years exercisable on November 12, 1997.
The fair value and unrealized gain of the interest rate swap contracts were
approximately $1,360 at December 31, 1996.
9. CAPITAL STOCK:
In conjunction with the acquisition of WEA at February 11, 1994, the Company
authorized 269,411,949 shares of $0.01 par value common stock of which
44,901,991 shares were issued. During 1995, WEA issued an additional 212,836
shares of common stock in conjunction with the recontribution of 10% of the July
1995 and October 1995 distribution, respectively. Additionally during 1995, the
Company authorized 200 shares of 7% non-cumulative, non-participating,
non-voting preferred stock with a par value of $1.00 of which 105 shares were
issued. During the six months ended June 30, 1996, the Company issued an
additional 169,370 shares of common stock in conjunction with the recontribution
of 10% and 5% of the December 1995 and March 1996 distributions, respectively.
In July 1996, the Company's Articles of Incorporation were amended. The
total number of shares of all classes of stock that the Company is authorized to
issue is 435,012,800.
In conjunction with the Recapitalization in July 1996, the Company's stock
split 8,980.3983 shares to one. In addition, Westfield America Trust ("WAT"), a
newly formed publicly traded Australian trust in which WHL has an ownership
interest, acquired 19,631,543 shares of Class B-1 common stock and a warrant to
purchase up to 6,246,096 shares of Class B-1 common stock at $16.01 per share,
all of which was exercisable at December 31, 1996. The Company received
$314,304, 940,000 WAT Special Options and 2,498,440 WAT Ordinary Options for the
issuance of this stock and warrants issued by the Company. In connection with
the sale of common and preferred stock, WEA designated the purchasers of such
stock to be the recipients of WAT Ordinary and Special Options, respectively.
The Company received additional proceeds totaling $26,101 from the sale of
1,623,985 shares of Class B-2 common stock, 6,300 shares of Class B-3 common
stock and 2,498,440 WAT Ordinary Options. The Company also received $94,000 upon
the sale of 940,000 shares of Series A Preferred Stock and sale of 940,000 WAT
special options.
F-24
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
9. CAPITAL STOCK: (CONTINUED)
The Company used a portion of the proceeds raised from the issuance of
common and preferred stock to repurchase 5,434,104 shares from GGP and 8,182,386
shares from Goldman for a total purchase price of $218,000. The cost associated
with the Recapitalization of the Company and issuance of new capital stock was
$29,000.
At December 31, 1996 and 1995, the total number of shares authorized, issued
and outstanding were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
DECEMBER 31, 1996 ---------------------------
--------------------------- NUMBER OF
NUMBER OF NUMBER OF NUMBER OF SHARES
SHARES SHARES SHARES ISSUED AND
AUTHORIZED OUTSTANDING AUTHORIZED OUTSTANDING
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Class A common stock, $.01 par value................... 25,000,000 8,151,155 44,901,992 18,045,931
Class B common stock, $.01 par value................... -- -- 44,901,992 18,045,931
Class B-1 common stock, $.01 par value................. 100,000,000 31,342,970 -- --
Class B-2 common stock, $.01 par value................. 100,000,000 13,429,110 -- --
Class B-3 common stock, $.01 par value................. 6,300 6,300 -- --
Class C common stock, $.01 par value................... -- -- 44,901,992 9,022,965
Excess common stock, $.01 par value.................... 200,006,300 -- 134,705,973 --
Non-voting senior preferred stock, $1.00 par value..... 200 105 200 105
Preferred stock, $1.00 par value of which 940,000
shares shall be designated Series A cumulative
redeemable preferred stock........................... 5,000,000 940,000 -- --
Excess preferred stock, $1.00 par value................ 5,000,000 -- -- --
------------- ------------ ------------- ------------
Total number of shares authorized, issued and
outstanding...................................... 435,012,800 53,869,640 269,412,149 45,114,932
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
</TABLE>
Shares authorized, issued and outstanding at December 31, 1995 were adjusted to
reflect the July 1996 stock split.
SENIOR PREFERRED SHARES:
The holders of non-voting senior preferred stock shall be entitled to
receive, when declared, cash dividends at an annual rate of $35 per share, and
no more, payable quarterly. No dividend shall be paid on any Preferred or Common
Shares unless the full dividend has been paid on the Senior Preferred Shares.
The Company has an option to redeem the Senior Preferred Shares anytime after
February 20, 1999 at a redemption price of $550 per share, which is equal to the
liquidation preference.
SERIES A PREFERRED SHARES:
The holders of Series A Preferred Shares shall be entitled to receive, when
declared, cumulative cash dividends equal to the greater of $8.50 per annum or
an amount currently equal to 6.2461 times the dollar amount declared on common
shares. Series A Preferred Shareholders are entitled to dividends before
dividends are distributed to common shareholders. The holders of Series A
Preferred Shares have no
F-25
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
9. CAPITAL STOCK: (CONTINUED)
voting rights unless a dividend is not declared for four quarters, at which time
the holders of Series A Preferred Shares may elect a Director to be added to the
Board of Directors. The Company has an option to redeem the Series A Preferred
Shares anytime after July 1, 2003 at a redemption price of $100 per share, which
is equal to the liquidation preference. Simultaneously with the issuance of the
Series A Preferred Shares, the Series A Preferred Shareholder also acquired
940,000 Special Options to acquire units in WAT. Each special option permits the
holder to acquire 124.92 (or 117,428,609 WAT units in the aggregate) units in
WAT in consideration for $100 or one Series A Preferred Share. The Special
Options are exercisable at any time after July 1, 1998 and prior to July 1,
2011.
COMMON SHARES:
The holders of Class A, Class B-1, Class B-2 and Class B-3 Common Shares
vote together as a class on all matters other than election of directors and
termination of REIT status and are entitled to receive distributions declared
after payment of dividends on preferred shares. Simultaneously with the
Recapitalization, the Class B-2 Shareholders acquired 13,429,110 Ordinary
Options to acquire units in WAT. Each Ordinary Option permits the holder to
acquire 20 units in WAT in exchange for one Class B-2 Common Share. The Ordinary
Options are exercisable at any time after January 1, 1997. The Ordinary Options
expire upon the listing of the Company's Common Stock on the New York Stock
Exchange, the American Stock Exchange or the London Stock Exchange.
10. SUPPLEMENTAL CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
FEBRUARY 12, JANUARY 1, 1994
YEAR ENDED YEAR ENDED 1994 THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, FEBRUARY 11,
1996 1995 1994 1994
------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C>
CASH PAID DURING THE PERIOD FOR:
Interest (net of amount capitalized).................. $ 42,378 $ 27,444 $ 21,731 $ 307
------------ ------------ ------------ -----
------------ ------------ ------------ -----
Income taxes.......................................... $ 60 $ 73 $ 1,684 $ --
------------ ------------ ------------ -----
------------ ------------ ------------ -----
</TABLE>
NON CASH INVESTING AND FINANCING INFORMATION:
Mission Valley Partnership was accounted for under the equity method in 1995
and has been consolidated in 1996. The condensed assets and liabilities of the
partnership were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Net investment in real estate.................................... $ 34,992 $ 24,612
Cash and Cash Equivalents........................................ 2,824 2,389
Accounts and notes receivable.................................... 1,407 891
Deferred expenses and other assets............................... 979 1,201
Notes payable.................................................... (37,976) (28,988)
Accounts payable................................................. (2,172) (798)
------------ ------------
Minority/other partners' interest................................ $ 54 $ (693)
------------ ------------
------------ ------------
</TABLE>
F-26
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
-------------------
10. SUPPLEMENTAL CASH FLOW INFORMATION: (CONTINUED)
The Mission Valley Partnerships condensed consolidated statements of income
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Total Revenue.................................................... $ 13,198 $ 11,117
Total Expenses................................................... 8,179 7,102
------------ ------------
Operating Income............................................... 5,019 4,015
Interest Expense................................................. (1,945) (2,226)
Other Income..................................................... 76 185
------------ ------------
Income before minority/other partners' interest................ 3,150 1,974
Minority/other partners' interest in earnings.................... (1,063) (1,277)
------------ ------------
Net income..................................................... $ 2,087 $ 697
------------ ------------
------------ ------------
</TABLE>
During 1996, construction in process totaling $4,529 was placed into
service.
During 1995, the Company increased its ownership interest in the Mission
Valley Partnership from 50% to 75.8%. In consideration, the Company paid $2,000
in cash and provided the partner selling its interest with a note for the
remaining purchase price totaling $9,000.
During 1995, the Company purchased a building previously owned by one of the
Company's major tenants. In consideration, the Company paid $528 in cash and
provided the seller with a note for the remaining purchase price totaling
$1,500.
Included in accounts payable and accrued liabilities at December 31, 1995
are cash overdrafts totaling $2,263.
The cost of GWG's acquisition of the Company on February 11, 1994 was
accounted for as a purchase. Accordingly, the cost of the acquisition was
allocated to the assets acquired and liabilities assumed based upon respective
fair values as follows:
<TABLE>
<CAPTION>
Net property and equipment................................................ $ (10,498)
<S> <C>
Investments in unconsolidated real estate partnerships.................... (6,818)
Direct financing leases receivable........................................ 13,484
Accounts and notes receivable............................................. (2,465)
Deferred expenses and other assets........................................ (7,715)
Accounts payable and accrued expenses..................................... (6,863)
Deferred income taxes..................................................... 195,501
---------
Adjustment to reflect cost allocated to GWG's investment in CenterMark
Properties, Inc....................................................... $ 174,626
---------
---------
</TABLE>
Shortly before GWG's acquisition of the Company on February 11, 1994, the
Company dividended its 50% interest in Ballston Common Mall to Prudential. The
assets and liabilities that were dividended consisted of the following:
<TABLE>
<CAPTION>
Net investment in real estate.............................................. $ (3,037)
<S> <C>
Investment in unconsolidated real estate partnerships...................... (3,408)
Accounts payable and accrued expenses...................................... 1,557
---------
Distribution of partnership interest to Prudential......................... $ (4,888)
---------
---------
</TABLE>
F-27
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
-------------------
11. INCOME TAXES:
As discussed in Note 2, the Company elected REIT status for income tax
purposes effective February 12, 1994 and, accordingly, is exempt from federal
income tax subsequent to that date. For the year ended December 31, 1996 and
1995 and the period from February 12, 1994 through December 31, 1994,
distributions have exceeded taxable income resulting in a partial return of
capital. On a per share basis distributions represented by ordinary income and
return of capital were approximately as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER PERIOD FROM
31, FEBRUARY 12, 1994
-------------------- THROUGH DECEMBER
1996 1995 31, 1994
--------- --------- -------------------
<S> <C> <C> <C>
(UNAUDITED)
Distributions per share representing ordinary income.......................... $ 0.88 $ 0.61 $ 0.56
Distributions per share representing a return of capital...................... 0.63 0.96 0.35
--------- --------- -----
Total distributions per share based on income tax amounts..................... $ 1.51 $ 1.57 $ 0.91
--------- --------- -----
--------- --------- -----
</TABLE>
For periods prior to the REIT election, the income tax provision consisted of
the following:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
1994 THROUGH
FEBRUARY 11,
1994
-------------
<S> <C>
Current income taxes:
Federal...................................................................... $ 6,968
State and local.............................................................. 1,847
-------------
Total current income taxes................................................. 8,815
-------------
Deferred income taxes:
Federal...................................................................... (5,752)
State and local.............................................................. (1,580)
-------------
Total deferred income taxes................................................ (7,332)
Tax benefit due to dividend of partnership investment.......................... (1,480)
-------------
$ 3
-------------
-------------
</TABLE>
In 1994, total current income taxes includes $6,965 in federal and $1,551 in
state income taxes relating to the Ballston Common Mall partnership interest
dividended to Prudential as discussed in Note 10.
Included in accounts payable and accrued liabilities is a deferred income
tax liability of $1,479 and $1,457 at December 31, 1996 and 1995, respectively,
relating to installment notes receivable for property sales prior to February
12, 1994.
F-28
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
-------------------
12. RELATED PARTIES:
As discussed in Note 1, the Company acquired the Acquired Properties in
conjunction with the Company's Recapitalization. Accordingly, the cost of this
acquisition was allocated to the assets acquired and liabilities assumed based
upon their respective fair values as follows:
<TABLE>
<S> <C>
Net property and equipment...................................... $ 459,707
Cash and cash equivalents....................................... 9,616
Accounts and notes receivable................................... 3,761
Deferred expenses and other assets.............................. 1,915
Notes payable................................................... (388,609)
Accounts payable and accrued expenses........................... (13,980)
----------
Total purchase price............................................ $ 72,410
----------
----------
</TABLE>
The operations of the Company include the Acquired Properties from the date
of purchase, July 1, 1996. If the Acquired Properties were acquired on January
1, 1995, the Condensed Consolidated Statements of Income would have been as
follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
Total revenues................................................... $ 183,352 $ 164,511
Total operating expenses......................................... 67,096 58,812
Depreciation expense............................................. 43,131 39,060
------------ ------------
Operating income............................................... 73,125 66,639
Interest expense, net............................................ (52,479) (52,306)
Other income..................................................... 3,839 4,148
------------ ------------
Income before minority interest................................ 24,485 18,481
Minority interest................................................ (1,063) --
------------ ------------
Net income....................................................... $ 23,422 $ 18,481
------------ ------------
------------ ------------
Earnings per share............................................... $ 0.39 $ 0.41
------------ ------------
------------ ------------
Estimated taxable income......................................... $ 39,372
------------
------------
Estimated cash flow.............................................. $ 79,536
------------
------------
</TABLE>
If all of the above estimated cash flows were assumed to have been
distributed, the unaudited distributions per share, based on the pro forma
common shares and Common Stock equivalents outstanding would have been $1.53 per
share which would have included an unaudited estimated return of capital of
$0.70 per share.
CenterMark Management Company, an entity wholly owned by WHL, entered into
an agreement with WEA to manage the properties in WEA's portfolio beginning
January 1, 1995. Property management fees totaling $3,495 and $1,828, net of
capitalized leasing fees of $1,667 and $1,219 were expensed by WEA
F-29
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
-------------------
12. RELATED PARTIES: (CONTINUED)
for the years ended December 31, 1996 and 1995 respectively. Included in
accounts payable and accrued expenses at December 31, 1996 and 1995, are
management fees payable to CMC totaling $711 and $0, respectively.
In addition to the management fees, CMC is reimbursed for corporate overhead
and mall related payroll costs. Reimbursements to CMC of recoverable property
operating costs for the years ended December 31, 1996 and 1995 totaled $8,409
and $6,598, respectively.
The Company entered into a Master Development Framework Agreement with WCI,
a wholly owned subsidiary of WHL, whereby the Company granted WCI the exclusive
right to carry out expansion, redevelopment and related works on WEA wholly
owned shopping centers and to endeavor to have WCI be appointed by the relevant
partner to carry out similar activities for jointly owned real estate
partnerships. During 1996 and 1995, the Company reimbursed WCI $21,535 and
$4,373, respectively, for expansion, redevelopment and related work.
In conjunction with the Recapitalization on July 1, 1996, the Company
engaged Westfield U.S. Advisory L.P. ("Advisor"), a wholly owned subsidiary of
WHL, to provide information, advise and assist the Company and undertake certain
duties and responsibilities on behalf of, and subject to, supervision of the
Company. The advisor is entitled to an annual fee of .55% of the net fair market
value of the Company. No fee is payable for the period through December 31,
1997. The service fee that would have been paid for the six months ended
December 31, 1996, if applicable, was approximately $2.6 million.
In conjunction with the Recapitalization on July 1, 1996, the Company
obtained an option to acquire all of the outstanding common stock of Westland
Realty, Inc. ("WRI"). WRI, a wholly owned subsidiary of WHL, holds a 50%
indirect general partnership interest in Westland Garden State Plaza L.P., an
owner and operator of a super-regional shopping center located in Paramus, New
Jersey. The terms of the option allow WEA to purchase the WRI stock at a price
equal to 50% of the market value of Garden State Plaza net of any mortgage debt
provided that the Company exercises its option within 120 days of the valuation
date. The valuation will be performed upon completion of the expansion of Garden
State Plaza and stabilization of its rents.
13. FINANCIAL INSTRUMENTS:
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of Statements of
Financial Accounting Standards No. 107, DISCLOSURES ABOUT FAIR VALUE OF
FINANCIAL INSTRUMENTS. The estimated fair value amounts have been determined by
the Company, using available market information and appropriate valuation
methodologies. However, considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
The fair value estimates presented herein are based on pertinent information
available to management as of December 31, 1996. Although management is not
aware of any factors that would significantly affect the estimated fair value
amounts, such amounts have not been comprehensively revalued for
F-30
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
-------------------
13. FINANCIAL INSTRUMENTS: (CONTINUED)
purpose of these consolidated financial statements since that date, and current
estimates of fair value may differ significantly from the amounts presented
herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------
CARRYING ESTIMATED
AMOUNT FAIR VALUE
--------- ----------
<S> <C> <C>
Assets:
Direct financing leases receivable....................................................... $ 92,351 $ 80,689
Accounts and notes receivable............................................................ 19,716 18,180
Liabilities:
Notes payable............................................................................ 770,625 718,914
Accounts payable and accrued expenses.................................................... 33,380 33,380
Off-balance sheet financial instruments--
Letters of credit........................................................................ 3,337 3,337
</TABLE>
RESTRICTED CASH, ACCOUNTS AND NOTES RECEIVABLE, AND ACCOUNTS PAYABLE AND ACCRUED
EXPENSES:
The carrying amounts of these items are a reasonable estimate of their fair
value, except for certain notes receivable which are discounted at current rates
for similar terms.
DIRECT FINANCING LEASES RECEIVABLE:
The fair value of these lease receivables are based upon the discounted
future cash flows at current market rates for leases with similar terms.
NOTES PAYABLE:
The fair value of notes payable are based upon current market rates for
loans with similar terms.
LETTERS OF CREDIT:
The fair value of letters of credit is based on fees currently charged for
similar agreements or on the estimated cost to terminate them or otherwise
settle the obligations with the counterparts at the reporting date.
14. COMMITMENTS AND CONTINGENCIES:
COMMITMENTS:
The Company is currently involved in several development projects and had
outstanding commitments with contractors totaling approximately $35,829 at
December 31, 1996.
The Redevelopment Agency of the City of West Covina (the "Agency") issued
$45,000 of special tax assessment municipal bonds ("Original Bonds") on March 1,
1990, to finance land acquisition for expansion of the shopping center and
additional site improvements. During 1996, the agency refinanced the Original
Bonds by issuing certain serial and term bonds with a total face amount of
$51,220 ("New Bonds"), proceeds of which were used to redeem the Original Bonds.
Special taxes levied against the
F-31
<PAGE>
WESTFIELD AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
-------------------
14. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
property, together with incremental property tax, incremental sales tax, and
park and ride revenues will be used to pay the principal and interest on the
bonds and the administrative expense of the Agency. Principal and interest
payments began in 1996 and continue to 2022 in graduating amounts ranging from
$2,030 to $5,289. WEA has the contingent obligation to satisfy any shortfall in
annual debt service requirements after tenant recoveries.
The Company is subject to the risks inherent in the ownership and operation
of commercial real estate. These include, among others, the risks normally
associated with changes in the general economic climate, trends in the retail
industry, including creditworthiness of tenants, competition for tenants,
changes in tax laws, interest rate levels, the availability of financing, and
potential liability under environmental and other laws.
Substantially all of the properties have been subjected to Phase I
environmental reviews. Such reviews have not revealed, nor is management aware
of, any probable or reasonably possible environmental costs that management
believes would be material to the consolidated financial statements.
LITIGATION:
During early 1994, the Company reached an agreement to settle certain
litigation for $950. WEA currently is neither subject to any other material
litigation nor, to management's knowledge, is any material litigation currently
threatened against WEA other than routine litigation and administrative
proceedings arising in the ordinary course of business. Based on consultation
with counsel, management believes that these items will not have a material
adverse impact on the Company's consolidated financial position or results of
operations.
15. SUBSEQUENT EVENTS:
The Company paid a distribution of $22,440 to its shareholders on January
30, 1997.
On January 2, 1997, the Company sold 8,151 common shares to WAT. The Company
used proceeds totaling $130,500 to purchase the remaining common stock held by
GGP Limited Partnership.
F-32
<PAGE>
SCHEDULE III
WESTFIELD AMERICA, INC.
REAL ESTATE INVESTMENT AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
BUILDINGS & ACCUMULATED
PROPERTY LAND IMPROVEMENTS TOTAL DEPRECIATION ENCUMBRANCES
- -------------------------------------------------- ---------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Eagle Rock........................................ $ 3,624 $ 12,646 $ 16,270 $ 2,446 --
Eastland.......................................... 16,609 3,375 19,984 627 $ 4,885
Enfield........................................... 8,468 21,050 29,518 3,767 --
La Jolla.......................................... 2,558 2,458 5,016 218 --
Mid Rivers........................................ 10,816 47,732 58,548 7,947 53,205
Mission Valley.................................... 1,007 63,237 64,244 23,283 37,976
Montgomery........................................ 32,420 163,740 196,160 24,572 121,515
Plaza Bonita...................................... 22,994 79,732 102,726 13,951 59,030
South County...................................... 13,259 34,832 48,091 6,514 28,735
West County....................................... 6,506 22,632 29,138 4,215 16,750
West Covina....................................... 18,922 82,326 101,248 10,910 60,615
West Park......................................... 2,633 23,583 26,216 4,482 14,150
Westland.......................................... 5,162 13,101 18,263 2,053 --
Trumbull.......................................... 16,405 161,814 178,219 2,235 144,959
South Shore....................................... 29,071 112,111 141,182 1,402 73,350
Connecticut Post.................................. 6,356 130,855 137,211 1,638 73,450
---------- ------------- ------------ ------------ -------------
$ 196,810 $ 975,224 $ 1,172,034 $ 110,260 $ 688,620
---------- ------------- ------------ ------------ -------------
---------- ------------- ------------ ------------ -------------
<CAPTION>
DEPRECIABLE
PROPERTY DATE OF COMPLETION LIFE
- -------------------------------------------------- --------------------- -------------
<S> <C> <C>
Eagle Rock........................................ 1973 3-31.5 yrs
Eastland.......................................... under constr./1957 3-30 yrs.
Enfield........................................... 1987/1971 3-31.5 yrs.
La Jolla.......................................... 1981 15-31.5 yrs.
Mid Rivers........................................ 1996/1987 3-22 yrs.
Mission Valley.................................... 1997/1961 3-50 yrs.
Montgomery........................................ 1991/1962 3-20 yrs.
Plaza Bonita...................................... 1981 3-39 yrs.
South County...................................... 1979/1963 3-39 yrs.
West County....................................... 1985/1969 3-22 yrs.
West Covina....................................... 1993/1975 3-22 yrs.
West Park......................................... 1984/1981 3-50 yrs.
Westland.......................................... 1994/1960 3-50 yrs.
Trumbull.......................................... 1992/1964 3-40 yrs.
South Shore....................................... under constr./1963 3-40 yrs.
Connecticut Post.................................. 1991/1960 3-40 yrs.
</TABLE>
F-33
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
-------------------
To the Board of Directors
of Westfield America, Inc.
We have audited the accompanying combined statements of revenues and certain
expenses of the Acquired Properties (as defined in Note 1) for the years ended
June 30, 1996, 1995 and 1994. The above mentioned combined statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the above mentioned combined statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the above mentioned combined statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the above mentioned combined
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
above mentioned combined statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the registration statement
on Form S-11 of Westfield America, Inc. (formerly CenterMark Properties, Inc.).
Material amounts (described in the Notes to the combined statement of revenues
and certain expenses) that would not be comparable to those resulting from the
proposed future operations of the Acquired Properties are excluded, and the
above mentioned combined statements are not intended to be a complete
presentation of the revenues and expenses of the properties.
In our opinion, the above mentioned combined statements referred to above
present fairly, in all material respects, the revenues and certain expenses for
the years ended June 30, 1996, 1995 and 1994 in conformity with generally
accepted accounting principles.
BDO Seidman, LLP
Los Angeles, California
February 7, 1997
F-34
<PAGE>
THE ACQUIRED PROPERTIES
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE YEARS ENDED JUNE 30, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR YEAR YEAR
ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30,
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Minimum rents.................................................................. $ 34,914 $ 34,741 $ 33,258
Tenant recoveries.............................................................. 17,231 16,922 16,128
Percentage Rents............................................................... 1,498 1,717 1,961
--------- --------- ---------
Total revenue................................................................ 53,643 53,380 51,347
--------- --------- ---------
OPERATING EXPENSES
Operating...................................................................... 20,031 20,021 18,551
Management fees................................................................ 1,325 1,337 1,335
--------- --------- ---------
Total operating expenses..................................................... 21,356 21,358 19,886
--------- --------- ---------
OPERATING INCOME $ 32,287 $ 32,022 $ 31,461
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-35
<PAGE>
THE ACQUIRED PROPERTIES
NOTES TO THE COMBINED STATEMENTS OF REVENUES
AND CERTAIN EXPENSES
(IN THOUSANDS)
-------------------
1. ORGANIZATION AND BASIS OF PRESENTATION:
The accompanying combined statements of revenues and certain expenses
include the accounts of regional shopping centers which Westfield America, Inc.
("WEA") acquired from affiliates on July 1, 1996 in conjunction with its
recapitalization. These regional shopping centers ("Acquired Properties") are as
follows:
Connecticut Post Mall--Milford Connecticut
South Shore Mall--Bay Shore, New York
Trumbull Shopping Park--Trumbull, Connecticut
The accounts of the Acquired Properties have been presented on a combined
historical cost basis in the hands of the sellers. No adjustments have been
reflected in the combined financial statements to give effect to the purchase by
WEA of the properties, listed above.
The combined statements of revenue and certain expenses include only the
accounts and activity of the Acquired Properties and do not include other
accounts or operations of the sellers, primarily expenses that are not
comparable to the expenses expected to be incurred by WEA in the proposed future
operations of the Acquired Properties. Expenses exclude interest, income taxes
and depreciation and amortization.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION:
Shopping center space is generally leased to specialty retail tenants under
leases which are accounted for as operating leases. Minimum rent revenues are
recognized on an accrual basis over the respective lease term, which
approximates the straight-line basis. Percentage rents are recognized on an
accrual basis as earned. Recoveries from tenants, which include an
administrative fee, are recognized as income in the period the applicable costs
are accrued.
BAD DEBTS:
The sellers periodically evaluated amounts billed to tenants and accrued
recoveries from tenants and adjusted the allowance for doubtful accounts to
reflect the amounts estimated to be uncollectible. Amounts determined to be
uncollectible are included in operating expenses.
LEASE TERMINATIONS:
Lump sum payments received from tenants to terminate their lease are
deferred and amortized as minimum rental revenue over the remaining life of the
lease unless the space is re-leased to a new tenant, at which time the remaining
deferred income is recognized.
USE OF ESTIMATES:
The preparation of the combined statements of revenue and certain expenses
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that effect the reported amounts of revenue
and certain expenses during the reporting periods. Actual results could differ
from those estimates.
F-36
<PAGE>
THE ACQUIRED PROPERTIES
NOTES TO THE COMBINED STATEMENTS OF REVENUES (CONTINUED)
AND CERTAIN EXPENSES
(IN THOUSANDS)
-------------------
3. PROPERTY RENTALS:
Future minimum rental revenues under non cancelable leases as of June 30,
1996 are as follows:
<TABLE>
<S> <C>
1997...................................................... $ 29,805
1998...................................................... 28,662
1999...................................................... 27,609
2000...................................................... 26,794
2001...................................................... 24,717
Thereafter................................................ 103,576
---------
$ 241,163
---------
---------
</TABLE>
These amounts do not include percentage rentals that may be received under
certain leases on the basis of tenant sales in excess of stipulated minimums.
4. TRANSACTIONS WITH RELATED PARTIES:
CenterMark Management Company ("CMC"), an affiliate, provides management,
leasing and development services for the Acquired Properties. CMC received a
management fee of 5% of gross receipts (as defined) for the years ended June 30,
1996, 1995 and 1994. CMC is wholly-owned by Westfield Corporation, Inc. ("WCI")
and its subsidiaries. WCI currently has a 3.85% direct ownership interest in the
Company. WCI is a wholly-owned subsidiary of a company who has a direct and
indirect ownership interest in the Company.
F-37
<PAGE>
REPORT OF INDEPENDENT AUDITORS
-------------------
To the Board of Directors
of Westfield America, Inc.
We have audited the accompanying statement of revenues and certain expenses
of Annapolis Mall for the year ended December 31, 1996. The above mentioned
statement is the responsibility of the Company's management. Our responsibility
is to express an opinion on the above mentioned statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the above mentioned statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the above mentioned statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall above mentioned
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying statement of revenues and certain expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form S-11 of
Westfield America, Inc. (formerly CenterMark Properties, Inc.). As described in
the Note 1 to the statement of revenues and certain expenses, certain expenses
that would not be comparable to those resulting from the proposed future
operations of Annapolis Mall are excluded, and the above mentioned statement is
not intended to be a complete presentation of the revenues and expenses of the
property.
In our opinion, the statement referred to above presents fairly, in all
material respects, the revenues and certain expenses for the year ended December
31, 1996 in conformity with generally accepted accounting principles.
Ernst & Young, LLP
Los Angeles, California
January 30, 1997
F-38
<PAGE>
ANNAPOLIS MALL
STATEMENT OF REVENUES AND CERTAIN EXPENSES
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR
ENDED
DECEMBER 31,
1996
------------
<S> <C>
REVENUES:
Minimum rents..................................................................................... $ 14,216
Tenant recoveries................................................................................. 5,219
Percentage rents.................................................................................. 171
------------
Total revenues.................................................................................. 19,606
------------
OPERATING EXPENSES
Operating--recoverable............................................................................ 4,414
Other operating................................................................................... 274
------------
Total operating expenses........................................................................ 4,688
------------
Excess of revenue over certain operating expenses................................................... $ 14,918
------------
------------
Interest in excess of revenue over certain operating expenses being acquired........................ $ 10,443
------------
------------
</TABLE>
See accompanying notes
F-39
<PAGE>
ANNAPOLIS MALL
NOTES TO THE STATEMENT OF REVENUES
AND CERTAIN EXPENSES
(IN THOUSANDS)
-------------------
1. ORGANIZATION AND BASIS OF PRESENTATION:
The accompanying statement of revenues and certain expenses includes the
accounts of a regional shopping center which is owned by Annapolis Mall Limited
Partnership (the "Partnership"). The Partnership consists of CenterMark
Properties of Annapolis, Inc. ("CMPA"), a 30% general partner, and RREEF USA
Fund-III/Annapolis, Inc. ("RREEF"), which is both a 50% general and a 20%
limited partner. CMPA is a wholly-owned subsidiary of Westfield America, Inc.
(WEA), formerly CenterMark Properties, Inc.
In the proposed transaction WEA is proposing to acquire a 70% interest in
Annapolis Mall.
Interest income, depreciation expense and management fee expense (see Note
4) are not comparable to the proposed operations of Annapolis Mall and have been
excluded from the accompanying statement of revenues and certain expenses.
Income taxes are not reflected in the statement of revenues and certain
expenses as Annapolis Mall is currently owned by the Partnership and income of
the Partnership is included in the partners' respective tax returns.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION:
Shopping center space is generally leased to specialty retail tenants under
leases which are accounted for as operating leases. Minimum rent revenues are
recognized on a straight-line basis over the respective lease term. Percentage
rents are recognized on an accrual basis as earned. Recoveries from tenants,
which include an administrative fee, are recognized as income in the period the
applicable costs are accrued.
BAD DEBTS:
Management periodically evaluates amounts billed to tenants and accrued
recoveries from tenants and adjusts the allowance for doubtful accounts to
reflect the amounts estimated to be uncollectible. Amounts determined to be
uncollectible are included in other operating expenses.
LEASE TERMINATIONS:
Lump sum payments received from tenants to terminate their lease are
deferred and amortized as minimum rental revenue over the remaining life of the
lease unless the space is re-leased to a new tenant, at which time the remaining
deferred income is recognized.
USE OF ESTIMATES:
The preparation of the statement of revenues and certain expenses in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenue and
certain expenses during the reporting periods. Actual results could differ from
those estimates.
F-40
<PAGE>
3. PROPERTY RENTALS:
Future Minimum rental revenues under noncancelable operating leases as of
December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997................................. $ 13,119
1998................................. 13,413
1999................................. 13,329
2000................................. 12,894
2001................................. 11,986
Thereafter........................... 44,321
--------
$ 109,062
--------
--------
</TABLE>
These amounts do not include percentage rentals that may be received under
certain leases on the basis of tenant sales in excess of stipulated minimums.
4. TRANSACTIONS WITH RELATED PARTIES:
During 1996 the property was managed by an affiliate WEA. The management fee
is not reflected in the accompanying statement of revenue and certain expenses
since it is not comparable to the proposed operations of Annapolis Mall. In
addition, the affiliate is reimbursed for mall related overhead and payroll
costs recoverable from tenants in accordance with their leases. Reimbursements
of recoverable overhead and payroll costs for the year ended December 31, 1996
totaled $1,073.
F-41
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
-------------------
To the Board of Directors
of Westfield America, Inc.
We have audited the accompanying statements of revenues and certain expenses
of Westland Garden State Plaza Limited Partnership (the "Partnership") for the
years ended December 31, 1996, 1995 and 1994. The above mentioned statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on the above mentioned statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the above mentioned statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the above mentioned statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall above mentioned
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
The accompanying statements of revenues and certain expenses were prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the registration statement on Form S-11
of Westfield America, Inc. (formerly CenterMark Properties, Inc.). Material
amounts (described in the Notes to the Statements of Revenues and Certain
Expenses) that would not be comparable to those resulting from the proposed
future operations of Garden State Plaza are excluded, and the above mentioned
statements are not intended to be a complete presentation of the revenues and
expenses of Garden State Plaza.
In our opinion, the statements referred to above present fairly, in all
material respects, the revenues and certain expenses of Westland Garden State
Plaza Limited Partnership for the years ended December 31, 1996, 1995 and 1994
in conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
Los Angeles, California
February 5, 1997
F-42
<PAGE>
WESTLAND GARDEN STATE PLAZA LIMITED PARTNERSHIP
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES:
Minimum rents............................................................... $ 32,829 $ 28,238 $ 26,228
Tenant recoveries........................................................... 13,112 12,073 11,839
Percentage rents............................................................ 799 1,705 2,625
---------- ---------- ----------
Total revenue............................................................. 46,740 42,016 40,692
---------- ---------- ----------
EXPENSES:
Operating recoverable....................................................... 11,688 11,069 10,974
Other operating............................................................. 804 910 230
Management fees............................................................. 1,388 1,132 1,102
---------- ---------- ----------
Total expenses............................................................ 13,880 13,111 12,306
---------- ---------- ----------
OPERATING INCOME.............................................................. 32,860 28,905 28,386
INTEREST EXPENSE, net......................................................... (11,279) (15,815) (18,323)
INTEREST INCOME............................................................... 127 75 43
---------- ---------- ----------
NET REVENUES AND CERTAIN EXPENSES............................................. $ 21,708 $ 13,165 $ 10,106
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
F-43
<PAGE>
WESTLAND GARDEN STATE PLAZA LIMITED PARTNERSHIP
NOTES TO THE STATEMENTS OF REVENUES AND CERTAIN EXPENSES
(IN THOUSANDS)
-------------------
1. ORGANIZATION:
Westland Garden State Plaza Limited Partnership, a Delaware limited
partnership (the "Partnership"), was formed to acquire, hold for investment and
operate Garden State Plaza, a super regional shopping center located in Paramus,
New Jersey. For the years ended December 31, 1996, 1995 and 1994, the general
partners are HRE Garden State Plaza, Inc. (50%) and Westland Management, Inc.
("WMI") (1%) and the limited partner is Westfield Partners, Inc. ("WPI") (49%).
WMI and WPI are indirectly wholly owned by Westfield Holdings Limited ("WHL").
Profits and losses are allocated in accordance with the partners' respective
interests.
Westfield America, Inc., an affiliate of WMI, WPI and WHL, will acquire a
substantial economic interest in the revenues of Garden State Plaza by using a
portion of the proceeds from its initial public offering to make a $145 million
participating secured loan to WMI and WPI.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION:
Shopping center space is generally leased to specialty retail tenants under
leases which are accounted for as operating leases. Minimum rent revenues are
recognized on an accrual basis over the respective lease term, which
approximates the straight-line basis. Percentage rents are recognized on an
accrual basis as earned. Recoveries from tenants are recognized as income in the
period the applicable costs are accrued.
BAD DEBTS:
Management periodically evaluates amounts billed to tenants and accrued
recoveries from tenants and adjusts the allowance for doubtful accounts to
reflect the amounts estimated to be uncollectible. Amounts determined to be
uncollectible are included in bad debt expense.
DEFERRED EXPENSES:
Procurement costs associated with the note payable are amortized on a
straight-line basis, which approximates the effective interest rate method, over
the term of the note payable. Direct costs related to leasing activities are
capitalized and amortized over the initial term of the new lease.
LEASE TERMINATIONS:
Lump sum payments received from tenants to terminate their lease are
deferred and amortized as minimum rental revenue over the remaining life of the
lease unless the space is re-leased to a new tenant, at which time the remaining
deferred income is recognized.
INCOME TAXES:
Income of the Partnership is included in the partners' respective tax
returns; therefore, no provision is made in the accompanying statements of
income for federal and state income taxes.
F-44
<PAGE>
WESTLAND GARDEN STATE PLAZA LIMITED PARTNERSHIP
NOTES TO THE STATEMENTS OF REVENUES AND CERTAIN EXPENSES
(IN THOUSANDS) (CONTINUED)
-------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
USE OF ESTIMATES:
The preparation of the statements of income in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of revenue and expenses during the
reporting periods. Actual results could differ from those estimates.
3. PROPERTY RENTALS:
Future minimum rental revenues under noncancelable leases as of December 31,
1996 are as follows:
<TABLE>
<S> <C>
1997.............................................................. $ 39,994
1998.............................................................. 39,447
1999.............................................................. 37,093
2000.............................................................. 36,444
2001.............................................................. 35,481
Thereafter........................................................ 253,046
---------
$ 441,505
---------
---------
</TABLE>
These amounts do not include percentage rentals that may be received under
certain leases on the basis of tenant sales in excess of stipulated minimums.
During the years ended December 31, 1996, 1995 and 1994, one tenant,
Federated Department Stores operating as Macy's, represented approximately 15%
of rental revenues.
4. INTEREST EXPENSE:
The Partnership incurs interest at 8.23% on a collateralized note payable to
an insurance company totaling $260,020. Interest only payments are due monthly
with the principal balance due in May 2005.
During the years ended December 31, 1996, 1995 and 1994, the Partnership
capitalized interest totaling $10,468, $7,404 and $4,739, respectively.
5. TRANSACTIONS WITH RELATED PARTIES:
On July 1, 1993 the Partnership entered into a management agreement with
Westfield Corporation, Inc. ("WCI"), a wholly owned subsidiary of WHL. The
agreement provides that the Partnership pay a fee of four percent on minimum
rents and percentage rents and reimburse WCI for payroll and related fringe
benefit costs incurred on its behalf. Employee related expenses are reflected as
recoverable expenses in the accompanying statements of income.
F-45
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SHARES IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
-------------------
SUMMARY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 1
Risk Factors................................... 21
The Company.................................... 37
Use of Proceeds................................ 47
Capitalization................................. 48
Dilution....................................... 49
Distributions.................................. 50
Selected Financial Data........................ 51
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 54
Business and Properties........................ 65
Policies and Objectives with Respect to
Investments, Financing and Other Activities... 99
Management..................................... 104
Advisory, Management and Development Services
to the Company................................ 109
Certain Transactions........................... 112
Principal Shareholders......................... 117
Description of Capital Stock................... 120
Certain Provisions of the Company's Articles of
Incorporation and By-Laws and of Missouri
Law........................................... 124
Shares Available for Future Sale............... 129
Federal Income Tax Considerations.............. 131
ERISA Considerations........................... 143
Underwriting................................... 144
Experts........................................ 148
Legal Matters.................................. 148
Additional Information......................... 148
Glossary....................................... G-1
Index to Financial Statements.................. F-1
</TABLE>
UNTIL (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE SHARES OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
18,000,000 SHARES
rstuw
COMMON STOCK
-------------------
PROSPECTUS
-------------------
MERRILL LYNCH & CO.
FURMAN SELZ
GOLDMAN, SACHS & CO.
MORGANSTANLEY & CO.
INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
BT SECURITIES CORPORATION
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[Alternate page for International Prospectus]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[Alternate page for International Prospectus]
PROSPECTUS
SUBJECT TO COMPLETION, DATED MAY 14, 1997
18,000,000 SHARES
[LOGO]
WESTFIELD AMERICA, INC.
COMMON STOCK
---------------------------
Westfield America, Inc. (formerly known as CenterMark Properties, Inc.) (the
"Company") is a Missouri corporation incorporated in 1924 and is engaged in
owning, operating, leasing, developing, redeveloping and acquiring super
regional and regional shopping centers and power centers located primarily in
major metropolitan areas in the United States. The Company's portfolio consists
of interests in 13 super regional and six regional shopping centers and three
power centers containing approximately 19.2 million square feet of gross
leasable area (together, the "Centers") and 13 separate department store
properties. The Company has engaged subsidiaries of Westfield Holdings Limited
(individually, "Westfield Holdings Limited" and collectively with its
subsidiaries, "Westfield Holdings"), an Australian public corporation and a
principal shareholder in the Company, to provide advisory, management and
development services to the Company and the Centers. The Company will use $145
million of the proceeds of the Offerings (as defined below) to make a
non-recourse loan secured by Westfield Holdings's indirect 50% interest in
Garden State Plaza, a super-regional shopping center, and $15.3 million to
purchase from Westfield Holdings Limited warrants (the "Westfield Holdings
Warrants") to acquire 9.8 million ordinary shares of Westfield Holdings Limited.
Westfield Holdings Limited is an independent company from the Company and,
except for the Company's interest in the Westfield Holdings Warrants, the
purchasers of the Shares will not acquire any interest in Westfield Holdings
Limited. The Company is organized and operated as a real estate investment trust
("REIT") and expects to continue to be operated as a REIT for Federal income tax
purposes. The Company intends to continue to pay regular quarterly
distributions.
All of the shares (the "Shares") of common stock, par value $.01 per share
(the "Common Stock"), of the Company offered hereby are being sold by the
Company. Of the 18,000,000 Shares being offered, 2,700,000 Shares are being
offered initially outside the United States and Canada by the International
Managers (the "International Offering") and the remaining 15,300,000 Shares are
being offered initially in a concurrent offering in the United States and Canada
by the U.S. Underwriters (the "U.S. Offering" and, together with the
International Offering, the "Offerings"). Westfield Holdings, interests
associated with the Lowy family and a Co-President of the Company have placed
orders to purchase up to 2,300,000, 600,000 and 100,000 shares respectively (the
"Orders"), at the price to public in the Offerings. The Common Stock has been
approved for listing on the New York Stock Exchange, subject to official notice
of issuance, under the symbol "WEA". Prior to the Offerings, there has been no
public market for the Common Stock. It is currently anticipated that the initial
public offering price will be between $16.00 and $17.50 per Share. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price. The Company's articles of incorporation impose
limitations, subject to certain limited exceptions, on the number of shares of
capital stock that may be directly or indirectly owned by any person or
affiliated group. See "Description of Capital Stock--Restrictions on Ownership
and Transfer."
Upon consummation of the Offerings and concurrent transactions and taking
account of the maximum number of Shares which may be acquired under the Orders,
Westfield America Trust, an Australian public property trust ("WAT") will own
62.4% and Westfield Holdings will own 16.7% (31.7% including its indirect
interest through WAT) of the outstanding Common Stock on a fully-diluted basis.
The Shares offered hereby represent approximately 22.7% of all shares of Common
Stock (including up to 3.8% which may be acquired under the Orders) that will be
issued and outstanding after the Offerings and concurrent transactions on a
fully-diluted basis.
SEE "RISK FACTORS" BEGINNING ON PAGE 21 FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK, INCLUDING:
- POSSIBLE CONFLICTS OF INTEREST AMONG WESTFIELD HOLDINGS, THE LOWY FAMILY,
WAT AND THE OTHER SHAREHOLDERS OF THE COMPANY.
- RELIANCE BY THE COMPANY ON WESTFIELD HOLDINGS FOR ADVISORY, MANAGEMENT AND
DEVELOPMENT SERVICES SUCH THAT THE COMPANY IS NOT CURRENTLY ABLE TO
OPERATE WITHOUT WESTFIELD HOLDINGS.
- THE ABILITY OF WESTFIELD HOLDINGS, THE LOWY FAMILY AND WAT TO EXERCISE
SIGNIFICANT INFLUENCE OVER THE BUSINESS AND POLICIES OF THE COMPANY.
- LIMITATIONS ON THE SHAREHOLDERS' ABILITY TO CHANGE CONTROL OF THE COMPANY
DUE TO SIGNIFICANT OWNERSHIP BY WESTFIELD HOLDINGS AND WAT AND DUE TO
RESTRICTIONS ON OWNERSHIP OF MORE THAN 5.5% OF THE SHARES OF CAPITAL STOCK
BY OTHER SHAREHOLDERS.
- RISKS GENERALLY INHERENT IN RETAIL REAL ESTATE INVESTMENTS, SUCH AS RISKS
FROM CHANGES IN ECONOMIC CONDITIONS, REDEVELOPMENT RISK, COMPETITION FROM
OTHER SHOPPING CENTERS AND OTHER FORMS OF RETAILING AND FINANCIAL
DIFFICULTIES OR BANKRUPTCIES OF TENANTS OR ANCHORS.
- RISKS NORMALLY ASSOCIATED WITH DEBT FINANCING, INCLUDING POSSIBLE
INABILITY TO REFINANCE BALLOON PAYMENTS AND THE RISK OF HIGHER INTEREST
RATES.
- TAXATION OF THE COMPANY AS A REGULAR CORPORATION AND RESULTING ADVERSE
CONSEQUENCES IF IT FAILS TO CONTINUE TO QUALIFY AS A REIT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share..................................... $ $ $
Total (3)..................................... $ $ $
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of $ payable by the Company.
(3) The Company has granted to the U.S. Underwriters and the International
Managers options, exercisable for a period of 30 days after the date of the
Prospectus, to purchase up to an aggregate of 2,295,000 and 405,000
additional shares of Common Stock, respectively, solely to cover
over-allotments. If all such shares of Common Stock are purchased, the total
Price to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
---------------------------
The Shares are offered by the several Underwriters, subject to prior sale,
when, as and if delivered to and accepted by the Underwriters, and subject to
their right to withdraw, modify, cancel and reject orders in whole or in part.
It is expected that delivery of the Shares offered hereby will be made in New
York City on or about May , 1997.
---------------------------
MERRILL LYNCH INTERNATIONAL
FURMAN SELZ
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO. INTERNATIONAL
PRUDENTIAL-BACHE SECURITIES
SMITH BARNEY INC.
BANKERS TRUST INTERNATIONAL PLC
----------------
The date of this Prospectus is , 1997
<PAGE>
[Alternate page for International Prospectus]
Map showing the locations of Westfield America, Inc.'s shopping centers
throughout the United States and identifying the redevelopment projects over a
five-year period; photograph of Montgomery Mall; aerial photographs of Annapolis
Mall, Topanga Plaza, Trumbull Shopping Park, West County Center, Meriden Square,
Mission Valley Center, Plaza Bonita, Mid Rivers Mall, The Plaza at West Covina;
interior photographs of Montgomery Mall, Plaza Camino Real, Plaza Bonita,
Annapolis Mall and Connecticut Post Mall.
Certain persons participating in these offerings may engage in transactions that
stabilize, maintain, or otherwise affect the price of the shares of Common
Stock. Such transactions may include stabilizing the purchase of Common Stock to
cover syndicate short positions and the imposition of penalty bids. For a
description of these activities, see "Underwriting."
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF SECURITIES IN THE
UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL SERVICES ACT 1986 AND
THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995 WITH RESPECT TO ANYTHING DONE
BY ANY PERSON IN RELATION TO ANY SECURITIES IN, FROM OR OTHERWISE INVOLVING THE
UNITED KINGDOM MUST BE COMPLIED WITH. SEE "UNDERWRITING."
Certain information relating to Westfield Holdings Limited, Westfield Trust
(as defined in the Glossary) and WAT has been included in this Prospectus. Each
such entity reports its financial results, and its securities trade on the
Australian Stock Exchange, in Australian currency. As used herein, references to
"$," "U.S.$" and "U.S. dollars" are references to U.S. currency and references
to "Aus.$" and "Australian dollars" are references to Australian currency. For
the convenience of the reader, the calculation of the purchase price for the
Westfield Holdings Warrants has been converted from Australian dollars to U.S.
dollars based on an exchange rate of $0.78 to Aus.$1.00 (the rate as of May 8,
1997).
<PAGE>
[Alternate page for International Prospectus]
UNDERWRITING
The underwriters named below (the "International Managers"), acting through
their respective representatives, Merrill Lynch International, Furman Selz LLC,
Goldman Sachs International, Morgan Stanley & Co. International,
Prudential-Bache Securities (U.K.) Inc., Smith Barney Inc. and Bankers Trust
International PLC (the "International Representatives" and, together with the
U.S. Representatives, the "Representatives"), have severally agreed, subject to
the terms and conditions contained in a purchase agreement relating to the
Common Stock (the "International Purchase Agreement") and concurrently with the
sale of 15,300,000 shares of Common Stock to certain underwriters in the United
States and Canada (the "U.S. Underwriters" and, together with the International
Managers, the "Underwriters"), to purchase from the Company the number of shares
of Common Stock set forth opposite their respective names below. Under certain
circumstances, the commitments of certain non-defaulting International Managers
or U.S. Underwriters may be increased.
<TABLE>
<CAPTION>
NUMBER
INTERNATIONAL MANAGERS OF SHARES
----------
<S> <C>
Merrill Lynch International................................................................
Furman Selz LLC............................................................................
Goldman Sachs International................................................................
Morgan Stanley & Co. International.........................................................
Prudential-Bache Securities (U.K.) Inc. ...................................................
Smith Barney Inc...........................................................................
Bankers Trust International PLC............................................................
ABN AMRO Rothschild........................................................................
----------
Total........................................................................... 2,700,000
----------
----------
</TABLE>
The Company has also entered into a purchase agreement (the "U.S. Purchase
Agreement") with the U.S. Underwriters. Subject to the terms and conditions set
forth in the U.S. Purchase Agreement, and concurrently with the sale of
2,700,000 shares of Common Stock to the International Managers pursuant to the
International Purchase Agreement, the Company has agreed to sell to the U.S.
Underwriters, and the U.S. Underwriters have severally agreed to purchase from
the Company, an aggregate of 15,300,000 shares of Common Stock. The initial
public offering price per share of the Common Stock and the total underwriting
discount per share of the Common Stock are identical under the International
Purchase Agreement and the U.S. Purchase Agreement.
In the International Purchase Agreement and the U.S. Purchase Agreement, the
International Managers and the U.S. Underwriters, respectively, have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of Common Stock being sold pursuant to each such Purchase Agreement if
any of such shares of Common Stock being sold pursuant to each such Purchase
Agreement are purchased. The closings with respect to the sale of the shares to
be purchased by the International Managers and the U.S. Underwriters are
conditioned upon one another.
The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Under the terms of the Intersyndicate
Agreement, the U.S. Underwriters and the International Managers are permitted to
sell shares of Common Stock to each other for purposes of resale at the initial
public offering price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the International Managers and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to United States or Canadian persons or to persons
they believe intend to resell to United States or Canadian persons, and the U.S.
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to non-United States or
non-Canadian persons or to persons they believe intend to resell to non-United
States or non-Canadian persons, except in each case for transactions pursuant to
the Intersyndicate Agreement.
The International Representatives have advised the Company that the
International Managers propose initially to offer the shares of Common Stock to
the public at the initial offering price set forth on the cover page of this
Prospectus and to certain dealers (who may include International Managers) at
such price less a concession not in excess of $ per share of Common Stock.
The International Managers may allow, and such dealers may reallow, a discount
not in excess of $ per share on sales to certain other dealers. After the
initial public offering, the offering price, the concession and discount may be
changed.
The Company has granted to the International Managers an option exercisable
for a period of 30 days from the date of this Prospectus to purchase up to an
additional 405,000 shares of Common Stock to cover over-allotments, if any, at
the initial offering price less the underwriting discount. If the International
Managers exercise this option, each International Manager will have a firm
commitment, subject to certain conditions, to purchase approximately the same
percentage thereof which the number of shares of Common Stock to be purchased by
it shown in the foregoing table bears to the 2,700,000 shares of Common Stock
initially offered hereby.
Each International Manager has represented and agreed that (i) it has not
offered or sold, and will not for a period of six months following consummation
of the Offerings offer or sell any shares of Common
144
<PAGE>
[Alternate page for International Prospectus]
Stock to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances that do not constitute an offer to the public in the
United Kingdom for the purposes of the Public Offers of Securities Regulations
1995, (ii) it has complied with and will comply with all applicable provisions
of the Public Offers of Securities Regulations 1995 and the Financial Services
Act 1986 with respect to anything done by it in relation to the shares of Common
Stock in, from, or otherwise involving the United Kingdom and (iii) it has only
issued or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue or sale of the shares of
Common Stock to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom the document may otherwise lawfully be issued or passed
on.
At the request of the Company, the U.S. Underwriters have reserved for sale,
at the initial public offering price, up to 5% of the shares to be sold and
offered hereby by the Company to certain employees, officers and family members
of such officers of U.S. affiliates of Westfield Holdings Limited. The number of
shares of Common Stock available for sale to the general public will be reduced
to the extent such persons purchase such reserved shares. Any reserved shares
which are not orally confirmed for purchase within one day of the pricing of the
Offerings will be offered by the U.S. Underwriters to the general public on the
same terms as the other shares offered hereby.
The Company has been informed that none of the proceeds of the Offerings
will be used by the offerees to acquire the Common Stock under the Orders.
Westfield Holdings has advised the Company it will utilize currently available
cash or credit facilities to acquire such Common Stock under the Orders.
Interests associated with the Lowy family and Richard Green have also notified
the Company that they will utilize currently available cash or credit facilities
to acquire such Common Stock. Based on current conditions which may change,
Merrill Lynch currently intends to fill the Orders in their entirety even if the
Offerings are oversubscribed.
In the Purchase Agreements, the Company has agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the Underwriters may be required to
make in respect thereof.
The Company, Westfield Holdings, interests associated with the Lowy family
and Richard E. Green, a Co-President of the Company, will each agree, subject to
certain exceptions (including issuance of the 1997 WAT Warrant and the Series B
Preferred Shares and the exercise of the WAT Warrants), not to (i) sell, grant
any option, right or warrant for the sale of, or to purchase or otherwise
transfer or dispose of any Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock or file a registration statement
under the Securities Act with respect to the foregoing or (ii) enter into any
swap or other agreement or transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, for a period of 90 days from the date of this Prospectus in the case of
the Company and any Shares which may be acquired under the Orders and 36 months
from the date of this Prospectus in the case of shares held by Westfield
Holdings immediately prior to consummation of the Offerings, without the prior
written consent of Merrill Lynch. See "Shares Available for Future Sale."
The Underwriters have informed the Company that the Underwriters do not
intend to confirm sales accounts over which they exercise discretionary
authority in excess of 5%.
Prior to the Offerings, there has been no public market for the Common
Stock. WAT units, however, have been traded on the ASX since July 1996. The
initial public offering price has been determined by negotiations among the
Company and the Underwriters. Among the factors considered in such negotiations,
in addition to the prevailing market conditions in the equity securities market,
the price at which the WAT units have been traded on the ASX, dividend yields,
price-earnings ratios and price-Funds from Operations ratios of publicly traded
REITs that the Company and the Underwriters believe to be comparable to the
Company, an assessment of the recent results of the operations of the Company
(which are based on the results of the operations of the Properties), estimates
of the future prospects of the Company, the present state of the Company's
development projects, the current state of the real estate markets in the
geographic area in which the Company operates and the economics of the Company's
principal markets as a whole. The initial public offering price set forth on the
cover page of this Prospectus should not, however, be considered as indication
of the actual value of the Common Stock. Such price is subject to change as a
result of market conditions and other factors. There can be no assurance that an
active trading market will develop for the Common Stock or that the Common Stock
will trade in the public market subsequent to the Offerings at or above the
initial offering price.
The Common Stock has been approved for listing on the NYSE, subject to
official notice of issuance under the symbol "WEA." In order to meet the
requirements for listing of the Common Stock on such exchange, the Underwriters
have undertaken to sell lots of 100 or more shares to a minimum of 2,000
beneficial owners.
Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase the Common Stock. As an exception to these
rules, the Representatives are permitted to engage in certain transactions that
145
<PAGE>
[Alternate page for International Prospectus]
stabilize the price of the Common Stock. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the Representatives may
reduce that short position by purchasing Common Stock in the open market. The
Representatives may also elect to reduce any short position by exercising all or
part of the over-allotment options described above.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the Offerings.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
Roy Furman, the Vice Chairman of Furman Selz LLC, one of the International
Managers, is a director of the Company. Goldman, Sachs & Co., one of the U.S.
Representatives and an affiliate of Goldman Sachs, is the owner and/or manager
of several investment funds that currently are investors in the Company and such
investors will receive a pro-rata portion of the Special Distribution.
In 1994, in connection with Prudential's sale of the Company to Westfield
Holdings and certain other investors, Prudential, an affiliate of
Prudential-Bache Securities (U.K.) Inc. which is one of the International
Managers, made secured loans in the aggregate amount of $339.0 million to
certain subsidiaries of the Company. In 1996, these loans were increased by
$15.0 million to $354.0 million. See "Business and Properties--Debt Summary."
Under the terms of the loan agreement, Prudential is entitled to receive a
transfer fee of $1.77 million from the Company on such mortgage loan upon the
sale of the Company's Common Stock in an initial public offering. Upon
consummation of the Offerings, the Company will pay such fees to Prudential.
In 1995, Prudential made a $260.02 million secured loan to Westland Garden
State Plaza Limited Partnership, the owner of Garden State Plaza. In connection
with the making of the Garden State Plaza Loan by the Company to Westfield
Holdings, Prudential is entitled to receive a transfer fee of $130,000. Upon
consummation of the Offerings, Westfield Holdings will pay such fees to
Prudential.
In July 1996, an affiliate of Bankers Trust International PLC, one of the
International Managers, received customary underwriting fees from WAT as a
co-manager in connection with the initial public offering of 402 million WAT
units.
Robert A. Ferguson, Managing Director at Bankers Trust Australia Limited, an
affiliate of Bankers Trust International PLC which is one of the Lead Managers,
is a member of the Board of Directors of Westfield Holdings Limited. Elliot
Slade, III, Senior Managing Director at BT Wolfensohn, a division of Bankers
Trust International PLC, resigned in March 1997 as a member of the Board of
Directors of the Company and its subsidiaries.
In the ordinary course of their business, certain of the Underwriters have
engaged in transactions with and performed services for the Company, Westfield
Holdings Limited and WAT and their respective subsidiaries for which they have
received customary fees.
146
<PAGE>
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- --------------------------------------------------------------------------------
[Alternate page for International Prospectus]
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SHARES IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
-------------------
SUMMARY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 1
Risk Factors................................... 21
The Company.................................... 37
Use of Proceeds................................ 47
Capitalization................................. 48
Dilution....................................... 49
Distributions.................................. 50
Selected Financial Data........................ 51
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 54
Business and Properties........................ 65
Policies and Objectives with Respect to
Investments, Financing and Other Activities... 99
Management..................................... 104
Advisory, Management and Development Services
to the Company................................ 109
Certain Transactions........................... 112
Principal Shareholders......................... 117
Description of Capital Stock................... 120
Certain Provisions of the Company's Articles of
Incorporation and By-Laws and of Missouri
Law........................................... 124
Shares Available for Future Sale............... 129
Federal Income Tax Considerations.............. 131
ERISA Considerations........................... 143
Underwriting................................... 144
Experts........................................ 148
Legal Matters.................................. 148
Additional Information......................... 148
Glossary....................................... G-1
Index to Financial Statements.................. F-1
</TABLE>
UNTIL (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE SHARES OFFERED HEREBY, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
18,000,000 SHARES
[LOGO]
COMMON STOCK
-------------------
PROSPECTUS
-------------------
MERRILL LYNCH INTERNATIONAL
FURMAN SELZ
GOLDMAN SACHS INTERNATIONAL
MORGANSTANLEY & CO.
INTERNATIONAL
PRUDENTIAL-BACHE SECURITIES
SMITH BARNEY INC.
BANKERS TRUST INTERNATIONAL PLC
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 30. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Shares being registered. All of the amounts shown are estimates, except
for the SEC registration fee, the NASD filing fee and the NYSE listing fee.
<TABLE>
<S> <C>
SEC registration fee.................................... $ 139,394
NASD filing fee......................................... 30,500
NYSE filing fee......................................... 374,840
Printing and engraving fees............................. 861,200
Legal fees and expenses................................. 1,500,000
Accounting fees and expenses............................ 430,000
Blue Sky fees and expense............................... 10,000
Transfer agent and registrar............................ 3,500
Miscellaneous........................................... 100,566
---------
Total................................................. $3,450,000
---------
---------
</TABLE>
ITEM 32. SALES TO SPECIAL PARTIES.
On January 2, 1997, the Company sold 8,151,155 shares of Common Stock to the
WAT Trustee, for a purchase price of $16.01 per share.
ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES.
On July 1, 1996, the Company sold 940,000 shares of Series A Preferred
Shares, together with 940,000 WAT special options, for $100 per share, to a
Dutch pension fund in an offering exempt from registration pursuant to
Regulation S. ABN AMRO Bank N.V. ("ABN AMRO") acted as underwriter, in a best
efforts underwriting. The Company paid ABN AMRO a selling commission of 3.5% of
the gross purchase price of securities sold and an underwriting commission of
1.5% of the gross purchase price of the minimum amount (namely, 940,000 Series A
Preferred Shares and 940,000 WAT special options).
On July 1, 1996 the Company issued 6,300 shares of Common Stock to a foreign
individual for a net cash consideration of $100,000, in an offering exempt from
registration pursuant to Regulation S. Concurrently, the Company sold 1,623,985
shares of Common Stock for $16.01 (or $15.21 net of a commission paid to the
purchaser) per share to a U.S. accredited investor as defined in Rule 501 of the
Securities Act. The sale was effected in a private placement exempt from
registration pursuant to Section 4(2) of the Securities Act.
On July 1, 1996 the Company issued to WAT, for $314.3 million and WAT's
agreement to issue certain options to purchase WAT units to certain shareholders
of the Company, 19,631,543 shares of Common Stock and a warrant to purchase up
to 6,246,096 shares of Common Stock at an exercise price of $16.01 per share,
subject to adjustment in certain events. The sale was effected in a private
placement exempt from registration pursuant to Section 4(2) of the Securities
Act.
In January 1997, Westland Properties, Inc., a subsidiary of the Company,
issued 116 shares of preferred stock at $500 per share to individual accredited
investors in a private placement exempt from registration pursuant to Section
4(2) of the Securities Act.
II-1
<PAGE>
On January 2, 1997, the Company sold 8,151,155 shares of Common Stock to
WAT, for a purchase price of $16.01 per share. The sale was effected as a
private placement exempt from registration pursuant to Section 4(2) of the
Securities Act.
In the first half of 1996, the Company issued 169,370 shares of Common Stock
(after giving effect to the 8980.3893-for-one stock split effected in June 1996)
to its existing shareholders in conjunction with a recontribution of $1,915,500
the December 1995 and March 1996 distributions. In 1995, the Company issued
212,836 shares of Common Stock (after giving effect to the 8980.3893-for-one
stock split effected in June 1996) to its existing stockholders in conjunction
with a recontribution of $3,169,600 of the July 1995 and October 1995
distributions. The sales were effected in private placements exempt from
registration pursuant to Section 4(2) of the Securities Act. In 1995, the
Company issued 105 shares of preferred stock at a purchase price of $500 per
share to individual accredited investors in a private placement exempt from
registration pursuant to Section 4(2) of the Securities Act.
ITEM 34. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has obtained, and pays the cost of, directors' and officers'
liability insurance coverage in the amount of $5.0 million (subject to a
retention of "deductible" of $250,000). Directors' and officers' insurance
insures (i) the directors and officers of the Company from any claim arising out
of an alleged wrongful act by the directors and officers of the Company in their
respective capacities as directors and officers of the Company, and (ii) the
Company to the extent that the Company has indemnified the directors and
officers for such loss. The Articles provide for indemnification to the full
extent permitted by Missouri law.
Section 351.355(1) of the Revised Statutes of Missouri provides that a
corporation may indemnify a director, officer, employee or agent of the
corporation in any action, suit or proceeding other than an action by or in the
right of the corporation, against expenses (including attorney's fees),
judgments, fines and settlement amounts actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action, had no reasonable
cause to believe his conduct was unlawful.
Section 351.355(2) provides that the corporation may indemnify any such
person in any action or suit by or in the right of the corporation against
expenses (including attorney's fees) and settlement amounts actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, except that he
may not be indemnified in respect of any matter in which he has been adjudged
liable for negligence or misconduct in the performance of his duty to the
corporation, unless authorized by the court.
Section 351.355(3) provides that a corporation shall indemnify any such
person against expenses (including attorney's fees) actually and reasonably
incurred by him in connection with the action, suit or proceeding if he has been
successful in defense of such action, suit or proceeding, and if such action,
suit or proceeding is one for which the corporation may indemnify him under
Section 351.355(1) or (2). Section 351.355(7) provides that a corporation shall
have the power to give any further indemnity to any such person, in addition to
the indemnity otherwise authorized under Section 351.355, provided such further
indemnity is either (i) authorized, directed or provided for in the articles of
incorporation of the corporation or any duly adopted amendment thereof or (ii)
is authorized, directed or provided for in any by-law or agreement of the
corporation which has been adopted by a vote of the shareholders of the
corporation, provided that no such indemnity shall indemnify any person from or
on account of such person's conduct which was finally adjudged to have been
knowingly fraudulent, deliberately dishonest or willful misconduct.
The Articles of Incorporation of the Company contain provisions indemnifying
its directors and officers to the extent authorized specifically by Sections
351.355(1), (2), (3) and (7).
II-2
<PAGE>
ITEM 35. TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED.
Not applicable.
ITEM 36. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Certain Unaudited Consolidated Pro Forma Financial Data
Westfield America, Inc. Unaudited Pro Forma Condensed Consolidated Balance
sheet as of December 31, 1996 (included in the Prospectus as part of this
registration).
Westfield America, Inc. Unaudited Pro Forma Condensed Consolidated Statement
of Income for the year ended December 31, 1996 (included in the Prospectus
as part of this registration).
(b) Financial Statements
Westfield America, Inc. and Subsidiaries Consolidated Financial Statements
as of December 31, 1996 and for the year ended December 31, 1996 (included
in the Prospectus as part of this registration).
Westfield America, Inc. and Subsidiaries Consolidated Financial Statements
as of December 31, 1995 and 1994 and for the year ended December 31, 1995,
the period February 12, 1994 through December 31, 1994 and the period from
January 1, 1994 through February 11, 1994 (included in the Prospectus as
part of this registration).
Acquired Properties Statements of Revenues and Certain Expenses for the
years ended June 30, 1996, 1995 and 1994 (included in the Prospectus as part
of this registration).
(c) Financial Statement Schedule (included in the Prospectus as part of this
registration).
Westfield America, Inc. and Subsidiaries
Schedule III Real Estate and Accumulated Depreciation
(d) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of U.S. Purchase Agreement, among the Company and the U.S. Underwriters.
1.2 Form of International Purchase Agreement, among the Company and the International Managers.
3.1 Form of Third Restated Articles of Incorporation of the Company.
3.2* Form of Certificate of Designation for Series B Preferred Shares.
3.3* Form of Second Amended and Restated By-Laws of the Company.
4.1* Specimen of Common Stock Certificate.
5.1 Opinion of Debevoise & Plimpton as to legality of the Shares.
5.2 Opinion of Bryan, Cave LLP, as to certain matters of Missouri law.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding tax matters.
10.1 Form of Pledge and Security Agreement, together with the Promissory Note attached thereto, dated as
of May , 1997, among Westland Realty, Inc., Westfield Partners, Inc., Westland Management, Inc.
and the Company.
10.2* Form of Westfield Holdings Warrant, dated May , 1997, between Westfield Holdings Limited and the
Company.
10.3* Subscription Agreement and Plan of Reorganization, dated as of May 13, 1996, among the WAT Trustee,
the Manager and the Company.
10.4* Warrant of the Company, dated July 1, 1996.
10.5* Form of Common Stock Purchase Warrant of the Company, dated May , 1997.
10.6* Special Option Deed, dated May 14, 1996, among WAM, the WAT Trustee and the Company.
10.7* Deed of Variation, dated June 24, 1996, among WAM, the WAT Trustee and the Company.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.8* Form of Special Option Deed, dated May , 1997, among WAM, the WAT Trustee and ABP.
10.9* Advisory Agreement, dated July 1, 1996, between the Company and Advisor.
10.10 Form of First Amendment to Advisory Agreement, dated May , 1997, between the Company and the
Advisor.
10.11* Master Development Framework Agreement, dated July 1, 1996, between the Company and the Developer.
10.12 Form of First Amendment to Master Development Framework Agreement, dated May , 1997, between the
Company and the Developer.
10.13* Property Management Letter Agreement, dated July 1, 1996, between the Company and CenterMark
Management Company ("CMC").
10.14 Form of First Amendment to Property Management Letter Agreement dated May , 1997, between the
Company and CMC.
10.15* Management Agreement, dated July 1, 1996, between CMC and the Owner and each of the wholly-owned
Centers.
10.16 Form of First Amendment to Management Agreement, dated May , 1997, between CMC and the Owner of
each of the wholly-owned Centers.
10.17* Amended and Restated Assignments of Management Agreements, dated July 1, 1996, between the Company
and CMC.
10.18* Form of Amended and Restated Assignments of Management Agreements, dated May , 1997, between the
Company and CMC.
10.19* Subcontract of Management Rights, dated July 1, 1996, between the Company and CMC.
10.20* Form of Amended and Restated Subcontract of Management Rights dated May , 1997, between the Company
and CMC.
10.21* Garden State Plaza Option Agreement, dated July 1, 1996, between the Company and Westfield Capital
Corporation Finance Pty Limited.
10.22 Form of First Amendment to GSP Option Agreement, dated as of May , between the Company and
Westfield Capital Corporation Finance Pty Limited.
10.23* License Agreement, dated July 1, 1996, between the Company and Westfield Corporation, Inc.
10.24* Stock Purchase Agreement, dated as of May 13, 1996, among Westland Park Avenue Corporation, Westland
Holding Company, Inc. and the Company.
10.25 Form of Registration Rights Agreement between the Company and Westfield Holdings Limited.
10.26 Form of Investors Agreement among the Company, Westfield Holdings, the WAT Trustee and WAM.
10.27 Form of Non-Competition Agreement, dated as of May , 1997, among the Company, Frank P. Lowy, David
H. Lowy, Peter S. Lowy and Steven M. Lowy.
10.28* Subscription Agreement, dated as of June 14, 1996, among ABP and the Company.
10.29* Form of Subscription Agreement, dated as of May , 1997, among WAM, the WAT Trustee, ABP, and the
Company.
10.31* Form of First Amendment to Trade Name License Agreement, dated as of May , 1997, between Westfield
Corporation, Inc. and the Company.
10.32 Form of Letter Agreement, dated as of May , 1997, between the Company and Westland Holdings
Limited.
11.1* Computation of Primary Earnings Per Share.
12.1* Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
21.1 List of Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Coopers & Lybrand LLP.
23.3 Consent of BDO Seidman LLP.
23.4 Consent of Debevoise & Plimpton (included in Exhibit 5.2)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
23.5 Consent of Bryan Cave LLP (included in Exhibit 5.1)
23.6 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 8.1)
23.7** Consent of Equifax National Decision Systems.
23.8** Consents of Director Nominees
24.1** Powers of Attorney
</TABLE>
- ------------------------
* Previously filed
ITEM 37. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
The Registrant undertakes to send to each shareholder at least on an annual
basis a detailed statement of any transactions with the Advisor or its
affiliates, and of fees, commissions, compensation and other benefits paid or
accrued to the Advisor or its affiliates for the fiscal year completed, showing
the amount paid or accrued to each recipient and the services performed.
The Registrant undertakes to file during the offering period a sticker
supplement pursuant to Rule 424(c) under the Act describing each property not
identified in the Prospectus at such time as there arises a reasonable
probability of Investment in such property by the Registrant and to consolidate
all such stickers into a post-effective amendment filed at least once every
three months with the information contained in such amendment provided
simultaneously to the existing shareholders. Each sticker supplement will also
disclose all compensation and fees received by the Advisor or its affiliates in
connection with any such investment. The post-effective amendment shall include
audited financial statements meeting the requirements of Rule 3-14 of Regulation
S-X only for properties acquired during the distribution period.
The Registrant undertakes to file, after the end of the offering period, a
current report on Form 8-K containing the financial statements and any
additional information required by Rule 3-14 of Regulation S-X, to reflect each
commitment not previously disclosed in the Prospectus or a supplement thereto
involving the use of 10% or more (on a cumulative basis) of the net proceeds of
the Offerings and to provide the information contained in such report to the
shareholders at least once each quarter after the end of the Offerings period.
The Registrant undertakes to file the financial statements required by Form 10-K
for the first full fiscal year of operations and will provide the financial
information contained therein to the Shareholders. The Registrant undertakes to
file a final report on Form SR pursuant to Rule 463 of the Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the provisions described under Item 33
above, or otherwise (other than pursuant to insurance), the Registrant has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than pursuant to insurance or the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceedings), is asserted by such director, officer, or controlling person in
connection with the securities registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
Submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The Registrant hereby undertakes to provide to the Underwriters, at the
closing specified in the Purchase Agreement, certificates in such denominations
and registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-11 and has duly caused this Amendment No. 4 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Los Angeles, State of California, on
the 14th day of May, 1997.
WESTFIELD AMERICA, INC.
By: /s/ RICHARD E. GREEN
--------------------------------------------------------------------
Richard E. Green
Co-President
By: /s/ PETER S. LOWY
--------------------------------------------------------------------
Peter S. Lowy
Co-President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to the Registration Statement has been signed by the following persons on
May 14, 1997 in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
<C> <S>
*
- -------------------------------------------- Director and Chairman of the Board
Frank P. Lowy
*
- -------------------------------------------- Director
Roy L. Furman
/s/ RICHARD E. GREEN
- -------------------------------------------- Director and Co-President
Richard E. Green (Principal Executive Officer)
*
- -------------------------------------------- Director
Frederick H. Hilmer
*
- -------------------------------------------- Director
David H. Lowy
/s/ PETER S. LOWY
- -------------------------------------------- Director and Co-President
Peter S. Lowy (Principal Executive Officer)
/s/ MARK A. STEFANEK Chief Financial
- -------------------------------------------- Officer and Treasurer
Mark A. Stefanek (Principal Financial and Accounting Officer)
*By: /s/ PETER S. LOWY
---------------------------------------
Peter S. Lowy
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------------------------------- -----
<C> <S> <C>
1.1 Form of U.S. Purchase Agreement, among the Company and the U.S. Underwriters.
1.2 Form of International Purchase Agreement, among the Company and the International Managers.
3.1 Form of Third Restated Articles of Incorporation of the Company.
3.2* Form of Certificate of Designation for Series B Preferred Shares.
3.3* Form of Second Amended and Restated By-Laws of the Company.
4.1* Specimen of Common Stock Certificate.
5.1 Opinion of Debevoise & Plimpton as to legality of the Shares.
5.2 Opinion of Bryan, Cave LLP, as to certain matters of Missouri law.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding tax matters.
10.1 Form of Pledge and Security Agreement, together with the Promissory Note attached thereto,
dated as of May , 1997, among Westland Realty, Inc., Westfield Partners, Inc., Westland
Management, Inc. and the Company.
10.2* Form of Westfield Holdings Warrant, dated May , 1997, between Westfield Holdings Limited and
the Company.
10.3* Subscription Agreement and Plan of Reorganization, dated as of May 13, 1996, among the WAT
Trustee, the Manager and the Company.
10.4* Warrant of the Company, dated July 1, 1996.
10.5* Form of Common Stock Purchase Warrant of the Company, dated May , 1997.
10.6* Special Option Deed, dated May 14, 1996, among WAM, the WAT Trustee and the Company.
10.7* Deed of Variation, dated June 24, 1996, among WAM, the WAT Trustee and the Company.
10.8* Form of Special Option Deed, dated May , 1997, among WAM, the WAT Trustee and ABP.
10.9* Advisory Agreement, dated July 1, 1996, between the Company and Advisor.
10.10 Form of First Amendment to Advisory Agreement, dated May , 1997, between the Company and the
Advisor.
10.11* Master Development Framework Agreement, dated July 1, 1996, between the Company and the
Developer.
10.12 Form of First Amendment to Master Development Framework Agreement, dated May , 1997, between
the Company and the Developer.
10.13* Property Management Letter Agreement, dated July 1, 1996, between the Company and CenterMark
Management Company ("CMC").
10.14 Form of First Amendment to Property Management Letter Agreement dated May , 1997, between
the Company and CMC.
10.15* Management Agreement, dated July 1, 1996, between CMC and the Owner and each of the
wholly-owned Centers.
10.16 Form of First Amendment to Management Agreement, dated May , 1997, between CMC and the Owner
of each of the wholly-owned Centers.
10.17* Amended and Restated Assignments of Management Agreements, dated July 1, 1996, between the
Company and CMC.
10.18* Form of Amended and Restated Assignments of Management Agreements, dated May , 1997, between
the Company and CMC.
10.19* Subcontract of Management Rights, dated July 1, 1996, between the Company and CMC.
10.20* Form of Amended and Restated Subcontract of Management Rights dated May , 1997, between the
Company and CMC.
10.21* Garden State Plaza Option Agreement, dated July 1, 1996, between the Company and Westfield
Capital Corporation Finance Pty Limited.
10.22 Form of First Amendment to GSP Option Agreement, dated as of May , between the Company and
Westfield Capital Corporation Finance Pty Limited.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------------------------------- -----
<C> <S> <C>
10.23* License Agreement, dated July 1, 1996, between the Company and Westfield Corporation, Inc.
10.24* Stock Purchase Agreement, dated as of May 13, 1996, among Westland Park Avenue Corporation,
Westland Holding Company, Inc. and the Company.
10.25 Form of Registration Rights Agreement between the Company and Westfield Holdings Limited.
10.26 Form of Investors Agreement among the Company, Westfield Holdings, the WAT Trustee and WAM.
10.27 Form of Non-Competition Agreement, dated as of May , 1997, among the Company, Frank P. Lowy,
David H. Lowy, Peter S. Lowy and Steven M. Lowy.
10.28* Subscription Agreement, dated as of June 14, 1996, among ABP and the Company.
10.29* Form of Subscription Agreement, dated as of May , 1997, among WAM, the WAT Trustee, ABP, and
the Company.
10.31* Form of First Amendment to Trade Name License Agreement, dated as of May , 1997, between
Westfield Corporation, Inc. and the Company.
10.32 Form of Letter Agreement, dated as of May , 1997, between the Company and Westland Holdings
Limited.
11.1* Computation of Primary Earnings Per Share.
12.1* Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
21.1 List of Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Coopers & Lybrand LLP.
23.3 Consent of BDO Seidman LLP.
23.4 Consent of Debevoise & Plimpton (included in Exhibit 5.2)
23.5 Consent of Bryan Cave LLP (included in Exhibit 5.1)
23.6 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 8.1)
23.7** Consent of Equifax National Decision Systems.
23.8** Consents of Director Nominees
24.1** Powers of Attorney
</TABLE>
- ------------------------
* To be filed by amendment
** Previously filed
<PAGE>
EXHIBIT 1.1
WESTFIELD AMERICA, INC.
(a Missouri corporation)
15,300,000 Shares of Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
-----------------------
May __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
FURMAN SELZ LLC
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
BT SECURITIES CORPORATION
as Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Westfield America, Inc., a Missouri corporation, formerly known as
CenterMark Properties, Inc. (the "Company"), confirms its agreement with
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and each of the other U.S. Underwriters named in Schedule
A hereto (collectively, the "U.S. Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch, Furman Selz LLC, Goldman, Sachs & Co.,
Morgan Stanley & Co. Incorporated, Prudential Securities Incorporated, Smith
Barney Inc. and BT Securities Corporation are acting as representatives (in
such capacity, the "U.S. Representatives"), with respect to the issue and
sale by the Company and the purchase by the U.S. Underwriters, acting
severally and not jointly, of the respective numbers of shares of Common
Stock, par value $.01 per share, of the Company ("Common Stock") set forth in
said Schedule A, and with respect to the grant by the Company
<PAGE>
to the U.S. Underwriters, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of 2,295,000
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 15,300,000 shares of Common Stock (the "Initial U.S. Securities")
to be purchased by the U.S. Underwriters and all or any part of the 2,295,000
shares of Common Stock subject to the option described in Section 2(b) hereof
(the "U.S. Option Securities") are hereinafter called, collectively, the
"U.S. Securities."
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of 2,700,000 shares of
Common Stock (the "Initial International Securities") through arrangements with
certain underwriters outside the United States and Canada (the "International
Managers") for which Merrill Lynch International, Furman Selz LLC, Goldman Sachs
International, Morgan Stanley & Co. Incorporated, Prudential-Bache Securities
(U.K.) Inc., Smith Barney Inc. and Bankers Trust International PLC are acting as
lead managers (the "Lead Managers") and the grant by the Company to the
International Managers, acting severally and not jointly, of an option to
purchase all or any part of the International Managers' pro rata portion of up
to 405,000 additional shares of Common Stock solely to cover over-allotments, if
any (the "International Option Securities" and, together with the U.S. Option
Securities, the "Option Securities"). The Initial International Securities and
the International Option Securities are hereinafter called the "International
Securities." It is understood that the Company is not obligated to sell and the
U.S. Underwriters are not obligated to purchase, any Initial U.S. Securities
unless all of the Initial International Securities are contemporaneously
purchased by the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters," the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities," and the U.S. Securities, and the International Securities
are hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").
The Company understands that the U.S. Underwriters propose to make a public
offering of the U.S. Securities as soon as the U.S. Representatives deem
advisable after this Agreement has been executed and delivered.
The Company and the Underwriters agree that up to 900,000 shares of the
Securities to be purchased by the U.S Underwriters (the "Reserved Securities")
shall be reserved for sale by the U.S Underwriters to certain employees,
officers and family members of such officers of U.S. affiliates of Westfield
Holdings Limited, as part of the distribution of the Securities by the
Underwriters, subject to the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. (the "NASD") and all other
2
<PAGE>
applicable laws, rules and regulations. To the extent that such Reserved
Securities are not orally confirmed for purchase by such employees, officers
and family members of such officers of U.S. affiliates of Westfield Holdings
Limited by the end of the first business day after the date of this
Agreement, such Reserved Securities may be offered to the public as part of
the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11 (No. 333-22731) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b).
Two forms of prospectus are to be used in connection with the offering and sale
of the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of International Prospectus is identical
to the Form of U.S. Prospectus, except for the front cover and back cover pages,
the page immediately following the cover page and the information under the
caption "Underwriting." The information included in any such prospectus or in
any such Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective (a) pursuant to paragraph
(b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each Form
of U.S. Prospectus and Form of International Prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits and schedules thereto at the time it became
effective and including the Rule 430A Information and the Rule 434 Information,
as applicable, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final Form of U.S. Prospectus and the final Form of
International Prospectus in the forms first furnished to the Underwriters for
use in connection with the offering of the Securities are herein called the
"U.S. Prospectus" and the "International Prospectus," respectively, and
collectively, the "Prospectuses." If Rule 434 is relied on, the terms "U.S.
Prospectus" and "International Prospectus" shall refer to the preliminary U.S.
Prospectus dated _____, 1997 and preliminary International Prospectus dated
_____, 1997, respectively, each together with the applicable Term Sheet and all
references in this Agreement to the date of such Prospectuses shall mean the
date of the applicable Term Sheet. For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the U.S.
Prospectus, the International Prospectus or any Term Sheet or any amendment or
supplement
3
<PAGE>
to any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus (including the Form of U.S.
Prospectus and Form of International Prospectus) or the Prospectuses (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus
(including the Form of U.S. Prospectus and Form of International Prospectus) or
the Prospectuses, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectuses shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectuses, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to each U.S. Underwriter as of the date hereof, as of the Closing
Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if
any) referred to in Section 2(b) hereof, and, to the extent any agreements
are set forth below, agrees with each U.S. Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with or
satisfied.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective, and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Neither of the Prospectuses nor any amendments or
supplements thereto, at the time any such Prospectus or any such amendment
or supplement was issued and at the Closing Time, (and, if any U.S. Option
Securities are purchased, at the Date of Delivery) included or will include
an untrue statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in the
light of the
4
<PAGE>
circumstances under which they were made, not misleading. If Rule 434 is
used, the Company will comply with the requirements of Rule 434 and the
Prospectuses shall not be "materially different," as such term is
used in Rule 434, from the prospectuses included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement, any post-effective amendment to the
Registration Statement, the U.S. Prospectus or any amendment or supplement
to the U.S. Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any U.S. Underwriter
through the U.S. Representatives expressly for use in the Registration
Statement or the U.S. Prospectus or any amendment or supplement thereto.
Each preliminary prospectus and the Prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iii) FINANCIAL STATEMENTS. The financial statements included in
the Registration Statement and the Prospectuses, together with the related
schedules and notes, present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, shareholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; and said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules included in the Registration
Statement present fairly in accordance with GAAP the information required
to be stated therein. The summary financial data and the selected
financial data included in the Prospectuses present fairly the information
shown therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Registration Statement. The
pro forma financial statements and the related notes thereto included in
the Registration Statement and the Prospectuses present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and, in
the opinion of the Company, all necessary adjustments to reflect the
transactions and circumstances referred to therein have been made.
5
<PAGE>
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) except as described in the Prospectuses, there has
been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(v) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Missouri and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect.
(vi) GOOD STANDING OF SUBSIDIARIES. Each subsidiary of the Company
has been duly formed and is validly existing and in good standing under
the laws of the jurisdiction of its origin, has the power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and is duly qualified to transact business
and is in good standing in each jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock or other ownership interests of each such
subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and, except for certain non-voting preferred stock of
Westland Properties, Inc. which is owned by approximately 120 individuals,
and for the Joint Ventures which are owned as described in the Prospectuses
is owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity,
except for the stock of CMF, Inc., which is pledged by the Company as
security for certain indebtedness relating to department stores which
are net leased to The May Department Stores Company (the "May Properties");
none of the outstanding shares of capital stock or other ownership
interests of any subsidiary of the Company was issued in violation of the
preemptive or similar rights of any securityholder of such subsidiary.
(vii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses in the
column entitled "Historical" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this
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Agreement, the International Purchase Agreement and the ABP Subscription
Agreement or pursuant to the exercise of convertible securities referred
to in the Prospectuses). The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; and none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive
or other similar rights of any securityholder of the Company.
(viii) AUTHORIZATION OF AGREEMENT. This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by the Company.
(ix) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The Securities to
be purchased by the U.S. Underwriters and the International Managers from
the Company have been duly authorized for issuance and sale to the U.S.
Underwriters pursuant to this Agreement and the International Managers
pursuant to the International Purchase Agreement, respectively, and, when
issued and delivered by the Company pursuant to this Agreement and the
International Purchase Agreement, respectively, against payment of the
consideration set forth herein and the International Purchase Agreement,
respectively, will be validly issued, fully paid and non-assessable; as of
the Closing Time and each Date of Delivery, the capital stock of the
Company (including the Common Stock) will conform to all statements
relating thereto contained in the Prospectuses (including under the heading
"Description of Capital Stock" therein) and such description will conform
to the rights set forth in the instruments defining the same; no holder of
the Securities will be subject to personal liability by reason of being
such a holder; and the issuance of the Securities is not subject to the
preemptive or other similar rights of any securityholder of the Company.
(x) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any
of its subsidiaries is in violation of its charter, by-laws or other
organizational documents or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which
any of them may be bound, or to which any of the property or assets of
the Company or any of its subsidiaries is subject (collectively,
"Agreements and Instruments"), except for such defaults as would not
reasonably be expected to result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the
International Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, the International
Purchase Agreement and in the Registration Statement (including the
issuance and sale of the Securities and the use of the proceeds from
the sale of the Securities as described in the Prospectuses under the
caption "Use of Proceeds") and compliance by the Company with its
obligations hereunder and under the International Purchase Agreement
have been duly authorized by all necessary corporate and other action
and do not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event (as defined below) under, or result
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in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant
to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
reasonably be expected to result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
charter, by-laws or other organizational documents of the Company or
any of its subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of its
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company
or any of its subsidiaries. The Company and its subsidiaries have
obtained all required consents from such holders of any note,
debenture or other evidence of indebtedness, some of which consents
are conditioned upon the closing of the issuance and sale of the
Securities.
(xi) EMPLOYEES. The Company and its subsidiaries have no employees.
(xii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or
any of its subsidiaries, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
properties or assets thereof, taken as a whole, or the consummation of the
transactions contemplated in this Agreement and the International Purchase
Agreement or the performance by the Company of its obligations hereunder or
thereunder; the aggregate of all pending legal or governmental proceedings
to which the Company or any of its subsidiaries is a party or of which any
of its property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to
its business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiii) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so
described and filed as required.
(xiv) REIT Status. The Company elected to be taxed as a real
estate investment trust (a "REIT") under the Internal Revenue Code of 1986,
as amended (the "Code"), commencing with its taxable year ended
December 31, 1994, and the Company intends to continue to operate in a
manner consistent with such election and all rules with which a REIT must
comply. Commencing with the Company's taxable year ended December 31, 1994,
the Company was organized in conformity with the requirements for
qualification as a REIT, and its
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planned method of operation, and its actual method of operation from
February 12, 1994 through the date of the Prospectuses, will enable it to
meet the requirements for qualification and taxation as a REIT under the
Code. Westland Properties, Inc. ("WPI"), a Delaware corporation in which
the Company owns all of the issued and outstanding stock of WPI, except
for certain preferred stock which is owned by approximately 120
individuals, will elect to be taxed as a REIT under the Code commencing
with its taxable year ended December 31, 1996, and WPI intends to continue
to operate in a manner consistent with such election and all rules with
which a REIT must comply. Commencing with WPI's taxable year ending
December 31, 1996, WPI was organized in conformity with the requirements
for qualification as a REIT, and its planned method of operation, and its
actual method of operation from January 1, 1996 through the date of the
Prospectuses, will enable WPI to meet the requirements for qualification
and taxation as a REIT under the Code.
(xv) NYSE LISTING. The shares of Common Stock, including the
Securities, have been approved for listing on the New York Stock Exchange
("NYSE"), subject to official notice of issue.
(xvi) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property,
including a non-transferable, non-exclusive, royalty-free right and license
granted by Westfield Corporation, Inc. to the Company to use the name of
"Westfield" in the names "Westfield America, Inc." and "Westfield
Shoppingtown" as evidenced by the Trade Name License Agreement and the
amendments thereto (collectively, "Intellectual Property") necessary to
carry on the business now operated by it, and neither the Company nor any of
its subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xvii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency,
foreign or domestic, is necessary or required for the performance by the
Company of its obligations hereunder, in connection with the offering,
issuance or sale of the Securities hereunder and under the International
Purchase Agreement or the consummation of the transactions contemplated by
this Agreement and the International Purchase Agreement, except such as
have been already obtained or will be obtained as of the Closing Time or as
may be required under the 1933 Act or the 1933 Act Regulations or foreign
or state securities or blue sky laws.
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(xviii) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except for such
Governmental Licenses the failure of which to obtain would not reasonably
be expected to have a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to result in a Material Adverse
Effect.
(xix) TITLE TO PROPERTY. (A) Except as described in the
Prospectuses, the Company and its subsidiaries, or any partnership or joint
venture in which the Company or its subsidiaries is a managing partner or
managing joint venturer, has good and marketable title in fee simple to, or
a valid leasehold interest in, all real property and interests in real
property owned or leased by each of them which is material to the business
of the Company and its subsidiaries considered as one enterprise,
including, but not limited to, the properties referred to under the heading
"Business and Properties" in the Prospectuses (collectively, for purposes of
this Section 1(a)(xx), the "Properties"); in each case, such title is free
and clear of all liens, encumbrances, claims, security interests and defects
of any kind (including, without limitation, options to purchase and rights
of first refusal), other than those referred to in the Prospectuses, those
contained in the partnership or joint venture agreements or those which do
not, singly or in the aggregate, materially affect the value of such
Properties and do not materially interfere with the use made and proposed
to be made of the Properties by the Company or any of its subsidiaries;
(B) all liens, charges, encumbrances, claims, or restrictions on or
affecting the Properties which are required to be disclosed in the
Prospectus are disclosed therein; (C) neither the Company nor any of its
subsidiaries or, to the best knowledge of any of them, any lessee under a
lease relating to any of the
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Properties, is in default under any of the leases relating thereto, and
neither the Company nor any of its subsidiaries knows of any event which,
but for the passage of time or the giving of notice, or both, would
constitute a default under any of such leases, except such defaults that
would not reasonably be expected to result in a Material Adverse Effect;
(D) each of the Properties is in compliance with all applicable codes,
ordinances, zoning laws and regulations, and neither the Company nor any
of its subsidiaries has received a notice of violation of any of the
foregoing, except for such failures to comply or violations which would
not reasonably be expected to result in a Material Adverse Effect; (E)
neither the Company nor any of its subsidiaries has any knowledge of any
pending or threatened condemnation or zoning change with respect to all
or any portion of any of the Properties, or of any other proceeding or
action that will affect the size of, use of, improvements on, construction
on, or access to all or any portion of any of the Properties, except such
proceedings or actions that would not reasonably be expected to result in
a Material Adverse Effect; (F) the maintenance, service, advertising and
other like contracts and agreements with respect to the ownership and
operation of Properties other than the Management Agreements and the
Advisory Agreement (the "Service Contracts") are in full force and
effect, except where the failure to be in full force and effect would not
reasonably be expected to result in a Material Adverse Effect, and are on
commercially reasonable terms and are incidental and reasonably related to
the ownership and/or operation of its Properties and neither the Company
nor its subsidiaries is in default under any of the Service Contracts except
for such defaults that would not reasonably be expected to result in a
Material Adverse Effect; (G) all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one enterprise,
and under which the Company or any of its subsidiaries holds Properties are
in full force and effect, and neither the Company nor any of its
subsidiaries has any notice of any claim of any sort that has been asserted
by anyone adverse to the rights of the Company or any subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession of the
leased or subleased premises under any such lease or sublease, except for
any claim that could not reasonably be expected to result in a Material
Adverse Effect; and (H) except as set forth in the Prospectuses, there
exist no liens, encumbrances, claims, security interests and defects of
any kind on the Company's or any subsidiary's ability to collect rents from
its Properties, except for such liens, encumbrances, claims, security
interests and defects that would not reasonably be expected to result in a
Material Adverse Effect, and the Company's collection of such rents is in
accordance with all applicable laws, rules and regulations and neither the
Company nor any of its subsidiaries has received a notice of violation of
any of the foregoing, except for such violations that would not reasonably
be expected to have a Material Adverse Effect.
(xx) TITLE INSURANCE. Each of the Company and its subsidiaries has
title insurance on all of its shopping centers, subject only to liens,
encumbrances, claims, security interests and defects that do not, singly or
in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its subsidiaries; such title insurance is in full force
and effect; and no notice of cancellation has been received with respect
thereto and, to the knowledge of the Company, none is threatened.
(xxi) MORTGAGES. The mortgages and deeds of trust encumbering the
properties and assets described in the Prospectuses (a) are not convertible
into an equity ownership interest in the Company or any of its
subsidiaries, and (b) except as disclosed in the Prospectuses, neither the
Company nor any of its subsidiaries holds a participating interest therein,
and (c) except as disclosed in the Prospectuses, such mortgages and deeds
of trust are not cross-defaulted or cross-collateralized to any property
not owned or leased by the Company or any of its subsidiaries.
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(xxii) STABILIZATION. The Company has not taken and will not take,
directly or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the price
of the Common Stock.
(xxiii) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxiv) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect or otherwise require disclosure in the Registration
Statement, (A) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata)
or wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental
Laws and are in compliance with their requirements, (C) there are no
pending or, to the knowledge of the Company, threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) to the knowledge of the Company, there are no events
or circumstances that would reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
The Company has conducted environmental investigations of, and has
reviewed information regarding, its business, properties and operations as
described in the Registration Statement; on the basis of such reviews,
investigations and inquiries, the Company has reasonably concluded that,
except as disclosed in the Registration Statement, any costs and
liabilities associated with such matters would not have a Material Adverse
Effect on the Company or otherwise require disclosure in the Registration
Statement.
(xxv) TAXES. (i) The Company has prepared and filed when due all
material Federal, state, local and foreign returns for "Taxes" (as
hereinafter defined) that are
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required to be filed by it for all taxable periods through the date of
this Purchase Agreement; all such returns are true, correct and complete
in all material respects; the Company has paid all Taxes reported as
due on such returns, except to the extent that any taxes are being contested
in good faith or for which a reserve has been established and has paid any
other material Taxes for which it is liable; (ii) except as previously
disclosed in writing, there are no material liens or claims for Taxes
outstanding upon or against or threatened upon or against the Company or any
of its assets (other than liens for Taxes which are not yet due and
payable); and (iii) no audit, inquiry, investigation or similar proceeding
with respect to Taxes is currently pending or, to the knowledge of the
Company, threatened against the Company or any of its assets with respect to
which it may be liable for the payment of Taxes, an adverse outcome of which
would reasonably be expected to result in a Material Adverse Effect.
As used in the above paragraph, the term "Tax" or "Taxes" shall
mean all United States Federal, state, local and foreign taxes, assessments
or other governmental charges (whether imposed directly or through
withholding by any governmental entity), including any interest, penalties
and additions to taxes applicable thereto.
(xxvi) REGISTRATION RIGHTS. Except as set forth in the
Prospectuses, there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act.
(xxvii) ENFORCEABILITY OF GARDEN STATE PLAZA LOAN. Based on
opinions of counsel received by the Company, each of the $145
million Promissory Note and the Mortgage, Pledge and Security Agreement
will be at the time of the Closing Date, duly authorized and executed and
delivered by Westland Management, Inc. and Westfield Partners, Inc., and is
a valid and binding agreement of Westland Management, Inc. and Westfield
Partners, Inc., enforceable against Westland Management, Inc. and Westfield
Partners, Inc. in accordance with its terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and
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(ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(xxviii) ENFORCEABILITY OF GARDEN STATE PLAZA OPTION. Based on
opinions of counsel received by the Company, the GSP Option Agreement
and any amendments thereto have been, or will be at the time of the Closing
Date, duly authorized and executed and delivered by Westfield Capital
Corporation Finance Pty. Limited, and is a valid and binding agreement of
Westfield Capital Corporation Finance Pty. Limited, enforceable against
Westfield Capital Corporation Finance Pty. Limited in accordance with its
terms, except to the extent that enforcement thereof may be limited by
(i) bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting creditors' rights
generally and (ii)
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general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(xxix) ENFORCEABILITY OF WESTFIELD HOLDING WARRANTS. Based on
opinions of counsel received by the Company, the WHL Option
Deed and any amendments thereto have been, or will be at the time of the
Closing Date, duly authorized and executed and delivered by Westfield
Holdings Limited, and is a valid and binding agreement of Westfield
Holdings Limited, enforceable against Westfield Holdings Limited in
accordance with its terms, except to the extent that enforcement thereof
may be limited by (i) bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(xxx) ENFORCEABILITY OF THE MANAGEMENT, ADVISORY AND DEVELOPMENT
AGREEMENTS. Based on opinions of counsel received by the Company, each of
the Management Agreements and Advisory Agreement and any amendments
thereto, has been, or will be at the time of the Closing Date, duly
authorized and executed and delivered by CenterMark Management Company and
Westfield U.S. Advisor, L.P, respectively, and is a valid and binding
agreement of CenterMark Management Company and Westfield U.S. Advisor,
L.P., respectively, enforceable against CenterMark Management Company and
Westfield U.S. Advisor, L.P., respectively, in accordance with its terms,
except to the extent that enforcement thereof may be limited by
(i) bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(xxxi) ASSETS OWNED BY CMF, INC. The May Properties as described
in the Prospectuses represent the sole assets of CMF, Inc.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Company or any of its subsidiaries and delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each U.S. Underwriter as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each U.S. Underwriter, severally and not
jointly, and each U.S. Underwriter, severally and not jointly, agrees to
purchase from the Company, at the price per share set forth in Schedule B, the
number of Initial U.S. Securities set forth in Schedule A opposite the name of
such U.S.
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Underwriter, plus any additional number of Initial U.S. Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the U.S. Underwriters,
severally and not jointly, to purchase up to an additional 2,295,000 shares of
Common Stock at the price per share set forth in Schedule B, less an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial U.S. Securities but not payable on the U.S. Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Company setting forth the number of U.S. Option Securities as
to which the several U.S. Underwriters are then exercising the option and the
time and date of payment and delivery for such U.S. Option Securities. Any such
time and date of delivery for the U.S. Option Securities (a "Date of Delivery")
shall be determined by the Global Coordinator, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time, as hereinafter defined. If the option is exercised as to all
or any portion of the U.S. Option Securities, each of the U.S. Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of U.S. Option Securities then being purchased which the number of
Initial U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter bears to the total number of Initial U.S. Securities, subject in
each case to such adjustments as the Global Coordinator in its discretion shall
make to eliminate any sales or purchases of fractional shares.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York
10022, or at such other place as shall be agreed upon by the Global Coordinator
and the Company, at 9:00 A.M. (New York City time) on the third (fourth, if the
pricing occurs after 4:30 P.M. (New York City time) on any given day) business
day after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Global Coordinator and the Company (such time and
date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the U.S. Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the U.S. Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities
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to be purchased by them. It is understood that each U.S. Underwriter has
authorized the U.S. Representatives, for its account, to accept delivery of,
receipt for, and make payment of the purchase price for, the Initial U.S.
Securities and the U.S. Option Securities, if any, which it has agreed to
purchase. Merrill Lynch, individually and not as representative of the U.S.
Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Initial U.S. Securities or the U.S. Option Securities,
if any, to be purchased by any U.S. Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case
may be, but such payment shall not relieve such U.S. Underwriter from its
obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in The City of New
York not later than 10:00 A.M. (New York City time) on the business day prior to
the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
U.S. Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify Merrill Lynch immediately, and
confirm the notice in writing, (i) of the effectiveness of the Registration
Statement and when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectuses or any amended
Prospectuses shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectuses or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such Prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. At any time when the Prospectuses are required
to be delivered under the 1933 Act in connection with the sales of the
Securities, the Company will give the Global Coordinator notice of its intention
to file or prepare any amendment to the
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Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the Prospectuses
included in the Registration Statement at the time it became effective or to
the Prospectuses, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Global Coordinator or counsel for the U.S. Underwriters shall object.
(c) DELIVERY OF REGISTRATION STATEMENT. The Company has furnished or will
deliver to the U.S. Representatives and counsel for the U.S. Underwriters,
without charge, signed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the U.S. Representatives,
without charge, one conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the U.S.
Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary prospectus as
such U.S. Underwriter reasonably requested, and the Company hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each U.S. Underwriter, without charge, during the period when the
U.S. Prospectus is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934 (the "1934 Act"), such number of copies of the U.S.
Prospectus (as amended or supplemented) as such U.S. Underwriter may reasonably
request. The U.S. Prospectus and any amendments or supplements thereto
furnished to the U.S. Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement, the
International Purchase Agreement and in the Prospectuses. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the U.S. Underwriters or
for the Company, to amend the Registration Statement or amend or supplement any
Prospectus in order that the Prospectuses will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, in form and substance satisfactory to counsel for the
U.S. Underwriters, such amendment or supplement as may be necessary to correct
such statement or omission or to make the Registration Statement
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or the Prospectuses comply with such requirements, and the Company will
furnish to the U.S. Underwriters such number of copies of such amendment or
supplement as the U.S. Underwriters may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in
cooperation with the U.S. Underwriters, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Global Coordinator may designate and
to maintain such qualifications in effect for a period of not less than one year
from the later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) RULE 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectuses
under "Use of Proceeds."
(i) LISTING. The Company will use its best efforts to effect the listing
of the Common Stock (including the Securities) on the NYSE.
(j) RESTRICTION ON SALE OF SECURITIES. During a period of 90 days from
the date of the Prospectuses, the Company will not, without the prior written
consent of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder or under the International Purchase
Agreement, (B) the Series B Preferred Shares and the 1997 WAT Warrant and (C)
any shares of Common Stock issued by the Company upon the exercise of an option
or warrant or the conversion of a security outstanding on the date hereof
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or to be issued at the Closing of the offerings as described in the
Prospectuses and referred to in the Prospectuses.
(k) REIT REQUIREMENTS. The Company will use its best efforts to (i)
continue to meet the requirements to qualify as a REIT under the Code and
(ii) cause WPI to continue to meet the requirements to qualify as a REIT
under the Code, unless the Company's Board of Directors, with the consent of a
majority of each of the Series A Preferred Shares and Series B Preferred
Shares, voting as a single class, and the Common Stock determines to revoke
the Company's REIT election because of circumstances or changes in the Code
(or in the Treasury regulations).
(l) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
(m) COMPLIANCE WITH NASD RULES. The Company hereby agrees that it will
ensure that the Reserved Securities will be restricted as required by the NASD
or the NASD rules from sale, transfer, assignment, pledge or hypothecation for a
period of three months following the date of this Agreement. The U.S.
Underwriters will notify the Company as to which persons will need to be so
restricted. At the request of the U.S. Underwriters, the Company will direct
the transfer agent to place a stop transfer restriction upon such securities for
such period of time. Should the Company release, or seek to release, from such
restrictions any of the Reserved Securities, the Company agrees to reimburse the
U.S. Underwriters for any reasonable expenses (including, without limitation,
legal expenses) they incur in connection with such release.
(n) COMPLIANCE WITH RULE 463. The Company will file with the Commission
such reports on Form SR as may be required pursuant to Rule 463 of the 1933 Act
Regulations.
(o) Notwithstanding anything to the contrary contained in the Garden
State Option Agreement, the Company agrees that it shall obtain the approval
of a majority of the holders of its Common Stock, other than Westfield
Holdings Limited and its affiliates (including, without limitation, Westfield
America Trust) and interests associated with the Lowy family, voting at a
meeting on such issue, prior to exercising the Garden State Plaza Option if
the purchase price payable on such exercise exceeds $55 million (net of the
outstanding principal balance under the Garden State Plaza Loan).
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters and the transfer of
the Securities between the U.S. Underwriters and the International Managers,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey
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and any supplement thereto, (viii) the fees and expenses of any transfer
agent or registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities, (x) the
fees and expenses incurred in connection with the listing of the Securities on
the NYSE and (xi) all costs and expenses of the Underwriters, including the fees
and disbursements of counsel for the Underwriters, in connection with matters
related to the Reserved Securities which are designated by the Company for sale
to certain employees, officers and family members of such officers of U.S.
affiliates of Westfield Holdings Limited.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the U.S.
Representatives in accordance with the provisions of Section 5 or
Section 9(a)(i) hereof, the Company shall reimburse the U.S. Underwriters for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the U.S. Underwriters.
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any of its
subsidiaries delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, shall have become effective
and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the U.S. Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) OPINION OF COUNSEL FOR THE COMPANY. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Debevoise & Plimpton, counsel for the Company, in form and substance
satisfactory to counsel for the U.S. Underwriters, to the effect set forth in
clauses __ of Exhibit A hereto and to such further effect as counsel to the U.S.
Underwriters, together with signed or reproduced copies of such letter for each
of the other U.S. Underwriters with respect to such matters as they may
reasonably request.
In addition, the opinion of Debevoise & Plimpton shall state that they
have participated in conferences with officers and representatives of the
Company, counsel for the Company, counsel for the Underwriters, representatives
of the independent accountants of the Company and you at which the contents of
the Registration Statement and the Prospectus and
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related matters were discussed and, although they are not passing upon, and
do not assume any responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectuses
and have made no independent check or verification thereof, on the basis of
the foregoing, no facts have come to such counsel's attention that have led
them to believe that the Registration Statement (except for (i) financial
statements and supported schedules and other financial information and data
included therein or omitted therefrom and (ii) tax matters as to which such
counsel will not be required to express any beliefs), at the time it became
effective, contained an untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading or that each of the Prospectuses except
as aforesaid, as of its date and as of the date hereof, contained or contains
an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) OPINION OF THE COMPANY. At Closing Time, the U.S. Representatives
shall have received the favorable opinion, dated as of Closing Time, Robert
Bermingham, General Counsel for the Company, in form and substance satisfactory
to counsel for the U.S. Underwriters, to the effect set forth in clauses __ of
Exhibit A hereto and to such further effect as counsel to the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of the other
U.S. Underwriters with respect to such matters as they may reasonably request.
(d) OPINION OF TAX COUNSEL FOR THE COMPANY. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel for the Company,
substantially in the form of Exhibit __ attached hereto, together with signed or
reproduced copies of such letter for each of the other U.S. Underwriters.
In addition, the opinion of Tax Counsel for the Company shall state that
they have participated in conferences at which the contents of the
Registration Statement and the Prospectuses relating to Federal income tax
matters were discussed with officers and other representatives of the
Company, the Underwriters, counsel for the Underwriters and the Company's
independent accountants. On the basis of the foregoing, although they are
not passing upon and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectuses, and they have not made any independent check or
verification thereof, no facts have come to their attention that have led
them to believe (i) that at the time that the Registration Statement became
effective, the discussion in the Registration Statement, insofar as it
relates to tax matters contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which they
were made, not misleading, or (ii) that the discussion in the Prospectuses as
it relates to tax matters, as of the date of the Prospectuses and as of the
date hereof, included any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made,
not misleading. They shall state that they express no opinion or belief with
respect to any other section of the Registration Statement or the
Prospectuses, including, without limitation, the financial statements,
schedules and other financial data included in the Prospectuses or excluded
therefrom and included in the exhibits to the Registration Statement.
(e) OPINION OF MISSOURI COUNSEL FOR THE COMPANY. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Bryan Cave LLP, Missouri counsel for the Company, in form and
substance satisfactory to counsel for the U.S. Underwriters, to the effect set
forth in clauses __ of Exhibit A hereto and to such further effect as counsel to
the U.S. Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters with respect to such matters as they may
reasonably request.
(f) OPINION OF AUSTRALIAN COUNSEL FOR WESTFIELD HOLDINGS. At Closing
Time, the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time, of Minter Ellison, Australian Counsel for Westfield
Holdings, in form and substance satisfactory to counsel for the U.S.
Underwriters, to the effect set forth in clauses of Exhibit A hereto and
to such further effect as counsel to the U.S. Underwriters, together with
signed or reproduced copies of such letter for each of the other U.S.
Underwriters with respect to such matters as they may reasonably request.
(g) OPINION OF COUNSEL FOR THE U.S. UNDERWRITERS. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters with respect to the matters set forth in
clauses (ix), (x) and (xi)(b) of Exhibit A. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York and the federal law of the United States
upon the opinions of counsel satisfactory to the U.S. Representatives. Such
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counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company and its subsidiaries and certificates of public officials.
In addition, the opinion of Counsel for the U.S. Underwriters shall state
that they have participated in conferences with officers and representatives
of the Company, counsel for the Company, counsel for the Underwriters,
representatives of the independent accountants of the Company and you at
which the contents of the Registration Statement and the Prospectuses and
related matters were discussed and, although they are not passing upon, and
do not assume any responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectuses
and have made no independent check or verification thereof, on the basis of
the foregoing, no facts have come to such counsel's attention that have led
them to believe that the Registration Statement (except for financial
statements and supported schedules and other financial information and data
included therein or omitted therefrom), at the time it became effective,
contained an untrue statement of a material fact or ommitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that each of the Prospectuses except as
aforesaid, as of its date and as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(h) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectuses, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the U.S.
Representatives shall have received a certificate of the Co-President and the
Chief Financial Officer of the Company, dated as of Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct with
the same force and effect as though expressly made at and as of Closing Time,
(iii) the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to Closing Time, and
(iv) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted or are
pending or are contemplated by the Commission.
(i) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the U.S. Representatives shall have received from each of Ernst &
Young LLP, Coopers & Lybrand LLP and BDO Seidman LLP, a letter dated such date,
in form and substance satisfactory to the U.S. Representatives, together with
signed or reproduced copies of such letter for each of the other U.S.
Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectuses.
(j) BRING-DOWN COMFORT LETTER. At Closing Time, the U.S. Representatives
shall have received from each of Ernst & Young LLP, Coopers & Lybrand LLP
and BDO Seidman LLP, a letter, dated as of Closing Time, to the effect
that each of Ernst & Young LLP, Coopers & Lybrand LLP and BDO Seidman LLP
reaffirms the statements made in the letter furnished pursuant to
subsection (h) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(k) APPROVAL OF LISTING. At Closing Time, the Securities shall have been
approved for listing on the NYSE, subject only to official notice of issuance.
(l) NO OBJECTION. The NASD shall have confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements relating to the offering of the Securities
pursuant to this Agreement.
(m) LOCK-UP AGREEMENTS. At the date of this Agreement, the U.S.
Representatives shall have received agreements substantially in the forms of
Exhibit B and Exhibit C hereto signed by the persons listed on Schedule C
hereto.
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(n) PURCHASE OF INITIAL INTERNATIONAL SECURITIES. Contemporaneously with
the purchase by the U.S. Underwriters of the Initial U.S. Securities under this
Agreement, the International Managers shall have purchased the Initial
International Securities under the International Purchase Agreement.
(o) CONDITIONS TO PURCHASE OF U.S. OPTION SECURITIES. In the event that
the U.S. Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the U.S. Option Securities, the representations
and warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any of its subsidiaries hereunder shall
be true and correct as of each Date of Delivery and, at the relevant Date of
Delivery, the U.S. Representatives shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the Co-President and the Chief Financial Officer of the
Company confirming that the certificate delivered at the Closing Time
pursuant to Section 5(g) hereof remains true and correct as of such Date of
Delivery.
(ii) OPINION OF COUNSEL FOR THE COMPANY. The favorable opinion of
Debevoise & Plimpton, counsel for the Company, in form and substance
satisfactory to counsel for the U.S. Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(b) hereof.
(iii) OPINION OF THE COMPANY. The favorable opinion of Robert
Bermingham, General Counsel for the Company, in form and substance
satisfactory to counsel for the U.S. Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(c) hereof.
(iv) OPINION OF TAX COUNSEL FOR THE COMPANY. The favorable opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel for the Company,
substantially in the form of Exhibit __ attached hereto.
(v) OPINION OF MISSOURI COUNSEL FOR THE COMPANY. The favorable
opinion of Bryan Cave LLP, Missouri counsel for the Company, in form and
substance satisfactory to counsel for the U.S. Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required
by Section 5(e) hereof.
(vi) OPINION OF AUSTRALIAN COUNSEL FOR WESTFIELD HOLDINGS. The
favorable opinion of Minter Ellison, Australian Counsel for Westfield
Holdings, in form and substance satisfactory to counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the Option Securities
to be purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(f) hereof.
(vii) OPINION OF COUNSEL FOR U.S. UNDERWRITERS. The favorable opinion
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the U.S.
Underwriters, dated such Date of Delivery, to the same effect as the
opinion required by Section 5(g) hereof.
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(viii) BRING-DOWN COMFORT LETTER. A letter from each of Ernst &
Young LLP, Coopers & Lybrand LLP and BDO Seidman LLP, in form and substance
satisfactory to the U.S. Representatives and dated such Date of Delivery,
substantially in the same form and substance as the letter furnished to the
Representatives pursuant to Section 5(i) hereof, except that the "specified
date" in the letter furnished pursuant to this paragraph shall be a date
not more than five days prior to such Date of Delivery.
(p) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the U.S. Underwriters shall have been furnished with such documents
and opinions as they may require for the purpose of enabling them to pass upon
the issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the U.S.
Representatives and counsel for the U.S. Underwriters.
(q) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of U.S. Option
Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant U.S.
Option Securities, may be terminated by the U.S. Representatives by notice to
the Company at any time at or prior to Closing Time or such Date of Delivery, as
the case may be, and such termination shall be without liability of any party to
any other party except as provided in Section 4 and except that Sections 1, 6, 7
and 8 shall survive any such termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF U.S. UNDERWRITERS. The Company agrees to indemnify
and hold harmless each U.S. Underwriter and each person, if any, who controls
any U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
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(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
U.S. Prospectus (or any amendment or supplement thereto); and provided further
that the foregoing indemnity with respect to any preliminary prospectus shall
not inure to the benefit of any U.S. Underwriter (or to the benefit of any
person controlling such U.S. Underwriter) from whom the person asserting any
such loss, liability, claim or damage purchased U.S. Securities if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary prospectus is eliminated or remedied in the U.S. Prospectus (as
amended or supplemented by the Company if the Company shall have furnished any
amendments or supplements thereto) and a copy of the U.S. Prospectus (as so
amended or supplemented), which at such time had been provided to the U.S.
Underwriters for their use, shall not have been furnished to such person at or
prior to the written confirmation of sale of such Securities to such person.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of the Company's officers who signed the Registration Statement,
and each person, if any, who controls any of the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary U.S.
prospectus or the U.S. Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such U.S. Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the U.S. Prospectus (or any amendment or supplement thereto).
25
<PAGE>
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement. Notwithstanding the immediately preceding sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by Section 6(a)(ii)
effected without its written consent if such indemnifying party (x) reimburses
such indemnified party in accordance with such request to the extent it
considers such request to be reasonable and (y) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
26
<PAGE>
(e) INDEMNIFICATION FOR RESERVED SECURITIES. In connection with the offer
and sale of the Reserved Securities, the Company agrees, promptly upon a request
in writing, to indemnify and hold harmless the Underwriters from and against any
and all losses, liabilities, claims, damages and expenses incurred by them as a
result of the failure of certain employees, officers and family members of such
officers of U.S. affiliates of Westfield Holdings Limited to pay for and accept
delivery of Reserved Securities which, by the end of the first business day
following the date of this Agreement, were subject to a properly confirmed
agreement to purchase.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the U.S. Underwriters, on the other hand, from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company, on the one hand, and of
the U.S. Underwriters, on the other hand, in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
U.S. Underwriters, on the other hand, in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the U.S.
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus, or,
if Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the U.S. Securities as set forth on
such cover.
The relative fault of the Company, on the one hand, and the Underwriters,
on the other hand, shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the U.S. Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the U.S. Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or
27
<PAGE>defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue or alleged untrue statement or omission
or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the U.S. Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
U.S. Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any U.S.
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the U.S. Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The U.S. Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the U.S. Prospectus,
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the U.S.
Representatives, impracticable to market the Securities
28
<PAGE>or to enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the Commission or the NYSE, or if trading generally on the
American Stock Exchange or the NYSE or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission, the NASD or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of
the U.S. Underwriters shall fail at Closing Time or a Date of Delivery to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the U.S. Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the U.S.
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of U.S. Securities to be purchased on such date, each of the
non-defaulting U.S. Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
U.S. Securities to be purchased on such date, this Agreement or, with respect to
any Date of Delivery which occurs after the Closing Time, the obligation of the
U.S. Underwriters to purchase and of the Company to sell the U.S. Option
Securities to be purchased and sold on such Date of Delivery shall terminate
without liability on the part of any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting U.S.
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the U.S.
Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either the U.S. Representatives or the Company
shall have the right to postpone Closing Time or the relevant Date of Delivery,
as the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein,
29
<PAGE>the term "U.S. Underwriter" includes any person substituted for a U.S.
Underwriter under this Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the Representatives at Merrill Lynch & Co.,
World Financial Center, North Tower, New York, New York 10281, attention of
Martin J. Cicco; and notices to the Company shall be directed to it at 11601
Wilshire Boulevard, 12th Floor, Los Angeles, California 90025, attention of
Robert P. Bermingham.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the U.S. Underwriters and the Company and its successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the U.S. Underwriters and the
Company and its successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the U.S. Underwriters and the Company and its successors,
and said controlling persons and officers and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any U.S. Underwriter shall be
deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
30
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the U.S. Underwriters and the Company in accordance with its terms.
Very truly yours,
WESTFIELD AMERICA, INC.
By__________________________________
Name:
Title:
31
<PAGE>
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
FURMAN SELZ LLC
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY
BT SECURITIES CORPORATION
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By ____________________________
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.
32
<PAGE>
SCHEDULE A
Number of
Initial
NAME OF UNDERWRITER Securities
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Furman Selz LLC...........................................
Goldman, Sachs & Co.......................................
Morgan Stanley & Co. Incorporated ........................
Prudential Securities Incorporated........................
Smith Barney Inc..........................................
BT Securities Corporation.................................
Total ......................................................... 15,300,000
Sch A-1
<PAGE>
SCHEDULE B
WESTFIELD AMERICA, INC.
18,000,000 Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $ .
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $[ ], being an amount equal to the initial
public offering price set forth above less $[ ] per share; provided that
the purchase price per share for any Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial Securities but not payable on the Option
Securities.
Sch B-1
<PAGE>
SCHEDULE C
List of persons and entities
subject to lock-up
Westfield Holdings Limited and its subsidiaries
Cordera Holdings Pty Limited
Richard Green
Sch C-1
<PAGE>
Exhibit A
FORM OF COUNSEL OPINION
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company is a corporation incorporated, is validly existing
in good standing under the laws of the State of Missouri.
[Missouri Counsel]
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the
Purchase Agreements. [Missouri Counsel]
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect. [General Counsel]
(iv) (a) The authorized capital stock of the Company is as set forth
in the Prospectuses in the column entitled "Historical" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to
the Purchase Agreements or pursuant to reservations or agreements referred
to in the Prospectuses or pursuant to the exercise of convertible securities
or options referred to in the Prospectuses) and (b) the issued and
outstanding capital stock of the Company is as set forth in the
Prospectuses in the column entitled "Historical" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to the
Purchase Agreements or pursuant to reservations or agreements referred to in
the Prospectuses or pursuant to the exercise of convertible securities or
options referred to in the Prospectuses); (c) the shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in violation
of the preemptive or other similar rights of any securityholder of the
Company under Missouri law. [Missouri Counsel]
(v) The Securities have been duly authorized for issuance and sale to
the Underwriters pursuant to the Purchase Agreements and, when issued and
delivered by the Company pursuant to the Purchase Agreements against
payment of the consideration set forth in the Purchase Agreement, will be
validly issued and fully paid and non-assessable and no holder of the
Securities is or will be subject to personal liability solely by reason of
being such a holder. [Missouri Counsel]
(vi) (a) To our knowledge, the issuance of the Securities is not
subject to preemptive or other similar rights of any securityholder of the
Company, and (b) under Missouri law, the issuance of the Securities is not
subject to preemptive or other similar rights of any securityholder of the
Company. [(a) General Counsel/(b) Missouri Counsel]
A-1
<PAGE>
(vii) Each subsidiary of the Company has been duly formed and is
validly existing and in good standing under the laws of the jurisdiction of
its origin, has the power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectuses and
is duly qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as disclosed in the Registration
Statement, all of the issued and outstanding capital stock or other
ownership interests of each such subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and, to his knowledge,
except as otherwise disclosed in the Prospectuses and the Purchase
Agreements, is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; and, to his knowledge, none of the
outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of such
Subsidiary. [General Counsel]
(viii) (a) The Purchase Agreements have been duly authorized and
executed by the Company, and (b) have been delivered by the Company.
[Missouri Counsel]
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectuses pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); and, to
our knowledge, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or threatened by the Commission. [Debevoise]
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectuses and each amendment or
supplement to the Registration Statement and Prospectuses as of their
respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom, as to which
we need express no opinion) complied as to form in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations.
[Debevoise]
(xi) The form of certificate used to evidence the Common Stock
complies in all material respects with (a) all applicable requirements of
Missouri law, with any applicable requirements of the charter and by-laws
of the Company and (b) the requirements of the New York Stock Exchange.
[(a) Missouri Counsel/(b) Debevoise]
(xii) To his knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company or
any of its subsidiaries is a party, or to which the property of any of them
is subject, before or brought by any court or governmental agency or body,
domestic or foreign, which might reasonably be
A-2
<PAGE>
expected to result in a Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the consummation of the
transactions contemplated in the Purchase Agreement or the performance by
the Company of its obligations thereunder. [General Counsel]
(xiii) The information in the Prospectuses under "Description of
Capital Stock -- Capital Stock" (except for matters as to amounts of
outstanding Capital Stock, as to which such counsel expresses no opinion),
"-- Senior Preferred Shares," "-- Preferred Shares," "-- Series A Preferred
Shares," "--Common Shares" (except for the second, third, fifth and sixth
sentence under "--Distribution Rights") and "--Restrictions on Ownership and
Transfer" (except for the first and last paragraphs) and "Certain Provisions
of the Company's Articles of Incorporation and Bylaws and of Missouri Law,"
and in the Registration Statement under Item 34, conform as to legal matters
in all material respects with the charter and by-laws of the Company and the
described provisions of the General Business and Corporation Law of
Missouri.
[Missouri Counsel]
(xiv) To our knowledge, (a) there are no U.S., Federal or New York
statutes or regulations that are required to be described in the
Prospectuses that are not described as required (other than statutes and
regulations relating to taxes as to which such counsel expresses no opinion)
and [(b) there are no Missouri statutes or Missouri regulations that are
required to be described in the Prospectuses that are not described as
required.] [(a) Debevoise and General Counsel/(b) Missouri Counsel]
(xv) All descriptions of contracts in the Registration Statement
under "Advisory, Management and Development Services of the Company,"
"Certain Transactions," "The Company-Company Structure and History" and
"The Company-Westfield Holdings" to which the Company or its
subsidiaries is a party are accurate in all material respects;
and to our knowledge, there are no contracts or documents that
are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not
been not been so described and filed as required. [Debevoise]
(xvi) To his knowledge, neither the Company nor any of its
subsidiaries is in violation of its charter, by-laws or other
organizational documents and no default by the Company or any of its
subsidiaries exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement
or the Prospectuses or filed as an exhibit to the Registration Statement,
except for such defaults that would not reasonably be expected to result in
a Material Adverse Effect.
[General Counsel]
(xvii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree known by us of, any
court or governmental authority or agency, domestic or foreign (other than
under the 1933 Act and the 1933 Act Regulations, which have been obtained,
or as may be required under the securities or blue sky laws of the various
states, as to which we need express no opinion) is necessary or
A-3
<PAGE>
required in connection with the due authorization, execution and delivery
of the Purchase Agreements or for the offering, issuance or sale of the
Securities.
[Debevoise]
(xviii) The execution, delivery and performance of the Purchase
Agreement and the consummation of the issuance and sale of the Securities
and the compliance by the Company with its obligations under the Purchase
Agreements do not and will not, nor will such action result in any
violation of, the provisions of the charter and by-laws of the Company, or
any Missouri law, statute, rule or regulation [which, in our experience,
are normally applicable to transactions of the type contemplated by the
Purchase Agreements] (provided that we make no comment with respect to
antifraud laws or any law, rule or regulation that may have become
applicable to the Company as a result of the Underwriters' involvement
with the transactions contemplated by the Purchase Agreements or because
of any facts specifically pertaining to the Underwriters). [MISSOURI
COUNSEL]
(xix) The execution, delivery and performance of the Purchase
Agreements and the consummation of the transactions contemplated in the
Purchase Agreements and in the Registration Statement (including the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the Prospectuses under the caption
"Use Of Proceeds") and compliance by the Company with its obligations under
the Purchase Agreements do not and will not, nor will such action result
in any violation of the provisions of any applicable New York or U.S.
federal law, statute, rule, regulation, judgment, order, writ or decree,
known to us, of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries, or any of their respective properties, assets or operations.
[Debevoise]
(xx) The execution, delivery and performance of the Purchase
Agreements and the consummation of the transactions contemplated in the
Purchase Agreements and in the Registration Statement (including the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the Prospectuses under the caption
"Use Of Proceeds") and compliance by the Company with its obligations under
the Purchase Agreements have been duly authorized by all necessary corporate
and other action and do not and will not, whether with or without the giving
of notice or lapse of time or both, conflict with or constitute a breach of,
or default or Repayment Event (as defined in Section 1(a)(xi) of the
Purchase Agreements) under or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or any other agreement or
instrument, known to us, to which the Company or any of its subsidiaries is
a party or by which any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not reasonably be expected to result in a Material
Adverse Effect). [General Counsel]
(xxi) To our knowledge, there are no persons with registration rights
or other similar rights to have any securities registered pursuant to the
Registration Statement or, except as described in the Prospectuses,
otherwise registered by the Company under the 1933 Act.
[Debevoise]
(xxii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
1940 Act.
A-4
<PAGE>
[Debevoise]
(xxiii) Each of the $145 million Promissory Note and the Pledge and
Security Agreement will be at the time of the Closing Date, duly authorized
and executed and delivered by Westland Management, Inc. and Westfield
Partners, Inc., and is a valid and binding agreement of Westland
Management, Inc. and Westfield Partners, Inc., enforceable against Westland
Management, Inc. and Westfield Partners, Inc. in accordance with its terms,
except to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law),[ except that such
counsel need express no opinion as to the priority of the security
interests granted by the Pledge and Security Agreement. In
connection with the foregoing opinion, such counsel may note that (a)
provisions of the $145 million Promissory Note and the Mortgage, Pledge and
Security Agreement which permit the Company to take action or make
determinations may be subject to a requirement that such action be taken or
such determinations be made on a reasonable basis and in good faith and (b)
a holder of the $145 million Promissory Note may, under certain
circumstances, be called upon to prove the outstanding amount of the loans
evidenced thereby.] [Debevoise/ Security Interest Opinion to come]
(xxiv) The GSP Option Agreement and any amendments thereto has
been, or will be at the time of the Closing Date, duly authorized and
executed and delivered by Westfield Capital Corporation Finance Pty.
Limited, and is a valid and binding agreement of Westfield Capital
Corporation Finance Pty. Limited, enforceable against Westfield Capital
Corporation Finance Pty. Limited in accordance with its terms, except to
the extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law). [Australian
Counsel/Debevoise]
(xxv) The WHL Option Deed and any amendments thereto has been, or
will be at the time of the Closing Date, duly authorized and executed and
delivered by Westfield Holdings Limited, and is a valid and binding
agreement of Westfield Holdings Limited, enforceable against Westfield
Holdings Limited in accordance with its terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in
a proceeding in equity or at law). [Australian Counsel]
A-5
<PAGE>
(xxvi) Each of the Management Agreements and Advisory Agreement and
any amendments thereto, has been, or will be at the time
of the Closing Date, duly authorized and executed and delivered by
CenterMark Management Company and Westfield U.S. Advisor, L.P. ,
respectively, and is a valid and binding agreement of CenterMark Management
Company and Westfield U.S. Advisor, L.P., respectively, enforceable against
CenterMark Management Company and Westfield U.S. Advisor, L.P.,
respectively, in accordance with its terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in
a proceeding in equity or at law). [Debevoise]
In giving such opinions, such counsel may state that their opinion is
limited to matters governed by the federal laws of the United States of America
and the laws of the State of New York (or, in the case of Missouri counsel, on
the laws of the State of Missouri). In addition, such counsel may rely upon the
representations and warranties as to the matters of fact contained in the
Purchase Agreements and the originals or copies certified to such counsel's
satisfaction of such corporate records, documents, certificates and other
instruments as in the judgment of such counsel necessary or appropriate to
enable such counsel to render such opinions.
A-6
<PAGE>
Exhibit B
May __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
FURMAN SELZ LLC
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
BT SECURITIES CORPORATION
as Representative(s) of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Public Offering by Westfield America, Inc.
Ladies and Gentlemen:
The undersigned, Westfield Holdings Limited on its own behalf and on behalf
of its subsidiaries, understands that Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Furman Selz LLC, Goldman,
Sachs & Co., Morgan Stanley & Co. Incorporated, Prudential Securities
Incorporated, Smith Barney Inc. and BT Securities Corporation propose to enter
into a Purchase Agreement (the "Purchase Agreement") with the Company providing
for the public offering of shares (the "Securities") of the Company's common
stock, par value $.01 per share (the "Common Stock"). In recognition of the
benefit that such an offering will confer upon the undersigned as a shareholder
of the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the Purchase Agreements that the undersigned will
not, without the prior written consent of Merrill Lynch, directly or
indirectly, (i) sell, grant any option, right or warrant for the sale of,
or purchase or otherwise dispose of or transfer any shares of the Common
Stock or any securities convertible into or exchangeable or exercisable for
Common Stock or file any registration statement under the Securities Act of
1933, as amended, with respect to any of the
B-1
<PAGE>
foregoing or (ii) enter into any swap or any otheragreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap transaction
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise (x) during a period of 36 months from the date of the Prospectuses
(as defined in the Purchase Agreement) in the case of now outstanding
securities as of the date of the Prospectuses and (y) during a period of
90 days from the date of the Prospectuses in the case of securities issued
after the date of the Prospectuses.
Very truly yours,
Signature: __________________________
Print Name: ________________________
B-2
<PAGE>
Exhibit C
May , 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
FURZMAN SELZ LLC
GOLDMAN, SACHS & CO.
MORGAN STANLEY &. CO. INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
BT SECURITIES CORPORATION
as Representative(s) of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: PROPOSED PUBLIC OFFERING BY WESTFIELD AMERICA, INC.
---------------------------------------------------
Ladies and Gentlemen:
The undersigned, Cordera Holdings Pty Limited and Richard Green,
understand that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Furzman Selz LLC, Goldman, Sachs & Co.,
Morgan Stanley & Co. Incorporated, Prudential Securities Incorporated, Smith
Barney Inc. and BT Securities Corporation propose to enter into a Purchase
Agreement (the "Purchase Agreement") with the Company providing for the
public offering of shares (the "Securities") of the Company's common stock,
par value $.01 per share (the "Common Stock"). In recognition of the benefit
that such an offering will confer upon the undersigned as a shareholder of
the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with
each underwriter to be named in the Purchase Agreement that undersigned will
not, without the prior written consent of Merrill Lynch, directly or
indirectly, (i) sell, grant any option, right or warrant for the sale of, or
purchase or otherwise dispose of or transfer any shares of the Common Stock
or any securities convertible into or exchangeable or exercisable for Common
Stock or file any registration statement under the Securities Act of 1933, as
amended, with respect to any of the foregoing or (ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap transaction is to be settled by delivery of
Common Stock
<PAGE>
or other securities, in cash or otherwise during a period of 90 days from the
date of the Prospectuses in the case of securities issued after the date of
the Prospectuses.
Very truly yours,
CORDERA HOLDINGS PTY LIMITED
Signature:
-------------------------
Print:
------------------------------
RICHARD GREEN
Signature:
----------------------------
Richard Green
<PAGE>
EXHIBIT 1.2
WESTFIELD AMERICA, INC.
(a Missouri corporation)
2,700,000 Shares of Common Stock
(Par Value $.01 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
Dated: May __, 1997
MERRILL LYNCH INTERNATIONAL
FURMAN SELZ LLC
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO. INTERNATIONAL
PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
SMITH BARNEY INC.
BANKERS TRUST INTERNATIONAL PLC
as Lead Managers of the several International Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
Westfield America, Inc., a Missouri corporation, formerly known as
CenterMark Properties, Inc. (the "Company"), confirms its agreement with Merrill
Lynch International ("Merrill Lynch") and each of the other international
underwriters named in Schedule A hereto (collectively, the "International
Managers", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Merrill Lynch, Furman Selz
LLC, Goldman Sachs International, Morgan Stanley & Co. International,
Prudential-Bache Securities (U.K.) Inc. Smith Barney Inc. and Bankers Trust
International PLC. are acting as representatives (in such capacity, the "Lead
Managers"), with respect to the issue and sale by the Company and the purchase
by the International Managers, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $.01 per share, of the
Company ("Common Stock") set forth in said Schedule A, and with respect to the
grant by the Company to the International Managers, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of 405,000 additional shares of Common Stock to cover over-allotments, if
any. The aforesaid 2,700,000 shares of Common Stock (the "Initial International
Securities") to be purchased by the International Managers and all or any part
of the
<PAGE>
405,000 shares of Common Stock subject to the option described in Section
2(b) hereof (the "International Option Securities") are hereinafter called,
collectively, the "International Securities."
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement") providing for
the offering by the Company of an aggregate of 15,300,000 shares of Common Stock
(the "Initial U.S. Securities") through arrangements with certain underwriters
in the United States and Canada (the "U.S. Underwriters") for which Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Furman Selz LLC, Goldman, Sachs &
Co., Morgan Stanley & Co. Incorporated, Prudential Securities Incorporated,
Smith Barney Inc. and BT Securities Incorporated are acting as representatives
(the "U.S. Representatives") and the grant by the Company to the U.S.
Underwriters, acting severally and not jointly, of an option to purchase all or
any part of the U.S. Underwriters' pro rata portion of up to 2,295,000
additional shares of Common Stock solely to cover over-allotments, if any (the
"U.S. Option Securities" and, together with the International Option Securities,
the "Option Securities"). The Initial U.S. Securities and the U.S. Option
Securities are hereinafter called the "U.S. Securities." It is understood that
the Company is not obligated to sell and the International Managers are not
obligated to purchase, any Initial International Securities unless all of the
Initial U.S. Securities are contemporaneously purchased by the U.S.
Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters," the Initial International Securities and
the Initial U.S. Securities are hereinafter collectively called the "Initial
Securities," and the International Securities, and the U.S. Securities are
hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").
The Company understands that the International Managers propose to make a
public offering of the International Securities as soon as the Lead Managers
deem advisable after this Agreement has been executed and delivered.
The Company and the Underwriters agree that up to 900,000 shares of the
Securities to be purchased by the U.S Underwriters (the "Reserved Securities")
shall be reserved for sale by the U.S Underwriters to certain employees,
officers and family members of such officers of U.S. affiliates of Westfield
Holdings Limited, as part of the distribution of the Securities by the
Underwriters, subject to the terms of this Agreement, the applicable rules,
regulations and interpretations of the National Association of Securities
Dealers, Inc. (the "NASD") and all other applicable laws, rules and
regulations. To the extent that such Reserved Securities are not orally
confirmed for purchase by such employees, officers and family members of such
officers of U.S. affiliates of Westfield Holdings Limited by the end of the
first business day after the date of this Agreement, such Reserved Securities
may be offered to the public as part of the public offering contemplated
hereby.
2
<PAGE>
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11 (No. 333-22731) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b).
Two forms of prospectus are to be used in connection with the offering and sale
of the Securities: one relating to the International Securities (the "Form of
International Prospectus") and one relating to the U.S. Securities (the "Form of
U.S. Prospectus"). The Form of International Prospectus is identical to the
Form of U.S. Prospectus, except for the front cover and back cover pages, the
page immediately following the cover page and the information under the caption
"Underwriting." The information included in any such prospectus or in any such
Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective (a) pursuant to paragraph
(b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each Form
of International Prospectus and Form of U.S. Prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final Form of International Prospectus and the
final Form of U.S. Prospectus in the forms first furnished to the Underwriters
for use in connection with the offering of the Securities are herein called the
"International Prospectus" and the "U.S. Prospectus," respectively, and
collectively, the "Prospectuses." If Rule 434 is relied on, the terms
"International Prospectus" and "U.S. Prospectus" shall refer to the preliminary
International Prospectus dated _____, 1997 and preliminary U.S. Prospectus dated
____, 1997, respectively, each together with the applicable Term Sheet and all
references in this Agreement to the date of such Prospectuses shall mean the
date of the applicable Term Sheet. For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the
International Prospectus, the U.S. Prospectus or any Term Sheet or any amendment
or supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").
3
<PAGE>
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus (including the Form of U.S.
Prospectus and Form of International Prospectus) or the Prospectuses (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus
(including the Form of U.S. Prospectus and Form of International Prospectus) or
the Prospectuses, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectuses shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectuses, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each International Manager as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and, to the extent any
agreements are set forth below, as of each Date of Delivery (if any) referred to
in Section 2(b) hereof, and agrees with each International Manager, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with or
satisfied.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any International Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. Neither of the Prospectuses nor any
amendments or supplements thereto, at the time any such Prospectus or any
such amendment or supplement was issued and at the Closing Time (and, if
any International Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material fact
or omitted or will omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. If Rule 434 is used, the Company will comply
with the requirements of Rule 434 and the Prospectuses shall not
4
<PAGE>
be "materially different", as such term is used in Rule 434, from the
prospectuses included in the Registration Statement at the time it became
effective. The representations and warranties in this subsection shall not
apply to statements in or omissions from the Registration Statement, any
post-effective amendment to the Registration Statement, the International
Prospectus or any amendment or supplement to the International Prospectus
made in reliance upon and in conformity with information furnished to the
Company in writing by any International Manager through the Lead Managers
expressly for use in the Registration Statement or the International
Prospectus or any amendment or supplement thereto.
Each preliminary prospectus and the Prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included in the
Registration Statement and the Prospectuses, together with the related
schedules and notes, present fairly the financial position of the Company
and its consolidated subsidiaries at the dates indicated and the statement
of operations, shareholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; and said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules included in the Registration
Statement present fairly in accordance with GAAP the information required
to be stated therein. The summary financial data and the selected
financial data included in the Prospectuses present fairly the information
shown therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Registration Statement. The
pro forma financial statements and the related notes thereto included in
the Registration Statement and the Prospectuses present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described therein,
and the assumptions used in the preparation thereof are reasonable and, in
the opinion of the Company, all necessary adjustments to reflect the
transactions and circumstances referred to therein have been made.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been no
material adverse change in the condition,
5
<PAGE>
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary course
of business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) except as described in
the Prospectuses, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of Missouri and has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(vi) Good Standing of Subsidiaries. Each subsidiary of the Company
has been duly formed and is validly existing and in good standing under the
laws of the jurisdiction of its origin, has the power and authority to own,
lease and operate its properties and to conduct its business as described
in the Prospectuses and is duly qualified to transact business and is in
good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect; except as otherwise
disclosed in the Registration Statement, all of the issued and outstanding
capital stock or other ownership interests of each such subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable and,
except for certain non-voting preferred stock of Westland Properties, Inc.
which is owned by approximately 120 individuals, and for the Joint Ventures
which are owned as described in the Prospectus, is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; except for the stock
of CMF, Inc., which is pledged by the Company as security for certain
indebtedness relating to department stores which are net leased to the May
Department Stores Company (the "May Properties"); none of the outstanding
shares of capital stock or other ownership interests of any subsidiary of
the Company was issued in violation of the preemptive or similar rights of
any securityholder of such subsidiary.
(vii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectuses in the column
entitled "Historical" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, the International
Purchase Agreement and the ABP Subscription Agreement or pursuant to the
exercise of convertible securities referred to in the Prospectuses). The
shares of issued and outstanding capital stock of the Company have been
duly authorized
6
<PAGE>
and validly issued and are fully paid and non-assessable;
and none of the outstanding shares of capital stock of the Company was
issued in violation of the preemptive or other similar rights of any
securityholder of the Company.
(viii) Authorization of Agreement. This Agreement and the U.S.
Purchase Agreement have been duly authorized, executed and delivered by the
Company.
(ix) Authorization and Description of Securities. The Securities to
be purchased by the International Managers and the U.S. Underwriters from
the Company have been duly authorized for issuance and sale to the
International Managers pursuant to this Agreement and the U.S. Underwriters
pursuant to the U.S. Purchase Agreement, respectively, and, when issued and
delivered by the Company pursuant to this Agreement and the U.S. Purchase
Agreement, respectively, against payment of the consideration set forth
herein and the U.S. Purchase Agreement, respectively, will be validly
issued, fully paid and non-assessable;as of the Closing Time and each Date
of Delivery, the capital stock of the Company (including the Common Stock)
will conform to all statements relating thereto contained in the
Prospectuses (including under the heading "Description of Capital Stock"
therein) and such description will conform to the rights set forth in the
instruments defining the same; no holder of the Securities will be subject
to personal liability by reason of being such a holder; and the issuance of
the Securities is not subject to the preemptive or other similar rights of
any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company or any of
its subsidiaries is in violation of its charter, by-laws or other
organizational documents or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any of its
subsidiaries is subject (collectively, "Agreements and Instruments"),
except for such defaults that would not reasonably be expected to result in
a Material Adverse Effect; and the execution, delivery and performance of
this Agreement and the U.S. Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, the U.S. Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectuses under the caption "Use of Proceeds") and
compliance by the Company with its obligations under this Agreement and the
U.S. Purchase Agreement have been duly authorized by all necessary
corporate and other action and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not reasonably be expected to result in a Material Adverse Effect),
nor will such action result
7
<PAGE>
in any violation of the provisions of the charter, by-laws or other
organizational documents of the Company or any of its subsidiaries, or any
applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its subsidiaries
or any of their assets, properties or operations. As used herein, a
"Repayment Event" means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or any
of its subsidiaries. The Company and its subsidiaries have obtained all
required consents from such holders of any note, debenture or other
evidence of indebtedness, some of which consents are conditioned upon the
closing of the issuance and sale of the Securities.
(xi) Employees. The Company and its subsidiaries have no employees.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or any of its
subsidiaries, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the properties or assets
thereof, taken as a whole, or the consummation of the transactions
contemplated in this Agreement and the U.S. Purchase Agreement or the
performance by the Company of its obligations hereunder or thereunder; the
aggregate of all pending legal or governmental proceedings to which the
Company or any of its subsidiaries is a party or of which any of its
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to
the business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so
described and filed as required.
(xiv) REIT Status. The Company elected to be taxed as a a real
estate investment trust (a "REIT") REIT under the Internal Revenue Code of
1986, as amended (the "Code"), commencing with its taxable year ended
December 31, 1994, and the Company intends to continue to operate in a
manner consistent with such election and all rules with which a REIT must
comply. Commencing with the Company's taxable year ended December 31,
1994, the Company was organized in conformity with the requirements for
qualification as a REIT, and its planned method of operation, and its
actual method of operation from February 12, 1994 through the date of the
Prospectuses, will enable it to meet the requirements for qualification and
taxation as a REIT under the Code. Westland Properties, Inc. ("WPI"), a
Delaware corporation in which the Company owns all of the issued and
outstanding
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stock, except for certain preferred stock of WPI which is owned by
approximately 120 individuals, will elect to be taxed as a REIT under the
Code commencing with its taxable year ended December 31, 1996, and WPI
intends to continue to operate in a manner consistent with such election
and all rules with which a REIT must comply. Commencing with WPI's taxable
year ending December 31, 1996, WPI was organized in conformity with the
requirements for qualification as a REIT, and its planned method of
operation, and its actual method of operation from January 1, 1996 through
the date of the Prospectuses, will enable WPI to meet the requirements for
qualification and taxation as a REIT under the Code.
(xv) NYSE Listing. The shares of Common Stock, including the
Securities, have been approved for listing on the New York Stock Exchange
("NYSE"), subject to official notice of issue.
(xvi) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property,
including a non-transferable, non-exclusive, royalty-free right and license
granted by Westfield Corporation, Inc. to the Company to use the names of
"Westfield" in the name "Westfield America, Inc." and "Westfield
Shoppingtown" as evidenced by the Trade Name License Agreement and the
amendments thereto (collectively, "Intellectual Property") necessary to
carry on the business now operated by it, and neither the Company nor any
of its subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency,
foreign or domestic, is necessary or required for the performance by the
Company of its obligations hereunder, in connection with the offering,
issuance or sale of the Securities under this Agreement and the U.S.
Purchase Agreement or the consummation of the transactions contemplated by
this Agreement and the U.S. Purchase Agreement, except such as have been
already obtained or will be obtained as of the Closing Time or as may be
required under the 1933 Act or the 1933 Act Regulations or foreign or state
securities or blue sky laws.
(xviii) Possession of Licenses and Permits. The Company and
its subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by
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them, except for such Governmental Licenses the failure of which to obtain
would not reasonably be expected to have a Material Adverse Effect; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so to
comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would
not have a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to result in a Material Adverse
Effect.
(xix) Title to Property. (A) Except as described in the
Prospectuses, the Company and its subsidiaries, or any partnership or joint
venture in which the Company or its subsidiaries is a managing partner or
managing joint venturer, has good and marketable title in fee simple to, or
a valid leasehold interest in, all real property and interests in real
property owned or leased by each of them which is material to the business
of the Company and its subsidiaries considered as one enterprise,
including, but not limited to, the properties referred to under the heading
"Business and Properties" in the Prospectuses (collectively, for purposes
of this Section 1(a)(xx), the "Properties"); in each case, such title is
free and clear of all liens, encumbrances, claims, security interests and
defects of any kind (including, without limitation, options to purchase and
rights of first refusal), other than those referred to in the Prospectuses,
those contained in the partnership or joint venture agreements or those
which do not, singly or in the aggregate, materially affect the value of
such Properties and do not materially interfere with the use made and
proposed to be made of the Properties by the Company or any of its
subsidiaries; (B) all liens, charges, encumbrances, claims, or restrictions
on or affecting the Properties which are required to be disclosed in the
Prospectus are disclosed therein; (C) neither the Company nor any of its
subsidiaries or, to the best knowledge of any of them, any lessee under a
lease relating to any of the Properties, is in default under any of the
leases relating thereto, and neither the Company nor any of its
subsidiaries knows of any event which, but for the passage of time or the
giving of notice, or both, would constitute a default under any of such
leases, except such defaults that would not reasonably be expected to
result in a Material Adverse Effect; (D) each of the Properties is in
compliance with all applicable codes, ordinances, zoning laws and
regulations, and neither the Company nor any of its subsidiaries has
received a notice of violation of any of the foregoing, except for such
failures to comply or violations which would not reasonably be expected to
result in a Material Adverse Effect; (E) neither the Company nor any of its
subsidiaries has any knowledge of any pending or threatened condemnation or
zoning change with respect to all or any portion of any of the Properties,
or of any other proceeding or action that will affect the size of, use
of, improvements on, construction on, or access to all or any portion of
any of the Properties, except such proceedings or actions that would not
reasonably be expected to result in a Material Adverse Effect; (F) the
maintenance, service, advertising and other like contracts
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and agreements with respect to the ownership and operation of Properties
other than the Management Agreements and the Advisory Agreement (the
"Service Contracts") are in full force and effect and are on commercially
reasonable terms and are incidental and reasonably related to the
ownership and/or operation of its Properties and neither the Company nor
its subsidiaries is in default under any of the Service Contracts except
for such defaults that would not reasonably be expected to result in a
Material Adverse Effect; (G) all of the leases and subleases material to
the business of the Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of its subsidiaries holds
Properties are in full force and effect, except where the failure to be
in full force and effect would not reasonably be expected to result in a
Material Adverse Effect, and neither the Company nor any of its
subsidiaries has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any subsidiary
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease, except for any claim that could not reasonably be expected to
result in a Material Adverse Effect; and (H) except as set forth in the
Prospectuses, there exist no liens, encumbrances, claims, security
interests and defects of any kind on the Company's or any subsidiary's
ability to collect rents from its Properties, except for such liens,
encumbrances, claims, security interests and defects that would not
reasonably be expected to result in a Material Adverse Effect, and the
Company's collection of such rents is in accordance with all applicable
laws, rules and regulations and neither the Company nor any of its
subsidiaries has received a notice of violation of any of the foregoing,
except for such violations that would not reasonably be expected to have
a Material Adverse Effect.
(xx) Title Insurance. Each of the Company and its subsidiaries has
title insurance on all of its shopping centers, subject only to liens,
encumbrances, claims, security interests and defects that do not, singly or
in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its subsidiaries; such title insurance is in full force
and effect; and no notice of cancellation has been received with respect
thereto and, to the knowledge of the Company, none is threatened.
(xxi) Mortgages. The mortgages and deeds of trust encumbering the
properties and assets described in the Prospectuses (a) are not convertible
into an equity ownership interest in the Company or any of its
subsidiaries, and (b) except as disclosed in the Prospectuses, neither the
Company nor any of its subsidiaries holds a participating interest therein,
and (c) except as disclosed in the Prospectuses, such mortgages and deeds
of trust are not cross-defaulted or cross-collateralized to any property
not owned or leased by the Company or any of its subsidiaries.
(xxii) Stabilization. The Company has not taken and will not take,
directly or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the price
of the Common Stock.
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(xxiii) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxiv) Environmental Laws. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect or otherwise require disclosure in the Registration
Statement, (A) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata)
or wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental
Laws and are in compliance with their requirements, (C) there are no
pending or, to the knowledge of the Company, threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) to the knowledge of the Company, there are no events
or circumstances that would reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
The Company has conducted environmental investigations of, and has
reviewed information regarding, its business, properties and operations as
described in the Registration Statement; on the basis of such
reviews, investigations and inquiries, the Company has reasonably
concluded that, except as disclosed in the Registration
Statement, any costs and liabilities associated with such matters
would not have a Material Adverse Effect on the Company or
otherwise require disclosure in the Registration Statement.
(xxv) Taxes. (i) The Company has prepared and filed when due all
material Federal, state, local and foreign returns for "Taxes" (as
hereinafter defined) that are required to be filed by it for all taxable
periods through the date of this Purchase Agreement, all such returns are
true, correct and complete in all material respects; the Company has
paid all Taxes reported as due on such returns, except to the extent that
any Taxes are being contested in good faith or for which a reserve has been
established;
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and has paid any other material Taxes for which it is liable; (ii) except
as previously disclosed in writing, there are no material liens or claims
for Taxes outstanding upon or against or threatened upon or against the
Company or any of its assets (other than liens for Taxes which are not
yet due and payable); and (iii) no audit, inquiry, investigation or
similar proceeding with respect to Taxes is currently pending or, to the
knowledge of the Company, threatened against the Company or any of its
assets with respect to which it may be liable for the payment of Taxes,
an adverse outcome of which would reasonably be expected to result in a
Material Adverse Effect.
As used in the above paragraph, the term "Tax" or "Taxes" shall
mean all United States Federal, state, local and foreign taxes, assessments
or other governmental charges (whether imposed directly or through
withholding by any governmental entity), including any interest, penalties
and additions to taxes applicable thereto.
(xxvi) Registration Rights. Except as set forth in the Prospectuses,
there are no persons with registration rights or other similar rights to
have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act.
(xxvii) Enforceability of Garden State Plaza Loan. Based on
opinions of counsel received by the Company, each of the $145 million
Promissory Note and the Mortgage, Pledge and Security Agreement will
be at the time of the Closing Date, duly authorized and executed and
delivered by Westland Management, Inc. and Westfield Partners, Inc.,
and is a valid and binding agreement of Westland Management, Inc. and
Westfield Partners, Inc., enforceable against Westland Management,
Inc. and Westfield Partners, Inc. in accordance with its terms, except
to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(xxviii) Enforceability of Garden State Plaza Option. Based on
opinions of counsel received by the Company, the GSP Option Agreement and
any amendments thereto have been, or will be at the time of the Closing
Date, duly authorized and executed and delivered by Westfield Capital
Corporation Finance Pty. Limited, and is a valid and binding agreement of
Westfield Capital Corporation Finance Pty. Limited, enforceable against
Westfield Capital Corporation Finance Pty. Limited in accordance with its
terms, except to the extent that enforcement thereof may be limited by
(i) bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(xxix) Enforceability of Westfield Holding Warrants. Based on
opinion of counsel received by the Company, the WHL Option Deed
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and any amendments thereto have been, or will be at the time of the
Closing Date, duly authorized and executed and delivered by Westfield
Holdings Limited, and is a valid and binding agreement of Westfield
Holdings Limited, enforceable against Westfield Holdings Limited in
accordance with its terms, except to the extent that enforcement thereof
may be limited by (i) bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(xxx) Enforceability of the Management and Advisory Agreements. Based
on opinions of counsel received by the Company, each of the Management
Agreements and Advisory Agreement and any admendments thereto, has been,
or will be at the time of the Closing Date, duly authorized and executed
and delivered by CenterMark Management Company and Westfield U.S.
Advisor, L.P, respectively, and is a valid and binding agreement of
CenterMark Management Company and Westfield U.S. Advisor, L.P.,
respectively, enforceable against CenterMark Management Company and
Westfield U.S. Advisor, L.P., respectively, in accordance with its terms,
except to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law).
(xxxi) Assets Owned by CMF, Inc. The May Properties as described
in the Prospectuses represent the sole assets of CMF, Inc.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the Lead
Managers or to counsel for the International Managers shall be deemed a
representation and warranty by the Company to each International Manager as to
the matters covered thereby.
SECTION 2. Sale and Delivery to International Managers; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each International Manager, severally and
not jointly, and each International Manager, severally and not jointly, agrees
to purchase from the Company, at the price per share set forth in Schedule B,
the number of Initial International Securities set forth in Schedule A opposite
the name of such International Manager, plus any additional number of Initial
International Securities which such International Manager may become obligated
to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties
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herein contained and subject to the terms and conditions herein set forth,
the Company hereby grants an option to the International Managers, severally
and not jointly, to purchase up to an additional 405,000 shares of Common
Stock at the price per share set forth in Schedule B, less an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial International Securities but not payable on the
International Option Securities. The option hereby granted will expire 30
days after the date hereof and may be exercised in whole or in part from time
to time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial International
Securities upon notice by the Global Coordinator to the Company setting forth
the number of International Option Securities as to which the several
International Managers are then exercising the option and the time and date
of payment and delivery for such International Option Securities. Any such
time and date of delivery for the International Option Securities (a "Date of
Delivery") shall be determined by the Global Coordinator, but shall not be
later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option
is exercised as to all or any portion of the International Option Securities,
each of the International Managers, acting severally and not jointly, will
purchase that proportion of the total number of International Option
Securities then being purchased which the number of Initial International
Securities set forth in Schedule A opposite the name of such International
Manager bears to the total number of Initial International Securities,
subject in each case to such adjustments as the Global Coordinator in its
discretion shall make to eliminate any sales or purchases of fractional
shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York
10022, or at such other place as shall be agreed upon by the Global Coordinator
and the Company, at 9:00 A.M. (New York City time) on the third (fourth, if the
pricing occurs after 4:30 P.M. (New York City time) on any given day) business
day after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Global Coordinator and the Company (such time and
date of payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the purchase
price for, and delivery of certificates for, such International Option
Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Global Coordinator and the Company, on each Date
of Delivery as specified in the notice from the Global Coordinator to the
Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Lead Managers for the respective accounts of the International Managers of
certificates for the International Securities to be purchased by them. It is
understood that each International Manager has authorized the Lead Managers, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Initial International Securities and the International
Option Securities, if
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any, which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the International Managers, may (but shall not be obligated
to) make payment of the purchase price for the Initial International
Securities or the International Option Securities, if any, to be purchased by
any International Manager whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such International Manager from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
International Securities and the International Option Securities, if any, shall
be in such denominations and registered in such names as the Lead Managers may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
International Securities and the International Option Securities, if any, will
be made available for examination and packaging by the Lead Managers in The City
of New York not later than 10:00 A.M. (New York City time) on the business day
prior to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
International Manager as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify Merrill Lynch
immediately, and confirm the notice in writing, (i) of the effectiveness of
the Registration Statement and when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectuses or any amended Prospectuses shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectuses or for additional information, and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of
the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes. The Company will promptly effect the filings
necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted
for filing under Rule 424(b) was received for filing by the Commission and,
in the event that it was not, it will promptly file such Prospectus. The
Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(b) Filing of Amendments. At any time when the Prospectuses are
required to be delivered under the 1933 Act in connection with the sales of
the Securities, the Company will give the Global Coordinator notice of its
intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the Prospectuses included
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in the Registration Statement at the time it became effective or to the
Prospectuses, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Global Coordinator or counsel for the International Managers shall object.
(c) Delivery of Registration Statement. The Company has furnished or
will deliver to the Lead Managers and counsel for the International
Managers, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the Lead
Managers, without charge, one conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits) for
each of the International Managers. The copies of the Registration
Statement and each amendment thereto furnished to the International
Managers will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the
Company hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Company will furnish to each International Manager,
without charge, during the period when the International Prospectus is
required to be delivered under the 1933 Act or the Securities Exchange Act
of 1934 (the "1934 Act"), such number of copies of the International
Prospectus (as amended or supplemented) as such International Manager may
reasonably request. The International Prospectus and any amendments or
supplements thereto furnished to the International Managers will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement, the U.S. Purchase Agreement and in the Prospectuses. If at any
time when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of counsel
for the International Managers or for the Company, to amend the
Registration Statement or amend or supplement any Prospectus in order that
the Prospectuses will not include any untrue statements of a material fact
or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration
Statement or amend or supplement any Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act
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Regulations, the Company will promptly prepare and file with the
Commission, in form and substance satisfactory to counsel to the
International Managers, such amendment or supplement as may be necessary
to correct such statement or omission or to make the Registration
Statement or the Prospectuses comply with such requirements, and the
Company will furnish to the International Managers such number of copies
of such amendment or supplement as the International Managers may
reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the International Managers, to qualify the Securities
for offering and sale under the applicable securities laws of such states
and other jurisdictions (domestic or foreign) as the Global Coordinator
may designate and to maintain such qualifications in effect for a period
of not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the
listing of the Common Stock (including the Securities) on the NYSE.
(j) Restriction on Sale of Securities. During a period of 90 days
from the date of the Prospectuses, the Company will not, without the prior
written consent of Merrill Lynch, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of any share of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under
the 1933 Act with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be
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settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Securities
to be sold hereunder or under the International Purchase Agreement, (B)
the Series B Preferred Shares and the 1997 WAT Warrant and (C) any shares
of Common Stock issued by the Company upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof or
to be issued at the Closing of the offerings as described in the
Prospectuses and referred to in the Prospectuses.
(k) REIT Requirements. The Company will use its best efforts to (i)
continue to meet the requirements to qualify as a REIT under the Code and
(ii) cause WPI to continue to meet the requirements to qualify as a REIT
under the Code, unless the Company's Board of Directors, with the consent
of a majority of each of the Series A Preferred Shares and Series B
Preferred Shares, voting as a single class, and the Common Stock
determines to revoke the Company's REIT election because of circumstances
or changes in the Code (or in the Treasury regulations).
(l) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the rules and regulations of the Commission thereunder.
(m) Compliance with NASD Rules. The Company hereby agrees that it
will ensure that the Reserved Securities will be restricted as required by
the NASD or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of this
Agreement. The U.S. Underwriters will notify the Company as to which
persons will need to be so restricted. At the request of the U.S.
Underwriters, the Company will direct the transfer agent to place a stop
transfer restriction upon such securities for such period of time.
Should the Company release, or seek to release, from such restrictions
any of the Reserved Securities, the Company agrees to reimburse the U.S.
Underwriters for any reasonable expenses (including, without limitation,
legal expenses) they incur in connection with such release.
(n) Compliance with Rule 463. The Company will file with the
Commission such reports on Form SR as may be required pursuant to Rule 463
of the 1933 Act Regulations.
(m) Notwithstanding anything to the contrary contained in the Garden
State Option Agreement, the Company agrees that it shall obtain the
approval of a majority of the holders of its Common Stock, other than
Westfield Holdings Limited and its affiliates (including, without
limitation, Westfield America Trust) and interests associated with the
Lowy family, voting at a meeting on such issue, prior to exercising the
Garden State Plaza Option if the purchase price payable on such exercise
exceeds $55 million (net of the outstanding principal balance under the
Garden State Plaza Loan).
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of
this Agreement, any Agreement among Underwriters and such other documents as
may be required in connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and delivery of
the certificates for the Securities to the Underwriters, including any stock
or other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters and the transfer
of the Securities
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between the U.S. Underwriters and the International Managers, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors,
(v) the qualification of the Securities under securities laws in accordance
with the provisions of Section 3(f) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters
in connection with, the review by the NASD of the terms of the sale of the
Securities, (x) the fees and expenses incurred in connection with the listing
of the Securities on the NYSE and (xi) all costs and expenses of the
Underwriters, including the fees and disbursements of counsel for the
Underwriters, in connection with matters related to the Reserved Securities
which are designated by the Company for sale to certain employees, officers
and family members of such officers of U.S. affiliates of Westfield Holdings
Limited.
(b) Termination of Agreement. If this Agreement is terminated by the
Lead Managers in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the International Managers for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the International Managers.
SECTION 5. Conditions of International Managers' Obligations. The
obligations of the several International Managers hereunder are subject to
the accuracy of the representations and warranties of the Company contained
in Section 1 hereof or in certificates of any officer of the Company or any
subsidiary of the Company or any of its subsidiaries delivered pursuant to
the provisions hereof, to the performance by the Company of its covenants and
other obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, shall have
become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act or proceedings therefor initiated or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction
of counsel to the International Managers. A prospectus containing the
Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance
with the requirements of Rule 430A) or, if the Company has elected to
rely upon Rule 434, a Term Sheet shall have been filed with the
Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the Lead
Managers shall have received the favorable opinion, dated as of Closing
Time, of Debevoise &
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Plimpton, counsel for the Company, in form and substance satisfactory to
counsel for the International Managers,to the effect set forth in clauses
___ of Exhibit A hereto and to such further effect as counsel to the
International Managers, together with signed or reproduced copies of such
letter for each of the other International Managers with respect to such
matters as they may reasonably request.
In addition, the opinion of Debevoise & Plimpton shall state that
they have participated in conferences with officers and representatives
of the Company, counsel for the Company, counsel for the Underwriters,
representatives of the independent accountants of the Company and you at
which the contents of the Registration Statement and the Prospectus and
related matters were discussed and, although they are not passing upon,
and do not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectuses and have made no independent check or verification thereof,
on the basis of the foregoing, no facts have come to such counsel's
attention that have led them to believe that the Registration Statement
(except for (i) financial statements and supported schedules and other
financial information and data included therein or omitted therefrom and
(ii) tax matters as to which such counsel will not be required to express
any beliefs), at the time it became effective, contained an untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading or that each of the Prospectuses except as aforesaid, as
of its date and as of the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) Opinion of General Counsel of the Company. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as of
Closing Time, Robert Bermingham, General Counsel of the Company, in form
and substance satisfactory to counsel for the International Managers, to
the effect set forth in clauses ___ of Exhibit A hereto and to such
further effect as counsel to the International Managers, together with
signed or reproduced copies of such letter for each of the other
International Managers with respect to such matters as they may
reasonably request.
(d) Opinion of Tax Counsel for the Company. At Closing Time, the
Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel
for the Company,substantially in the form of Exhibit __ attached hereto,
together with signed or reproduced copies of such letter for each of the
other International Managers.
In addition, the opinion of Tax Counsel for the Company shall state
that they have participated in conferences at which the contents of the
Registration Statement and the Prospectuses relating to Federal income
tax matters were discussed with officers and other representatives of the
Company, the International Managers, counsel for the International
Managers and the Company's independent accounts. On the basis of the
foregoing, although they are not passing upon and do not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or Prospectuses, and
they have not made any independent check or verification thereof, no
facts have come to their attention that have led them to believe (i) that
at the time that the Registration Statement became effective, the
discussion in the Registration Statement, insofar as it relates to tax
matters contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were
made, not misleading, or (ii) that the discussion in the Prospectuses as
it relates to tax matters, as of the date of the Prospectuses and as of
the date hereof, included any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
in which they were made, not misleading. They shall state that they
express no opinion or belief with respect to any other section of the
Registration Statement or the Prospectuses, including, without
limitation, the financial statements, schedules and other financial data
included in the Prospectuses or excluded therefrom and included in the
exhibits to the Registration Statement.
(e) Opinion of Missouri Counsel for the Company. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of Bryan Cave LLP, Missouri counsel for the Company, in
form and substance satisfactory to counsel for the International
Managers, to the effect set forth in clauses ___ of Exhibit A hereto and
to such further effect as counsel to the International Managers, together
with
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signed or reproduced copies of such letter for each of the other
International Managers with respect to such matters as they may
reasonably request.
(f) Opinion of Australian Counsel for Westfield Holdings. At
Closing Time, the Lead Managers shall have recieved the favorable
opinion, dated as of Closing Time, of Minter Ellison, Australian Counsel
for Westfield Holdings, in form and substance satisfactory to counsel for
the International Managers, to the effect set forth in clauses __ of
Exhibit A hereto and to such further effect as counsel to the
International Managers, together with signed or reproduced copies of such
letter for each of the other International Managers with respect to such
matters as they may reasonably request.
(g) Opinion of Counsel for International Managers. At Closing
Time, the Lead Managers shall have received the favorable opinion, dated
as of Closing Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel
for the International Managers, together with signed or reproduced copies
of such letter for each of the other International Managers with respect
the matters set forth in clauses (ix), (x) and (xi)(b) of Exhibit A. In
giving such opinion such counsel may rely, as to all matters governed by
the laws of jurisdictions other than the law of the State of New York and
the federal law of the United States upon the opinions of counsel
satisfactory to the Lead Managers. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to
the extent they deem proper, upon certificates of officers of the Company
and its subsidiaries and certificates of public officials.
In addition, the opinion of Counsel for the International Managers
shall state that they have participated in conferences with officers and
representatives of the Company, counsel for the Company, counsel for the
International Managers, representatives of the independent accountants of
the Company and you at which the contents of the Registration Statement
or the Prospectuses and related matters were discussed and although they
are not passing upon, and do not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectuses and have made no independent
check or verification thereof, on the basis of the foregoing, no facts
have come to such counsel's attention that have led them to believe that
the Registration Statement (except for financial statements and supported
schedules and other financial information and data included therein or
omitted therefrom), at the time it became effective, contained an untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading or that each of the Prospectuses except as aforesaid, as
of its date and as of the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(h) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the Lead Managers shall have received a
certificate of the Co-President and of the Chief Financial Officer of the
Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties
in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the
Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to Closing Time, and
(iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
(i) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Lead Managers shall have received from each of Ernst
& Young LLP, Coopers & Lybrand LLP and BDO Seidman LLP a letter dated
such date, in form and substance satisfactory to the Lead Managers,
together with signed or reproduced copies of such letter for each of the
other International Managers containing statements and information of the
type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectuses.
(j) Bring-down Comfort Letter. At Closing Time, the Lead Managers
shall have received from each of Ernst & Young LLP, Coopers & Lybrand LLP
and BDO Seidman LLP a letter, dated as of Closing Time, to the effect
that each of Ernst & Young
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LLP, Coopers & Lybrand LLP and BDO Seidman LLP reaffirms the statements
made in the letter furnished pursuant to subsection (H) of this Section,
except that the specified date referred to shall be a date not more than
three business days prior to Closing Time.
(k) Approval of Listing. At Closing Time, the Securities shall
have been approved for listing on the NYSE, subject only to official
notice of issuance.
(l) No Objection. The NASD shall have confirmed that it has not
raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements relating to the offering of the
Securities pursuant to this Agreement.
(m) Lock-Up Agreements. At the date of this Agreement, the Lead
Managers shall have received agreements substantially in the forms of
Exhibit B and Exhibit C hereto signed by the persons listed on Schedule C
hereto.
(n) Purchase of Initial U.S. Securities. Contemporaneously with
the purchase by the International Managers of the Initial International
Securities under this Agreement, the U.S. Underwriters shall have
purchased the Initial U.S. Securities under the U.S. Purchase Agreement.
(o) Conditions to Purchase of International Option Securities. In
the event that the International Managers exercise their option provided
in Section 2(b) hereof to purchase all or any portion of the
International Option Securities, the representations and warranties of
the Company contained herein and the statements in any certificates
furnished by the Company or any of its subsidiaries hereunder shall be
true and correct as of each Date of Delivery and, at the relevant Date of
Delivery, the Lead Managers shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the Co-President and of the Chief Financial Officer of
the Company confirming that the certificate delivered at the Closing
Time pursuant to Section 5(g) hereof remains true and correct as of
such Date of Delivery.
(ii) Opinion of Counsel for the Company. The favorable opinion
of Debevoise & Plimpton, counsel for the Company, in form and
substance satisfactory to counsel for the International Managers,
dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of General Counsel of the Company. The
favorable opinion of Robert Bermingham, General Counsel for the
Company, in form and substance satisfactory to counsel for the
International Managers, dated such Date of Delivery, relating to the
International Option Securities to be purchased
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on such Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(c) hereof.
(iv) Opinion of Tax Counsel for the Company. The favorable
opinion of Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel for
the Company, substantially in the form of Exhibit __ attached hereto.
(v) Opinion of Missouri Counsel for the Company. The
favorable opinion of Bryan Cave LLP, Missouri counsel for the
Company, in form and substance satisfactory to counsel for the
International Managers, dated such Date of Delivery, relating to the
International Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(e) hereof.
(vi) Opinion of Australian Counsel for Westfield Holdings.
The favorable opinion of Minter Ellison, Australian Counsel for
Westfield Holdings, in form and substance satisfactory to counsel for
the International Managers, dated such Date of Delivery, relating to
the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(f)
hereof.
(vii) Opinion of Counsel for International Managers. The
favorable opinion of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel for the International Managers, dated such Date of Delivery,
to the same effect as the opinion required by Section 5(f) hereof.
(viii) Bring-down Comfort Letter. A letter from each of Ernst &
Young LLP, Coopers & Lybrand LLP and BDO Seidman LLP, in form and
substance satisfactory to the Lead Managers and dated such Date of
Delivery, substantially in the same form and substance as the letter
furnished to the Lead Managers pursuant to Section 5(h) hereof,
except that the "specified date" in the letter furnished pursuant to
this paragraph shall be a date not more than five days prior to such
Date of Delivery.
(p) Additional Documents. At Closing Time and at each Date of
Delivery counsel for the International Managers shall have been furnished
with such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the Lead
Managers and counsel for the International Managers.
(q) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of International Option Securities on a Date of Delivery which
is after the Closing Time, the obligations of the several International
Managers to purchase the relevant International Option Securities may be
terminated by the Lead Managers by notice to the Company at any time at
or prior to Closing Time or such Date of Delivery, as the case may be,
and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 1,
6, 7 and 8 shall survive any such termination and remain
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in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of International Managers. The Company agrees to
indemnify and hold harmless each International Manager and each person, if
any, who controls any International Manager within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under (i) or (ii) above; provided, however, that this
indemnity agreement shall not apply to any loss, liability, claim, damage
or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by any
International Manager through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto, including the Rule 430A
Information and the Rule 434 Information, if applicable, or any
preliminary prospectus or the U.S. Prospectus (or any amendment or
supplement thereto); and provided further that the foregoing indemnity
with respect to any preliminary prospectus shall not inure to the benefit
of any International Manager (or to the benefit of any person controlling
such International Manager) from whom the person asserting any such loss,
liability, claim or damage purchased International Securities if such
untrue
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statement or omission or alleged untrue statement or omission made
in such preliminary prospectus is eliminated or remedied in the
International Prospectus (as amended or supplemented by the Company if
the Company shall have furnished any amendments or supplements thereto)
and a copy of the International Prospectus (as so amended or
supplemented), which at such time had been provided to the International
Managers for their use, shall not have been furnished to such person at
or prior to the written confirmation of sale of such Securities to such
person.
(b) Indemnification of Company, Directors and Officers. Each
International Manager severally agrees to indemnify and hold harmless the
Company, its directors, the Company's officers who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary International prospectus or the International
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such
International Manager through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary
prospectus or the International Prospectus (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party
of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Section
6(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising
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out of such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement. Notwithstanding the
immediately preceding sentence, if at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, an indemnifying party shall not be liable for
any settlement of the nature contemplated by Section 6(a)(ii) effected
without its written consent if such indemnifying party (x) reimburses such
indemnified party in accordance with such request to the extent it considers
such request to be reasonable and (y) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
(e) Indemnification for Reserved Securities. In connection with the
offer and sale of the Reserved Securities, the Company agrees, promptly upon
a request in writing, to indemnify and hold harmless the Underwriters from
and against any and all losses, liabilities, claims, damages and expenses
incurred by them as a result of the failure of certain employees, officers
and family members of such officers of U.S. affiliates of Westfield Holdings
Limited to pay for and accept delivery of Reserved Securities which, by the
end of the first business day following the date of this Agreement, were
subject to a properly confirmed agreement to purchase.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute
to the aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the International Managers on the other hand
from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
on the one hand, and of the International Managers on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company, on the one hand, and the
International Managers, on the other hand, in connection with the offering of
the International Securities
27
<PAGE>
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the International
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the International
Managers, in each case as set forth on the cover of the International
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the
International Securities as set forth on such cover.
The relative fault of the Company, on the one hand, and the International
Managers, on the other hand, shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the International Managers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the International Managers agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation (even if the International Managers were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this
Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 7, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the International Securities underwritten by
it and distributed to the public were offered to the public exceeds the
amount of any damages which such International Managers has otherwise been
required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
International Managers within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company. The International Managers' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the number of Initial
International Securities set forth opposite their respective names in
28
<PAGE>
Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Compan or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
International Manager or controlling person, or by or on behalf of the
Company and shall survive delivery of the Securities to the International
Managers.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Lead Managers may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the International
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to make it,
in the judgment of the Lead Managers, impracticable to market the Securities
or to enforce contracts for the sale of the Securities, or (iii) if trading
in any securities of the Company has been suspended or materially limited by
the Commission or the NYSE, or if trading generally on the American Stock
Exchange or the NYSE or in the Nasdaq National Market has been suspended or
materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or
by such system or by order of the Commission, the NASD or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full
force and effect.
SECTION 10. Default by One or More of the International Managers. If
one or more of the International Managers shall fail at Closing Time or a
Date of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Lead Managers
shall have the right, within 24 hours thereafter, to make arrangements for
one or more of the non-defaulting International Managers, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein
set forth; if, however, the Lead Managers shall not have completed such
arrangements within such 24-hour period, then:
29
<PAGE>
(a) if the number of Defaulted Securities does not exceed 10% of the
number of International Securities to be purchased on such date, each of
the non-defaulting International Managers shall be obligated, severally
and not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting International Managers, or
(b) if the number of Defaulted Securities exceeds 10% of the number
of International Securities to be purchased on such date, this Agreement
or, with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the International Managers to purchase and of the
Company to sell the International Option Securities to be purchased and
sold on such Date of Delivery shall terminate without liability on the
part of any non-defaulting International Manager.
No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
International Managers to purchase and the Company to sell the relevant
International Option Securities, as the case may be, either the Lead Managers
or the Company shall have the right to postpone Closing Time or the relevant
Date of Delivery, as the case may be, for a period not exceeding seven days
in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the
term "International Manager" includes any person substituted for an
International Manager under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers at Merrill
Lynch & Co., World Financial Center, North Tower, New York, New York
10281-1201, attention of Martin J. Cicco; and notices to the Company shall be
directed to it at 11601 Wilshire Boulevard, 12th Floor, Los Angeles,
California 90025, attention of Robert P. Bermingham.
SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the International Managers and the Company and its
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
International Managers and the Company and its successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the International
Managers and the Company and its successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any International Manager shall be deemed to be a successor by
30
<PAGE>
reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT
AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
31
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the International Managers and the Company in accordance with its terms.
Very truly yours,
WESTFIELD AMERICA, INC.
By__________________________________
Name:
Title:
32
<PAGE>
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH INTERNATIONAL
FURMAN SELZ LLC
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO. INTERNATIONAL
PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
SMITH BARNEY INC.
BANKERS TRUST INTERNATIONAL PLC
ABN AMRO ROTHSCHILD
By: MERRILL LYNCH INTERNATIONAL
By
----------------------------------------------------------
Authorized Signatory
For themselves and as Lead Managers of the
other International Managers named in Schedule A hereto.
33
<PAGE>
SCHEDULE A
Number of
Initial International
Name of International Manager Securities
- ------------------------------ ---------------------
Merrill Lynch International............
Furman Selz LLC .......................
Goldman Sachs International............
Morgan Stanley & Co. International.....
Prudential-Bache Securities (U.K) Inc..
Smith Barney Inc. .....................
Bankers Trust International PLC........
ABN AMRO Rothschild....................
_________
Total.................................. 2,700,000
34
<PAGE>
SCHEDULE B
WESTFIELD AMERICA, INC.
2,700,000 Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $ .
2. The purchase price per share for the International Securities to
be paid by the several International Managers shall be $ , being an amount
equal to the initial public offering price set forth above less $ per
share; provided that the purchase price per share for any International
Option Securities purchased upon the exercise of the over-allotment option
described in Section 2(b) shall be reduced by an amount per share equal to
any dividends or distributions declared by the Company and payable on the
Initial International Securities but not payable on the International Option
Securities.
Sch B - 1
<PAGE>
SCHEDULE C
List of persons and entities
subject to lock-up
Westfield Holdings Limited and its subsidiaries
Cordera Holdings Pty Limited
Richard Green
Sch C - 1
<PAGE>
Exhibit A
FORM OF COUNSEL OPINION
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company is a corporation incorporated, is validly existing in
good standing under the laws of the State of Missouri. [Missouri Counsel]
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the
Purchase Agreements. [Missouri Counsel]
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect. [General Counsel]
(iv) (a) The authorized capital stock of the Company is as set forth
in the Prospectuses in the column entitled "Historical" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to
the Purchase Agreements or pursuant to reservations or agreements
referred to in the Prospectuses or pursuant to the exercise of
convertible securities or options referred to in the Prospectuses) and
(b) the issued and outstanding capital stock of the Company is as set
forth in the Prospectuses in the column entitled "Historical" under the
caption "Capitalization" (except for subsequent issuances, if any,
pursuant to the Purchase Agreements or pursuant to reservations or
agreements referred to in the Prospectuses or pursuant to the exercise of
convertible securities or options referred to in the Prospectuses); (c)
the shares of issued and outstanding capital stock of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable; and none of the outstanding shares of capital stock of
the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company under Missouri law.
[Missouri Counsel]
(v) The Securities have been duly authorized for issuance and sale to
the Underwriters pursuant to the Purchase Agreements and, when issued and
delivered by the Company pursuant to the Purchase Agreements against
payment of the consideration set forth in the Purchase Agreement, will be
validly issued and fully paid and non-assessable and no holder of the
Securities is or will be subject to personal liability solely by reason of
being such a holder. [Missouri Counsel]
(vi) (a) To our knowledge, the issuance of the Securities is not
subject to preemptive or other similar rights of any securityholder of the
Company, and (b) under Missouri law, the issuance of the Securities is not
subject to preemptive or other similar rights of any securityholder of the
Company. [(a) General Counsel/(b) Missouri Counsel]
A-1
<PAGE>
(vii) Each subsidiary of the Company has been duly formed and is
validly existing and in good standing under the laws of the jurisdiction of
its origin, has the power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectuses and
is duly qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as disclosed in the Registration
Statement, all of the issued and outstanding capital stock or other
ownership interests of each such subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and, to his knowledge,
except as otherwise disclosed in the Prospectuses and the Purchase
Agreements, is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; and, to his knowledge, none of the
outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of such
Subsidiary. [General Counsel]
(viii) The Purchase Agreements have been duly authorized and executed
by the Company, and (b) have been delivered by the Company. [Missouri
Counsel]
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectuses pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); and, to
our knowledge, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or threatened by the Commission. [Debevoise]
(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectuses and each amendment or
supplement to the Registration Statement and Prospectuses as of their
respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom, as to which
we need express no opinion) complied as to form in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations.
[Debevoise]
(xi) The form of certificate used to evidence the Common Stock
complies in all material respects with (a) all applicable requirements of
Missouri law, with any applicable requirements of the charter and by-laws
of the Company and (b) the requirements of the New York Stock Exchange.
[(a) Missouri Counsel/(b) Debevoise]
(xii) To his knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company or
any of its subsidiaries is a party, or to which the property of any of them
is subject, before or brought by any court or governmental
A-2
<PAGE>
agency or body, domestic or foreign, which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the consummation of the transactions
contemplated in the Purchase Agreement or the performance by the Company of
its obligations thereunder. [General Counsel]
(xiii) The information in the Prospectuses under "Description
of Capital Stock -- Capital Stock" (except for matters as to amounts of
outstanding capital stock, as to which such counsel expresses no
opinion), "--Senior Preferred Shares," "-- Preferred Shares," "-- Series
A Preferred Shares," "--Common Shares" (except for the second, third,
fifth and sixth sentence under "-- Distribution Rights") and
"--Restrictions on Ownership and Transfer," (except for the first and
last paragraphs) "Certain Provisions of the Company's Articles of
Incorporation and Bylaws and of Missouri Law," and in the Registration
Statement under Item 34 conforms as to legal matters in all material
respects with the charter and by-laws of the Company and the described
provisions of the General Business and Corporation Law of Missouri.
[Missouri Counsel]
(xiv) To our knowledge, (a) there are no U.S., Federal or New York
statutes or regulations that are required to be described in the
Prospectuses that are not described as required (other than statutes and
regulations relating to taxes as to which such counsel expresses no
opinion) [and (b) there are no Missouri statutes or Missouri regulations
that are required to be described in the Prospectuses that are not
described as required.]
[(a) Debevoise and General Counsel/(b) Missouri Counsel]
(xv) All descriptions of contracts in the Registration Statement
under "Advisory, Management and Development Services of the Company,"
"Certain Transactions," "The Company-Company Structure and History" and
"The Company-Westfield Holdings" to which the Company or its
subsidiaries is a party are accurate in all material respects; and to our
knowledge, there are no contracts or documents that are required to be
described in the Registration Statement or the Prospectuses or to be
filed as exhibits thereto which have not been not been so described and
filed as required. [Debevoise]
(xvi) To his knowledge, neither the Company nor any of its
subsidiaries is in violation of its charter, by-laws or other
organizational documents and no default by the Company or any of its
subsidiaries exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement
or the Prospectuses or filed as an exhibit to the Registration Statement,
except for such defaults that would not reasonably be expected to result in
a Material Adverse Effect.
[General Counsel]
(xvii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree known by us of, any
court or governmental authority or agency, domestic or foreign (other than
under the 1933 Act and the 1933 Act Regulations, which have been obtained,
or as may be required under the securities or blue sky laws of the various
states, as to which we need express no opinion) is necessary or
A-3
<PAGE>
required in connection with the due authorization, execution and delivery
of the Purchase Agreements or for the offering, issuance or sale of the
Securities.
[Debevoise]
(xviii) The execution, delivery and performance of the Purchase
Agreements and the consummation of the issuance and sale of the
Securities and the compliance by the Company with its obligations under
the Purchase Agreements do not and will not, nor will such action result
in any violation of, the provisions of the charter and by-laws of the
Company, or any Missouri law, statue, rule or regulation [which, in our
experience, are normally applicable to transactions of the type
contemplated by the Purchase Agreements] (provided that we make no comment
with respect to antifraud laws or any law, rule or regulation that may
have become applicable to the Company as a result of the International
Managers' involvement with the transactions contemplated by the Purchase
Agreements or because of any facts specifically pertaining to the
International Managers). [Missouri Counsel]
(xix) The execution, delivery and performance of the Purchase
Agreements and the consummation of the transactions contemplated in the
Purchase Agreements and in the Registration Statement (including the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the Prospectuses under the caption
"Use Of Proceeds") and compliance by the Company with its obligations under
the Purchase Agreements do not and will not, nor will such action result
in any violation of the provisions of any applicable New York or U.S.
Federal law, statute, rule, regulation, judgment, order, writ or decree,
known to us, of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries, or any of their respective properties, assets or operations.
[Debevoise]
(xx) The execution, delivery and performance of the Purchase
Agreements and the consummation of the transactiocontemplated in the
Purchase Agreements and in the Registration Statement (including the
issuance and sale of the Securities and the use of the proceeds from
the sale of the Securities as described in the Prospectuses under the
caption "Use Of Proceeds") and compliance by the Company with its
obligations under the Purchase Agreements have been duly authorized
by all necessary corporate and other action and do not and will not,
whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event
(as defined in Section 1(a)(xi) of the Purchase Agreements) under or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or any other agreement or instrument,
known to us, to which the Company or any of its subsidiaries is a
party or by which any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not reasonably be expected to result in a
Material Adverse Effect). [General Counsel]
(xxi) To our knowledge, there are no persons with registration rights
or other similar rights to have any securities registered pursuant to the
Registration Statement or, except as described in the Prospectuses,
otherwise registered by the Company under the 1933 Act.
[Debevoise]
(xxii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
1940 Act.
A-4
<PAGE>
[Debevoise]
(xxiii) Each of the $145 million Promissory Note and the Pledge and
Security Agreement will be at the time of the Closing Date, duly
authorized and executed and delivered by Westland Management, Inc. and
Westfield Partners, Inc., and is a valid and binding agreement of Westland
Management, Inc. and Westfield Partners, Inc., enforceable against Westland
Management, Inc. and Westfield Partners, Inc. in accordance with its terms,
except to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law),[ except that such
counsel need express no opinion as to the priority of the security
interests granted by the Mortgage, Pledge and Security Agreement. In
connection with the foregoing opinion, such counsel may note that (a)
provisions of the $145 million Promissory Note and the Pledge and
Security Agreement which permit the Company to take action or make
determinations may be subject to a requirement that such action be taken or
such determinations be made on a reasonable basis and in good faith and (b)
a holder of the $145 million Promissory Note may, under certain
circumstances, be called upon to prove the outstanding amount of the loans
evidenced thereby.] [Debevoise/ Security Interest Opinion to come]
(xxiv) The GSP Option Agreement and any amendments thereto has
been, or will be at the time of the Closing Date, duly authorized and
executed and delivered by Westfield Capital Corporation Finance Pty.
Limited, and is a valid and binding agreement of Westfield Capital
Corporation Finance Pty. Limited, enforceable against Westfield Capital
Corporation Finance Pty. Limited in accordance with its terms, except to
the extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law). [Australian
Counsel/Debevoise]
(xxv) The WHL Option Deed and any amendments thereto has been, or
will be at the time of the Closing Date, duly authorized and executed and
delivered by Westfield Holdings Limited, and is a valid and binding
agreement of Westfield Holdings Limited, enforceable against Westfield
Holdings Limited in accordance with its terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in
a proceeding in equity or at law). [Australian Counsel]
(xxvi) Each of the Management Agreements and Advisory Agreement and any
A-5
<PAGE>
amendments thereto, has been, or will be at the time of the Closing Date,
duly authorized and executed and delivered by CenterMark Management
Company and Westfield U.S. Advisor, L.P. , respectively, and is a valid
and binding agreement of CenterMark Management Company and Westfield U.S.
Advisor, L.P., respectively, enforceable against CenterMark Management
Company and Westfield U.S. Advisor, L.P., respectively, in accordance with
its terms, except to the extent that enforcement thereof may be limited by
(i) bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
[Debevoise]
In giving such opinions, such counsel may state that their opinion is
limited to matters governed by the federal laws of the United States of America
and the laws of the State of New York (or, in the case of Missouri counsel, on
the laws of the State of Missouri). In addition, such counsel may rely upon the
representations and warranties as to the matters of fact contained in the
Purchase Agreements and the originals or copies certified to such counsel's
satisfaction of such corporate records, documents, certificates and other
instruments as in the judgment of such counsel necessary or appropriate to
enable such counsel to render such opinions.
A-6
<PAGE>
Exhibit B
May __, 1997
MERRILL LYNCH INTERNATIONAL
FURMAN SELZ LLC
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO. INTERNATIONAL
PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
SMITH BARNEY INC.
BANKERS TRUST INTERNATIONAL PLC
as Lead Managers of the several International Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC24 9L4
England
Re: Proposed Public Offering by Westfield America, Inc.
Dear Sirs:
The undersigned, Westfield Holdings Limited on its own behalf and on behalf
of its subsidiaries, understands that Merrill Lynch & Co., Merrill Lynch
International ("Merrill Lynch"), Furman Selz LLC, Goldman Sachs International.,
Morgan Stanley & Co. International, Prudential-Bache Securities (U.K.) Inc.,
Smith Barney Inc. and Bankers Trust International PLC propose to enter into a
Purchase Agreement (the "International Purchase Agreement") with the Company
providing for the public offering of shares (the "Securities") of the Company's
common stock, par value $.01 per share (the "Common Stock"). In recognition of
the benefit that such an offering will confer upon the undersigned as a
shareholder of the Company, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned agrees
with each underwriter to be named in the Purchase Agreements that the
undersigned will not, without the prior written consent of Merrill Lynch,
directly or indirectly, (i) sell, grant any option, right or warrant for the
sale of, or to purchase or otherwise dispose of or transfer any shares of the
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock or file any registration statement under the Securities Act of
1933, as amended, with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of
B-1
<PAGE>
the Common Stock, whether any such swap transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise
(x) during a period of 36 months from the date of the Prospectuses
(as defined in the Purchase Agreement) in the case of securities now
outstanding as of the date of the Prospectuses and (y) during a period of
90 days from the date of the Prospectuses in the case of securities issued
after the date of the Prospectuses.
Very truly yours,
__________________________
Westfield Holdings Limited, on its behalf
and on behalf of each of its subsidiaries
B-2
<PAGE>
Exhibit C
May__,1997
MERRILL LYNCH INTERNATIONAL
FURMAN SELZ LLC
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO. INTERNATIONAL
PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
SMITH BARNEY INC.
BANKERS TRUST INTERNATIONAL PLC
as Lead Managers of the several International Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC24 9L4
England
Re: Proposed Public Offering by Westfield America, Inc.
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Dear Sirs:
The undersigned, Cordera Holdings Pty Limited and Richard Green,
understand that Merrill Lynch & Co., Merrill Lynch International ("Merrill
Lynch"), Furman Selz LLC, Goldman Sachs International., Morgan Stanley & Co.
International, Prudential-Bache Securities (U.K.) Inc., Smith Barney Inc. and
Bankers Trust International PLC propose enter into a Purchase Agreement (the
"International Purchase Agreement") with the Company providing for the public
offering of shares (the "Securities") of the Company's common stock, par value
$.01 per share (the "Common Stock"). In recognition of the benefit that such an
offering will confer upon the undersigned as a shareholder of the Company, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned agrees with each underwriter to be
named in the Purchase Agreement that the undersigned will not, without the
prior written consent of Merrill Lynch, directly or indirectly, (i) sell, grant
any option, right or warrant for the sale of, or purchase or otherwise dispose
of or transfer any shares of the Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock or file any registration
statement under the Securities Act of 1933, as amended, with respect to any of
the foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap
transaction is to be settled by delivery of Common Stock or other securities,
in cash or otherwise during a period of 90 days from the date of the
Prospectuses in the case of securities issued after the date of the Prospectus.
C-1
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Very truly yours,
CORDERA HOLDINGS PTY LIMITED
Signature: _______________________
Print Name: ______________________
RICHARD GREEN
Signature: _______________________
Richard Green
C-2
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EXHIBIT 3.1
THIRD RESTATED ARTICLES OF INCORPORATION
OF
WESTFIELD AMERICA, INC.
---------------------
SECRETARY OF STATE
STATE OF MISSOURI
P.O. BOX 778
JEFFERSON CITY, MO 65101
Westfield America, Inc., a Missouri corporation, originally incorporated
under the name of May Building Company of Missouri, hereby certifies to the
Secretary of State of Missouri that said Westfield America, Inc., formerly
known as CenterMark Properties, Inc., (the "Corporation") desires to restate
its Second Restated Articles of Incorporation as currently in effect and the
following Third Restated Articles of Incorporation are all of the provisions of
the Articles of Incorporation of the Corporation as theretofore amended and
that these Third Restated Articles of Incorporation correctly set forth
without change the corresponding provisions of such Articles of Incorporation
as theretofore amended. These Third Restated Articles of Incorporation
supersede the current Restated Articles of Incorporation and all amendments
thereto.
These Third Restated Articles of Incorporation were adopted by the
shareholders of the Corporation upon receipt of the affirmative vote of
________ of the outstanding shares entitled to vote thereon at a meeting held
on ________, 1997.
* * *
ARTICLE FIRST
The name of the corporation is: Westfield America, Inc.
ARTICLE SECOND
The Corporation's registered agent in the State of Missouri shall be
The Corporation Company, 7733 Forsyth Boulevard, Clayton, Missouri 631015-1817.
ARTICLE THIRD
The Corporation is formed for the following purposes:
(a) To take, purchase or otherwise acquire, and to hold, own, use,
manage, develop, control, improve, sell, exchange, convey, transfer, assign,
mortgage or otherwise encumber, and to let, lease as lessor or lessee, invest in
and otherwise deal in and with real property, or any estate or interest therein,
within and without the State of Missouri and in any part of the world; and
(b) To have and exercise all powers which are or may be conferred
upon corporations organized under and pursuant to The General and Business
Corporation Law of Missouri (the "GBCL").
ARTICLE FOURTH
SECTION 4.1 CLASSES AND NUMBER OF SHARES.
----------------------------
The total number of shares of all classes of stock that the
Corporation shall have authority to issue is four
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hundred ten million, and two hundred (410,000,200) shares, consisting of (i) two
hundred (200) shares of non-voting senior preferred stock, par value $1.00 per
share (the "Senior Preferred Shares"), (ii) five million (5,000,000) shares of
preferred stock, par value $1.00 per share (the "Preferred Shares"), of which
nine hundred forty thousand (940,000) shares shall be designated Series A
cumulative redeemable preferred stock (the "Series A Preferred Shares"), (iii)
two-hundred million (200,000,000) shares of common stock, par value $.0l per
share (the "Common Shares"), and (iv) two hundred five million (205,000,000)
shares of excess stock, par value $.0l per share (the "Excess Shares"). Excess
Shares, if any, that are exchanged pursuant to Sections 4.5(c) and 4.7 hereof
(i) for Common Shares, are sometimes referred to herein as "Excess Common
Shares", (ii) for Preferred Shares, are sometimes referred to herein as "Excess
Preferred Shares", and together with the Preferred Shares, as "Preferred Equity
Shares", and (iii) for Series A Preferred Shares, are sometimes referred to
herein as "Excess Series A Preferred Shares", and together with the Series A
Preferred Shares, as "Series A Equity Shares". The Preferred Shares and Excess
Preferred Shares may be issued, from time to time, in one or more series as
authorized by the Board of Directors of the Corporation (the "Board of
Directors"). Prior to issuance of a series, the Board of Directors by
resolution shall designate that series to distinguish it from other series and
classes of stock of the Corporation, shall specify the number of shares to be
included in the series, and shall fix the terms, rights, restrictions and
qualifications of the shares of the series, including any preferences, voting
powers, dividend rights and redemption, sinking fund and conversion rights.
Subject to the express terms of any other series of Preferred Equity Shares
outstanding at the time, the Board of Directors may increase or decrease the
number of shares or alter the designation or classify or reclassify any unissued
shares of a particular series of Preferred Equity Shares by fixing or altering
in any one or more respects from time to time before issuing the shares any
terms, rights, restrictions and qualifications of the shares. The Senior
Preferred Shares and the Preferred Shares are sometimes referred to herein
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collectively as the "Senior Shares". The Common Shares and the Excess Common
Shares are sometimes referred to herein collectively as the "Common Equity
Shares".
SECTION 4.2 SENIOR PREFERRED SHARES.
(a) GENERAL TERMS. Each Senior Preferred Share shall be identical
in all respects with each other Senior Preferred Share. Senior Preferred Shares
that are redeemed or purchased by the Corporation may, at the election of the
Corporation either (i) be reissued by the Corporation or (ii) be canceled and if
so canceled shall revert to authorized but unissued Senior Preferred Shares. No
other shares of the Corporation may be authorized that are senior to or PARI
PASSU with the Senior Preferred Shares with respect to rights to receive
dividends and rights upon liquidation of the Corporation.
(b) DIVIDEND RIGHTS. (i) The holders of Senior Preferred Shares
shall be entitled to receive, when and as declared by the Board of Directors,
but only out of funds legally available therefor, cash dividends at the annual
rate of $35.00 per share, and no more, payable quarterly on the first day of
January, April, July and October, respectively, in each year with respect to the
quarterly dividend period (or portion thereof) ending on the day preceding such
respective dividend payment date, to shareholders of record on the respective
date, not exceeding fifty days preceding such dividend payment date, fixed for
the purpose by the Board of Directors in advance of payment of each particular
dividend.
(ii) So long as any Senior Preferred Shares remain outstanding, no
dividend whatever shall be paid or declared and no distribution made on any
Preferred Shares or Common Equity Shares other than a dividend payable in
Preferred Shares or Common Equity Shares, and no shares of Preferred Shares or
Common Equity Shares shall be purchased, redeemed or otherwise acquired for
consideration by the Corporation, directly or indirectly (other than as a result
of a reclassification of Preferred Shares or Common Equity Shares,
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or the exchange or conversion of one Preferred Share or Common Equity Share for
or into another Preferred Share or Common Equity Share or other than through the
use of the proceeds of a substantially contemporaneous sale of other Preferred
Shares or Common Shares), unless the full dividend payable with respect to the
Senior Preferred Shares for the then current quarterly-yearly dividend period
shall have been paid or declared and set apart for payment. Subject to the
foregoing, and not otherwise, dividends may be declared by the Board of
Directors and paid on any Series A Equity Shares or Common Equity Shares from
time to time out of any funds legally available therefor, and the Senior
Preferred Shares shall not be entitled to participate in any such dividends,
whether payable in cash, stock or otherwise.
(c) RIGHTS UPON LIQUIDATION. In the event of any voluntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Senior Preferred Shares shall be entitled, before any distribution or
payment is made to the holders of any Preferred Shares or Common Equity Shares,
to be paid in full an amount equal to $550.00 per share (which amount is
hereinafter referred to as the "senior voluntary liquidation amount"), together
with the full dividend thereon for the then current quarterly-yearly dividend
period. In the event of any involuntary liquidation, dissolution or winding up
of the affairs of the Corporation, then, before any distribution or payment
shall be made to the holders of any Preferred Shares or Common Equity Shares,
the holders of Senior Preferred Shares shall be entitled to be paid in full an
amount equal to $550.00 per share (which amount is hereinafter referred to as
the "senior involuntary liquidation amount"), together with the full dividend
thereon for the then current quarterly-yearly dividend period.
If payment shall have been made in full to all holders of Senior
Preferred Shares, the remaining assets of the Corporation shall be distributed
among the holders of Preferred Shares or Common Equity Shares, according to
their respective numbers of shares. For the purposes of this Section 4.2(c),
the consolidation or merger of the Corporation
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with any other corporation shall not be deemed to constitute a liquidation,
dissolution or winding up of the Corporation.
(d) REDEMPTION. The Corporation, at the option of the Board of
Directors, may redeem in whole, but not in part, the Senior Preferred Shares at
the time outstanding at any time from and after February 20, 1999, upon notice
given as hereinafter specified, at a redemption price for each Senior Preferred
Share equal to $550.00, together with the full dividend thereon for the then
current quarterly-yearly dividend period.
Notice of redemption of the Senior Preferred Shares shall be mailed by
first class mail, postage prepaid, addressed to the holders of record of the
shares to be redeemed at their respective last addresses as they shall appear on
the books of the Corporation. Such mailing shall be at least 30 days and not
more than 60 days prior to the date fixed for redemption. Any notice which is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the shareholder receives such notice, and failure
duly to give such notice by mail, or any defect in such notice, to any holder of
Senior Preferred Shares designated for redemption shall not affect the validity
of the proceedings for the redemption of any other Senior Preferred Shares.
The Board of Directors shall have full power and authority, subject to
the provisions herein contained, to prescribe the terms and conditions upon
which Senior Preferred Shares shall be redeemed.
If notice of redemption shall have been duly given, and if, on or
before the redemption date specified therein, all funds necessary for such
redemption shall have been set aside by the Corporation, separate and apart from
its other funds, in trust for the pro rata benefit of the holders of the shares
called for redemption, so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares so called for redemption shall
not have been
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surrendered for cancellation, all shares so called for redemption shall no
longer be deemed outstanding on and after such redemption date, and all rights
with respect to such shares shall forthwith on such redemption date cease and
terminate, except only the right of the holders thereof to receive the amount
payable on redemption thereof, without interest.
Any funds so set aside and unclaimed at the end of three years from
such redemption date shall, to the extent permitted by law, be released or
repaid to the Corporation, after which repayment the holders of the shares so
called for redemption shall look only to the Corporation for payment thereof.
(e) VOTING RIGHTS. Except as required by applicable law, the holders
of Senior Preferred Shares shall have no voting rights in the Corporation.
(f) NO OTHER RIGHTS. The Senior Preferred Shares shall not have any
relative, participating, optional or other special rights and powers other than
as set forth herein.
(g) LEGEND. Any certificate evidencing Senior Preferred Shares shall
be stamped or endorsed with a legend in substantially the following form:
THE SHARES OF SENIOR PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS, AND ACCORDINGLY NEITHER THE
SHARES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT AND ANY SUCH LAWS APPLICABLE
THERETO AND THE RULES AND REGULATIONS THEREUNDER.
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SECTION 4.2A SERIES A PREFERRED SHARES.
(a) GENERAL TERMS. Each Series A Preferred Share shall be identical
in all respects to each other Series A Preferred Share. Each Excess Series A
Preferred Share shall be identical in all respects to each other Excess Series A
Preferred Share, and except as otherwise provided herein, shall be identical in
all respects to each Series A Preferred Share. Series A Preferred Shares that
are redeemed or purchased by the Corporation may, at the election of the
Corporation either (i) be reissued by the Corporation or (ii) be canceled and if
so canceled shall revert to authorized but unissued Preferred Shares.
(b) DIVIDEND RIGHTS. (i) The holders of Series A Equity Shares
shall be entitled to receive, when and as declared by the Board of Directors,
but only out of funds legally available therefor, cumulative cash dividends
payable to shareholders of record on the respective date, not exceeding 50 days
preceding such dividend payment date, fixed for the purpose by the Board of
Directors in advance of payment of each particular dividend in an amount equal
to the greater of (A) $8.50 per share per annum and (B) an amount per share
equal to 6.2461 (subject to proportional adjustment in the case of any
subdivision, stock split, stock dividend, combination or reverse split of the
Common Equity Shares or the Preferred Equity Shares) (as so adjusted from time
to time, the "Common Equivalent Factor") times the dollar amount of dividends
declared with respect to each Common Equity Share (such product, the "Common
Equivalent Amount") for the same annual period; PROVIDED, HOWEVER, that if, as a
result of the quarterly dividends paid in accordance with the following
sentence, the holders of Series A Equity Shares shall have received for any
calendar year more dividends than such Shares shall be entitled under clauses
(A) and (B) above, the dividends payable in respect of Series A Preferred Shares
in subsequent calendar years shall be reduced to the extent of such overpayment.
Subject to the proviso of the preceding sentence of this Section 4.2A(b)(i), the
dividend paid in respect of each quarterly period in each calendar year shall
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be determined as follows: (1) for the first quarter, the greater of $2.125 per
share and the Common Equivalent Amount for same quarter; (2) for the second
quarter, an amount such that the aggregate amount to be received per Series A
Equity Share in respect of the first two quarters of such calendar year shall be
the greater of $4.25 per share and the Common Equivalent Amount for the same two
quarters; (3) for the third quarter, an amount such that the aggregate amount to
be received per Series A Equity Share in respect of the first three quarters of
such calendar year shall be the greater of $6.375 per share and the Common
Equivalent Amount for the same three quarters; and (4) for the fourth quarter,
an amount such that the aggregate amount to be received per Series A Equity
Share in respect of such calendar year shall be the amount provided in the
preceding sentence of this Section 4.2A(b)(i). Dividends paid on shares of
Series A Equity Shares in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all Series A Equity Shares as are outstanding at the
time. Accumulated but unpaid dividends for any past quarterly dividend periods
may be declared and paid at any time, without reference to any regularly
scheduled quarterly dividend payment date, to holders of record on such date,
not exceeding 50 days preceding such dividend payment date, fixed for the
purpose by the Board of Directors in advance of payment of each particular
dividend.
(ii) So long as any Series A Equity Shares remain outstanding, no
dividend whatever shall be paid or declared and no distribution made on any
Common Equity Shares other than a dividend payable in Common Equity Shares, and
no shares of Common Equity Shares shall be purchased, redeemed or otherwise
acquired for consideration by the Corporation, directly or indirectly (other
than as a result of a reclassification of Common Equity Shares, or the exchange
or conversion of one Common Equity Share for or into another Common Equity
Share, or other than through the use of the proceeds of a substantially
contemporaneous sale of other Common Shares), unless the full dividend thereon
for the then
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current quarterly dividend period and all prior dividend periods shall have been
paid or declared and set apart for payment. Subject to the foregoing, and not
otherwise, such dividends may be declared by the Board of Directors and paid on
any Common Equity Shares from time to time out of any funds legally available
therefor, and the Series A Equity Shares shall not be entitled to participate in
any such dividends, whether payable in cash, stock or otherwise.
(c) RIGHTS UPON LIQUIDATION. In the event of any voluntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Series A Equity Shares shall be entitled, before any distribution or
payment is made to the holders of any Common Equity Shares, to be paid in full
an amount per share equal to $100.00 (which amount is hereinafter referred to as
the "Series A Preferred voluntary liquidation amount"), together with (x) all
accrued and unpaid dividends through the end date of the calender quarter most
recently completed prior to the date of liquidation, dissolution or winding up
of the affairs of the Corporation (any such date, a "Series A Voluntary
Liquidation Date") plus (y) $2.125 times a fraction equal to the actual number
of days elapsed from the end date of the calendar quarter most recently
completed to the relevant Series A Voluntary Liquidation Date over ninety days.
In the event of any involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, then, before any distribution or payment shall be
made to the holders of any Common Equity Shares, the holders of Series A Equity
Shares shall be entitled to be paid in full an amount per share equal to $100.00
(which amount is hereinafter referred to as the "Series A Preferred involuntary
liquidation amount"), together with (x) all accrued and unpaid dividends through
the end date of the calender quarter most recently completed prior to the date
of involuntary liquidation, dissolution or winding up of the affairs of the
Corporation (any such date, a "Series A Involuntary Liquidation Date"); plus (y)
$2.125 times a fraction equal to the actual number of days elapsed from the end
date of the calendar quarter most recently completed to
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the relevant Series A Involuntary Liquidation Date over ninety days.
Payment shall be made in full to all holders of Series A Equity Shares
and other Shares ranking PARI PASSU on liquidation with the Series A Equity
Shares, before any remaining assets of the Corporation shall be distributed
among the holders of Common Equity Shares, according to their respective numbers
of shares. For the purposes of this Section 4.2A(c), the consolidation or
merger of the Corporation with any other corporation shall not be deemed to
constitute a liquidation, dissolution or winding up of the Corporation, but
shall, to the extent appropriate, cause an adjustment to the Common Equivalent
Factor.
(d) REDEMPTION. The Corporation, at the option of the Board of
Directors, with approval of a majority of the Independent Directors (as defined
in Section 4.5 hereof), may redeem in whole, or in part, the Series A Equity
Shares at the time outstanding at any time and from time to time from and after
July 1, 2003, upon notice given as hereinafter specified, at a redemption price
for each Series A Equity Share equal to $100.00, together with (i) all accrued
and unpaid dividends through the end date of the calender quarter most recently
completed prior to the date of redemption of the Series A Equity Shares (each a
"Series A Redemption Date"); plus (ii) $2.125 times a fraction equal to the
actual number of days elapsed from the end date of the calendar quarter most
recently completed to the relevant Series A Redemption Date over ninety days
(such fraction, the "Pro Rata Adjustment"); plus (iii) a right to receive on the
payment date for dividends declared on the Common Equity Shares with respect to
the calendar quarter during which the relevant Series A Redemption Date occurs
(the "Relevant Quarter"), the excess of (x) the Common Equivalent Factor times
(A) the dollar amount of the per share dividends declared on the Common Equity
Shares for the Relevant Quarter times the Pro Rata Adjustment plus (B) the
dollar amount of the per share dividends declared on the Common Equity Shares
from the beginning of the calendar year in which such redemption occurs through
the end date of
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the calendar quarter prior to the Relevant Quarter over (y) the dollar amount
calculated in the preceding clause (ii) plus all other dividends paid on the
Preferred Shares from the beginning of the calendar year during which the
relevant Series A Redemption Date occurs.
If the Corporation shall determine to redeem less than all the Series
A Equity Shares then outstanding, the shares to be redeemed shall be selected
pro rata (as nearly as may be) so that the number of shares redeemed from each
holder shall be the same proportion of all the shares to be redeemed that the
total number of Series A Equity Shares then held by such holder bears to the
total number of Series A Equity Shares then outstanding.
Notice of redemption of the Series A Equity Shares shall be mailed by
first class mail, postage prepaid, addressed to the holders of record of the
shares to be redeemed at their respective last addresses as they shall appear on
the books of the Corporation. Such mailing shall be at least 30 days and not
more than 60 days prior to the date fixed for redemption. Any notice which is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the shareholder receives such notice, and failure
duly to give such notice by mail, or any defect in such notice, to any holder of
Series A Equity Shares designated for redemption shall not affect the validity
of the proceedings for the redemption of any other Series A Equity Shares.
The Board of Directors shall have full power and authority, subject to
the provisions herein contained, to prescribe the terms and conditions upon
which Preferred Shares shall be redeemed.
If notice of redemption shall have been duly given, and if, on or
before the redemption date specified therein, the Corporation shall deposit all
funds necessary for such redemption with a bank or trust company in an account
that is separate and apart from its other accounts and shall hold such
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funds in trust for the pro rata benefit of the holders of the shares called for
redemption, so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares so called for redemption shall
not have been surrendered for cancellation, all shares so called for redemption
shall no longer be deemed outstanding on and after such redemption date, and all
rights with respect to such shares shall forthwith on such redemption date cease
and terminate, except only the right of the holders thereof to receive the
amount payable on redemption thereof, without interest.
Any funds so deposited and unclaimed at the end of two years from such
redemption date shall, to the extent permitted by law, be released or repaid to
the Corporation, after which repayment the holders of the shares so called for
redemption shall look only to the Corporation for payment thereof.
(e) VOTING RIGHTS. The holders of Series A Equity Shares shall have
no voting rights in the Corporation except: (i) in the event that the Board of
Directors has not declared a dividend payable to holders of any series of
Preferred Shares that were authorized with the consent of the holders of a
majority of the Series A Equity Shares or were issued to the original holder of
the Series A Equity Shares (all such Preferred Shares, collectively the "Ranking
Preferred Shares") or the Series A Preferred Shares for four (4) quarterly
dividend periods, the number of directors constituting the Board of Directors
shall, without further action, be increased by one (1) and the holders of a
majority of the Series A Equity Shares shall have the exclusive right together
with holders of all other series of Ranking Preferred Shares, to elect one (1)
director to fill such newly created directorship until such time as all such
dividends in arrears are made current and paid in full, at which time the
director so elected shall cease to be a director, the number of directors
constituting the Board of Directors shall be reduced by one (1) and such
additional voting rights of the holders of the Series A Equity Shares shall
terminate, subject to revesting
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in the event of each and every subsequent event of the character indicated
above, (ii) the affirmative vote of the holders of a majority of the Series A
Equity Shares voting together as a class shall be required to approve any
amendment to these Articles of Incorporation that materially and adversely
affects the rights, preferences or powers of the Series A Equity Shares,
including, without limitation, the definition of Ownership Limit with respect to
the Series A Equity Shares, PROVIDED, that (x) except as required by clause (y)
where the amendment to these Articles of Incorporation for which the vote is
required pursuant to this clause (ii) adversely affects the rights, powers and
preferences of other series of Ranking Preferred Shares, then such amendment
shall be approved by a vote of a majority of the Ranking Preferred Shares
affected thereby, voting together as a class and (y) the unanimous approval of
the holders of Series A Equity Shares shall be required for any amendment to
these Articles of Incorporation that would decrease the rate or change the time
of payment of any dividend or distribution on the Series A Equity Shares,
decrease the amount payable upon redemption of the Series A Equity Shares or
upon the voluntary or involuntary liquidation of the Corporation, or advance the
date on which the Series A Equity Shares may be redeemed by the Corporation,
amend the number of shares of Series A Equity Shares required to effect
amendments to these Articles of Incorporation or amend this Section 4.2A(e),
(iii) the affirmative vote of the holders of a majority of the Ranking Preferred
Shares of each affected series voting together as a class shall be required to
approve any merger or consolidation of the Corporation and another entity in
which the Corporation is not the surviving corporation and each holder of such
series of Ranking Preferred Shares does not receive shares of the surviving
corporation with substantially similar rights, preferences and powers in the
surviving corporation as the Ranking Preferred Shares have with respect to the
Corporation, (iv) the affirmative vote of the holders of a majority of the
Ranking Preferred Shares of each affected series voting together as a class
shall be required to approve any voluntary action by the Board of Directors
intended to cause the Corporation to cease to have the status as a REIT (as
defined
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in Section 4.5 hereof) and (v) as otherwise required by applicable law.
(f) NO OTHER RIGHTS. The Series A Equity Shares shall not have any
relative, participating, optional or other special rights and powers other than
as set forth herein.
SECTION 4.3 COMMON EQUITY SHARES.
(a) COMMON EQUITY SHARES SUBJECT TO TERMS OF SHARES. The Common
Equity Shares shall be subject to the express priorities and limitations of the
Senior Shares.
(b) DIVIDEND RIGHTS. (i) The holders of Common Equity Shares shall
be entitled to receive such dividends as may be declared by the Board of
Directors out of funds legally available therefor.
(ii) Each of the Common Shares, and the Excess Common Shares shall
rank in parity with one another with respect to the declaration and payment
of any dividend or the making of any distribution by, or out of the property
and assets of the Corporation, or the issuance of any rights or warrants to
subscribe for, or purchase securities convertible into, stock or other
securities of the Corporation. No dividend or distribution, whether payable
in cash, securities or other property or assets of the Corporation, shall be
declared or paid or made, and no such rights or warrants shall be issued, in
respect of any of the Common Shares unless an identical dividend or
distribution is concurrently declared and paid or made, or identical rights
or warrants are issued, in respect of each of the Excess Common Shares, nor
shall any dividend or distribution be declared or paid or made, nor any
rights or warrants issued, in respect of any of the Common Shares or any
class thereof unless an identical dividend or distribution is concurrently
declared and paid or made, or identical rights or warrants are issued, in
respect of each of the Excess Common Shares, nor any rights or warrants
issued, in respect of any of the Excess Common Shares unless an identical
dividend or distribution is concurrently declared and paid or made, or
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identical rights or warrants are issued, in respect of each of the Common
Shares; PROVIDED, HOWEVER, that in the case of any dividend or distribution
payable in, or rights or warrants to subscribe for, or purchase securities
convertible into Common Shares, such dividend or distribution shall only be
payable in, and such rights or warrants shall only provide subscription or
purchase rights relating to securities convertible into, Common Shares to
holders of Common Shares and Excess Common Shares to holders of Excess Common
Shares.
(c) RIGHTS UPON LIQUIDATION. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of Common Equity Shares shall be
entitled to receive, ratably with each other holder of Common Equity Shares,
that portion of the assets of the Corporation available for distribution to the
holders of its Common Equity Shares, as the number of Common Equity Shares held
by such holder bears to the total number of Common Equity Shares then
outstanding.
(d) VOTING RIGHTS. Except as otherwise provided herein, the holders
of Common Shares shall vote together as a single class. At all meetings of the
shareholders of the Corporation each holder of Common Shares shall be entitled
to one vote for each Common Share entitled to vote at such meeting. The
affirmative vote of a majority of the holders of Common Shares voting together
as a class shall be required to approve: (1) an election to change the
Corporation's status as a REIT, and (2) other matters as required by applicable
law.
(e) ELECTION OF DIRECTORS. (i) The cumulative voting rights set
forth in Section 351.245(3) of the GBCL are hereby eliminated.
SECTION 4.4 PREEMPTIVE RIGHTS. No holder of Common Equity Shares or
of Senior Shares shall be entitled as a matter of right to subscribe for or
purchase, or have any preemptive right with respect to, any part of any new or
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additional issue of stock of any class whatsoever, or of securities convertible
into any stock of any class whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration or by way of dividend.
SECTION 4.5 RESTRICTIONS ON OWNERSHIP AND TRANSFER; EXCHANGE FOR
EXCESS SHARES.
(a) DEFINITIONS. As used in these Articles of Incorporation, the
following terms shall have the following meanings:
"Affiliate" shall mean with respect to any person, any other person
that, directly or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such person and the term
"Affiliated" has a meaning correlative to the foregoing. As used herein the
term "control" shall mean either (i) having (directly or indirectly through
one or more intermediaries) the exclusive power to direct the management and
policies of a person or (ii) having both (A) at least fifty percent (50%) of
the economic interest in a person and (B) at least fifty percent (50%) of the
voting rights with respect to such person with the full right to exercise
such vote, and the term "controlled" has a meaning correlative to the
foregoing. Notwithstanding the foregoing, (i) with respect to Westfield
American Investments Pty Limited ("Westfield") only, the term "Affiliate"
shall include any United States real estate investment trust or foreign trust
with shares publicly traded on an internationally recognized national
securities exchange, provided that Westfield and its Affiliates own in the
aggregate at least twenty-five percent (25%) of the economic and voting
interests in such real estate investment trust or foreign trust and Westfield
or one of its Affiliates is the manager of all or substantially all of the
properties in which such real estate investment trust or foreign trust has a
direct or
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indirect interest and for which such real estate investment trust or foreign
trust has the right to designate the manager thereof or is a manager of such
trust. As used herein the term "person" shall mean an individual, corporation,
partnership, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity that may be treated as a
person under applicable law.
"Beneficial Ownership" shall mean ownership of Shares either directly
or constructively through the application of Section 544 of the Code, as
modified by Section 856(h) of the Code. The terms "Beneficial Owner",
"Beneficially Owns" and "Beneficially Owned" shall have the correlative
meanings.
"Beneficiary" shall mean the beneficiary or beneficiaries of the
Special Trust which shall be the United Jewish Appeal and, if necessary to avoid
the Corporation being "closely held" within the meaning of Section 856(h) of the
Code or to assure that the Corporation satisfies the requirement of Section
856(a)(5) of the Code that it has at least 100 shareholders, one or more
additional persons exempt from tax under Section 501(c)(3) of the Code as shall
be designated by the Board of Directors or a duly authorized officer of the
Corporation.
"Closely Held" shall have the meaning prescribed in Section 856(h)
of the Code.
"Closing Date" shall mean the date of the initial closing of the
offerings of Common Shares by the Corporation as described to the registration
statement on Form S-11 as filed with the Securities and Exchange Commission
(Registration No. 333-22731).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and references to sections thereof shall include any appropriate
successor provisions.
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"Existing Holder" shall mean Mr. Frank P. Lowy and all of the members
of his family, as such term is defined for purposes of Section 544(a)(2) of the
Code.
"Existing Holder Limit" shall mean, (A) for the period prior to the
Closing Date 33% of the value of the total outstanding Shares of the
Corporation, and (B) for the period on and after the Closing Date, 26% of the
value of the total outstanding Shares of the Corporation.
"Independent Director" shall mean a director of the Company who (i) is
not, and has not for the last 12 months been, an officer, director or employee
of any of the Westfield Group or the WAT Trustee, (ii) is not an affiliate of
any of the Westfield Group or the WAT Trustee or an officer or employee of such
an affiliate, (iii) is not a member of the immediate family of any natural
person described in clauses (i) and (ii) above, and (iv) is free from any
relationship that would interfere with the exercise of independent judgment as a
Director. For purposes of this definition of Independent Director only, an
"Affiliate" shall mean any person directly or indirectly controlling, controlled
by, or under common control with, such other person; "Control" shall mean the
power to exercise a controlling influence over the management or policies of a
company, unless such power is solely the result of an official position with any
of the Westfield Group or the WAT Trustee; and "Member of the Immediate Family"
shall mean any parent, spouse of a parent, child, spouse of a child, spouse,
brother or sister and includes step and adoptive relationships.
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"Individual" shall mean any Person that is treated as an individual
for purposes of Section 542(a)(2) of the Code as the application of such Section
may be modified by Section 856(h) of the Code.
"Institutional Investor" shall mean any "qualified institutional
buyer" as defined in Section (a)(1)(i)(A), (a)(1)(i)(D), (a)(1)(i)(E),
(a)(1)(i)(F), (a)(1)(i)(H) (but limited to any organization exempt from tax
under Section 501(c)(3) of the Code), (a)(1)(iv) or (a)(1)(vi) of Rule 144A
under the Securities Act of 1933, as amended. The term Institutional Investor
shall be deemed to include any foreign entity that would otherwise qualify under
the foregoing definition, including, without limitation, a foreign insurance
company.
"Market Price" shall mean, with respect to Shares of the relevant
class or series on the relevant date, the closing sale price regular way on such
day, or, in case no such sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in each case on the New York
Stock Exchange, or, if such Shares are not listed or admitted to trading on such
exchange, on the principal national securities exchange or quotation system on
which such Shares are quoted or listed or admitted to trading, or, if not quoted
or listed on any national securities exchange or quotation system, the average
of the closing bid and asked prices of such Shares on the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similarly generally accepted reporting service, or, if not so
available in such manner, the fair market value of such Shares as determined by
a nationally recognized investment banking firm selected by the Board of
Directors.
"Ownership Limit", shall mean, (A) with respect to Shares Beneficially
Owned by any Individual (other than an Existing Holder), (i) for the period
prior to the Closing Date, 4% of the total value of the outstanding Shares of
all classes and series, and (ii) for the period on and after the
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Closing Date, 5.5% of the total value of the outstanding Shares of all classes
and series, and (B) with respect to the Senior Preferred Shares during the
period prior to the Closing Date, one Senior Preferred Share, in each case
subject to adjustment as set forth in Sections 4.5(i) and 4.5(j).
"Ownership Limitation Termination Date" shall mean the first day, if
any, on which holders of Shares determine, in accordance with any class
voting procedures as provided in these Articles, that it is no longer in the
best interests of the Corporation to attempt to, or continue to, qualify as a
REIT.
"Person" shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under section 401(a) or 501(c)(17) of the
Code), a portion of a trust permanently set aside for or to be used exclusively
for the purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity or any government or agency or political subdivision thereof and
also includes a group as that term is used for purposes of Section 13(d)(3) of
the Exchange Act.
"Purported Beneficial Holder" shall mean, with respect to any event
other than a purported Transfer which results in Shares being automatically
exchanged for Excess Shares, the person for whom the Purported Record Holder of
the Shares that were, pursuant to Section 4.5(c), automatically exchanged for
Excess Shares upon the occurrence of such event held such exchanged Shares.
"Purported Beneficial Transferee" shall mean, with respect to any
purported Transfer which results in Shares being automatically exchanged for
Excess Shares, the purported beneficial transferee for whom the Purported Record
Transferee would have acquired such exchanged Shares, if such Transfer had been
valid under Sections 4.5(b) and 4.5(c).
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"Purported Record Holder" shall mean, with respect to any event other
than a purported Transfer which results in Shares being automatically exchanged
for Excess Shares, the record holder of the Shares that were, pursuant to
Section 4.5(c), automatically exchanged for Excess Shares upon the occurrence of
such event.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Shares being automatically exchanged for
Excess Shares, the record holder of such exchanged Shares if such Transfer had
been valid under Sections 4.5(b) and 4.5(c).
"REIT" shall mean a real estate investment trust under Section 856 of
the Code.
"Shares" shall mean Senior Shares or Common Shares (all as defined in
section 4.1).
"Special Trust" shall mean a trust created pursuant to Section 4.7(a).
"Special Trust Transferee" shall mean the ultimate transferee or
transferees of New Shares that are to be transferred from a Special Trust upon
transfer of Excess Shares pursuant to Section 4.7(e) below.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of Shares (including the granting or transfer of any option or
entering into any agreement for the sale, transfer or other disposition of
Shares), whether voluntary or involuntary, whether of record or beneficially and
whether by operation of law or otherwise.
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"Trustee" shall mean such person, as trustee of the Special Trust, as
shall be selected from time to time by the Board of Directors.
(b) RESTRICTIONS ON OWNERSHIP AND TRANSFER.
(1) Prior to the Ownership Limitation Termination Date, no Individual
(other than an Existing Holder) shall Beneficially Own Shares (and, with respect
to the Senior Preferred Shares, during the period prior to the Closing Date, no
Person shall beneficially own (without reference to any rules of attribution)
Senior Preferred Shares, in each case in excess of the applicable Ownership
Limit.) In addition, prior to the Ownership Limitation Termination Date, no
Existing Holder shall Beneficially Own Shares in excess of the Existing Holder
Limit.
(2) Prior to the Ownership Limitation Termination Date, to the extent
that any Transfer, if effective, would result in any Individual (other than an
Existing Holder) Beneficially Owning Shares in excess of the Ownership Limit,
the Transfer of such Shares which would be otherwise Beneficially Owned by such
Individual in excess of such Ownership Limit shall be void AB INITIO; and the
intended transferee shall acquire no rights to such Shares.
(3) Prior to the Ownership Limitation Termination Date, any Transfer
that, if effective, would result in any Existing Holder Beneficially Owning
Shares in excess of the Existing Holder Limit shall be void AB INITIO as to the
Transfer of such Shares which would be otherwise Beneficially Owned by such
Existing Holder in excess of such Existing Holder Limit; and such Existing
Holder shall acquire no rights to such Shares.
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(4) Prior to the earlier of the Closing Date and the Ownership
Limitation Termination Date, any Transfer of Senior Preferred Shares that, if
effective, would result in any Person (determined without reference to any rules
of attribution) beneficially owning Senior Preferred Shares in excess of the
Ownership Limit with respect to Senior Preferred Shares shall be void AB INITIO
as to the Transfer of such Preferred Shares which would be otherwise
beneficially owned by such Person (determined without reference to any rules of
attribution) in excess of such amount; and the intended transferee shall acquire
no rights in such Senior Preferred Shares.
(5) Prior to the Ownership Limitation Termination Date, any Transfer
that, if effective, would result in the Shares being beneficially owned by less
than 100 Persons (determined without reference to any rules of attribution) or
which would otherwise cause the Corporation to fail to satisfy the requirements
for qualification as a REIT, shall be void AB INITIO as to the Transfer of such
Shares which would be otherwise beneficially owned by the transferee (determined
without reference to any rules of attribution); and the intended transferee
shall acquire no rights in such Shares.
(6) Prior to the Ownership Limitation Termination Date, any
Transfer that, if effective, would result in the Corporation being "Closely
Held" shall be void AB INITIO as to the Transfer of the Shares which would
cause the Corporation to be "Closely Held" and the intended transferee shall
acquire no rights in such Shares.
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(c) SHARES EXCHANGED FOR EXCESS SHARES.
(1) If at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer such that, notwithstanding the other
provisions contained in this Article Fourth, any Individual (other than an
Existing Holder) would Beneficially Own Shares in excess of the Ownership Limit,
such number of Shares in excess of such Ownership Limit (rounded up to the
nearest whole Share) shall be automatically exchanged for Excess Shares, and
shall be subject to the terms of Section 4.7 hereof.
(2) If at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer such that, notwithstanding the other
provisions contained in this Article Fourth, an Existing Holder would
Beneficially Own Shares in excess of the applicable Existing Holder Limit, then
such number of Shares in excess of such Existing Holder Limit (rounded up to the
nearest whole Share) shall be automatically exchanged for Excess Shares, and
shall be subject to the terms of Section 4.7 hereof.
(3) If at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer of Shares which would, notwithstanding the
other provisions contained in this Article Fourth, cause the Corporation to
become Closely Held, then the Shares being Transferred which would cause the
Corporation to be Closely Held (rounded up to the nearest whole Share) shall
be automatically exchanged for Excess Shares, and shall be subject to the
terms of Section 4.7 hereof.
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(4) If, at any time prior to the Ownership Limitation Termination
Date, there is a purported Transfer such that, notwithstanding the other
provisions contained in this Article Fourth, the total outstanding Shares would
be beneficially owned (without reference to any rules of attribution) by fewer
than 100 Persons, then such number of Shares as would otherwise cause the
Corporation to fail to satisfy the ownership requirements of Section 856(a)(5)
of the Code shall automatically be exchanged for Excess Shares and shall be
subject to the terms of Section 4.7 hereof.
(5) If, at any time prior to the Ownership Limitation Termination
Date, an event other than a purported Transfer (an "Event") occurs which
would (i) cause any Individual (other than an Existing Holder) to
Beneficially Own Shares in excess of the Ownership Limit, (ii) cause an
Existing Holder to Beneficially Own Shares in excess of the Existing Holder
Limit, or (iii) cause the Corporation to be Closely Held, or then
outstanding Shares Beneficially Owned by such Individual or Existing Holder,
as the case may be, shall be automatically exchanged for Excess Shares, and
shall be subject to the terms of Section 4.7 hereof to the extent necessary
to eliminate such excess ownership. In determining which outstanding Shares
shall be exchanged for Excess Shares, outstanding Shares, if any, directly
held or Beneficially Owned by any Individual who caused the Event to occur
shall be exchanged for Excess Shares before any
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outstanding Shares not so Beneficially Owned are exchanged for Excess
Shares, and to the extent not inconsistent therewith, in such manner as
minimizes the aggregate value of the Shares that are exchanged for Excess Shares
(except to the extent that the Board of Directors determines that the Shares to
be exchanged for Excess Shares are to be those held through a Person that caused
or contributed to the occurrence of such Event, rather than Shares held through
a different chain of ownership). Where several such Individuals or Persons
exist, the outstanding Shares shall be exchanged for Excess Shares in such
manner as minimizes the aggregate value of the Shares that are exchanged for
Excess Shares (except to the extent that the Board of Directors determines that
the Shares to be exchanged for Excess Shares are to be those held through
Persons that caused or contributed to the occurrence of such Event, rather than
Shares held through a different chain of ownership), and to the extent not
inconsistent therewith, on a pro rata basis. If no Persons or Individuals
caused the Event to occur, outstanding Shares shall be exchanged for Excess
Shares in such manner as minimizes the aggregate value of Shares that are
exchanged for Excess Shares.
(6) Any exchange of Shares for Excess Shares pursuant to this Section
4.5(c) and Section 4.7 hereof shall be effective as of the close of business on
the business day prior to the date of the Transfer or other Event that
resulted in such exchange.
(7) A Special Trust that, in accordance with Section 4.7(a) and these
Articles is the holder of any Excess Shares shall, except as otherwise
specifically provided herein, have the same rights hereunder, including without
limitation, voting rights and distribution rights, to which a permitted holder
of the Shares exchanged therefor would be entitled in respect of such Shares had
such Shares not been exchanged for Excess Shares. Such Excess Shares shall be
treated as Shares of the same class or series as the Shares exchanged therefor.
(d) REMEDIES FOR BREACH. If the Board of Directors or its designees
shall at any time determine in good faith
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that a Transfer has taken place in violation of Sections 4.5(b) or 4.5(c) or
that a Person intends to acquire or has attempted to acquire beneficial
ownership (determined without reference to any rules of attribution) or an
Individual intends to acquire or has attempted to acquire Beneficial
Ownership of any Shares in violation of Sections 4.5(b) or 4.5(c), the Board
of Directors or its designees shall take such action as it deems advisable to
refuse to give effect to or to prevent such Transfer (or any Transfer related
to such intent), including, but not limited to, refusing to give effect to
such Transfer on the books of the Corporation or instituting proceedings to
prevent such Transfers; provided, however, that nothing contained in this
Section 4.5(d) shall prevent the automatic application and operation of
Section 4.5(b) (regarding certain attempted Transfers of Shares being void ab
initio) and, failing the operation and application of Section 4.5(b) for any
reason, the automatic application and operation of Section 4.5(c) (regarding
the exchange of Shares for Excess Shares), in each case without the need for
any further action by the Corporation or the Board of Directors.
(e) NOTICE OF OWNERSHIP OR ATTEMPTED OWNERSHIP IN VIOLATION OF
SECTION 4.5(b). Any Individual or Person who acquires or attempts to
acquire Beneficial Ownership of Shares in violation of Sections 4.5(b) or
4.5(c), shall immediately give written notice to the Corporation of such
event and shall provide to the Corporation such other information as the
Corporation may request in order to determine the effect, if any, of such
acquisition or attempted acquisition on the Corporation's status as a REIT.
(f) OWNERS REQUIRED TO PROVIDE INFORMATION. Prior to the Ownership
Limitation Termination Date,
each Person who is a Beneficial Owner of Shares and each Person
(including the shareholder of record) who is holding Shares for a Beneficial
Owner shall provide to the
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Corporation such information as the Corporation may request, in good faith,
in order to determine the Corporation's status as a REIT or to comply with
regulations promulgated under the REIT provisions of the Code including,
without limitation, Treasury Regulations Section 1.857-8 or any successor
regulation.
(g) REMEDIES NOT LIMITED. Nothing contained in this Article Fourth
shall (i) preclude the settlement of Shares on the New York Stock Exchange or
(ii) limit the authority of the Board of Directors to take such other action
as it deems necessary or advisable to protect the Corporation and the
interests of its shareholders by preservation of the Corporation's status as
a REIT.
(h) AMBIGUITY. In the case of an ambiguity in the application of
any of the provisions of this Article Fourth, including any definition
contained in Section 4.5(a) and any ambiguity with respect to which Shares
are to be exchanged for Excess Shares in a given situation, the Board of
Directors shall have the power to determine in good faith the application of
the provisions of this Article Fourth with respect to any situation based on
the facts known to it.
(i) MODIFICATIONS OF OWNERSHIP LIMIT. Subject to the limitations
provided in Section 4.5(j), the Board of Directors may from time to time
increase or decrease the Ownership Limit with respect to any Individual or
Person, or any Shares or class or series thereof.
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(j) LIMITATIONS ON MODIFICATIONS.
(1) The Ownership Limit may not be increased if, after giving
effect to such increase, five Individuals could Beneficially Own, in the
aggregate, more than 49.9% of the value of the outstanding Shares.
(2) Prior to the modification of any Ownership Limit pursuant to
Section 4.5(i), the Board of Directors may require such opinions of counsel,
affidavits, undertakings or agreements as it may deem necessary or advisable
in order to determine or ensure the Corporation's status as a REIT.
(3) The Ownership Limit may not be increased to a percentage which
is greater than 9.8% of the value of the outstanding Shares of the
Corporation of all classes and series.
SECTION 4.6 LEGEND. (a) Each certificate issued on or after the
Closing Date in respect of Common Shares shall bear the following legend:
"The Common Shares represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended. No Individual may Beneficially
Own Shares in excess of the then applicable Ownership Limit, which may
decrease or increase from time to time, unless such Individual is an
Existing Holder. In general, any Individual who attempts to Beneficially
Own shares in excess of the Ownership Limit must immediately notify the
Corporation. All capitalized terms used in this legend have the meanings
set forth in the Articles of Incorporation, a copy of which, including
the restrictions
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on ownership and transfer, will be sent without charge to each shareholder
who so requests. If the restrictions on ownership and transfer are
violated, the Common Shares represented hereby may be automatically
exchanged for Excess Shares and deemed transferred to a Special Trust as
provided in the Articles of Incorporation."
(b) Each certificate issued prior to the Closing Date in respect of
Senior Preferred Shares shall bear the following legend:
"The Preferred Shares represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"). No Person may
beneficially own more than one share of the outstanding Preferred Shares.
Any Person who attempts to beneficially own Preferred Shares in excess of
the above limitations must immediately notify the Corporation and any
transfer which would result in ownership of Preferred Shares in excess of
the above limitation shall be void. All capitalized terms used in this
legend have the meanings set forth in the Articles of Incorporation, a copy
of which, including the restrictions on ownership and transfer, will be
sent without charge to each shareholder who so requests."
The stock certificates evidencing any Senior Preferred Shares issued on or after
the Closing Date shall bear a legend in the form as set forth in Section 4.6(c)
hereof, PROVIDED, HOWEVER, that the term "Senior Preferred Shares" shall be
substituted in place of the term "Preferred Shares" in every place in which the
term "Preferred Shares" appears in such legend.
(c) Each certificate issued on or after the Closing Date in respect
of Preferred Shares shall bear the following legend:
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"The Preferred Shares represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the Corporation's
maintenance of its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended. No Individual may Beneficially
Own Shares in excess of the then applicable Ownership Limit, which may
decrease or increase from time to time, unless such Individual is an
Existing Holder. In general, any Individual who attempts to Beneficially
Own Shares in excess of the Ownership Limit must immediately notify the
Corporation. All capitalized terms used in this legend have the meanings
set forth in the Articles of Incorporation, a copy of which, including the
restrictions on ownership and transfer, will be sent without charge to each
shareholder who so requests. If the restrictions on ownership and transfer
are violated, the Preferred Shares represented hereby may be automatically
exchanged for Excess Shares and deemed transferred to a Special Trust as
provided in the Articles of Incorporation."
SECTION 4.7 EXCESS SHARES.
(a) OWNERSHIP IN TRUST. Upon any purported Transfer or other Event
that results in the exchange of Shares for Excess Shares pursuant to Section
4.5(c), such Excess Shares shall be deemed to have been transferred to a
Trustee, as trustee of a Special Trust for the exclusive benefit of a
Beneficiary. Excess Shares of any class or series that are held in trust as
provided in this Section 4.7 shall constitute issued and outstanding Common
Shares or Senior Shares of the Corporation, as the case may be. The Purported
Record Transferee or Purported Record Holder shall have no rights in such Excess
Shares, but shall have the rights provided in Sections 4.7(c) and 4.7(e). Where
a Transfer or other Event
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results in an automatic exchange of Shares of more than one class or series for
Excess Shares of more than one class or series, separate Special Trusts shall be
deemed to have been established for the Excess Shares of each such class or
series. Each exchange of Shares for Excess Shares pursuant to Section 4.5(c)(5)
hereof (relating to the requirement of Section 856(a)(5) of the Code that the
Corporation have at least 100 shareholders) shall, with respect to each such
Transfer that caused such exchange, be effected through a transfer of Excess
Shares to a separate and distinct Special Trust for the benefit of a separate
and distinct Beneficiary.
(b) DIVIDEND RIGHTS. Dividends or other distributions that have
been declared on any Shares that have been exchanged for Excess Shares
pursuant to Section 4.5(c) shall be paid when due to the appropriate Trustee,
as trustee of the particular Special Trust for the exclusive benefit of the
Beneficiary of such Special Trust until such time as the Trustee shall
transfer New Shares in respect of such Excess Shares pursuant to Section
4.7(e). Any dividend or distribution paid prior to the discovery by the
Corporation that the Shares with respect to which the dividend or
distribution was made had been exchanged for Excess Shares shall be returned
to the Corporation and promptly thereafter paid over to the Trustee, as
trustee of the Special Trust for the exclusive benefit of the Beneficiary.
(c) RIGHTS UPON LIQUIDATION. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, the Trustee of each Special Trust that is the
holder of any Excess Shares shall be entitled to receive a portion of the assets
of the Corporation available for distribution to the holders of that class or
series of Shares for which such Excess Shares were exchanged originally pursuant
to Section 4.5(c) and this Section 4.7. The Trustee shall distribute to the
Purported Record Transferee or Purported Record Holder of the Excess Shares held
in the Special Trust an amount (the "Original Value Amount") not to
exceed (A) in the case of a Purported Record Holder or in the case of a
Purported
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Record Transferee that did not give value for the Shares for which such
Excess Shares were exchanged (through a gift, devise or other transaction),
the Market Price of the Shares for which such Excess Shares were exchanged as
of the date of such exchange or (B) in the case of a Purported Record
Transferee that did give value for the Shares for which such Excess Shares
were exchanged, the price such Purported Record Transferee paid for such
Shares, out of the assets received by the Trustee in respect of the Excess
Shares held in such Special Trust in connection with any liquidation,
dissolution or winding up of, or any distribution of the assets of, the
Corporation, and the Trustee shall distribute to the Beneficiary of the
particular Special Trust any amounts in excess of the Original Common Amount.
(d) VOTING RIGHTS. Each Trustee, as holder of any Excess Shares and
as trustee of a Special Trust for the exclusive benefit of a Beneficiary, shall
have the same right to vote any such Excess Shares as the Shares exchanged
therefore would have had if they had not been so exchanged in connection with
any matter on which the holders of Shares are entitled to vote until such time
as the Trustee shall transfer New Shares in respect of such Excess Shares
pursuant to Section 4.7(e).
(e) TRANSFER OF EXCESS SHARES.
(1) Any Excess Shares which were issued in exchange for Shares
pursuant to Section 4.5(c) and are held by a Trustee in a Special Trust for the
benefit of a Beneficiary pursuant to Section 4.7(a) shall be Transferred by the
Trustee only as provided in this Section 4.7(e). Such Trustee shall, within one
hundred eighty (180) days after the date of the purported Transfer or other
Event that resulted in such Excess Shares being issued in exchange for Shares,
or, if later, one hundred eighty (180) days after the date on which the
Corporation first became aware of the issuance of Excess Shares (the "Excess
Shares Exchange Date"), Transfer the Excess Shares held in a Special Trust to
a Special Trust Transferee, provided that (i) simultaneously with such Transfer
such Excess Shares shall be automatically exchanged for an equal number of
Shares of the same class or series that had originally been exchanged
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for such Excess Shares (the "New Shares"), (ii) such New Shares would not as
a result of such Transfer to such Special Trust Transferee be automatically
exchanged for Excess Shares pursuant to Section 4.5(c) and (iii) such Special
Trust Transferee is an Institutional Investor or, if designated by the
Corporation as provided below, an Affiliate of a shareholder. The
Corporation shall have the right to designate a Special Trust Transferee
within the first ninety (90) days after the Excess Shares Exchange Date
provided that (i) such Special Trust Transferee is either (A) an Affiliate of
a shareholder or (B) an Institutional Investor and (ii) the New Shares would
not as a result of a Transfer to such Special Trust Transferee be
automatically exchanged for Excess Shares pursuant to Section 4.5(c).
Notwithstanding anything to the contrary in this Section 4.7(e), each Trustee
shall Transfer New Shares in respect of the Excess Shares held in each
Special Trust to a Special Trust Transferee designated by the Corporation
pursuant to the immediately preceding sentence and, during the first ninety
(90) days after the relevant Excess Shares Exchange Date, the Trustee shall
not Transfer New Shares in respect of the Excess Shares to a Special Trust
Transferee that has not been designated by the Corporation pursuant to the
immediately preceding sentence.
Each Trustee shall distribute to the particular Purported Record
Transferee or Purported Record Holder of the Excess Shares held in the Special
Trust out of the purchase price received by the Trustee from a Special Trust
Transferee for New Shares in respect of such Excess Shares an amount (the
"Original Transfer Amount") not to exceed (A) in the case of a Purported Record
Holder or in the case of a Purported Record Transferee that did not give value
for the Shares for which such Excess Shares were exchanged (through a gift,
devise or other transaction), the lesser of (w) the Market Price of such Shares
as of the date such Shares were exchanged for Excess Shares and (x) the purchase
price received by the Trustee from the Special Trust Transferee for the New
Shares or (B) in the case of a Purported Record Transferee that did give value
for the Shares for which such Excess Shares were exchanged, the lesser of (y)
the purchase price received by the Trustee from
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the Special Trust Transferee for the New Shares and (z) the price such Purported
Record Transferee paid for such Shares. The Trustee shall distribute to the
particular Beneficiary of the Special Trust any amounts in excess of the
Original Transfer Amount.
(2) Notwithstanding the foregoing, if a Purported Record Transferee
or Purported Record Holder receives any amounts in respect of any Excess Shares
held in a Special Trust that exceeds the amounts allowable under Section
4.7(e)(1), such Purported Record Transferee or Purported Record Holder shall pay
such excess to the Trustee for the benefit of the Beneficiary of such Special
Trust.
SECTION 4.8 SEVERABILITY. If any provision of this Article Fourth or
any application of any such provision is determined to be invalid by any federal
or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications of such
provision shall be affected only to the extent necessary to comply with the
determination of such court.
ARTICLE FIFTH
The Corporation shall have perpetual existence.
ARTICLE SIXTH
(a) The Board of Directors shall have the power without the assent or
vote of the stockholders to adopt, amend, alter or repeal the By-Laws of the
Corporation, except to the extent that the By-Laws or these Articles of
Incorporation otherwise provide.
(b) The Corporation may in its By-Laws confer powers upon the Board
of Directors in addition to the powers and authorities expressly conferred upon
the Board of Directors by applicable law.
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ARTICLE SEVENTH
(a) The number of directors of the Corporation shall be fixed by the
By-Laws of the Corporation but in no event shall be less than three (3) or more
than fourteen (14) and may be increased or decreased within such limitations
from time to time in such a manner as may be prescribed by the By-Laws and in
accordance with the terms hereof. In the event that the Board is increased by
such a resolution, the vacancy or vacancies so resulting shall be filled by a
vote of the majority of the directors then in office. No decrease in number in
the Board shall shorten the term of any incumbent directors. Any change shall
be reported to the Secretary of State within thirty (30) calendar days of such
change. The Board of Directors shall be divided into three (3) classes, as
nearly equal in number as possible, with the mode of such classification to be
provided for in the By-Laws. Except as otherwise provided in the By-Laws with
respect to the implementation of this Article 7, directors shall be elected to
hold office for a term of three (3) years, with the term of office of one class
expiring each year. Any director or the entire Board of Directors may be
removed, for cause only, by the holders of 66 2/3 of all shares then entitled
to vote at an election of directors. The provisions of this Section 7(a) shall
not be amended, altered, changed or repealed unless approved by the affirmative
vote of the holders of not less than seventy-five percent of the total voting
power of all outstanding shares of voting stock.
(b) Unless and except to the extent that the By-Laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.
(c) Notwithstanding anything contained in these Articles of
Incorporation to the contrary (other than Section 4.3(d) above), the affirmative
vote of the holders of a majority in interest of the then outstanding Common
Shares shall be required to terminate the Corporation's status as a real estate
investment trust.
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(d) Any action required or permitted to be taken by the holders of
any class or series of stock of the Corporation, including but not limited to
the election of directors, may be taken by written consent or consents but only
if such consent or consents are signed by all holders of the class or series of
stock entitled to vote on such action.
ARTICLE EIGHTH
(a) The Corporation shall, to the fullest extent permitted by the
GBCL, including the provisions of Section 351.355.7 RSMo, indemnify and advance
expenses to any person who was or is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a Director or Officer of the Corporation or is or was serving at the request
of the Corporation as a director or officer of any other corporation or
enterprise. Such right of indemnification shall inure to the benefit of the
heirs, executors, administrators and personal representatives of such a person.
The indemnification and advancement of expenses provided for herein shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any By-Law, agreement, vote of
shareholders or disinterested directors or otherwise.
(b) The Corporation may, to such extent as it deems appropriate and
as may be permitted by the GBCL, indemnify any other person acting in any of the
other capacities referred to in Section 351.355 of the GBCL against any such
claim by reason of the fact that he is or was serving the Corporation or at the
request of the Corporation in any of such capacities or arising out of his
status in any such capacity.
(c) The Corporation may, but shall not be required to, supplement the
right of indemnification under paragraph (a) above by (1) the purchase of
insurance on behalf of any one or more of such persons, whether or not the
Corporation
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would be obligated to indemnify such person under paragraph (a) above, (2)
individual or group indemnification agreements with any one or more of such
persons and (3) advances for related expenses of such a person.
ARTICLE NINTH
(a) In addition to any affirmative vote required by law, the Articles
of Incorporation, any agreement with any national securities exchange or
otherwise, any Business Combination (as hereinafter defined) involving the
Corporation shall be subject to approval in the manner set forth in this Article
9.
(b) No Business Combination shall be consummated or effected with an
Interested Shareholder (as hereinafter defined) during the five-year period
after which a person or an entity becomes an Interested Shareholder unless such
Business Combination or the transaction in which the person or entity becomes an
Interested Shareholder is approved by the Board of Directors on or before the
date of the Acquisition Transaction (as hereinafter defined).
(c) After the five-year period following the Acquisition Transaction,
Business Combinations may occur only if (i) prior to the Acquisition
Transaction, the board of directors approved the Acquisition Transaction or
approved the Business Combination in question; (ii) the holders of a majority of
the outstanding stock, other than stock owned by the Interested Shareholder,
approve the Business Combination or (iii) the Business Combination meets all of
the following conditions:
(A) The aggregate amount of the cash and the market value as of the
consummation date of consideration other than cash to be received per share by
holders of outstanding shares of Common Equity Shares is at least equal to the
higher of the following:
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1. The highest per share price paid by such Interested Shareholder
at a time when he was the beneficial owner, directly or indirectly, of five
percent or more of the outstanding voting stock of the Corporation, for any
shares of common stock of the same class or series acquired by it within the
five-year period immediately prior to the announcement date with respect to such
Business Combination, or within the five-year period immediately prior to, or
in, the transaction in which such Interested Shareholder became an Interested
Shareholder, whichever is higher; plus, in either case, interest compounded
annually from the earliest date on which such highest per share acquisition
price was paid through the consummation date at an amount equal to the greater
of (i) the rate for one-year United States treasury obligations from time to
time in effect and (ii) 8 1/2%; less the aggregate amount of any cash dividends
paid, and the market value of any dividends paid other than in cash, per share
of common stock since such earliest date, up to the amount of such interest; and
2. The market value per share of common stock on the announcement
date with respect to such Business Combination or on such Interested
Shareholder's stock acquisition date, whichever is higher; plus interest
compounded annually from such date through the consummation date at an amount
equal to the greater of (i) the rate for one-year United States treasury
obligations from time to time in effect and (ii) 8 1/2%; less the aggregate
amount of any cash dividend paid, and the market value of any dividends paid
other than in cash, per share of common stock since such date, up to the amount
of such interest;
(B) The aggregate amount of the cash and the market value as of the
consummation date of consideration other than cash to be received per share by
holders of outstanding shares of any class or series of stock other than the
Common Equity Shares is at least equal to the highest of the following, whether
or not such Interested Shareholder has previously acquired any shares of such
class or series of stock:
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1. The highest per share price paid by such Interested Shareholder
at a time when he was the beneficial owner, directly or indirectly, of five
percent or more of the outstanding voting stock of the Corporation, for any
shares of such class or series of stock acquired by him within the five-year
period immediately prior to the announcement date with respect to such Business
Combination, or within the five-year period immediately prior to, or in, the
transaction in which such Interested Shareholder became an Interested
Shareholder, whichever is higher; plus, in either case, interest compounded
annually from the earliest date on which such highest per share acquisition
price was paid through the consummation date at an amount equal to the greater
of (i) the rate for one-year United States treasury obligations from time to
time in effect and (ii) 8 1/2%; less the aggregate amount of any cash dividends
paid, and the market value of any dividends paid other than in cash, per share
of such class or series of stock since such earliest date, up to the amount of
such interest;
2. The highest preferential amount per share to which the holders of
shares of such class or series of stock are entitled in the event of any
voluntary liquidation, dissolution or winding up of the Corporation, plus the
aggregate amount of any dividends declared or due as to which such holders are
entitled prior to payment of dividends on some other class or series of stock,
unless the aggregate amount of such dividends is included in such preferential
amount; and
3. The market value per share of such class or series of stock on
the announcement date with respect to such business combination or on such
Interested Shareholder's stock acquisition date, whichever is higher; plus
interest compounded annually from such date through the consummation date at an
amount equal to the greater of (i) the rate for one-year United States treasury
obligations from time to time in effect and (ii) 8 1/2%; less the aggregate
amount of any cash dividends paid, and the market value of any dividends paid
other than in cash, per share of such class or series of stock since such date,
up to the amount of such interest;
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(C) The consideration to be received by holders of a particular class
or series of outstanding stock, including the Common Equity Shares, of the
Corporation in such Business Combination is in cash or in the same form as the
Interested Shareholder has used to acquire the largest numbers of shares of such
class of series of stock previously acquired by it, and such consideration shall
be distributed promptly;
(D) The holders of all outstanding shares of stock of the Corporation
not beneficially owned by such Interested Shareholder immediately prior to the
consummation of such Business Combination are entitled to receive in such
Business Combination cash or other consideration for such shares in compliance
with paragraphs (A),(B) and (C) of this clause (iii) of this paragraph (c) of
this Article Ninth;
(E) After such Interested Shareholder's stock acquisition date and
prior to the consummation date with respect to such Business Combination, such
Interested Shareholder has not become the beneficial owner of any additional
shares of voting stock of the Corporation except:
1. As part of the transaction which resulted in such Interested
Shareholder becoming an Interested Shareholder;
2. Through a Business Combination meeting all of the conditions of
clause (ii) of this paragraph (c) of this Article Ninth and this clause (iii) of
this paragraph (c) of this Article Ninth;
3. Through purchase by such Interested Shareholder at any price
which, if such price had been paid in an otherwise permissible Business
Combination the announcement date and consummation date of which were the date
of such purchase, would have satisfied the requirements of paragraphs (A), (B)
and (C) of this clause (iii) of this paragraph (c) of this Article Ninth.
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(e) DEFINITIONS. As used in this Article Nine, the following terms
shall have the following meanings:
"Acquisition Transaction" shall mean any transaction in which any
Person becomes an Interested Shareholder.
"Business Combination" shall mean (i) any merger, consolidation or
exchange of shares of capital stock of the Corporation of any of its
subsidiaries with or into an interested Shareholder, in each case irrespective
of which corporation or company is to be the surviving entity; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition to or with an
Interested Shareholder (in a single transaction or a series of related
transactions), other than in the ordinary course of business, of all or a
substantial part of the assets of the Corporation (including without limitation
any securities or assets of a subsidiary of the Corporation) or all or a
substantial part of the assets of any of its subsidiaries; (iii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition to or with the
Corporation or to or with any of its subsidiaries (in a single transaction or a
series of related transactions) other than in the ordinary course of business,
of all or a substantial part of the assets of an Interested Shareholder; (iv)
the issuance or transfer by the Corporation or any of its subsidiaries of any
securities of the Corporation or any of its subsidiaries to an Interested
Shareholder (other than an issuance or transfer of securities which is effected
on a pro rata basis to all shareholders of the Corporation); (v) the acquisition
by the Corporation or any of its subsidiaries from an Interested Shareholder of
any securities issued by an Interested Shareholder (other than an issuance or
transfer of securities which is effected on a pro rata basis to all shareholders
of the Interested Shareholder); (vi) any recapitalization or reclassification of
shares of any class of capital stock of the Corporation or any merger or
consolidation of the Corporation with any of its subsidiaries which would have
the effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of capital stock of the Corporation (or any
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securities convertible into any class of such capital stock) owned by any
Interested Shareholder; (vii) any merger or consolidation of the Corporation
with any of its subsidiaries after which the provisions of this Article 9 of the
Articles of Incorporation shall not appear in the Articles of Incorporation of
the surviving entity; (viii) a plan of partial or complete liquidation or
dissolution of the Corporation or spin-off or sale of a substantial part of the
assets of the Corporation or any of its subsidiaries proposed by or on behalf of
an Interested Shareholder; and (ix) any agreement, contract, plan, proposal or
other arrangement providing for any of the foregoing.
"Interested Shareholder" shall mean a Person which beneficially owns
or controls 20% or more of the outstanding voting shares of the Corporation
PROVIDED that any Person who would be an Interested Shareholder as of April 15,
1997 shall be excluded from the definition of Interested Shareholder.
"Person" shall mean any individual, corporation, partnership or other
person or entity.
(f) The provisions of this Article 9 shall not be amended, altered,
changed or repealed nor may any provision inconsistent with any of such
provisions be added to the Articles of Incorporation unless approved by the
affirmative vote of the holders of not less than the greater of (I) seventy-five
percent of the total voting power of all outstanding shares of voting stock of
the Corporation, voting as a single class and (II) a majority of shareholders
other than any Interested Shareholder.
ARTICLE TENTH
The Corporation reserves the right at any time and from time to time
to amend, alter, change or repeal any provision contained in these Articles of
Incorporation, and any other provisions authorized by the laws of the State of
Missouri at the time in force may be added or inserted in the
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manner now or hereafter prescribed herein or by applicable law, and all rights,
preferences and privileges of whatsoever nature conferred upon shareholders,
directors or any other persons whomsoever by and pursuant to these Articles of
Incorporation in their present form or as hereafter amended are granted subject
to the rights reserved in this Article Ninth; PROVIDED, HOWEVER, that any
amendment or repeal of Article Eighth of these Articles of Incorporation shall
not adversely affect any right or protection existing hereunder immediately
prior to such amendment or repeal.
ARTICLE ELEVENTH
The names of the original incorporators were Morton D. May, David May
and S.B. Butler, all of St. Louis, Missouri.
* * *
The foregoing Third Restated Articles adopted by the shareholders on
_________, 1997 correctly set forth without change the corresponding provisions
of the Restated Articles of Incorporation as heretofore amended, and supersedes
the original Restated Articles of Incorpoation and all amendments thereto and
restatements thereof. Of the 53,869,640 shares outstanding at the time of
adoption, 53,869,535 of such shares were entitled to vote on such restatement.
The total number of shares voted for the restatement was ______________, and
the total number of shares voted against the restatement was ____________.
The number of outstanding shares of any class entitled to vote as a class
and the number of shares voted for and against the restatement by the
respective classes entitled to vote thereon as a class were as follows:
Number of Shares
Outstanding and Shares
Class Shares Voted For Voted Against
- ----- ----------------- -------------
Class B-1 Common
Class B-2 Common
Class B-3 Common
Series A Preferred Shares
IN WITNESS WHEREOF, the Corporation has caused these Restated Articles of
Incorporation to be signed by one of its Executive Vice Presidents and attested
to by its Secretary this _____ day of _____, 1996.
WESTFIELD AMERICA
By:
-------------------------
Executive
Vice President
Attest:
----------------------
Secretary
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STATE OF )
) ss:
COUNTY OF )
I, , a notary public, do hereby certify that on this day of
, 1996, personally appeared before me and , who being by me
first duly sworn, declared that they are a Vice President and Secretary,
respectively, of Westfield America, Inc., that they signed the foregoing
documents as Executive Vice President and Secretary, respectively, of the
corporation, and the statements therein contained are true.
------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT 5.1
[Debevoise & Plimpton Letterhead]
May 14, 1997
Westfield America, Inc.
11601 Wilshire Boulevard, 12th Floor
Los Angeles, CA 90025
Westfield America, Inc.
Registration Statement on Form S-11
(File No. 333-22731)
Dear Ladies and Gentlemen:
We have acted as special counsel to Westfield America, Inc., a Missouri
corporation (the "Company"), in connection with the Registration Statement on
Form S-11 referenced above (as amended to date, the "Registration Statement")
filed by the Company with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Act of 1933, as amended (the "Act"),
relating to 20,700,000 shares (the "Shares") of the Company's common stock, par
value $.01 per share (the "Common Stock"), being offered by the Company,
including up to an additional 2,700,000 shares of Common Stock solely to cover
the underwriters' over-allotment options.
In so acting, we have examined and relied upon the originals, or copies
certified or otherwise identified to our satisfaction, of such records,
documents, certificates and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinion expressed below.
We have assumed, with your permission, that the Third Restated Articles of
Incorporation of the Company and the Second Amended and Restated Bylaws of the
Company will become effective in substantially the same forms as filed as
Exhibits 3.1 and 3.3 to the Registration Statement prior to the consummation of
the Offerings.
Based on the foregoing and in reliance thereon, and subject to the
qualifications and limitations stated herein, we are of the opinion that upon
issuance, delivery and payment therefor in the manner described in the
Registration Statement and in accordance with the terms of the U.S. Purchase
Agreement between the U.S. Underwriters (as defined therein) and the Company and
the International Purchase Agreement between the International Managers (as
defined therein) and the Company (in substantially the same form as Exhibits 1.1
and 1.2 to the Registration Statement), the Shares will be duly authorized,
validly issued and outstanding, fully paid and non-assessable.
This opinion is limited to the Federal laws of the United States and the
laws of the State of New York. Insofar as the foregoing opinion involves the
laws of the state of Missouri, we have relied, with your approval, upon the
opinion of Bryan Cave LLP, dated today and addressed to you, and filed as
Exhibit 5.2 to the Registration Statement, and accordingly by our opinion as to
such matters of Missouri law is subject to any limitation or qualification set
forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus forming a part thereof. In giving such consent, we do
not thereby concede that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
Very truly yours
/s/ DEBEVOISE & PLIMPTON
<PAGE>
EXHIBIT 5.2
[Bryan Cave LLP]
May 14, 1997
Westfield America, Inc.
11601 Wilshire Boulevard, 12th Floor
Los Angeles, California 90025
Re: Westfield America Inc. Registration Statement on Form S-11 (File No.
333-22731)
Dear Sirs:
We have acted as special Missouri counsel to Westfield America, Inc., a
Missouri corporation (the "Company") (formerly CenterMark Properties, Inc.), in
connection with the Registration Statement on Form S-11 referenced above (as
amended to date, the "Registration Statement") filed by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Act of 1933, as amended (the "Act"), relating to 18,000,000 shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), being
offered by the Company, and up to an additional 2,700,000 shares of the Common
Stock solely to cover the Underwriters' over-allotment option (together, the
"Shares"), pursuant to the Prospectus dated May 13, 1997, as amended and
supplemented, and the International Prospectus Dated May 13, 1997, as amended
and supplemental (together the "Prospectuses").
In our capacity as special Missouri counsel and for purposes of this
opinion, we have examined the following documents:
(i) Copies of the Certificate of Amendment to the Second Amended and
Restated Articles of Incorporation of the Company recorded April 7, 1997 at the
Missouri Secretary of State.
(ii) Copies of the Third Amended and Restated Articles of Incorporation of
the Company as approved by the shareholders of the Company on May 12, 1997.
(iii) Copies of the Bylaws of the Company as certified by the Secretary of
the Corporation on May 9, 1997.
(iv) Copies of the Second Amended and Restated Bylaws of the Company as
approved by the shareholders of the Company on May 12, 1997.
(v) A copy of the CenterMark Properties, Inc. Resolutions Adopted by the
Board of Directors at its Meeting of March 3, 1997, as certified by the
Secretary of the Company.
(vi) A copy of the April 14, 1997 draft of the Certificate of Designation
Setting Forth "Resolution Designating Series B Preferred Shares and Fixing
Preferences and Rights Thereof" Adopted by the Board of Directors of Westfield
America, Inc.
(vii) A copy of the May 9, 1997 draft of the U.S. Purchase Agreement,
between the U.S. Underwriters (defined therein) and the Company ("U.S. Purchase
Agreement").
(viii) A copy of the May 9, 1997 draft of the International Purchase
Agreement, between the International Managers (defined therein) and the Company
(together with the U.S. Purchase Agreement, the "Purchase Agreements").
(ix) Amendment No. 2 to the Company's Registration Statement registering the
Shares for sale.
<PAGE>
May 14, 1997
Page 2
(x) A certificate dated April 8, 1997 of the Missouri Secretary of State to
the effect that the Company was incorporated on September 24, 1924 and is in
good standing under the laws of the State of Missouri as of such date, and as
such good standing was confirmed by a telephone call to the Missouri Secretary
of State on May 14, 1997.
In all our examinations, we have assumed, without investigation, the
genuineness of all signatures, the legal capacity of all natural persons, the
correctness of all certificates, the authenticity of all documents and
instruments submitted to us as originals, the conformity to the original
documents and instruments of all such documents and instruments submitted to us
as certified, photostatic or facsimile copies and the authenticity of the
originals of such copies, and the accuracy and completeness of all records made
available to us by the Company.
We have assumed, with your permission, that the Third Amended and Restated
Articles of Incorporation of the Company and the Second Amended and Restated
Bylaws of the Company will become effective prior to the Closing Date in the
same form as such documents described above.
Based on the foregoing and in reliance thereon, and subject to the
qualifications and limitations stated herein, we are of the opinion that upon
issuance, delivery and payment therefor in the manner described in the Purchase
Agreements, the Shares will be duly authorized, validly issued, fully issued,
fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus forming a part thereof. In giving such consent, we do
not thereby concede that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
In rendering our opinion expressed above, no opinion is given with respect
to the laws of any jurisdiction other than Missouri. This opinion is delivered
as of the date set forth above, and we disclaim any obligation to advise you of
any changes to this opinion based on changes of law, facts or circumstances
occurring after the date of this opinion.
The opinions expressed in this letter are solely for the use and benefit of
you and your shareholders and Debevoise & Plimpton, which firm is hereby
expressly authorized to rely upon the opinions stated (subject to the
assumptions and qualifications herein stated) in rendering their opinion to the
Company and the Underwriters in connection with the offering described in the
Prospectuses and the opinions expressed herein may be relied upon any other
person or party or for any other purpose without our prior written approval. The
opinions expressed in this letter are limited to the matters set forth in this
letter and no other opinion should be inferred beyond the matters expressly
stated.
Very truly yours,
/s/ BRYAN CAVE LLP
<PAGE>
EXHIBIT 8.1
[Skadden, Arps, Slate, Meagher & Flom LLP Letterhead]
May 12, 1997
Westfield America, Inc.
11601 Wilshire Boulevard, 12th Floor
Los Angeles, California 90025-1748
Re: Federal Income Tax Matters
Dear Sirs:
You have requested our opinion concerning certain Federal income tax
considerations in connection with the offering (the "Offering") by Westfield
America, Inc., a Missouri corporation(1) ("WEA," and together with the
subsidiary partnerships and corporations (including Westland Properties, Inc., a
Delaware corporation ("WPI")) in which WEA owns a direct or indirect interest,
the "Company") of shares of its Common Stock, par value $.01 per share (the
"Common Stock"), pursuant to the Registration Statement on Form S-11 (No.
333-22731) filed with the Securities and Exchange Commission (the "Registration
Statement").
We have acted as special tax counsel to the Company in connection with the
Offering, and we have assisted in the preparation of the Registration Statement
and certain other documents. You have provided to us and we have reviewed
certain documents (collectively, the "Documents") that we have deemed necessary
or appropriate as a basis for our opinion, including, without limitation (i)
organizational documents of the entities comprising the Company, (ii) copies of
certain leases, management contracts and other agreements, (iii) responses to
questionnaires describing the Company's properties and their operation, (iv)
certificates executed by duly appointed officers of WEA and WPI (the "Officer's
Certificates") setting forth certain factual representations, and (v) certain
schedules, memoranda, financial information and other records. For purposes of
our opinion, we have not made an independent investigation of the facts set
forth in the Documents. We have, consequently, relied on your representations
that the information presented in the Documents or otherwise furnished to us
accurately and completely describes all material facts relevant to our opinion.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies, and the
authenticity of the originals of such copies. Where documents have been provided
to us in draft form, we have assumed that the final executed versions of such
documents will not differ materially from such drafts.
Our opinion is based on the correctness of the following specific
assumptions: (i) WEA and each of the entities comprising the Company has been
and will continue to be operated in accordance with the laws of the jurisdiction
in which it was formed and in the manner described in the relevant partnership
agreement or other organizational documents; (ii) there will be no changes in
the applicable laws of the States of Missouri or Delaware or any other state
under the laws of which any of the entities comprising the Company have been
formed; and (iii) each of the representations contained in the Officer's
Certificates are true, correct and complete.
In rendering our opinion, we have also considered and relied upon the
Internal Revenue Code of 1986, as amended (the "Code"), the regulations
promulgated thereunder by the Treasury Department (the "Regulations"),
administrative rulings and the other interpretations of the Code and the
Regulations by
- ------------------------
(1) Westfield America, Inc. was formerly known as CenterMark Properties, Inc.
<PAGE>
the courts and the Internal Revenue Service, all as they exist at the date of
this letter. With respect to the latter assumption, it should be noted that
statutes, regulations, judicial decisions, and administrative interpretations
are subject to change at any time and, in some circumstances, with retroactive
effect. A material change that is made after the date hereof in any of the
foregoing bases for our opinion could affect our conclusions.
We express no opinion as to the laws of any jurisdiction other than the
Federal laws of the United States of America to the extent specifically referred
to herein.
Based on the foregoing, we are of the opinion that:
1. Commencing with WEA's taxable year ended December 31, 1994, WEA was
organized in conformity with the requirements for qualification as a real
estate investment trust ("REIT") under the Code, and its planned method of
operation, and its actual method of operation from February 12, 1994 through
the date of this letter, will enable it to meet the requirements for
qualification and taxation as a REIT under the Code.
2. Commencing with WPI's taxable year ended December 31, 1996, WPI was
organized in conformity with the requirements for qualification as a REIT
under the Code, and its planned method of operation, and its actual method
of operation from January 1, 1996 through the date of this letter, will
enable it to meet the requirements for qualification and taxation as a REIT
under the Code.
Qualification and taxation as a REIT depends upon the ability of WEA and WPI
to meet, through actual annual operating results, certain requirements,
including requirements relating to distribution levels and diversity of stock
ownership, and the various qualification tests imposed under the Code, the
results of which will not be reviewed by us. Accordingly, no assurance can be
given that the actual results of WEA's or WPI's operation for any one taxable
year will satisfy such requirements.
3. The discussion in the Registration Statement under the heading
"FEDERAL INCOME TAX CONSIDERATIONS" is a fair and accurate summary of the
material Federal income tax consequences of the purchase, ownership and
disposition of the Common Stock, subject to the qualifications set forth
therein.
Other than as expressly stated above, we express no opinion on any issue
relating to WEA, WPI, the Company or to any investment therein.
This opinion is intended for the exclusive use of the Company and its
shareholders and, except as set forth herein, and it may not be used,
circulated, quoted or relied upon for any other purpose without our prior
written consent. We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to Skadden, Arps, Slate, Meagher &
Flom LLP in the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
or regulations of the Securities and Exchange Commission thereunder. This
opinion is expressed as of the date hereof, and we disclaim any undertaking to
advise you of any subsequent changes in the matters stated, represented, or
assumed herein or any subsequent changes in applicable law.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
<PAGE>
EXHIBIT 10.1
----------------------------------------------------------------------
----------------------------------------------------------------------
PLEDGE AND SECURITY AGREEMENT
among
WESTLAND REALTY, INC.,
WESTFIELD PARTNERS, INC.,
WESTLAND MANAGEMENT, INC.
and
WESTFIELD AMERICA, INC.
Dated as of May __, 1997
----------------------------------------------------------------------
----------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .2
SECTION 2. SECURITY FOR SECURED OBLIGATIONS . . . . . . . . . . . . . . .3
SECTION 3. GRANTING OF SECURITY . . . . . . . . . . . . . . . . . . . . .4
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . .5
SECTION 5. VOTING RIGHTS, DIVIDENDS AND OTHER DISTRIBUTIONS,ETC.. . . . .7
5.1. Prior to Event of Default . . . . . . . . . . . . . . . . . .7
5.2. After Event of Default. . . . . . . . . . . . . . . . . . . .7
SECTION 6. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.1. General Covenants . . . . . . . . . . . . . . . . . . . . . .8
6.1.1. Sale of Collateral, etc.. . . . . . . . . . . . . . . . . . .8
6.1.2. Filing of Financing Statements, etc. . . . . . . . . . . . .8
6.1.3. Other Distributions . . . . . . . . . . . . . . . . . . . . .8
6.1.4. Payment of Loan . . . . . . . . . . . . . . . . . . . . . . .8
6.1.5. Books and Records . . . . . . . . . . . . . . . . . . . . . .9
6.1.6. Chief Executive Office. . . . . . . . . . . . . . . . . . . .9
6.1.7. Further Assurances. . . . . . . . . . . . . . . . . . . . . .9
6.1.8. Estoppel Certificates . . . . . . . . . . . . . . . . . . . .9
6.1.9. Consent of Westland Realty. . . . . . . . . . . . . . . . . .9
6.2. Covenants Relating to the Property. . . . . . . . . . . . . 10
6.2.1. Additional Debt and Liens . . . . . . . . . . . . . . . . . 10
6.2.2. No Refinancing of Prudential Debt . . . . . . . . . . . . . 10
6.2.3. Amendments of Certain Documents . . . . . . . . . . . . . . 10
6.2.4. Warranty of Title . . . . . . . . . . . . . . . . . . . . . 10
6.2.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2.6. Payment of Taxes, etc.. . . . . . . . . . . . . . . . . . . 13
6.2.7. Leases and Rents. . . . . . . . . . . . . . . . . . . . . . 14
6.2.8. Maintenance of Property . . . . . . . . . . . . . . . . . . 17
6.2.9. Performance of Other Agreements . . . . . . . . . . . . . . 18
6.2.10. Hazardous Substances. . . . . . . . . . . . . . . . . . . . 18
6.2.11. Asbestos. . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7. RIGHTS OF THE PLEDGEE. . . . . . . . . . . . . . . . . . . . 20
(i)
<PAGE>
7.1. No Obligations or Liability to the Pledgors . . . . . . . . 20
7.2. Right of Pledgee to Perform Pledgors' Covenants, etc. . . . 20
7.3. Additional Security . . . . . . . . . . . . . . . . . . . . 20
7.4. Release of the Pledge and Security Interest Created Hereby. 21
SECTION 8. EVENTS OF DEFAULT; REMEDIES AND ENFORCEMENT. . . . . . . . . 21
8.1. Events of Default . . . . . . . . . . . . . . . . . . . . . 21
8.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.3. Application of Proceeds Following Event of Default. . . . . 24
8.4. Purchase of Collateral by Pledgee . . . . . . . . . . . . . 24
8.5. Receipt Sufficient Discharge. . . . . . . . . . . . . . . . 25
8.6. Sale a Bar Against the Pledgors . . . . . . . . . . . . . . 25
8.7. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . 25
SECTION 9. PLEDGORS' OBLIGATIONS NOT AFFECTED . . . . . . . . . . . . . 26
SECTION 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 27
10.1. Amendments, etc.. . . . . . . . . . . . . . . . . . . . . . 27
10.2. Successors and Assigns. . . . . . . . . . . . . . . . . . . 27
10.3. Notices, etc. . . . . . . . . . . . . . . . . . . . . . . . 28
10.4. Severability. . . . . . . . . . . . . . . . . . . . . . . . 28
10.5. Non-Recourse. . . . . . . . . . . . . . . . . . . . . . . . 28
10.6. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 29
10.7. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 30
Schedule I -- UCC Filing Offices
Schedule II -- New Leases
Schedule III -- Prudential Financing Documents
(ii)
<PAGE>
PLEDGE AND SECURITY AGREEMENT, dated as of May __, 1997, among
WESTLAND REALTY, INC, a Maryland corporation ("WESTLAND REALTY"), WESTFIELD
PARTNERS, INC., a Delaware corporation ("WESTFIELD PARTNERS"), and WESTLAND
MANAGEMENT, INC., a Delaware corporation ("WESTLAND MANAGEMENT", together
with Westfield Partners, the "PLEDGORS"), and WESTFIELD AMERICA, INC., a
Missouri corporation (the "PLEDGEE"). Capitalized terms used herein without
other definition have the respective meanings specified in Section 1.
R E C I T A L S
A. Westland Realty is the sole stockholder of Westfield Partners and
Westland Management.
B. Westfield Partners is a limited partner of Westland Garden State
Plaza, Limited Partnership, a Delaware limited partnership (the "PARTNERSHIP"),
and Westland Management is a general partner of the Partnership.
C. The Pledgee has agreed to make a loan to the Pledgors in the amount
of $145,000,000 (the "LOAN").
D. The Pledgors have jointly and severally agreed to repay the Loan on
the terms set forth in the Promissory Note, dated the date hereof (the "NOTE"),
issued by the Pledgors to the Pledgee.
E. It is a condition to the obligation of the Pledgee to make the
Loan that Westfield Partners and Westland Management pledge their respective
partnership interests in the Partnership to the Pledgee, in each case as
security for the performance of the obligations of the Pledgors under the
Note.
F. The Pledgors and the Pledgee intend that the Loan, as secured by the
Pledgors' partnership interest in the Partnership, shall be treated for Federal
income tax purposes as a "real estate asset" within the meaning of Section
856(c)(6)(B) of the Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, to induce the Pledgee to make the Loan, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
<PAGE>
acknowledged, each Pledgor and Westland Realty (but only to the extent set forth
herein) hereby agrees with the Pledgee as follows:
SECTION 1. CERTAIN DEFINITIONS.
The following capitalized terms are used herein with the respective
meanings set forth below.
COLLATERAL: the meaning given in Section 3.
DEEMED APPROVED LEASE: the meaning given in Section 6.2.7.
EASEMENT AGREEMENT: the meaning given in Section 6.2.4.
EVENT OF DEFAULT: the meaning given in Section 8.
FAIR MARKET RENTAL TERMS: the meaning given in Section 6.2.7.
HAZARDOUS ASBESTOS: the meaning given in Section 6.2.11.
HAZARDOUS SUBSTANCES: the meaning given in Section 6.2.10.
INTEREST: Fixed Interest and Contingent Interest (each as defined in
the Note).
LEASES: the meaning given in Section 6.2.7.
LIEN: as to any Person, any mortgage, lien, pledge, adverse claim,
charge, security interest or other encumbrance in or on, or any interest or
title of any vendor, lessor, lender or other secured party to or of such Person
under any conditional sale or other title retention agreement or capital lease
with respect to, any property or asset owned or held by such Person.
LOAN: the meaning given in Paragraph C of the Recitals.
MAJOR LEASES: the meaning given in Section 6.2.7.
MANAGEMENT AGREEMENT: the Management Agreement, dated July 1, 1993,
between the Partnership and Westfield Corporation, Inc., as amended,
supplemented or modified from time to time in accordance with the terms thereof
and hereof.
2
<PAGE>
NON-MAJOR LEASE: the meaning given in Section 6.2.7.
NOTE: the meaning given in Paragraph D of the Recitals.
NYUCC: the Uniform Commercial Code of the State of New York.
PARTNERSHIP: the meaning given in Paragraph B of the Recitals.
PARTNERSHIP AGREEMENT: the Agreement of Limited Partnership of the
Partnership, dated as of July 1, 1993, as amended, modified or supplemented from
time to time in accordance with the provisions thereof and hereof.
PERMITTED ENCUMBRANCES: the meaning given in Section 6.2.4.
PERSON: a corporation, an association, a partnership, a limited
liability company, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.
PLEDGORS: the meaning given in the first paragraph of the Recitals.
POLICIES: the meaning given in Section 6.2.5.
PROPERTY: the Garden State Plaza Shopping Center located in Paramus,
New Jersey, more particularly described on Exhibit A attached hereto.
PRUDENTIAL FINANCING DOCUMENTS: the documents listed on Schedule III
attached hereto relating to the existing $260,020,000 mortgage loan on the
Property held by The Prudential Insurance Company of America, each as amended,
modified or supplemented from time to time in accordance with the provisions
thereof and hereof.
SECURED OBLIGATIONS: the meaning given in Section 2.
TAXES: the meaning given in Section 6.2.6.
3
<PAGE>
SECTION 2. SECURITY FOR SECURED OBLIGATIONS.
This Agreement is made for the benefit of Pledgee to secure (a) the
payment of the principal of and Interest on the Note (including, without
limitation, Interest accruing after the date of any filing by any Pledgor of
any petition in bankruptcy or the commencement of any bankruptcy, insolvency
or similar proceeding with respect to any Pledgor) as and when the same shall
become due and payable in accordance with the terms thereof, whether at
maturity or by prepayment, acceleration or otherwise, (b) the payment of all
other indebtedness and other amounts payable by the Pledgors to the Pledgee
under the Note and this Agreement, including, without limitation, the
Make-Whole Amount (as defined in the Note) payable upon any voluntary or
involuntary prepayment of the Note as set forth therein, and (c) the due and
punctual performance by the Pledgors of and compliance by the Pledgors with
all of their other obligations owed to the Pledgee under the Note and this
Agreement. All of the payment and performance obligations referred to in
this Section 2 are referred to collectively as the "SECURED OBLIGATIONS".
SECTION 3. GRANTING OF SECURITY.
As security for the payment and performance of the Secured Obligations
when due (whether at maturity or by prepayment, acceleration or otherwise)
each of Westfield Partners and Westland Management hereby conveys, assigns,
grants, hypothecates, pledges, transfers and delivers to the Pledgee, and
hereby grants to the Pledgee a lien and charge upon, and a security interest
in, all the following property, whether now owned or hereafter acquired and
whether now or in the future existing:
(a) all the right, title and interest of such Pledgor as a limited or
general partner of the Partnership;
(b) any and all payments or distributions of whatever kind or character,
whether in cash or in property, at any time made, owing or payable to such
Pledgor in respect of or on account of its interest in the Partnership,
whether representing profits, distributions pursuant to complete or partial
liquidation or dissolution, repayment of capital contributions, proceeds from
the sale of any portion of such Pledgor's interest in the Partnership or
otherwise;
(c) the right to receive, receipt for, use and enjoy all such payments,
distributions and proceeds;
4
<PAGE>
(d) all right, title and interest of such Pledgor in and to all real and
personal property of the Partnership and every other right, however
characterized, now or hereafter held by the Partnership attributable to any
interest of such Pledgor in the Partnership or received in respect thereof;
and
(e) all cash and non-cash proceeds thereof
(collectively, the "COLLATERAL").
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Each of Westland Realty, Westfield Partners and Westland Management
hereby represents and warrants (to the extent such representation or warranty is
applicable to such entity) that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own and operate its properties
(including the Property), to carry on its business as now conducted and as
proposed to be conducted, and to enter into and carry out the terms of this
Agreement and the Note. The Partnership is duly formed, validly existing and
in good standing under the laws of Delaware and has all requisite power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted.
(b) The execution, delivery and performance of this Agreement and the
Note will not result in any violation of, conflict with or constitute a
default under any term of its certificate of incorporation or by-laws or any
agreement or instrument to which it is a party or by which it is bound
(including, without limitation, the Partnership Agreement and the Prudential
Financing Documents), or any term of any applicable law, ordinance, rule or
regulation of any governmental authority or any term of any applicable order,
judgment or decree of any court, arbitrator or governmental authority.
Except for the filing of a financing statement with respect to the Collateral
in the offices listed on Schedule I attached hereto, and continuation
statements with respect thereto, no consent, approval or authorization of, or
declaration or filing with, any governmental authority or regulatory body is
required for its valid execution, delivery and performance of this Agreement
and the Note.
5
<PAGE>
(c) Each of this Agreement and the Note has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to
the extent that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
application relating to or affecting the rights and remedies of creditors,
and by general equitable principles.
(d) There is no action, proceeding or investigation pending or threatened
(or, to its knowledge, any basis therefor) which questions the validity of
this Agreement or the Note or any action taken or to be taken pursuant to
this Agreement or the Note, or which might result, either in any case or in
the aggregate, in any material adverse change in its business, operations,
affairs, condition (financial or otherwise), properties or assets, or in any
liability on its part.
(e) No Event or Default or event or condition which, with notice or lapse
of time or both, would become an Event of Default has occurred or is
continuing.
(f) The principal place of business of Westland Realty is 11601 Wilshire
Boulevard, Los Angeles, California; the principal place of business of
Westfield Partners is 11601 Wilshire Boulevard, Los Angeles, California; and
the principal place of business of Westland Management is 11601 Wilshire
Boulevard, Los Angeles, California.
(g) Westland Realty is the record and beneficial owner of all of the
outstanding capital stock of Westfield Partners and Westland Management, free
and clear of any Lien.
(h) Westfield Partners and Westland Management own the respective
partnership interests pledged pursuant to this Agreement free and clear of
any Lien except for the Liens created by this Agreement and the Partnership
Agreement.
(i) The security interest granted by Westfield Partners and Westland
Management pursuant to this Agreement constitutes a valid security interest
in the Collateral, which is or will be perfected upon the filing of a
financing statement with respect to the Collateral in the offices listed on
SCHEDULE I attached hereto. Such security interest constitutes a first
priority security interest that is enforceable as such against all creditors
of Westfield Partners or Westland Management and any Persons purporting to
purchase any interest in the Partnership from Westfield Partners or Westland
Management.
6
<PAGE>
(j) No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Pledgee relating
to this Agreement.
(k) The Pledgors have delivered to the Pledgee true, correct and complete
copies of the Partnership Agreement, the Management Agreement, each of the
Prudential Financing Documents and the audited financial statements of the
Partnership for each of the years ended December 31, 1996 and December 31,
1995. There has been no material adverse change in the financial condition
of the Partnership from the condition disclosed by its most recent audited
financial statements.
SECTION 5. VOTING RIGHTS, DIVIDENDS AND OTHER DISTRIBUTIONS,
ETC.
5.1 PRIOR TO EVENT OF DEFAULT. (a) So long as no Event of Default
shall have occurred and be continuing, each of Westfield Partners and Westland
Management shall retain its rights to receive all cash payments and
distributions from the Partnership in respect of such Pledgor's partnership
interest in the Partnership for any purpose and shall retain all other rights as
a limited or general partner of the Partnership, provided that such rights are
not exercised in a manner that would cause a violation of any of the provisions
of this Agreement or the Note.
5.2 AFTER EVENT OF DEFAULT. For so long as an Event of Default is
continuing, (I) neither Westfield Partners nor Westland Management may exercise
any rights as a partner of the Partnership without the prior written consent of
the Pledgee, (II) all cash payments and distributions from the Partnership in
respect of the partnership interest of Westfield Partners or Westland Management
will be deemed held in trust by such Pledgor for the benefit of the Pledgee and
thereafter may not be commingled with other assets of such Pledgor, or applied
to any use other than the payment of Secured Obligations or the making of
capital contributions or loans to the Partnership, without the prior written
consent of the Pledgee, and (III) if the Pledgee shall have notified such
Pledgor that it elects to exercise rights as a partner of the Partnership
hereunder, (X) all rights of such Pledgor as a partner of the Partnership which
such Pledgor would otherwise be entitled to exercise pursuant to Section 5.1
shall cease, and (Y) all such rights shall thereupon become vested in the
Pledgee, who during the continuation of such Event of Default shall have
directly (or through its nominee) the sole right to exercise such rights as a
partner of the Partnership, all without liability except to account for property
actually received by it, but the Pledgee shall have no duty to such
7
<PAGE>
Pledgor to exercise any such right and shall not be responsible for any failure
to do so or delay in so doing.
SECTION 6. COVENANTS.
6.1. GENERAL COVENANTS.
6.1.1. SALE OF COLLATERAL, ETC. Unless the Note is simultaneously
prepaid in accordance with its terms or the Pledgee consents to such
transaction, no Pledgor will, directly or indirectly, (A) sell, assign,
transfer, convey or otherwise dispose of, or grant any option with respect
to, any of the Collateral, except as currently set forth in the Partnership
Agreement, or (B) create or permit to exist any Lien upon or with respect to
any of the Collateral, except for the lien and security interest created by
this Agreement or (C) do anything or suffer to exist anything, or omit to do
anything or suffer to exist any omission which would cause the value of the
Collateral to diminish in such a way as to have a material adverse effect on
the Pledgee or on its rights in respect of the Note, this Agreement or the
Collateral, including without limitation any dilution of the partnership
interests, except as currently set forth in the Partnership Agreement.
Notwithstanding the foregoing, the provisions of this Section 6.1.1 shall not
apply to (I) any transfer of any interest in any Pledgor to an entity all of
the outstanding voting equity interests of which are owned, directly or
indirectly, by Westfield Holdings Limited or (II) any transfer of any shares
of stock of Westfield Holdings Limited, PROVIDED that the Pledgors shall give
the Pledgee at least 10 days' prior written notice of any such transfer under
clause (I) above and shall execute and deliver to the Pledgee such documents
as the Pledgee may reasonably request in connection therewith.
6.1.2. FILING OF FINANCING STATEMENTS, ETC. Each Pledgor will immediately
cause Uniform Commercial Code financing statements with respect to the
Collateral to be filed in the offices listed on Schedule I attached hereto and
will cause the Partnership to make such notations in its books and records of
the pledge of the partnership interests of Westfield Partners and Westland
Management hereunder as may be necessary or desirable in order to perfect the
pledge of such partnership interests granted pursuant hereto.
6.1.3. OTHER DISTRIBUTIONS. Except for cash payments and distributions
from the Partnership permitted to be paid to Westfield Partners and Westland
Management pursuant to Section 5.1, each of Westfield Partners and Westland
Management will cause all payments and distributions of any kind on its
partnership interest in the Partnership (including any sums paid upon or in
respect of such partnership interest upon the liquidation or dissolution of the
Partnership) to be paid directly to the Pledgee (and if any such payments or
distributions are received by such Pledgor, such Pledgor will hold them in trust
for the benefit of, and will immediately turn them over to, the
8
<PAGE>
Pledgee) and the Pledgee will hold and dispose of all such payments and
distributions as part of the Collateral.
6.1.4. PAYMENT OF LOAN. The Pledgors, jointly and severally, agree to
pay the Loan in accordance with the terms set forth in the Note.
6.1.5. BOOKS AND RECORDS. Each Pledgor will keep full and accurate books
and records relating to the Collateral, and will comply with the provisions of
the Note relating to the delivery of financial statements.
6.1.6. CHIEF EXECUTIVE OFFICE. No Pledgor will change its name or change
the location of its chief executive office (A) to a location outside of the
United States and (B) unless such Pledgor shall have (I) given the Pledgee at
least 30 days' prior notice thereof and (II) made all filings or recordings, and
taken all other action, necessary or desirable under applicable law to protect
and continue the priority of the Lien created by this Agreement.
6.1.7. FURTHER ASSURANCES. Each Pledgor will at any time and from time
to time, at its own expense, promptly execute, acknowledge, file, deliver,
record and publish all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and all such further certificates, instruments and documents, and take all such
further action, as may be required by applicable law, or as may be necessary or
desirable, or that the Pledgee may reasonably request, to (A) grant more
effectively a security interest in favor of the Pledgee in all or any portion of
the Collateral, (B) maintain, preserve or perfect the security interest and lien
created or purported to be created by this Agreement, (C) preserve and defend
against any Person its title to the Collateral and the rights purported to be
granted therein by this Agreement to the Pledgee, (D) enable the Pledgee to
exercise and enforce its rights and remedies hereunder, and (E) carry out more
effectively the purposes of this Agreement.
6.1.8. ESTOPPEL CERTIFICATES. From time to time, upon request of any
Pledgor, the Pledgee will deliver to such Pledgor a statement as to (A) the
outstanding principal of, and accrued and unpaid Interest on, the Note and (B)
whether the Pledgee is aware that any Event of Default, or any event or
condition which, with notice or lapse of time or both, would become an Event of
Default, has occurred and is continuing. From time to time, upon request of the
Pledgee, each Pledgor will deliver to the Pledgee a statement as to (I) the
outstanding principal of, and accrued and unpaid Interest on, the Note and (II)
whether such Pledgor is aware that any Event of Default,
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or any event or condition which, with notice or lapse of time or both, would
become an Event of Default, has occurred and is continuing.
6.1.9. CONSENT OF WESTLAND REALTY. Westland Realty, as the sole
shareholder of the capital stock of each of Westfield Partners and Westland
Realty, hereby acknowledges that it has approved the pledge of the Collateral to
the Pledgee and hereby covenants to cause the Pledgors to comply with the terms
of the Note and this Agreement.
6.1.10. COMPLIANCE WITH PARTNERSHIP AGREEMENT. The Pledgors shall comply
with their respective obligations under the Partnership Agreement in
accordance with the terms thereof. To the extent within the Pledgors'
control, the Pledgors shall not permit the Partnership to expand its business
beyond the Property without the prior written consent of the Pledgee, which
consent will not be unreasonably withheld by the Pledgee.
6.2 COVENANTS RELATING TO THE PROPERTY.
6.2.1. ADDITIONAL DEBT AND LIENS. To the extent within Pledgors'
control, no Pledgor will permit the Partnership to incur any indebtedness for
borrowed money secured by a Lien on the Property or any other assets of the
Partnership, other than the indebtedness incurred pursuant to the Prudential
Financing Documents or as may be approved by the prior written consent of
Pledgee.
6.2.2. NO REFINANCING OF PRUDENTIAL DEBT. To the extent within Pledgors'
control, no Pledgor will permit the Partnership to refund or refinance the
indebtedness incurred pursuant to the Prudential Financing Documents without the
prior written consent of the Pledgee.
6.2.3. AMENDMENTS OF CERTAIN DOCUMENTS. To the extent within Pledgors'
control, no Pledgor will permit the Partnership to amend, modify or terminate,
or to grant any waiver or consent under, the Partnership Agreement, the
Management Agreement or any of the Prudential Financing Documents without the
prior written consent of the Pledgee. To the extent within Pledgors' control,
the Pledgors will cause the Partnership to comply with all of its obligations
under each of the Partnership Agreement, the Management Agreement and the
Prudential Financing Documents.
6.2.4. WARRANTY OF TITLE. The Pledgors warrant that the Partnership has
good and marketable title to the Property, that the Partnership possesses an
unencumbered and indefeasible fee estate in the Property and that the
Partnership owns the Property free and clear of all liens, encumbrances and
charges whatsoever except for those incurred pursuant to the Prudential
Financing Documents and those approved by the Pledgee (which includes all
matters existing of record as of the date hereof) (collectively, the "PERMITTED
ENCUMBRANCES"). To the extent within Pledgors' control, the Pledgors will not
permit the Partnership to further encumber the Property except as permitted by
this Agreement. Notwithstanding the foregoing, the Pledgors may permit the
Partnership to grant to the appropriate parties easements for utility purposes
(including easements for utility rights of way) affecting the Property, in the
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ordinary course of business or development of the Property, provided that such
easements have no material, adverse effect on the Property or any part thereof,
the value thereof or the use thereof as a first-class regional shopping center,
and the Pledgee agrees that such utility easements which meet all of the
foregoing requirements shall be deemed Permitted Encumbrances hereunder. The
Pledgors will forever warrant, defend and preserve such title to the Pledgee
against the claims of all persons whomsoever. The Partnership has entered into
that certain Easement and Option to Purchase Agreement (the "EASEMENT
AGREEMENT") as of July 1, 1993 with Westland Properties, Inc., recorded in the
Register's Office on July 7, 1993 in Deed Book 7617, Page 684, pursuant to which
Easement Agreement the Partnership is granted an easement over certain adjacent
property for ingress and egress purposes and parking of vehicles and other uses
and activities approved by Westland Properties, Inc. The Easement Agreement
also grants to the Partnership an option to purchase the property. To the
extent within the Pledgors' control, the Pledgors covenant and agree that they
will not permit the Partnership to exercise any option to purchase the property
under the Easement Agreement or make use of the easement for any purpose other
than ingress and egress and for the parking of vehicles without first obtaining
the prior written consent of the Pledgee.
6.2.5. INSURANCE. (a) To the extent within the Pledgors' control, the
Pledgors will cause the Partnership, at its sole cost and expense, to keep the
Property insured during the entire term of this Agreement for the benefit of,
among other parties, the Pledgors and the Pledgee against loss or damage by fire
and against loss or damage by other risks embraced by coverage of the type now
known as "fire and extended coverage", including, but not limited to, riot and
civil commotion, vandalism, malicious mischief, burglary, theft and mysterious
disappearance, in an amount (I) equal to at least 100% of the then "full
replacement cost" of the improvements and equipment, without deduction for
physical depreciation, and (II) such that the insurer would not deem the
Partnership a co-insurer under such policies. The policies of insurance carried
in accordance with this Section 6.2.5 shall be paid in advance (in such
installments as the Partnership may elect to pay under the terms of such
policies without being in default in payment of premiums) and shall contain the
"Replacement Cost Endorsement" with a waiver of depreciation.
(b) To the extent within the Pledgors' control, the Pledgors will cause
the Partnership, at its sole cost and expense, for the mutual benefit of, among
other parties, the Pledgors and the Pledgee, to obtain and maintain during the
entire term of this Agreement the following policies of insurance:
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(i) Flood Insurance if the Property is located in an area identified by
the Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the
National Flood Insurance Act of 1968 (and any successor act thereto) in an
amount at least equal to the outstanding principal amount of the Note and
the Prudential Financing or the maximum limit of coverage available with
respect to the improvements and equipment under said Act, whichever is less.
(ii) Comprehensive public liability insurance, including broad form
property damage, blanket contractual and person injuries (including death
resulting therefrom) coverages.
(iii) Rental loss insurance in an amount equal to at least 100% of the
aggregate annual amount of all rents and additional rents payable by all of
the tenants under the leases at the Property (whether or not such leases are
terminable in the event of a fire or casualty), such rental loss insurance to
cover rental losses for a period from the date of the fire or casualty in
question through the date which is 365 days after the completion of the
restoration of the damage caused by such fire or casualty. The amount of such
rental loss insurance shall be modified annually to reflect all increased rent
and increased additional rent payable by all of the tenants under the leases.
(iv) Insurance against loss or damage from explosion of steam boilers,
air conditioning equipment, high pressure piping, machinery and equipment,
pressure vessels or similar apparatus now or hereafter installed in the
improvements.
(v) To the extent within the Pledgors' control, such other insurance
(excluding earthquake insurance) as may from time to time be reasonably
required by the Pledgee in order to protect its interests, provided such
insurance is available at commercially reasonable rates and is customarily
carried in the regional shopping center industry.
(c) To the extent within the Pledgors' control, all policies of
insurance (the "POLICIES") required pursuant to this Section 6.2.5 (i) shall be
issued by an insurer reasonably satisfactory to the Pledgee (it being agreed
that any unrelated third party insurer having all required authority to issue
insurance policies relating to property located in the State of New Jersey, and
having an A.M. Best Property/Casualty Rating of A- or better and an A.M. Best
Financial Size Rating of Class VIII or better, shall be deemed satisfactory to
the Pledgee), (ii) shall be maintained throughout the term of the Note without
cost to the Pledgee, (iii) shall contain such provisions as the Pledgee
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deems reasonably necessary or desirable to protect its interest, including,
without limitation, endorsements providing that neither the Partnership, the
Pledgee nor any other party shall be a co-insurer under such Policies and that
the Pledgee shall receive at least 30 days' prior written notice of any
modification or cancellation, and (IV) shall be reasonable satisfactory in form
and substance to the Pledgee and shall be subject to the Pledgee's approval
(which approval shall not be unreasonably withheld or delayed) as to amounts,
form, risk coverage, deductibles, loss payees and insureds (provided that the
Pledgee's agreement to be reasonable in approving amounts, form, risk coverage,
deductibles, loss payees and insureds shall in no way affect or limit the
specific insurance requirements otherwise required to be observed by the
Pledgors under this Section 6.2.5). The Pledgors may permit the Partnership to
obtain blanket policies covering the Property and other property owned by
affiliates of the Partnership in satisfaction of the foregoing insurance
requirements, provided that such blanket policies meet all of the foregoing
insurance requirements, including, without limitation, amounts and deductibles
as to the Property and loss payees and insureds. Not later than five days prior
to the expiration date of each of the Policies, the Pledgors will deliver to the
Pledgee satisfactory evidence of the renewal of each of the Policies.
(d) If the Property shall be damaged or destroyed, in whole or in
part, by fire, or other casualty, the Pledgors will give prompt written notice
thereof to the Pledgee and prior to the making of any repairs thereto, PROVIDED,
HOWEVER, that no such notice shall be required where the loss or damage is
$2,000,000 or less and no Event of Default shall have occurred and be
continuing. If the loss or damage exceeds $2,000,000, then, subject to the
terms of the existing mortgage on the Property and to the extent within the
Pledgors' control, the Pledgors will cause the Partnership promptly to commence
and diligently to continue to perform the repair and restoration of the Property
so damaged or destroyed so as to restore the Property to substantially as good,
or better, condition as existed immediately prior to such damage or destruction.
To the extent within the Pledgors' control, the Pledgors will cause the Property
to be repaired and restored in accordance with all legal requirements, pursuant
to plans reasonably approved by the Pledgee and otherwise in accordance with the
requirements of this Agreement.
6.2.6. PAYMENT OF TAXES, ETC. (a) To the extent within the Pledgors'
control, the Pledgors will cause the Partnership to pay all taxes, assessments,
water rates and sewer rents, now or hereafter levied or assessed or imposed
against the Property or any part thereof (the "TAXES") and all maintenance
charges, other governmental impositions, and other charges prior to delinquency
and before interest and/or penalties become due. The Pledgors will deliver to
the Pledgee, promptly upon the Pledgee's request, evidence reasonably
satisfactory to the Pledgee that the Taxes
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and such charges, fees and impositions have been so paid and are not then
delinquent. To the extent within the Pledgors' control, the Pledgors will not
permit the Partnership to suffer, and will promptly cause to be paid and
discharged, any Lien which may be or become a Lien (including, without
limitation, tax liens and mechanics' liens) against the Property (other than the
Permitted Encumbrances), and will promptly pay for all utility services provided
to the Property.
(b) Notwithstanding the provisions of subsection (a) of this Section
6.10, the Pledgors may permit the Partnership to contest in good faith the
amount or validity of any such Lien (including, without limitation, tax liens
and mechanics' liens) referred to in the last sentence of subsection (a) above
(or in connection with any tenant mechanics' lien to enforce the Partnership's
rights under the lease to cause tenant to remove such mechanics' lien) by
appropriate legal proceedings and in accordance with all applicable law, after
notice to, but without cost or expense to, the Pledgee, PROVIDED that: (I) the
Partnership pays all Taxes prior to delinquency and before interest and/or
penalties become due, unless the Pledgors deliver evidence that, as a result of
the Partnership's contest, the Partnership's obligation to pay such Taxes has
been deferred by the appropriate governmental authority, in which event the
Pledgors may permit the Partnership to defer such payment of such Taxes until
the date specified by such governmental authority; (II) such contest shall be
promptly and diligently prosecuted by and at the expense of the Partnership;
(III) the Pledgee shall not thereby suffer any civil penalty, or be subjected
to any criminal penalties or sanctions; (IV) such contest shall be discontinued
if at any time all or any part of the Property shall be in imminent danger of
being foreclosed, sold, forfeited, or otherwise lost; and (V) during such
contest the Pledgors will, at the option of the Pledgee, provide security
satisfactory to the Pledgee, indemnifying and protecting the Pledgee against any
liability, loss or injury by reason of such contest (PROVIDED that the Pledgee
shall not require that the Pledgors post a bond as security in connection with
the contest of a mechanic's lien but it will post other security reasonably
satisfactory to the Pledgee).
6.2.7. LEASES AND RENTS. (a) To the extent within the Pledgors'
control, the Pledgors will cause the Partnership to use its reasonable efforts
to require that leases of the Property (the "LEASES") provide for rental rates
comparable to other similarly postured first class regional shopping center
malls in the relevant market area and be arm's-length stand-alone transactions
with independent third parties. To the extent within the Pledgors' control, all
Leases shall be subject to the prior written approval of the Pledgee, which
approval shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, a proposed Lease shall automatically be deemed approved by the
Pledgee (a "DEEMED APPROVED LEASE") if (I) such Lease covers an area of 10,000
square feet or less, or, to the extent the Lease is with a "national or
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regional" tenant (as hereinafter defined), covers an area of 18,000 square feet
or less, (II) such Lease provides a term of not less than five years nor more
than ten years, excluding renewal options (or 15 years, including renewal
options), (III) such Lease does not grant the tenant any options to purchase, or
rights of first refusal with respect to, all or any portion of the Property, or
any options, or rights of first refusal with respect to, expansion of the
premises demised thereby, (IV) such Lease does not grant the tenant any right of
self help or set-off, (V) such Lease or the provisions thereof does not violate,
or cause any violation of any other Lease or the provisions thereof, and (VI)
the rental of the Lease is upon Fair Market Rental Terms (hereinafter defined).
As used herein, the term "FAIR MARKET RENTAL TERMS" shall mean that all of the
rental terms of a lease, including, without limitation, base rent, additional
rent, percentage rent and payment of escalations, and taking into account all
concessions, when taken as a whole, shall be at or above the then current market
rental rates for comparable space located in the applicable market.
Notwithstanding anything to the contrary in this subsection (a), the Pledgors
shall not be required to obtain the Pledgee's approval in connection with
temporary/seasonal occupancy arrangements (which are licenses, not leases). For
purposes of this subsection, the term "national or regional tenant" shall mean
an entity then operating under a single business name in four or more shopping
centers in the United States each of which shopping centers contains more than
400,000 square feet of leasable retail space, including, without limitation,
anchors.
(b) (i) To the extent within the Pledgors' control, the Pledgors
will not permit the Partnership, without the prior written consent of the
Pledgee, which consent shall not be unreasonably withheld or delayed, to
(A) cancel, terminate, amend or modify the terms of any Lease listed on Schedule
II attached hereto (the "MAJOR LEASES") or accept a surrender thereof,
(B) consent to any assignment of or subletting under any Major Lease, or
(C) cancel, terminate, abridge or otherwise modify any guaranty of any Major
Lease or the terms thereof.
(ii) The Pledgors may permit the Partnership, without the prior written
consent of the Pledgee, to (A) cancel, terminate, amend or otherwise modify the
terms of any Deemed Approved Lease, or accept a surrender thereof, (B) consent
to an assignment or subletting under any Deemed Approved Lease or (C) cancel,
terminate, amend or modify any guaranty of a Deemed Approved Lease or the terms
thereof, PROVIDED that (X) no Event of Default shall have occurred and be
continuing hereunder, (Y) the Deemed Approved Lease, after any such modification
or amendment, will continue to meet the requirements set forth in clauses (i)
through (vi) of subsection (a) above, provided, however, that with respect to
clause (ii) of subsection (a) above, if the remaining term of the Deemed
Approved Lease is less than five years immediately prior to the time of
amendment, then the fact that such term is less than five years shall
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not cause the Pledgee's consent to be required with respect to such amendment so
long as the Partnership does not reduce such term any further as part of such
amendment by more than the number of years equal to 20% of the original term
(excluding renewal options) of such Lease, and (Z) such cancellation,
termination, amendment or modification, or acceptance of a surrender, of a
Deemed Approved Lease or such guaranty thereof, when taken together with other
cancellations, terminations, amendments, modifications or acceptances of
surrender of Deemed Approved Leases or guarantees thereof over the prior six
month period, will not materially adversely affect the Property or the value
thereof, provided that the Partnership may in any event terminate a Deemed
Approved Lease on account of a material default by the tenant thereunder.
(iii) The Pledgors may permit the Partnership, without the prior written
consent of the Pledgee, to (A) cancel, terminate, amend or otherwise modify the
terms of any Lease other than Leases described under subsections (i) and (ii)
above (each, a "NON-MAJOR LEASE"), or accept a surrender thereof, (B) consent to
an assignment or subletting under any Non-Major Lease or (C) cancel, terminate,
amend or modify any guaranty of a Non-Major Lease or the terms thereof, provided
that (X) no Event of Default shall have occurred and be continuing hereunder,
and (Y) without the prior written consent of the Pledgee, to the extent within
the Pledgors' control, the Pledgors will not permit the Partnership to (1)
change the rental, economics or term of any such Non-Major Lease (or grant to
tenant options to purchase or rights of first refusal with respect to all or any
portion of the Property, or grant to tenant options or rights of first refusal
with respect to expansion space, or add landlord obligations to construct, or
modify termination or cancellation rights or self help or offset rights, or add
or modify environmental indemnities), (2) cancel or terminate such Non-Major
Lease except for a material default thereunder, or (3) consent to an assignment
of or subletting with respect to such Non-Major Lease except to the extent the
tenant has the right so to assign or sublet the leased premises without the
Partnership's consent.
To the extent within the Pledgors' control, the Pledgors will cause the
Partnership not to accept prepayments of installments of rents for a period or
more than one month in advance without the prior written consent of the Pledgee
(provided that this provision shall not be deemed to apply to installments of
rents delivered to the Partnership as a security deposit under such Lease).
(c) With respect to each Lease, to the extent within the Pledgors'
control, the Pledgors will cause the Partnership to (I) fulfill or perform each
and every material provision thereof on the lessor's part to be fulfilled or
performed, (II) promptly send copies to the Pledgee of all material notices of
default which the Partnership shall send
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or receive thereunder, and (III) enforce all of the material terms, covenants
and conditions contained in such Lease upon the lessee's part to be performed,
PROVIDED, HOWEVER, that the Partnership shall not be required to terminate
Leases as part of such enforcement. Notwithstanding the foregoing sentence,
with respect to any Lease covering an area of less than 10,000 square feet, (A)
the Partnership shall not be required to perform its obligations with respect to
such Lease set forth in clauses (i) and (iii) of the foregoing sentence, if such
failure to perform such obligations, when taken together with the Partnership's
failure to perform its obligations under clauses (i) and (iii) of the foregoing
sentence with respect to other Leases covering an area of less than 10,000
square feet over the prior 12 month period, will not materially, adversely
affect the Property or the value thereof, and (B) notwithstanding the provisions
of clause (A) above, the Partnership shall at all times be required to perform
its obligations under clauses (i) and (iii) of the foregoing sentence with
respect to any provisions in such Leases concerning life, safety or
discrimination issues.
(d) To the extent the Pledgee's consent is required under this
Section 6.11, the Pledgee agrees that it will not unreasonably withhold or delay
such consent.
(e) The Pledgors will deliver to the Pledgee on an annual basis
commencing on June 1, 1998, (I) an updated rent roll for the Property, which
shall be highlighted to show all material changes due to the modification or
termination of Leases or guarantees thereof pursuant to subsection (c) above,
and (II) lease abstracts in form reasonably satisfactory to the Pledgee with
respect to such modifications, the items required under clauses (i) and (ii)
above to be certified by an authorized officer of Westland Management.
6.2.8. MAINTENANCE OF PROPERTY. (a) To the extent within the Pledgors'
control, the Pledgors will cause the Partnership, at its sole cost and expense,
to keep and maintain the Property, including, without limitation, the parking,
the recreational and landscaped portions thereof and the loading docks, in its
current order and condition and in accordance with the Partnership's current
standards of maintenance. To the extent within the Pledgors' control, the
Pledgors will not permit the Partnership to diminish, remove or demolish the
improvements and the equipment on the Property (except up to an aggregated
amount of $1,000,000 in any given calendar year or, in addition, with respect to
equipment, unless the Partnership concurrently therewith replaces the same with
reasonably similar and comparable items of equal or greater value) or materially
altered, and to the extent within the Pledgors' control, the Pledgors will not
permit the Partnership to erect any new buildings, structures or building
additions on the Property without the prior written consent of the Pledgee
(provided that such consent shall not be unreasonably withheld or delayed with
respect to new
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buildings, structures or building additions on the Property). To the extent
within the Pledgors' control, the Pledgors will cause the Partnership promptly
to comply in all material respects with all laws, orders and ordinances
affecting the Property, or the use thereof, PROVIDED, HOWEVER, that nothing in
the foregoing clause shall require the Partnership to comply with any such law,
order or ordinance so long as the Partnership shall in good faith, after notice
to, but without cost or expense to, the Pledgee, contest the validity of such
law, order or ordinance by appropriate legal proceedings and in accordance with
all applicable law, which proceedings must operate to prevent (1) the
enforcement thereof, (2) the payment of any fine, charge or penalty by the
Pledgee, (3) the sale or forfeiture of the Property or any part thereof, (4) the
imposition of criminal liability on the Pledgee and (5) the imposition, unless
stayed, of civil liability on the Pledgee; PROVIDED that during such contest, if
requested by the Pledgee and to the extent within the Pledgors' control, the
Pledgors will, or will cause the Partnership to, provide security reasonably
satisfactory to the Pledgee (after taking into account the financial wherewithal
of the Partnership), indemnifying and protecting the Pledgee against any
liability, loss or injury by reason of such non-compliance or contest, and
provided further, that such contest shall be promptly and diligently prosecuted
by and at the expense of the Partnership. To the extent within the Pledgors'
control, (A) the Pledgors will cause the Partnership promptly, at its sole cost
and expense, to repair, replace or rebuild any part of the Property which may
become damaged, worn or dilapidated, (B) the Pledgors will not permit the
Partnership to commit any waste at the Property, (C) the Pledgors will cause the
Partnership to operate the Property at all times as a first-class regional
shopping center, and (D) the Pledgors will cause the Partnership to be managed
at all times by an manager approved by the Pledgee (which approval will not be
required for any affiliate of Westfield Holdings Limited).
6.2.9. PERFORMANCE OF OTHER AGREEMENTS. To the extent within the
Pledgors' control, the Pledgors will cause the Partnership to observe and
perform all of the material terms to be observed and performed by the
Partnership pursuant to the terms of any material agreement or material recorded
instrument affecting or pertaining to the Property (including the loan on the
Property).
6.2.10. HAZARDOUS SUBSTANCES. To the extent within the Pledgors'
control, the Pledgors will cause the Partnership, at no cost or expense to the
Pledgee, to comply with and will cause all occupants of the Property to comply
with all applicable federal state and local laws, rules, regulations and orders
with respect to the discharge, generation, removal, transportation, storage and
handling of hazardous or toxic wastes or substances, including, without
limitation, PCB material (collectively "HAZARDOUS SUBSTANCES"), remove or cause
the removal of any Hazardous Substances from the Property that are in violation
of applicable law, pay immediately when due the cost of
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removal of any Hazardous Substances removed from the Property, and keep the
Property free of any Lien imposed pursuant to such laws, rules, regulations and
orders PROVIDED, HOWEVER, with respect to tenants under Leases, the Partnership
shall have 180 days to cause such tenants under Leases to comply with such laws,
rules, regulations and orders. To the extent within the Pledgors' control, the
Pledgors will not permit the Partnership or any occupant of the Property to use,
discharge, transport, or install any PCB material. To the extent within the
Pledgors' control, the Pledgors will cause the Partnership to maintain the
integrity of all storage tanks and drums on or under the Property during the
term of the loan in compliance with all applicable laws, rules, regulations and
orders. To the extent within the Pledgors' control, the Pledgors will cause the
Partnership to follow an operation and maintenance program with respect to all
storage tanks and drums on or under the Property after the date hereof, which
program has been approved in writing by the Pledgee. The Pledgors will indemnify
the Pledgee and hold the Pledgee harmless from and against all loss, cost,
damage and expense (including, without limitation, attorneys' fees and costs
incurred in the investigation, defense and settlement of claims) that the
Pledgee actually incurs as a result of the assertion against the Pledgee of any
claim relating to the presence or removal of any Hazardous Substances or storage
tanks or drums referred to in this paragraph, or compliance with any federal,
state or local laws, rules, regulations or orders relating thereto. The
obligations and liabilities of Pledgors under this Section 6.2.10 shall survive
full payment of the Note, any entry of judgment of foreclosure or a deed in lieu
of foreclosure.
6.2.11. ASBESTOS. To the extent within the Pledgors' control, the
Pledgors will not permit the Partnership or install or permit to be installed in
the Property, friable asbestos or any substance containing asbestos
(collectively, "HAZARDOUS ASBESTOS"). With respect to any such Hazardous
Asbestos currently present in the Property, to the extent within the Pledgors'
control, the Pledgors will cause the Partnership, at no cost or expense to the
Pledgee, promptly to comply with, and to cause all occupants of the Property to
comply with, all applicable federal, state or local laws, rules, regulations or
orders; provided, however, with respect to tenants under Leases, the Partnership
shall, have 180 days to cause such tenants under Leases to comply with such
applicable laws, rules, regulations and orders. The Pledgors will indemnify the
Pledgee and hold the Pledgee harmless from and against all loss, cost, damage
and expense (including, without limitation, attorneys' fees and costs incurred
in the investigation, defense and settlement of claims) that the Pledgee
actually incurs as a result of the assertion against the Pledgee of any claim
relating to the presence or removal of any Hazardous Asbestos, or compliance
with any federal, state or local laws, rules, regulations or orders relating
thereto. The obligations and liabilities of the
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Pledgors under this Section 6.2.11 shall survive full payment of the Note, any
entry of judgment of foreclosure or a deed in lieu of foreclosure.
SECTION 7. RIGHTS OF THE PLEDGEE.
7.1. NO OBLIGATIONS OR LIABILITY TO THE PLEDGORS. The rights of the
Pledgee hereunder shall not be conditioned or contingent upon the pursuit by the
Pledgee of any right or remedy against any Pledgor or against any other Person
which may be or become liable in respect of all or any part of the Secured
Obligations or against any other collateral security therefor, guarantee
therefor or right of offset with respect thereto. The rights and powers of the
Pledgee hereunder are solely to protect its interest in the Collateral, and the
Pledgee shall not be liable for any failure to demand, collect or realize upon
all or any part of the Collateral or for any delay in doing so, nor shall the
Pledgee be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. Prior to
foreclosure and sale or other transfer of the Collateral, neither the pledge of
and granting of a security interest in the Collateral under Section 3 nor any
action or inaction on the part of the Pledgee hereunder shall release any
Pledgor from any of its obligations hereunder, or constitute an assumption of
any such obligations on the part of the Pledgee, or cause the Pledgee to become
subject to any obligation or liability to any Pledgor. The Pledgee has no
obligation to perform any of the obligations or duties of any Pledgor as a
partner of the Partnership.
7.2. RIGHT OF PLEDGEE TO PERFORM PLEDGORS' COVENANTS, ETC. If any
Pledgor fails to make any payment or to perform any agreement required to be
made or performed hereunder after notice and opportunity to cure, the Pledgee
may (but need not) at any time thereafter make such payment or perform such act,
or otherwise cause such payment or performance. No such action will create any
liability to any Pledgor on the part of the Pledgee. All amounts so paid by the
Pledgee and all costs and expenses (including, without limitation, attorneys'
fees and expenses) incurred by the Pledgee in any such performance shall accrue
interest from the date paid or disbursed until reimbursed to the Pledgee in full
by or on behalf of the Pledgors at the rate of 12% per annum. All such amounts
shall constitute additional indebtedness of the Pledgors secured hereunder and
shall be payable on demand.
7.3. ADDITIONAL SECURITY. Without notice to or consent of any Pledgor
and without impairment of the security interest and rights granted pursuant to
this Agreement, the Pledgee may accept, from any Person or Persons, additional
security
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for the Secured Obligations. Neither the giving of this Agreement nor the
acceptance of any such additional security will prevent the Pledgee from
resorting, first to such additional security, or, first to the security created
by this Agreement, in either case without affecting the Pledgee's security
interest and rights granted pursuant to this Agreement.
7.4. RELEASE OF THE PLEDGE AND SECURITY INTEREST CREATED HEREBY. Upon
payment in full of the outstanding principal amount of, and accrued Interest on
the Note in accordance with its terms and payment or satisfaction of all other
Secured Obligations, the Pledgee will, upon the written request of the Pledgors,
return to the respective Pledgors all Collateral held by the Pledgee and, if the
Pledgors so request, execute and deliver to, or as directed in writing by, the
Pledgors an appropriate instrument (in due form for recording or filing)
sufficient to release from the pledge and security interest created hereby the
Collateral and all other property subject thereto.
SECTION 8. EVENTS OF DEFAULT; REMEDIES AND ENFORCEMENT.
8.1. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall exist if any of the
following conditions or events shall occur and be continuing:
(a) any Pledgor fails to make any payment under this Agreement, the
Note or any other agreement executed by any Pledgor as security for the payment
of the Note, within five days of the date when any such payment is due; or
(b) any Pledgor, within 30 days after written notice from the Pledgee
(or, if not curable within 30 days, such Pledgor does not commence cure of such
default within such 30 day period and thereafter diligently pursue such cure),
fails to perform or violates any other of the terms or conditions contained in
this Agreement, in the Note or under any other agreement executed by any Pledgor
as security for the payment of the Note; or
(c) any representation or warranty made in writing by or on behalf of
any Pledgor in this Agreement or in the Note or in any writing furnished in
connection with the transactions contemplated hereby proves to have been false
or incorrect in any material respect on the date as of which made; or
(d) an event of default shall occur and be continuing under the
Prudential Financing and Prudential shall have accelerated the payments of
the indebtedness represented by the Prudential Financing and commenced the
exercise of remedies under the Prudential Financing.
(e) any Pledgor (I) is generally not paying, or admits in writing its
inability to pay, its debts as they become due, (II) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or
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any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (III) makes an assignment for the benefit of its creditors, (IV)
consents to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property, (V) is adjudicated as insolvent or to be liquidated, or (VI)
takes corporate action for the purpose of any of the foregoing; or
(e) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by any Pledgor, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of any Pledgor, or any such petition shall be filed against any
Pledgor and such petition shall not be dismissed within 60 days.
8.2. REMEDIES. If an Event of Default shall have occurred and be
continuing, then, in addition to the actions referred to in Section 5.2, the
Pledgee may take any or all of the following actions, without demand of
performance or other demand, advertisement or notice of any kind to or upon any
Pledgor or any other Person (except the notice specified in Section 8.2(b) of
time and place of public or private sale), all and each of which demands,
advertisements and/or notices are hereby expressly waived:
(a) The Pledgee may, as assignee of the respective Pledgors with
respect to the Collateral, in its own name or, at its sole option, in the name
of such Pledgor, exercise any or all of the rights, powers and privileges of,
and pursue any or all of the remedies accorded to, such Pledgor as a partner of
the Partnership, and may exclude such Pledgor and all Persons claiming by,
through or under such Pledgor wholly or partly from the Collateral, including,
without limitation, the right to ask for, demand, take, collect, sue for,
receive, compromise and settle all payments in respect of the Collateral which
such Pledgor, except for the execution hereof, could ask for, demand, take,
collect, sue for, receive, compromise and settle for its own use, and in
connection therewith, the Pledgee may enforce all rights and remedies as a
partner of the Partnership, which such Pledgor could enforce if this Agreement
had not been made, and such Pledgor hereby ratifies any action which the Pledgee
shall take to enforce its rights hereunder.
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(b) The Pledgee may forthwith collect, recover, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith sell,
assign, give an option or options to purchase, contract to sell or otherwise
dispose of and deliver the Collateral, or any part thereof, in one or more
parcels at public or private sale or sales, or at any of the Pledgee's offices
or elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Pledgee need not make any sale of Collateral
even if notice thereof has been given, may reject any and all bids that in its
normally reasonable discretion it shall deem adequate, and may adjourn any
public or private sale. Without limiting the foregoing, the Pledgors agree that
the Pledgee need not give more than five days' notice of the time and place of
any public sale or of the time after which a private sale or other intended
disposition is to take place and that such notice is reasonable notification of
such matters, and waives all other demands or notices of any kind.
(c) The Pledgee shall as a matter of right and without notice to any
Pledgor or any Person claiming by, through or under such Pledgor, and without
regard to the then value of the Collateral or the interest of such Pledgor
therein, be entitled to the appointment of a receiver for all or any part of the
Collateral or otherwise, and such Pledgor hereby irrevocably consents to the
appointment of such receiver and will not oppose any such appointment.
(d) In addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to any of the Secured Obligations, the Pledgee shall have and may
exercise with respect to the Collateral or any Pledgor any and all the rights
and remedies of a secured party under the NYUCC.
Each Pledgor consents to and ratifies any action which the Pledgee may
take to enforce its rights under this Section 8.2. Each Pledgor waives the
benefit of all appraisement, valuation, stay, extension, moratorium and
redemption laws now or hereafter in force and all rights of marshaling in the
event of the sale of the Collateral or any part thereof or any interest therein.
Each Pledgor will execute and deliver such documents as the Pledgee deems
advisable or necessary in order that any such sale or disposition be made in
compliance with applicable law.
Any sale or other disposition of the Collateral or any part thereof or
interest therein in the exercise of any remedy hereunder will constitute a
perpetual bar against each Pledgor and any Persons claiming by, through or under
such Pledgor. Upon any
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such sale or other disposition, the receipt of the officer making the sale or
other disposition or of the Pledgee is a sufficient discharge to the purchaser
for the purchase money, and such purchaser will have no duty to see to the
application thereof.
8.3. APPLICATION OF PROCEEDS FOLLOWING EVENT OF DEFAULT. All amounts
held or collected by the Pledgee as part of the Collateral (including, without
limitation, all amounts realized as a result of the exercise of any rights and
remedies hereunder) following the occurrence of any Event of Default will be
applied forthwith by the Pledgee as follows:
FIRST: to the payment of all costs and expenses of such exercise
(including, without limitation, the cost of evidence of title and the costs and
expenses, if any, of taking possession of, retaining custody over and preserving
the Collateral or any part thereof, or any interest therein prior to such
exercise), all costs and expenses of any receiver of the Collateral or any part
thereof, or any interest therein, any taxes, assessments or charges with respect
to any of the Collateral, whether or not prior to the lien of this Agreement,
which the Pledgee may consider it necessary or desirable to pay and all amounts
due and payable to the Pledgee under Section 6.1.7 or 7.2 and unpaid;
SECOND: to the payment of the accrued and unpaid Interest in accordance
with the provisions of the Note;
THIRD: if the Note has not become due and payable in full, to the payment
of all outstanding principal of then due and payable on the Note;
FOURTH: if the Note has become due and payable in full whether at
maturity, by prepayment, acceleration, declaration of default or otherwise, to
the ratable payment of the outstanding principal of the Note in accordance with
the provisions of the Note and the Make-Whole Amount (as defined in the Note);
FIFTH: to the payment of all other obligations secured hereunder for
which moneys have not theretofore been applied; and
SIXTH: at such time as all of the obligations of the Pledgors under the
Note have been paid in full in cash in accordance with the terms of the Note and
all other Secured Obligations have been paid or performed to the satisfaction of
the Pledgee, the remainder, if any, will be paid over to Pledgors, their
respective successors or assigns, or to whomsoever may be lawfully entitled to
receive the same, as determined by a court of competent jurisdiction.
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8.4. PURCHASE OF COLLATERAL BY PLEDGEE. The Pledgee may be a purchaser
of the Collateral or any part thereof or any interest therein at any sale or
other disposition hereunder and may apply against the purchase price the
indebtedness secured hereby, in the case of the Pledgee, the indebtedness
secured hereby owing to such purchaser, to the extent of such purchaser's
distributive share of the purchase price. The Pledgee shall, upon any such
purchase, acquire good title to the Collateral so purchased free of the lien and
security interest created by this Agreement and free of all rights of equity or
redemption in any Pledgor, which right of equity and redemption each Pledgor
hereby expressly waives and releases, and each Pledgor hereby covenants to
warrant and defend the title of such purchaser against all claims arising by,
through or under any Pledgor.
8.5. RECEIPT SUFFICIENT DISCHARGE. Upon any sale or other disposition
hereunder of the Collateral or any part thereof or any interest therein, the
receipt of the officer making the sale under judicial proceedings or of the
Pledgee shall be a sufficient discharge to the purchaser for the purchase money,
and such purchaser shall have no duty to see to the application thereof.
8.6. SALE A BAR AGAINST THE PLEDGORS. Any sale or other disposition
hereunder of the Collateral or any part thereof or any interest therein shall
forever be a bar against any Pledgor to assert any claim of ownership to the
Collateral or any part thereof or such interest therein.
8.7. NO WAIVER; CUMULATIVE REMEDIES. The Pledgee shall not by any action
or inaction be deemed to have waived any of its rights, powers or remedies
hereunder except pursuant to a writing, signed by the Pledgee, and then only to
the extent therein set forth. A waiver by the Pledgee of any right, power or
remedy hereunder on any one occasion shall not bar the exercise of any right,
power or remedy hereunder on any future occasion. No failure to exercise nor
delay in exercising on the part of the Pledgee any right, power or remedy
hereunder shall preclude the exercise of any other right, power or remedy. By
accepting payment of any amount secured hereby after its due date, the Pledgee
shall not be deemed to waive its right to require prompt payment when due of all
other amounts payable hereunder. Each right, power and remedy of the Pledgee
provided for in this Agreement or now or hereafter existing at law or equity or
by statute or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power or remedy provided for herein or therein or
now or hereafter existing at law or in equity or by statute or otherwise, and
the exercise of any one or more of the rights, powers or remedies provided for
herein or therein with respect to a part only of the Collateral shall not
preclude the simultaneous or later
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exercise by the Pledgee of any or all such other rights, powers or remedies with
respect to any other part of the Collateral.
SECTION 9. PLEDGORS' OBLIGATIONS NOT AFFECTED.
The covenants and agreements of the Pledgors set forth herein are and
shall be joint and several primary obligations of each Pledgor, and, to the
extent permitted by applicable law, such obligations shall be absolute and
unconditional, shall not be subject to any counterclaim, set-off, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by each Pledgor with its obligations
hereunder) based upon any claim any Pledgor, the Partnership or any other Person
may have against the Pledgee or any other Person, and shall remain in full force
and effect without regard to, and shall not be released, discharged or in any
way affected by, any circumstance or condition whatsoever, foreseeable or
unforeseeable and without regard to whether any Pledgor, the Partnership or the
Pledgee shall have any knowledge or notice thereof, including, without
limitation:
(a) any termination, amendment, modification, addition, deletion or
supplement to or other change to any of the terms of any other instrument or
agreement applicable to any of the parties hereto or thereto, or any
assignment or transfer of any thereof, or any furnishing or acceptance or
release of additional security for any Secured Obligation or for the
obligations of any Person under this Agreement or the Note, or the failure of
any security or the failure of any Person to perfect any interest in any
collateral (including, without limitation, the Collateral);
(b) any waiver of, or extension of time for the performance of, the
payment, performance or observance of any of the obligations, conditions,
covenants or agreements contained in this Agreement or the Note, or any other
waiver, forbearance, consent, extension, renewal, indulgence, compromise,
release, settlement, refunding or other action or inaction under or in respect
of this Agreement or the Note or any other instrument or agreement, or under
or in respect of any obligation or liability of any Pledgor, the Partnership
or the Pledgee or any exercise or non-exercise of any right, remedy, power or
privilege under or in respect of any such instrument of agreement or any such
obligation or liability;
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(c) any failure, omission or delay on the part of the Pledgee to
enforce, assert or exercise any right, power or remedy conferred on it in this
Agreement or the Note to give notice to any Pledgor of the occurrence of an
Event of Default;
(d) any voluntary or involuntary bankruptcy, insolvency,
reorganization, moratorium, assignment for the benefit of creditors,
receivership, liquidation, marshaling of assets and liabilities or similar
proceedings with respect to any Pledgor or the Partnership or any other Person
or any of their respective properties or creditors, or any action taken by any
trustee or receiver or by any court in any such proceeding;
(e) any limitation on the liability or obligations of the Partnership
or any Pledgor under this Agreement or the Note or any other instrument or
agreement, which may now or hereafter be imposed by law, or any discharge,
termination, cancellation, frustration, irregularity, invalidity or
unenforceability, in whole or in part, of any thereof;
(f) any merger, consolidation or amalgamation of any Pledgor or the
Partnership into or with any other Person, or sale, lease or transfer of any
of the assets of any Pledgor or the Partnership to any other Person or change
in the ownership of any shares of capital stock of any Pledgor or any change
in the relationship between any Pledgor and any other Pledgor or the
Partnership, or any termination of any such relationship; or
(g) any other occurrence, circumstance, happening or event whatsoever,
whether similar or dissimilar to the foregoing, whether foreseen or
unforeseen, and any other circumstance (other than full and irrevocable
performance and payment of the Secured Obligations) which might otherwise
constitute a legal or equitable defense, release or discharge or which might
otherwise limit recourse against any Pledgor, whether or not the Pledgor shall
have notice or knowledge of the foregoing.
SECTION 10. MISCELLANEOUS.
10.1. AMENDMENTS, ETC. Any amendment, alteration, modification or waiver
of any term or provision of this Agreement, or consent to any departure by any
Pledgor therefrom, must be in writing and signed by the Pledgee. Any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it is given.
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10.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the respective successors
and permitted assigns of the parties hereto, whether so expressed or not.
10.3. NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, telecopy or cable
communication) and shall be sent (a) if to Westland Realty at its address at
11601 Wilshire Boulevard, Los Angeles, California 90025, Attention: President,
(b) if to Westfield Partners, at its address at 11601 Wilshire Boulevard, Los
Angeles, California 90025, Attention: President, (c) if to Westland Management,
at its address at 11601 Wilshire Boulevard, Los Angeles, California 90025,
Attention: President, (d) if to the Pledgee, at its address at 11601 Wilshire
Boulevard, Los Angeles, California 90025, or (e) as to each party, at such other
address as shall be designated by such party in a written notice to the other
parties. All such notices and communications shall be effective when received.
10.4. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent made necessary by such prohibition or
unenforceability. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable (i) the remaining provisions hereof
or (ii) such provision in any other jurisdiction.
10.5. NON-RECOURSE. Notwithstanding any provision herein or in the Note
to the contrary, the Pledgee agrees with the Pledgors that in the event the
Pledgee shall at any time take action to enforce the collection of the Note, it
shall proceed first to foreclose its pledge under this Agreement (including sale
under power of sale hereunder) and to exercise its remedies with respect to
other collateral securing the Note instead of instituting suit upon the Note and
if, as a result of such foreclosure and sale of the property described therein,
a lesser sum is realized therefrom than the amount then due and owing hereunder
and under the Note, the Pledgee will never institute any action, suit, claim or
demand in law or in equity against any Pledgor or any partner, shareholder,
officer or director of any Pledgor for or on account of such deficiency;
PROVIDED, HOWEVER, that nothing in this Section 10.5 contained shall in any way
affect or impair the Lien of this Agreement or any other collateral or any
representation or warranty of title made in this Agreement by any Pledgor, all
of which shall remain in full force and inure to the benefit of the Pledgee.
The Pledgee shall, nevertheless, be entitled to institute such an action, suit,
claim, or demand against, and to recover a judgment against, the Pledgors for
any such deficiency to the extent that such deficiency results from:
(a) intentional or willful fraud or misrepresentation by any Pledgor in
connection with the execution and delivery of, or in connection with the
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representations and warranties provided in, this Agreement, the Note or any
other documents executed by any Pledgor securing the Note or the performance of
any Pledgor's obligations under this Agreement, the Note or such other documents
or (b) the retention by any Pledgor of any rental or other income arising with
respect to the Property which is collected by such Pledgor after the Pledgee has
given notice to such Pledgor that such Pledgor is in default under the Note,
this Agreement, or any other document executed by any Pledgor securing the Note.
10.6. MISCELLANEOUS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Except as otherwise indicated, references
herein to any "Section" means a "Section" of this Agreement. The table of
contents and the section headings in this Agreement are for purposes of
reference only and shall not limit or define the meaning hereof.
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10.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their representative officers thereunto duly
authorized as of the date first above written.
WESTLAND REALTY, INC.
By
-----------------------------------
Name:
Title:
WESTFIELD PARTNERS, INC.
By
-----------------------------------
Name:
Title:
WESTLAND MANAGEMENT, INC.
By
-----------------------------------
Name:
Title:
WESTFIELD AMERICA, INC.
By
-----------------------------------
Name:
Title:
30
<PAGE>
PROMISSORY NOTE
$145,000,000 New York, New York
May __, 1997
FOR VALUE RECEIVED, the undersigned, WESTFIELD PARTNERS, INC., a
Delaware corporation ("WESTFIELD PARTNERS"), and WESTLAND MANAGEMENT, INC., a
Delaware corporation ("WESTLAND MANAGEMENT", together with Westfield Partners,
the "MAKERS"), jointly and severally promise to pay to WESTFIELD AMERICA, INC.,
a Missouri corporation (the "HOLDER"), or order, during regular business hours
at its offices at 11601 Wilshire Boulevard, 12th Floor, Los Angeles, California
90025, or at such other place as may be designated from time to time in writing
by Holder, the principal sum of ONE HUNDRED FORTY-FIVE MILLION AND 00/100
DOLLARS ($145,000,000), together with Fixed Interest (as hereinafter defined) on
so much thereof as is from time to time outstanding and unpaid, and Contingent
Interest (as hereinafter defined), all in lawful money of the United States of
America which shall at that time be deemed to be legal tender in payment of all
debts and dues, public and private. The principal amount hereof, the Fixed
Interest and the Contingent Interest shall be paid by the Makers to the Holder
as set forth below.
1. DEFINITIONS. As used in this Note, the following terms shall
have the following meanings.
"ACCELERATION DATE" shall mean the date on which the outstanding
principal balance hereof is declared to be immediately due and payable
pursuant to Section 8.
"CONTINGENT INTEREST" shall mean an amount computed with respect to
each fiscal quarter equal to the product of (A) 80% and (B) the excess of
the Gross Adjusted Cash Flow over the amount of Fixed Interest, subject, in
each case, to year-end audit adjustment as provided in Section 3, PROVIDED
that the aggregate amount payable by the Makers on account of Fixed
Interest and Contingent Interest for any Fiscal Year shall not exceed 11%
per annum on the outstanding principal balance of this Note.
"DEFAULT RATE" shall mean 12% per annum.
<PAGE>
"EVENT OF DEFAULT" shall have the meaning set forth in the Pledge
Agreement.
"FISCAL YEAR" shall mean the 12 calendar months commencing on January
1 and terminating on December 31 of each year until such time as the
principal amount of this Note shall have been paid in full. The first
Fiscal Year shall be the period commencing on the date hereof and ending on
December 31, 1997.
"FIXED INTEREST" shall have the meaning specified in Section 2.
"GROSS ADJUSTED CASH FLOW" shall mean an amount computed with respect
to each fiscal quarter equal to the aggregate net cash flow derived by each
of Westfield Partners and Westland Management from their respective
partnership interests in the Partnership, PROVIDED, however, that the
amount of such net cash flow shall be adjusted and computed as if any
mortgage loan to the Partnership secured by the Partnership's interest in
the Property (a "Mortgage") bears interest at a rate of 7.25% per annum but
computed otherwise in a manner consistent with the terms of such Mortgage.
"HOLDER" shall mean Westfield America, Inc., a Missouri corporation.
"MAKER" shall mean each of Westfield Partners and Westland Management.
"MAKE-WHOLE AMOUNT" shall mean the amount obtained by discounting
all Remaining Scheduled Payments from their respective scheduled due
dates to the Acceleration Date or Prepayment Date, as applicable, in
accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which Fixed Interest is
payable) equal to the Reinvestment Yield, PROVIDED that the Make-Whole
Amount may in no event be less than zero.
"MATURITY DATE" shall mean May , 2007.
"PARTNERSHIP" shall mean Westland Garden State Plaza Limited
Partnership, a Delaware limited partnership.
"PLEDGE AGREEMENT" shall mean the Pledge and Security Agreement,
dated as of the date hereof, among the Makers, Westland Realty,
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Inc. and the Holder, as the same may from time to time be amended, modified
or supplemented.
"PREPAYMENT DATE" shall mean the date on which the outstanding
principal balance hereof is prepaid in accordance with its terms.
"PROPERTY" shall mean the Garden State Plaza shopping center located
in Paramus, New Jersey.
"REINVESTMENT YIELD" shall mean the yield to maturity implied by (I)
the yields reported, as of 10:00 A.M. (New York City time) on the second
business day preceding the Acceleration Date, on the display designated as
"Page 678" on the Telerate Access Service (or such other display as may
replace Page 678 on the Telerate Access Service) for actively traded U.S.
Treasury securities having a maturity date of May __, 2002, or (II) if such
yields are not reported as of such time or the yields reported as of such
time are not ascertainable, the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as
of the second business day preceding the Acceleration Date, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a maturity
date of May __, 2002. Such implied yield will be determined, if necessary,
by (A) converting U.S. Treasury bill quotations to bond-equivalent yields
in accordance with accepted financial practice and (B) interpolating
linearly between (1) the actively traded U.S. Treasury security with the
duration closest to and greater than May __, 2002 and (2) the actively
traded U.S. Treasury security with the duration closest to and less than
May __, 2002.
"REMAINING SCHEDULED PAYMENTS" shall mean Fixed Interest and
Contingent Interest that would be due after the Acceleration Date or
Prepayment Date until May __, 2002 assuming that each such payment was
made on its scheduled due date and that the Contingent Interest borne by
this Note was the maximum amount permitted (I.E., together with Fixed
Interest, an aggregate amount equal to 11% per annum).
"WESTFIELD PARTNERS" shall mean Westfield Partners, Inc., a Delaware
corporation.
"WESTLAND MANAGEMENT" shall mean Westland Management, Inc., a Delaware
corporation.
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2. FIXED INTEREST. Fixed interest shall accrue on the principal
balance outstanding hereunder at the rate of 8.5% per annum during the period
from and including the date hereof through and including the payment in full of
the principal balance of the Note (the "FIXED INTEREST"). Fixed Interest shall
be payable in arrears on the last day of each March, June, September and
December commencing on June 30, 1997. Fixed Interest shall be computed on the
basis of a 360-day year of twelve 30-day months. Each Maker acknowledges that
the Fixed Interest shall be calculated on an aggregate basis and that each Maker
shall be jointly and severally liable for the payment of the entire amount of
Fixed Interest.
3. CONTINGENT INTEREST. (a) In addition to the Fixed Interest and
principal hereinabove provided for, the Makers hereby jointly and severally
promise, covenant and agree to pay the Contingent Interest to the Holder. Each
Maker acknowledges that the Contingent Interest shall be calculated on an
aggregate basis for Westfield Partners and Westland Management and that each
Maker shall be jointly and severally liable for the payment of the entire amount
of Contingent Interest. Each Maker's obligation to pay Contingent Interest will
become operative and will begin to accrue on the date hereof and shall continue
so long as this Note remains outstanding. Payments of Contingent Interest shall
be made quarterly in arrears, within 30 days of the end of each fiscal quarter
for which such Contingent Interest relates, except that the last installment of
Contingent Interest shall be paid on the date on which this Note is paid in
full.
(b) The Holder shall not, as a result of the rights granted herein,
including, without limitation, the right to receive Contingent Interest, be
considered as a co-owner, co-partner or co-venturer in the Property or under any
of the leases thereof or otherwise or under any other obligation, with any of
the Makers. It is further agreed that the Holder shall not be required to
perform or discharge any obligation, duty or liability under any of the leases
and the Makers shall and do hereby jointly and severally agree to indemnify and
hold the Holder harmless from and against any and all liability, loss or damage
which it may or might incur as a result hereof and of and from any and all
claims or demands whatsoever which may be instituted against it by reason of any
alleged obligations or undertakings on its part to perform or discharge any of
the terms, covenants or agreements contained in any of the leases; and should
the Holder incur any such liability under any of the leases, or under or by
virtue of this Note or the Pledge Agreement, or in defense of any claims or
demands, the amount thereof, including costs, expenses and reasonable attorney's
fees, shall be secured by the Pledge Agreement and the Makers agree to reimburse
the Holder therefor immediately upon demand and upon the failure of the Makers
to do so, the Holder may consider such
4
<PAGE>
failure a default under this Note (subject to any applicable notice and cure
provisions in this Note) and declare this Note immediately due and payable.
(c) At maturity or upon any voluntary prepayment of this Note in
accordance with Paragraph 7, then in addition to all other sums which may be
due, accrued Contingent Interest for the last fiscal quarter and for any
prior fiscal quarter if not yet paid shall also be due and payable. For
purposes of computing the amount of Contingent Interest required to be paid
for the last fiscal quarter or the fiscal quarter preceding the last fiscal
quarter if a financial statement thereof is not yet required to be delivered,
Contingent Interest shall be deemed to be the greater of (I) the average
annual amount of Contingent Interest for the preceding three full fiscal
quarters for which financial statements were received; and (II) the average
annual amount of Contingent Interest for all previous fiscal quarters for
which financial statements were received. The Contingent Interest payable
for the last fiscal quarter shall be a pro-rata share (based on the time
elapsed in the last fiscal quarter) of the Contingent Interest figure
calculated in accordance with the foregoing.
4. PAYMENT OF PRINCIPAL. The entire unpaid balance of this Note,
together with all unpaid accrued interest (including, without limitation,
accrued Fixed Interest and Contingent Interest) and all sums due hereunder and
under the Pledge Agreement shall be due and payable on the Maturity Date.
5. FINANCIAL STATEMENTS; BOOKS AND RECORDS. (a) Commencing not
later than July 30, 1997, and continuing not later than on the last day of
January, April, July and October in each succeeding Fiscal Year thereafter until
this Note shall have been paid in full, and again on the day when the last
payment against the principal hereof is made, each of Westfield Partners and
Westland Management shall deliver to the Holder unaudited financial statements
prepared in accordance with generally accepted accounting principles
consistently applied for the Property, certified by the principal financial
officer of Westland Management and Westfield Partners, respectively, for such
fiscal quarter and (in the case of the second, third and fourth fiscal quarters)
for the period from the beginning of the applicable Fiscal Year to the end of
such fiscal quarter, which shall include, with respect to the Property, a
Statement of Rents and Expenses and a Statement of Cash Flows and all data
necessary for calculation of Contingent Interest for the preceding fiscal
quarter, together with the Contingent Interest payment required under this Note
for such fiscal quarter.
(b) Commencing not later than April 30, 1998, and continuing not
later than the thirtieth day of April in each succeeding Fiscal Year thereafter
until this Note shall have been paid in full, each of Westfield Partners and
Westland Management shall deliver to the Holder an original annual audit report
prepared in accordance
5
<PAGE>
with generally accepted accounting principles consistently applied for the
Property, certified by an independent certified public accountant acceptable to
the Holder (it being agreed that any nationally-recognized public accounting
firms is acceptable to the Holder), which shall include, with respect to the
Property, a Statement of Rents and Expenses and a Statement of Cash Flows and
all data necessary for calculation of Contingent Interest for the preceding
Fiscal Year. There shall also be submitted by the Makers with such audited
statement and audit report, a certificate of compliance with the provisions of
this Note, which certificate of compliance shall be executed by the principal
financial officers of the Makers and a reconciliation between the audited
financial report and the Contingent Interest statement. If, as a result of
audit adjustments in connection with such audited financial statements, the
aggregate amount of Contingent Interest payable for such Fiscal Year shall be
greater or less than the amount calculated on the basis of the unaudited
financial statements for the four quarters of such Fiscal Year, the Makers will
promptly pay to the Holder the amount of any such underpayment or the Holder
will promptly pay to the Makers the amount of any such overpayment, in each case
without interest.
(c) Commencing not later than July 30, 1997, and continuing not later
than on the last day of January, April, July and October in each succeeding
Fiscal Year thereafter until this Note shall have been paid in full, and again
on the day when the last payment against the principal hereof is made, each of
Westfield Partners and Westland Management shall deliver to the Holder unaudited
financial statements prepared in accordance with generally accepted accounting
principles consistently applied for such Maker, certified by the principal
financial officer of such Maker, for such fiscal quarter and (in the case of the
second, third and fourth fiscal quarters) for the period from the beginning of
the applicable Fiscal Year to the end of such fiscal quarter, which shall
include, with respect to such Maker, a balance sheet, a Statement of Income and
Expenses and a Statement of Cash Flows.
(d) Concurrently with the delivery thereof to the partners of the
Partnership, the Makers will cause to be delivered to the Holder copies of the
Form K-1 of the Partnership for each Fiscal Year and any other financial
information distributed generally to partners of the Partnership.
(e) The Makers further agree to keep full, true and accurate
accounts, records and books of all monies and income received from the Property
and other information necessary or pertinent to determining the amount of
Contingent Interest due the Holder, all of which accounts, records and books
shall be kept by the Makers at their respective principal offices. The Makers
agree that the books and
6
<PAGE>
records for each particular Fiscal Year shall be kept available for at least
three years after such statements have been rendered as hereinabove required.
(f) The Holder shall have the right at all reasonable times to
inspect the books, papers and records of each Maker for the purposes of
determining the correctness of any statements delivered to it by the Makers.
Such inspection shall be made at the offices of the Makers or at such other
place as the Makers may designate in writing provided the Holder approves the
same. If upon such inspection it is found that an error has occurred with
respect to the amount of Contingent Interest, the Makers and the Holder shall
adjust any differences that shall have occurred by an appropriate payment to the
Holder or credit to the Makers. In addition, if the Holder should find that any
statements furnished by the Makers have understated Contingent Interest, then,
and in that event, the Makers shall promptly, upon demand, reimburse the Holder
for any sums expended by the Holder in making such inspection. The inspection
on behalf of the Holder may be made by any officer thereof or by any agent or
accountant appointed for that purpose.
(g) In the event that the Makers shall refuse or fail to furnish any
statements as afore-described, or in the event of the failure of the Makers to
permit the Holder or its representative to inspect its books and records on
request, as provided in clauses (e) and (f) hereof, the Holder may consider such
acts as a default under this Note (subject to any applicable notice and cure
provisions in this Note) and proceed in accordance with the rights and remedies
afforded it at law and under the provisions of this Note and the Pledge
Agreement.
6. SALE OF COLLATERAL, ETC. Unless this Note is simultaneously
prepaid in accordance with its terms or the Holder gives its prior written
consents to such transaction, no Maker will, directly or indirectly, (A)
sell, assign, transfer, convey or otherwise dispose of, or grant any option
with respect to, any of the Collateral (as defined in the Pledge Agreement),
except as currently set forth in the Partnership Agreement (as defined in the
Pledge Agreement), or (B) create or permit to exist any Lien (as defined in
the Pledge Agreement) upon or with respect to any of the Collateral, except
for the lien and security agreement created by the Pledge Agreement or (C) do
anything or suffer to exist anything, or omit to do anything or suffer to
exist any omission which would cause the value of the Collateral to diminish
in such a way as to have a material adverse effect on the Holder or on its
rights in respect of this Note, the Pledge Agreement or the Collateral,
including, without limitation, any dilution of the partnership interests,
except as currently set forth in the Partnership Agreement. Notwithstanding
the foregoing, the provisions of this Section 6 shall not apply to (I) any
transfer of any interest in any Maker to an entity all of the outstanding
voting equity interests of which are owned, directly or indirectly, by
Westfield Holdings Limited or (II) any transfer of any shares of stock of
Westfield Holdings Limited; PROVIDED that the Makers shall give the Holder at
least 10 days' prior written notice of any such transfer under clause (i)
above and shall execute and deliver to the Holder such documents as the
Holder may reasonably request in connection therewith.
7
<PAGE>
7. PREPAYMENT. No Maker shall have the right to prepay the
principal balance hereof in whole or in part except as expressly set forth in
this Note. The Makers shall be entitled to prepay the entire principal
balance of this Note at any time after the third anniversary of the date
hereof in connection with the sale of the Property or the Makers' interest
therein and after the fifth anniversary of the date hereof for any reason, on
not less than 30 days' prior written notice to Holder, subject to the payment
of all unpaid accrued Fixed Interest and unpaid Contingent Interest and all
other sums then due and owing under this Note and the Pledge Agreement and,
with respect to any prepayment prior to May , 2002, subject to the
payment of a prepayment premium in an amount equal to the Make-Whole Amount.
If this Note shall be prepaid on or prior to May __, 2002 as a result of the
acceleration of the principal balance hereof following the occurrence of an
Event of Default, the Makers shall, in addition to the payment of the
principal balance hereof, the accrued Fixed Interest and the accrued
Contingent Interest, pay to the Holder, on a joint and several basis, the
Make-Whole Amount.
8. ACCELERATION UPON DEFAULT. If an Event of Default shall occur
and be continuing, then, at the option of the Holder, the entire principal sum
evidenced hereby and secured by the Pledge Agreement, plus all other sums then
outstanding under this Note or the Pledge Agreement, shall immediately become
due and payable. Failure to exercise this option by the Holder shall not
constitute a waiver of the right to exercise same in the event of any subsequent
default.
9. DEFAULT INTEREST. In the event (A) the Makers fail to make any
payment hereunder, under the Pledge Agreement or under any other agreement
securing this Note when due, or (B) of any default hereunder or under the Pledge
Agreement and upon acceleration of the entire indebtedness aforesaid, fixed
interest shall accrue thereafter on the unpaid principal balance from and
including the date of such default (until the date such default is cured and the
indebtedness is reinstated) at the Default Rate, such interest to be compounded
annually.
10. ATTORNEYS' FEES. If any suit or action be instituted on this
Note, the Makers jointly and severally promise to pay the Holder, in addition to
the costs and disbursements allowed by law, such sum as the court may adjudge
reasonable as attorneys' fees in said suit or action.
11. WAIVERS. The Makers and all endorsers hereof and all others who
may become liable for all or any part of this obligation agree hereby to be
jointly and severally bound, and they jointly and severally waive and renounce,
to the extent permitted by law, the benefit of all valuation and appraisement
privileges as against this debt or any renewal or replacement thereof and waive
demand, protest, notice of nonpayment and any and all lack of diligence or
delays in collection or enforcement hereof, waive the right to plead any and all
statutes of limitation as a defense to any
8
<PAGE>
demand on this Note or under the Pledge Agreement and expressly consent to any
extension of time, release of any party liable for this obligation, release of
any of the security of this Note, acceptance of other security therefor, or any
other indulgence or forbearance. Any such extension, release, indulgence or
forbearance may be made without notice to any party and without in any way
affecting the personal liability of any party.
12. ESTOPPEL CERTIFICATES. From time to time, upon request of any
Maker, the Holder will deliver to such Maker a statement as to (A) the
outstanding principal of, and accrued and unpaid Fixed Interest and Contingent
Interest on, this Note and (B) whether the Holder is aware that any Event of
Default under the Pledge Agreement, or any event or condition which, with notice
or lapse of time or both, would become an Event of Default under the Pledge
Agreement, has occurred and is continuing. From time to time, upon request of
the Holder, each Maker will deliver to the Holder a statement as to (I) the
outstanding principal of, and accrued and unpaid Fixed Interest and Contingent
Interest on, this Note and (II) whether such Maker is aware that any Event of
Default under the Pledge Agreement, or any event or condition which, with notice
or lapse of time, or both, would become an Event of Default under the Pledge
Agreement, has occurred and is continuing.
13. NON-RECOURSE. Notwithstanding any provision herein or in the
Pledge Agreement securing this Note to the contrary, the Holder agrees with the
Makers that in the event the Holder shall at any time take action to enforce the
collection of this Note, it shall proceed first to foreclose against the
Collateral under the Pledge Agreement (including sale under power of sale
thereunder) and to exercise its remedies with respect to other collateral
securing this Note instead of instituting suit upon this Note and if, as a
result of such foreclosure and sale of the property described therein, a lesser
sum is realized therefrom than the amount then due and owing hereunder and under
the Pledge Agreement, the Holder will never institute any action, suit, claim or
demand in law or in equity against any Maker or any partner, shareholder,
officer or director of any Maker for or on account of such deficiency; PROVIDED,
HOWEVER, that nothing in this paragraph contained shall in any way affect or
impair the lien of the Pledge Agreement or any other collateral, all of which
shall remain in full force and inure to the benefit of the Holder. The Holder
shall, nevertheless, be entitled to institute such an action, suit, claim, or
demand against, and to recover a judgment against, the Makers for any such
deficiency to the extent that such deficiency results from: (A) fraud or
intentional misrepresentation by any Maker in connection with the execution and
delivery of, or in connection with the representations and warranties provided
in, the Pledge Agreement, this Note, or any other documents executed by any
Maker securing this Note or the performance of any
9
<PAGE>
Maker's obligations under the Pledge Agreement, this Note, or such other
documents or (B) the retention by any Maker of any rental or other income
arising with respect to the Property which is collected by such Maker after the
Holder has given notice to such Maker that such Maker is in default under this
Note, the Pledge Agreement, or any other document executed by any Maker securing
this Note.
14. PLEDGE AGREEMENT. This Note is secured by the Pledge Agreement.
15. MISCELLANEOUS. (a) This Note is intended as a contract under and
shall be construed and enforced in accordance with the laws of the State of New
York.
(b) As used herein, the terms "Maker" and "Holder" shall be deemed to
include their respective successors, legal representatives and assigns, whether
by voluntary action by the parties or by the operation of law.
(c) The headings used herein are for convenience of reference only
and shall not limit or otherwise affect any of the terms hereof.
(d) All obligations of the Makers hereunder shall be joint and
several obligations.
(e) The Maker and Holder intend that Fixed Interest and any
Contingent Interest payable hereunder shall be treated for Federal income tax
purposes as interest on obligations secured by mortgages on real property or on
interests in real property within the meaning of Section 856(c)(3)(B) of the
Internal Revenue Code of 1986, as amended.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Promissory Note as of the day and year first above written.
WESTFIELD PARTNERS, INC.
By
Name:
Title:
WESTLAND MANAGEMENT, INC.
By
Name:
Title:
11
<PAGE>
EXHIBIT 10.10
FIRST AMENDMENT TO
ADVISORY AGREEMENT
THIS FIRST AMENDMENT TO ADVISORY AGREEMENT is made as of May ___,
1997, by and between WESTFIELD AMERICA, INC., a Missouri corporation (formerly
known as CenterMark Properties, Inc.) ("Owner"), and WESTFIELD U.S. ADVISORY,
L.P., a Delaware limited partnership ("Advisor").
W I T N E S S E T H:
WHEREAS, Owner and Advisor are parties to that certain Advisory
Agreement (the "Original Advisory Agreement"), dated as of July 1, 1996; and
WHEREAS, Owner and Advisor desire to amend the Original Advisory
Agreement in the manner hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Owner and Advisor agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definition
shall have the respective meanings set forth in the Original Advisory Agreement.
2. AMENDMENT TO SECTION 3.1. Section 3.1 of the Original Advisory
Agreement is hereby amended by deleting such section in its entirety and
substituting the following therefor:
"3.1. ADVISORY FEE:
The Owner shall pay to the Advisor an annual Advisory
Fee equal to the lesser of (a) .55% of the Net Equity Value
of the Owner for such annual period, or (b) 25% of the
annual "Funds from Operations" (as hereinafter defined) in
excess of the "Advisory FFO Amount" (as hereinafter
defined). The Advisory Fee shall be paid in U.S. Dollars
and shall be payable quarterly in arrears at the end of each
calender quarter based on the budgeted annual Advisory Fee
for the then calender year, subject to final adjustment
within 90 days after the end of each calender year. The
Advisory Fee shall not be payable for the period through
December 31, 1997. The first payment on account of the
Advisory Fee shall be made on March 31, 1998 for the
quarterly period from January 1, 1998 through March 31,
1998.
"Funds from Operations" means net income (loss) (computed in
accordance with generally accepted accounting
<PAGE>
principles ("GAAP")) excluding gains (or losses) from debt
restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for
consolidated partnerships and joint ventures. Additionally, the
Company subtracts the portion of the management fee which
pertains to leasing commissions which are capitalized in
accordance with GAAP. Funds from Operations shall be calculated
before payment of or deduction for the Advisory Fee.
"Advisory FFO Amount" means, as of the date hereof,
$_____________, which amount shall be subject to adjustment
whenever the Owner issues additional common stock so as to be
equal to the sum of the then applicable Advisory FFO Amount and
the "FFO Adjustment Factor" (as hereinafter defined). The FFO
Adjustment Factor shall be equal to 103% (except that 100% shall
be used with respect to common stock issued under the Owner's
dividend reinvestment plan) multiplied by (a) a fraction the
numerator of which is the aggregate "Funds from Operations
Available for Common Stock" (as hereinafter defined) of the Owner
for each of the four full calendar quarters immediately preceding
the date of the new issuance and the denominator of which is the
aggregate number of shares of common stock (on a fully diluted
basis as required by GAAP) of the Owner then outstanding
immediately prior to the date of the new issuance multiplied by
(b) the number of shares of common stock issued in the new
issuance (on a fully diluted basis as required by GAAP). "Funds
From Operations Available for Common Stock" means Funds from
Operations less (i) the Advisory Fee payable for the applicable
four full calendar period, and (ii) dividends paid or accrued on
the Owner's preferred shares during the applicable four full
calendar quarter period."
3. AMENDMENT TO SECTION 3.3. Section 3.3 of the Original Advisory
Agreement is hereby amended by (i) deleting the period at the end of Section
3.3(b) and substituting "; and" therefor and (ii) inserting the following as
new subparagraph (c):
"(c) all costs of preparing and filing required reports with the
Securities and Exchange Commission, the costs payable by the
Owner to any transfer agent and registrar in connection with the
listing and trading of the Owner's stock on the New York Stock
Exchange, the fees payable by the Owner to the New York Stock
Exchange in connection with its listing, costs of preparing,
printing and mailing the Owner's annual report to its
shareholders and proxy materials with respect to any annual
meeting of the shareholders of the Owner."
2
<PAGE>
4. AMENDMENT TO SECTION 4.1. Section 4.1 of the Original Advisory
Agreement is hereby amended by deleting subsections A and B thereof in their
entirety and substituting the following therefor:
"A. TERM. From and after the date of the First Amendment to
Advisory Agreement, dated as of May ___, 1997, between Owner and
Manager, the term of this Agreement shall be for an initial term of
three years expiring on May ___, 2000. Thereafter, until this
Agreement is terminated in accordance with its terms, this Agreement
shall be deemed renewed automatically each year for an additional one
year period unless the trustee (the "WAT Trustee") of the Westfield
America Trust, an Australia publicly listed property trust, and 75% of
the Independent Directors (as such term is defined in the Third
Amended and Restated Articles of the Owner) of the Owner's Board of
Directors agree that either (i) there has been unsatisfactory
performance that is materially detrimental to the Owner or (ii) the
fees payable to Advisor are not fair, PROVIDED that Owner shall not
have the right to terminate this Agreement under clause (ii) above if
Advisor agrees to continue to provide advisory services for the
Property at a fee that the WAT Trustee and 75% of the independent
members of the Board have determined to be fair and PROVIDED FURTHER
that the WAT Trustee's agreement with respect to the matters set forth
in clauses (i) or (ii) will only be required if the WAT Trustee is the
owner of 10% or more of the outstanding capital stock of the Owner.
If Owner shall elect not to renew the term of this Agreement at the
expiration of the initial term or any extended term as set forth
above, Owner shall deliver to Advisor prior written notice of Owner's
determination not to renew this Agreement based on the terms set forth
in this subparagraph A not less than 30 days prior to the expiration
of the then existing term. If Owner elects not to renew this
Agreement, Owner shall designate the date, not less than 60 nor more
than 180 days from the date of the notice, on which Advisor shall
cease to provide services hereunder and this Agreement shall terminate
on such date.
B. NON-CURABLE TERMINATING EVENTS. (i) The Owner may terminate
this Advisory Agreement on not less than 30 days written notice to
Advisor upon the occurrence of any of the following events:
(x) the Bankruptcy of Advisor;
(y) an act of fraud, embezzlement or theft constituting a
felony against Owner or its Affiliates which causes it material
injury is perpetrated by Advisor or by Developer or by Manager in
its corporate capacity (as distinguished from the acts of any
employees of such entities which are taken without the approval
or complicity of the Board of Directors of such entities'
managing general partner) under this Agreement, the Management
Agreements, the Development Framework
3
<PAGE>
Agreements, any Development Agreement or any Leasing
Agreement; or
(z) an Event of Default (as defined therein) shall have
occurred and be continuing under that certain Pledge
and Security Agreement, dated as of May , 1997, among the
Company and Westland Management, Inc., Westfield
Partners, Inc. and Westland Realty, Inc.
(ii) This Agreement shall terminate if Advisor shall notify Owner
that advisory services shall cease to be one of the principal business
undertakings of Westfield Holdings Limited in the United States,
PROVIDED that this Advisory Agreement shall continue for a period of
180 days after delivery of such notice to Owner if Owner shall be
reasonably satisfied with Advisor's ability to continue providing the
services required hereunder during such period."
5. ASSIGNMENT TO OPERATING PARTNERSHIP. Owner has advised Advisor
that it intends to form an operating partnership (the "Operating
Partnership") in which Owner or its wholly-owned subsidiary will be the sole
general partner and Owner or its subsidiaries will be the initial limited
partners. Following such formation, Owner intends to transfer all or
substantially all of its assets to the Operating Partnership and to conduct
substantially all of its operations through the Operating Partnership.
Advisor agrees that, following such formation and transfer, its obligations
under this Agreement will apply to both the Operating Partnership and the
Owner.
6. RATIFICATION. Except as amended hereby, the Original Advisory
Agreement is hereby ratified and remains in full force and effect.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had all signed
the same signature page. Any signature page of this Amendment may be detached
from any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Amendment
identical in form hereto but having attached to it one more additional signature
pages.
8. EFFECTIVE DATE. This Amendment shall be effective as of the
closing of the initial public offering of common stock of the Owner pursuant to
its Registration Statement on Form S-11 (No. 333-22731).
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
OWNER:
WESTFIELD AMERICA, INC.
----------------------------------
Name:
Title:
ADVISOR:
WESTFIELD U.S. ADVISORY, L.P.
By: Westfield Services, Inc.
a general partner
By:
-------------------------
Name:
Title:
5
<PAGE>
EXHIBIT 10.12
FIRST AMENDMENT TO MASTER
DEVELOPMENT FRAMEWORK AGREEMENT
THIS FIRST AMENDMENT TO MASTER DEVELOPMENT FRAMEWORK AGREEMENT is made
as of May , 1997 by and between WESTFIELD AMERICA, INC. a Missouri
corporation (formerly known as CenterMark Properties, Inc). ("Owner"), and
WESTFIELD CORPORATION, INC., a Delaware corporation ("Developer").
W I T N E S S E T H:
WHEREAS, Owner and Developer are parties to that certain Master
Development Framework Agreement, dated as of July 1, 1996 (the "Original
Master Development Framework Agreement"); and
WHEREAS, Owner and Developer desire to amend the Original Master
Development Framework Agreement in the manner hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Owner and Developer agree as
follows:
1. DEFINITIONS. All capitalized terms used herein without
definition shall have the respective meanings set forth in the Original
Master Development Framework Agreement.
2. AMENDMENT TO SECTION 3.2(B) OF THE ORIGINAL MASTER DEVELOPMENT
AGREEMENT. Section 3.2(b) of the Original Master Development Framework
Agreement is hereby amended by deleting the third sentence of the first
paragraph thereof and substituting the following therefor:
"(b) During the term of this Agreement, Westfield agrees not to
directly or indirectly, act as the property developer for any third
party which owns a shopping center which directly competes (or,
upon redevelopment by Westfield, would directly compete) with any
of the Shopping Centers (a "Competing Mall"), provided that the
foregoing restriction shall not be deemed to be violated if Manager
shall acquire, either directly or indirectly, all or substantially
all of the assets of, or an interest in, an entity that does not
have any ownership interest in shopping center properties or power
centers in the United States which is engaged in the property
development business and which is providing development services to,
among other properties, a shopping center which is a Competing Mall."
3. AMENDMENT TO SECTION 6.4 OF THE ORIGINAL MASTER DEVELOPMENT
FRAMEWORK AGREEMENT. Section 6.4 of the Original Master Development Framework
Agreement is hereby amended by deleting subsection 6.4.1 thereof in its
entirety and substituting the following therefor:
"6.4.1. Upon the approval of the trustee (the "WAT Trustee") of
the Westfield America Trust, an Australian publicly listed property
trust, and 75% of the Independent Directors (as such term is defined
in the Third Amended and Restated Articles of the Owner) of the
Owner's Board of Directors, Owner may terminate this Agreement if
Owner has previously terminated the Advisory Agreement and the
Management Agreements in accordance with their terms, PROVIDED that
such termination shall not be applicable to any development project
for which Developer has performed substantial pre-development services
prior to the date of termination or for which a Development Agreement
has previously been executed and PROVIDED FURTHER that the WAT
Trustee's agreement will only be required if the WAT Trustee is the
owner of 10% or more of the outstanding capital stock of the Owner.
If Owner elects to terminate this Agreement, Owner shall designate the
date, not less than 60 nor more than 180 days from the date of the
termination notice, on which this Agreement shall terminate. In
addition, the Owner may terminate this Agreement on not less than
30 days notice if an Event of Default (as defined therein) shall
have occurred and be continuing under that certain Pledge and
Security Agreement, dated as of May , 1997, among the Company and
Westland Management, Inc., Westfield Partners, Inc. and Westland
Realty, Inc."
<PAGE>
4. RATIFICATION. Except as amended hereby, the Original Master
Development Framework Agreement is hereby ratified and remains in full force
and effect.
5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had all signed
the same signature page. Any signature page of this Amendment may be detached
from any counterpart of this Amendment without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Amendment
identical in form hereto but having attached to it one more additional signature
pages.
6. EFFECTIVE DATE. This Amendment shall be effective as of the
closing of the initial public offering of common stock of the Owner pursuant to
its Registration Statement on Form S-11 (No. 333-22731).
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
OWNER:
WESTFIELD AMERICA, INC.
------------------------------------
Name:
Title:
DEVELOPER:
WESTFIELD CORPORATION, INC.
By:
---------------------------------
Name:
Title:
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EXHIBIT 10.14
FIRST AMENDMENT TO
MANAGEMENT LETTER AGREEMENT
THIS FIRST AMENDMENT TO MANAGEMENT LETTER AGREEMENT, dated as of
May , 1997, by and between WESTFIELD AMERICA, INC., a Missouri corporation
(formerly known as CenterMark Properties, Inc.) ("Owner"), and CENTERMARK
MANAGEMENT COMPANY, a Delaware partnership ("Manager").
W I T N E S S E T H:
WHEREAS, Owner and Manager are parties to that certain Letter
Agreement (the "Original Management Letter Agreement"), dated as of July 1,
1996, relating to the management by the Manager of certain properties owned by
the Owner or in which the Owner or its subsidiaries is a joint venture partner;
WHEREAS, Exhibit A to the Original Management Letter Agreement is the
form of management agreement (the "Form Management Agreement") to be used by the
Manager and the Owner (or its subsidiary or Joint Venture) with respect to any
future property to be managed by the Manager for Owner (or its subsidiary or
Joint Venture);
WHEREAS, Owner and Manager desire to amend the Original Management
Letter Agreement in the manner hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Owner and Manager agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definition
shall have the respective meanings set forth in the Original Management Letter
Agreement.
2. AMENDMENT TO EXHIBIT A TO THE ORIGINAL MANAGEMENT LETTER
AGREEMENT. Exhibit A to the Original Management Letter Agreement is hereby
amended by substituting the Exhibit A attached hereto therefor so as to
reflect certain agreed upon modifications to the Form Management Agreement.
<PAGE>
3. RATIFICATION. Except as amended hereby, the Original Management
Letter Agreement is hereby ratified and remains in full force and effect.
4. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had all signed
the same signature page. Any signature page of this Amendment may be detached
from any counterpart of this Amendment without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Amendment
identical in form hereto but having attached to it one more additional signature
pages.
5. EFFECTIVE DATE. This Amendment shall be effective as of the
closing of the initial public offering of common stock of the Owner pursuant to
its Registration Statement on Form S-11 (No. 333-22731).
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
OWNER:
WESTFIELD AMERICA, INC.
------------------------------------
Name:
Title:
MANAGER:
CENTERMARK MANAGEMENT COMPANY
By: Westfield Services, Inc.
a general partner
By:
----------------------------
Name:
Title:
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EXHIBIT A
FORM OF MANAGEMENT AGREEMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM OF
MANAGEMENT AGREEMENT
BETWEEN
[WESTFIELD AMERICA, INC. OR ITS SUBSIDIARY],
AS OWNER,
AND
CENTERMARK MANAGEMENT COMPANY,
AS MANAGER.
DATED AS OF _____________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
MANAGEMENT AGREEMENT
PAGE
TABLE OF CONTENTS
-----------------
ARTICLE I CERTAIN DEFINITIONS.............................................1
ARTICLE II APPOINTMENT....................................................11
ARTICLE III MANAGER'S DUTIES...............................................12
A. Operating Standard; Duties................................12
B. Independent Contractor; Employees.........................14
C. Compliance with Requirements..............................14
D. Implementation of Annual Plan.............................15
E. Property Manager..........................................15
F. No Default................................................15
G. Powers....................................................16
ARTICLE IV LEASING THE PROPERTY...........................................17
A. Leasing Obligations.......................................17
B. Brokers...................................................18
C. Temporary Leases..........................................19
D. Small Shop Leases.........................................19
E. Large Shop Leases and Nonconforming Small Shop
and Temporary Leases......................................19
F. Anchor Leases.............................................19
G. Leasing Fee...............................................20
H. Occupant Improvements.....................................20
ARTICLE V TENANT RELATIONS...............................................20
A. Reasonable Efforts........................................20
B. Procedures................................................20
C. Enforcement of Leases.....................................20
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ARTICLE VI RECEIPTS.......................................................21
A. Cash Receipts.............................................21
B. Security Deposit Account..................................21
ARTICLE VII ANNUAL PLAN....................................................21
A. Initial Annual Plan.......................................21
B. Submission of Annual Plans................................21
C. Owner's Approval..........................................22
D. Miscellaneous Provisions..................................23
ARTICLE VIII DISBURSEMENTS.................................................24
A. Payment of Operating Expenses.............................24
B. Checks....................................................24
ARTICLE IX ADVANCES FOR OPERATING EXPENSES................................24
A. Notification..............................................24
B. Owner's Advances..........................................25
C. Indemnification...........................................25
ARTICLE X FIDELITY INSURANCE COVERAGE....................................26
ARTICLE XI MAINTENANCE OF THE PROPERTY....................................26
A. Standard..................................................26
B. Supplies and Equipment....................................27
C. Enforcement of Contracts..................................27
D. Emergencies...............................................27
ARTICLE XII RECORDS AND REPORTS............................................27
A. Monthly Reports...........................................27
B. Financial Statements......................................29
C. Records...................................................31
D. Production of Records and Information.....................32
E. Tax Returns...............................................33
F. General Qualifications....................................33
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ARTICLE XIII COSTS AND EXPENSES - COMPENSATION.............................34
A. Management Fee............................................34
B. Expense Reimbursement.....................................35
C. Leasing...................................................35
ARTICLE XIV INSURANCE......................................................36
ARTICLE XV ALTERATIONS....................................................36
ARTICLE XVI TERMINATION....................................................36
A. Term......................................................36
B. Non-Curable Terminating Events............................36
C. Curable Defaults..........................................38
D. Manager's Rights and Obligations on Termination...........39
ARTICLE XVII DELIVERY OF DOCUMENTS AND NOTICES.........................40
ARTICLE XVIII MISCELLANEOUS PROVISIONS..................................41
A. Law to Apply..............................................41
B. Incorporation by Reference................................41
C. Section Headings and References...........................41
D. Terms.....................................................41
E. Waiver....................................................41
F. Severability..............................................42
G. Counterparts..............................................42
H. Time......................................................42
I. Incorporation of Prior Agreements.........................42
J. Further Assurances........................................42
K. Attorneys' Fees...........................................42
L. Personal Agreement........................................42
M. No Partnership............................................43
N. Amendments................................................43
O. Indemnities...............................................43
P. Object of Agreement.......................................44
Q. Owner's Lenders and/or Purchasers.........................44
R. Confidentiality...........................................44
iii
<PAGE>
EXHIBITS
A - Other Management Agreements
iv
<PAGE>
FORM MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT ("Agreement") is made and entered into as of
the ___ day of _____, ____ by and between [WESTFIELD AMERICA, INC. OR ITS
SUBSIDIARY], a ____________ ("Owner"), and CENTERMARK MANAGEMENT COMPANY
("Manager"), a Delaware partnership.
W I T N E S E T H:
WHEREAS, Owner is the owner of that certain shopping center located in
______________, and commonly known as ___________; and
WHEREAS, Owner and Manager desire to enter into this Agreement to
appoint Manager to manage the Property (as defined below), it being the
understanding that the object of this Agreement is the provision of property
management and leasing services by Manager to Owner, upon all of the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as
follows:
ARTICLE I
---------
CERTAIN DEFINITIONS
-------------------
As used in this Agreement, the following terms shall have the meanings
respectively set forth in this Article I:
"ADVISOR" means Westfield U.S. Advisory, L.P., a Delaware limited
partnership, and its permitted successors and assigns under the Advisory
Agreement.
"ADVISORY AGREEMENT" means that certain Advisory Agreement, dated as
of July 1, 1996, between Westfield America, Inc. (formerly known as CenterMark
Properties, Inc.) and Advisor, as the same may be amended from time to time.
<PAGE>
"AFFILIATE" means, with respect to any Person (the "SUBJECT PERSON"),
any other Person controlling, controlled by or under common control with the
Subject Person. As used in this definition of "AFFILIATE," the term "CONTROL"
means, with respect to any Person, the right to the exercise, directly or
indirectly, of 50% or more of the voting rights attributable to such Person.
"ANCHOR LEASE" means a Lease for an Anchor Tenant.
"ANCHOR TENANT" means an Occupant that is a department store having
not less than seventy-five thousand (75,000) square feet of usable space at the
Property.
"ANNUAL PLAN" means the plan for the operation, leasing, maintenance
and improvement of the Property, including, without limitation, the Operating
Budget, prepared by Manager and approved by Owner as provided herein for each
Fiscal Year.
"BANKRUPTCY" of any Person means the occurrence of any of the
following events:
(i) if such Person shall file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent, or shall file
any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief for
itself under the present or any future Federal bankruptcy act or any other
present or future applicable Federal, state or other statute or law
relating to bankruptcy, insolvency, or other relief for debtors, or shall
seek or consent to the appointment of any trustee, receiver, conservator or
liquidator of such Person of all, or substantially all, of its property; or
(ii) if a court of competent jurisdiction shall enter an
order, judgment or decree approving a petition filed against such Person
seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or any future
Federal bankruptcy act, or any other present or future Federal, state or
other statute or law relating to bankruptcy, insolvency, or other relief
for debtors, and such order, judgment or decree shall remain unvacated and
unstayed for a period of ninety (90) days from the date of entry thereof,
or any trustee, receiver, conservator or liquidator of such Person or of
all or substantially all of its property shall be appointed without the
consent of such Person and such appointment shall remain unvacated and
unstayed for a period of ninety (90) days, or if such Person shall file an
answer
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<PAGE>
admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding; or
(iii) if such Person shall admit in writing its inability
to pay its debts as they mature; or
(iv) if such Person shall make a general assignment for the
benefit of creditors or take any other similar action for the protection or
benefit of creditors; or
(v) if any assets of such Person are attached, seized or
subjected to a garnishment or other action by a creditor of such Person
seeking to realize upon a judgment against such Person, and such
attachment, seizure, garnishment or other action is not vacated, stayed or
otherwise resolved within ninety (90) days thereafter.
"BUSINESS DAY" means a day which is not a Saturday, Sunday or legally
recognized public holiday in the United States.
"COMMON AREAS" means all those parts of the Property which are not
exclusively used or intended for the exclusive use of any particular Occupant.
Common Areas shall include, without limitation, the following areas within the
Property: parking areas and facilities, traffic control and information signs
and equipment, roadways, pedestrian sidewalks, public transportation loading and
unloading facilities not devoted to a single Occupant, truckways, delivery
areas, landscaped areas, community rooms, office facilities, Property Manager's
office, elevators, escalators, the enclosed mall, including space occupied by
carts or kiosks, roof, skylights, beams, stairs and ramps not contained within
any Occupant's floor area, public restrooms and comfort stations, service areas,
service and fire exit corridors and passageways, those areas within the Property
and adjacent to the Property containing signs, pylons or structures advertising
the Property, and other areas, amenities, facilities and improvements provided
by Owner for the convenience and use of Owner, the Occupants and their
respective concessionaires, agents, employees, customers, invitees and other
licensees.
"DEVELOPER" means Westfield Corporation, Inc., any entity wholly owned
by Westfield Corporation, Inc., and the permitted successors and assigns of
Westfield Corporation, Inc. or any entity wholly owned by Westfield Corporation,
Inc., under the Development Framework Agreement or any Development Agreement and
Leasing Agreement.
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<PAGE>
"DEVELOPMENT AGREEMENT" means any Design, Development and Construction
Agreement entered into between Westfield America, Inc. (formerly known as
CenterMark Properties, Inc.) or its Affiliate and Developer in accordance with
the terms of the Development Framework Agreement, as the same may be amended
from time to time.
"DEVELOPMENT FRAMEWORK AGREEMENT" means that certain Master
Development Framework Agreement, dated as July 1, 1996, between Westfield
America, Inc. (formerly known as CenterMark Properties, Inc.) and Developer, as
the same may be amended from time to time.
"DISCRETIONARY EXPENSES" means all Operating Expenses that are not
Non-Discretionary Expenses.
"EMERGENCY" means an event which, in Manager's reasonable judgment,
requires action to be taken prior to the time that approval could be obtained
from Owner (as reasonably determined by Manager) in order to comply with Legal
Requirements or Insurance Requirements or to preserve the Property, or for the
safety of any employees, Occupants, customers or invitees of the Property, or to
avoid the suspension of any services necessary to, or required by, the
Occupants, customers or invitees thereof.
"FISCAL YEAR" means the calendar year.
"GROSS INCOME" in respect of a particular period means all minimum,
fixed and percentage rents and all other receipts, revenues, proceeds and other
monies received by Owner, or by Agent on behalf of Owner, from or in connection
with the operation of the Property in respect of such period, directly or
indirectly and from any source whatsoever including, without limitation, all
payments made to Owner by Occupants including, but not limited to (i) minimum,
fixed and percentage rent (including proceeds from any litigation wherein
damages equivalent to or based upon rent from a defaulted tenant are recovered,
exclusive of interest), (ii) Common Area maintenance charges, (iii)
contributions for personal and real property taxes and sales taxes, insurance
premiums and deductibles, utilities, heating, ventilating and air conditioning,
domestic water and waste handling, sprinkler charges, Manager's administrative
costs and any other expenses of the Property for the payment of which Occupants
are obligated to contribute pursuant to their respective Leases, (iv) security
deposits which have been applied to rent, and (v) all proceeds from loss of
rents insurance maintained by Owner relating to the Property.
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<PAGE>
"INDEX" with respect to any applicable calculation that is provided
for herein, for each particular year or period in question, means the "All
Items" portion of the Consumer Price Index for All Urban Consumers: U.S. City
Average (1982-84 = 100), issued and published by the Bureau of Labor Statistics
of the United States Department of Labor. If the Index ceases to use the
1982-84 average equaling 100 as the basis of calculation, or if a change is made
in the terms or number of items contained in the Index, or if the Index is
altered, modified, converted or revised in any way, then the Index shall be
determined by reference to the index designated as the successor to the prior
Index or other substitute index published by the government of the United States
and new index numbers shall be substituted for the old index numbers in making
the calculations, as may be appropriate. If at any time the Bureau of Labor
Statistics shall no longer publish such Index, then any successor or substitute
index to the Index published by said Bureau or other governmental agency of the
United States, and similarly adjusted as aforesaid, shall be used. If such a
successor or substitute index is not available or may not lawfully be used for
the purposes herein stated, a reliable governmental or other non-partisan
publication selected by Manager and reasonably acceptable to Owner shall be used
in evaluating the information theretofore used in determining the Index.
"INSURANCE REQUIREMENTS" means the requirements of any insurer or
insurance carrier, to the extent that such requirements are applicable to the
Property, or any portion thereof, the use or manner of use of the same, or to
Owner in its capacity as owner of the Property.
"LAND" means that certain parcel or parcels of real property on which
_____________ is located.
"LARGE SHOP LEASE" means any Lease which is not an Anchor Lease, a
Small Shop Lease or a Temporary Lease.
"LEASE" means any lease, sublease, license to occupy or other right of
occupancy, use or possession of the Property or any part of the Property,
entered into or granted by or on behalf of Owner or by or on behalf of Owner's
predecessors in title, whether temporarily or for a fixed or periodic term,
whether or not recorded, and whether oral or written including, without
limitation, any storage license, cart or kiosk lease or license, and any other
specialty lease or license. "LEASES" means each and every Lease in effect at
the applicable time, collectively.
"LEASING AGREEMENT" means any Leasing Agreement entered into between
Westfield America, Inc. (formerly known as CenterMark Properties, Inc.) or its
Affiliate
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<PAGE>
and Developer in accordance with the terms of the Development Framework
Agreement, as the same may be amended from time to time.
"LEASING GUIDELINES" means the annual leasing guidelines for the
Property proposed by Manager and approved by Owner, which approval will not be
unreasonably withheld by Owner, as an element of each Annual Plan, as such
guidelines may be amended from time to time in accordance with the terms hereof.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, ordinances,
orders, regulations, judgments, decrees and directions of all federal, state and
local governments and courts and the appropriate agencies, officers,
departments, boards, authorities and commissions thereof, whether now or
hereafter enacted, to the extent that the same are applicable to the use or
operation of the Property or any portion thereof.
"MARKETING FUND" means the media fund or other like fund or
organization established, operated and maintained by Manager in accordance with
the Operating Budget for the advertising, merchandising and promotion of the
Property.
"NON-DISCRETIONARY EXPENSES" means those Operating Expenses, the
payment and amount of which are not within the discretion of Owner or Manager,
including without limitation utility charges, salaries and benefits of Property
employees, scheduled payments of principal and interest on indebtedness
encumbering the Property, real estate and personal property taxes and
assessments, insurance premiums, amounts due and payable under service contracts
and other agreements entered into in accordance with any Annual Plan, and
Operating Expenses required to be paid by Legal Requirements or Insurance
Requirements.
"OCCUPANTS" means all Persons using or in possession or occupation of
any portion of the Property from time to time under any Lease.
"OPERATING BUDGET" means the annual operating budget for the Property
proposed by Manager and approved by Owner, which approval will not be
unreasonably withheld by Owner, for the relevant Fiscal Year, as the same may be
amended from time to time in accordance with the terms hereof.
"OPERATING EXPENSES" means the total for each relevant period of the
costs and expenses incurred or accrued in respect of the Property by Owner or by
Manager on behalf of Owner in accordance with this Agreement. Subject to the
foregoing, Operating Expenses shall include, without limitation:
6
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(i) all rates, taxes, assessments and impositions whatsoever
(whether assessed, charged or imposed by or under Federal, State or local Legal
Requirements) assessed, charged or imposed in respect of the Property or Owner
in its capacity as owner of the Property, except to the extent that Owner has
elected to appeal the same until such time as such taxes are paid, including,
without limitation, sales taxes paid by Manager with respect to goods or
services benefiting the Property acquired or provided in accordance with the
Operating Budget;
(ii) charges for supply of water, sewerage, gas, electricity and
other utilities supplied to the Common Areas, and the disposal of all garbage
and refuse from the Common Areas;
(iii) costs of operating, maintaining, repairing and cleaning
all areas of the Property, including the salary, wages, benefits and other costs
of (x) all on-site employees at the Property employed by Manager or its
Affiliates and (y) all off-site costs which are allocable to the Property (which
shall include home office or regional office operational employees to the extent
such employees perform services specifically related to the Property), as may be
necessary or appropriate for the proper operation thereof and the performance by
Manager of its obligations hereunder, all in accordance with the Operating
Budget;
(iv) all charges for leasing or licensing, operating,
maintaining and repairing the lighting and HVAC systems, vertical or horizontal
transportation equipment, sanitary, security and fire detection and fighting
equipment and all other equipment, machinery and systems provided for or to the
Property from time to time, in accordance with the Operating Budget;
(v) the portion of overhead costs incurred by or on behalf of
Manager in performing its duties under this Agreement which (x) are for the sole
benefit of the Property and (y) have been approved by Owner in the Operating
Budget for the applicable Fiscal Year;
(vi) the costs of leasing, maintenance, registration and other
expenses incurred in respect of vehicles used by employees of Manager or a
Related Person of Manager in connection with the performance of services for the
benefit of the Property which are properly incurred in the performance by
Manager of its duties and obligations under this Agreement, in accordance with
the Operating Budget;
(vii) all fees and charges incurred in connection with the
opening, maintenance and operation of any bank accounts operated for the
Property by Manager;
7
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(viii) advertising, marketing and promotional costs for the
Property in accordance with the applicable Operating Budget or which otherwise
have been approved in writing by Owner;
(ix) the fees of attorneys and consultants incurred by Manager
in accordance with the Operating Budget or at the written request of Owner in
connection with the performance by Manager of its duties and obligations under
this Agreement including, without limitation, the enforcement of all Leases;
(x) all contributions made by Owner or Manager on behalf of
Owner from time to time to the Marketing Fund;
(xi) the payment or reimbursement of the applicable portion of
costs incurred by Owner or by or on behalf of Manager for insurance and claims
management services for the Property in accordance with the Operating Budget,
whether such payment is incurred pursuant to any master policy covering other
properties under the management of Manager or any Related Person, or otherwise;
(xii) all expenses incurred by Manager in accordance with the
Operating Budget or as otherwise approved in writing by Owner in connection with
equipment provided by or on behalf of the Manager or by others for the purpose
of the operation and maintenance of the Property or the applicable portion of
such costs relating solely to the Property including, without limitation, all
financing, leasing and other charges incurred in respect of such equipment and
legal and other costs associated with the arranging thereof;
(xiii) miscellaneous donations made by Manager from time to
time in the course of operations of the Property in accordance with the
Operating Budget or as otherwise approved in writing by Owner;
(xiv) third party audit and accountancy fees incurred in
accordance with the Annual Plan in connection with the preparation of any
accounts or financial statements relating solely to the Property prepared by or
on behalf of Owner for the purpose of providing the financial information to
Owner required by this Agreement and enabling Manager to perform its obligations
under this Agreement;
(xv) all third party costs and expenses incurred by Manager
directly for the benefit of the Property in connection with the lease or license
of space within the Property in accordance with the Operating Budget or as
otherwise approved in
8
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writing by Owner, excluding, however, brokerage or agency fees, commissions or
expenses payable to Manager or any third parties;
(xvi) the Management Fee payable to Manager in accordance with
Article XIII hereof;
(xvii) general expenses associated with the Property incurred in
accordance with the Operating Budget or as otherwise approved in writing by
Owner; and
(xviii) all costs incurred in accordance with the Operating
Budget or as otherwise approved in writing by Owner in connection with (x)
complying with Legal Requirements and Insurance Requirements binding the
Property, binding Owner in its capacity as owner of the Property, or binding
Manager in its capacity as Owner's agent; and (y) enforcing compliance with
Legal Requirements and Insurance Requirements binding Occupants, contractors or
consultants, provided, however, that if any such noncompliance was caused by
Manager's gross negligence, willful misconduct or fraud, any incremental
increase in the cost of enforcing such compliance shall be borne by Manager and
shall not be an Operating Expense;
PROVIDED, HOWEVER, that notwithstanding the foregoing, "OPERATING EXPENSES"
shall exclude:
(a) income taxes, capital gains tax and any other taxes imposed
on Owner, Manager or Occupants in their capacities as individual taxpayers;
(b) the fees of consultants and other costs proven by Owner to
have been incurred as a direct result of Manager's gross negligence, willful
misconduct or fraud; and
(c) premiums and other costs payable by Manager for fidelity
bond insurance.
"OTHER MANAGEMENT AGREEMENTS" mean the management agreements listed on
Exhibit A attached hereto between Manager and certain Affiliates of Owner, and
any new management agreements entered into between Manager and Owner in
accordance with that certain letter agreement, dated as of the date hereof,
between Manager and Westfield America, Inc. (formerly known as CenterMark
Properties, Inc.) ("WEA").
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"OWNER" means _____________, a ___________ corporation, and its
permitted successors or assigns hereunder. For purposes of granting any
approvals or consents under this Agreement with respect to the operation,
leasing or maintenance of the Property, Owner shall act through its Board of
Directors or through an executive committee of the Board of Directors.
"OWNER'S ACCOUNT" means the account established by Owner into which
Manager is to deposit all amounts collected by Manager under Section VI.A.
"PERSON" means an individual, partnership, joint venture, corporation,
trust, unincorporated association or other entity.
"PRIME RATE" means the rate of interest announced by Morgan Guaranty
Trust Company of New York or its successors, from time to time in its New York
City office as its "prime" rate, or if no such rate is announced, then the rate
charged to its best corporate customers for demand loans.
"PROPERTY" means the Land together with all of the improvements now or
hereafter erected thereon (including, without limitation, buildings, parking
structures, paved areas, landscaped areas, landscaping, sidewalks, bridges and
tunnels) commonly known as ___________ as it may be expanded or renovated from
time to time hereafter, together with all fixtures, machinery, equipment, and
other property located thereon belonging to or leased or licensed by or for
Owner and used in connection with the operation thereof.
"RELATED PERSON" means, with respect to any Person (the "SUBJECT
PERSON"), any other Person having any of the following relationships with the
Subject Person:
(i) any Affiliate of the Subject Person;
(ii) any other Person owning directly or indirectly more than
fifteen percent (15%) of the issued and outstanding stock of, or more than a
fifteen percent (15%) beneficial or voting interest in, the Subject Person; or
(iii) any other Person more than fifteen percent (15%) of the
issued and outstanding stock of which, or more than a fifteen percent (15%)
beneficial or voting interest in which, is owned directly or indirectly by the
Subject Person;
10
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"SMALL SHOP LEASE" means any Lease which both (i) covers a gross
leasable area at the Property which is twenty thousand (20,000) square feet or
less, and (ii) has a term, including renewal options (if any), less than or
equal to ten (10) years; provided, however that the term "Small Shop Lease"
expressly excludes all Temporary Leases.
"STANDARD FORM OF SHOP LEASE" means the standard form leasing
documents for Small Shop Leases and Large Shop Leases at the Property as
approved by Owner, which approval will not be unreasonably withheld by Owner, as
the same may be amended or restated from time to time in accordance with the
provisions of this Agreement.
"TEMPORARY LEASE" means any Lease of a temporary or seasonal nature,
having a term, including renewal options (if any) of less than one (1) year,
including without limitation, short-term concessions or license agreements and
cart or kiosk leases or licenses for less than one year.
ARTICLE II
----------
APPOINTMENT
-----------
Owner hereby appoints Manager to rent, lease, operate, manage and
direct the operation of the Property subject to the terms and conditions
hereinafter set forth. The appointment of Manager shall be exclusive to
Manager except to the extent that Manager otherwise agrees from time to time
in Manager's sole and absolute discretion. Manager agrees that during the
term of this Agreement it will not, directly or indirectly, act as the
property manager for any regional shopping center which directly competes
with the Property (a "Competing Mall"), PROVIDED that the foregoing
restriction shall not be deemed to be violated if Manager shall acquire,
either directly or indirectly, all or substantially all of the assets of, or
an interest in, an entity that does not have any ownership interest in
shopping center properties or power centers in the United States which is
engaged in the property management business and which manages, among other
properties, a shopping center which is a Competing Mall.
Owner and Manager acknowledge that Owner has engaged Developer as the
exclusive developer for the Property pursuant to the Development Framework
Agreement with respect to any expansion, redevelopment or refurbishment of the
Property (any such expansion, redevelopment or refurbishment being hereinafter
referred to as a "Project"). Owner and Manager further acknowledge that to the
extent Developer is providing leasing services with respect to the initial
leasing of any portion of the
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Project pursuant to a Leasing Agreement, Manager shall have no responsibility
hereunder for the initial leasing of such portion of the Project.
ARTICLE III
-----------
MANAGER'S DUTIES
----------------
A. OPERATING STANDARD; DUTIES. Manager shall exercise its powers and
perform its duties and obligations under this Agreement in a diligent manner,
and shall exercise professional competence in managing the Property at the
prevailing national standard of industry practice for properties of a similar
type and quality as the Property. Manager represents and warrants that it,
together with its Affiliates, has the skill and experience necessary to perform
its obligations in accordance with the terms of this Agreement. Owner
acknowledges that the prior management of the Property by Manager has met or
exceeded the standard set forth above. Without limiting the generality of the
foregoing, Manager shall perform the following duties, subject to the
limitations imposed by the Annual Plan and all other provisions of this
Agreement:
(1) The billing and collection of all amounts payable to Owner by
Occupants under the Leases and other amounts included in Gross Income and the
prompt deposit of all such amounts received by Manager in the Owner's Account;
(2) To the extent funds have been made available by Owner through
deposits into the Owner's Account, the payment of all Operating Expenses and
capital expenses of the Property;
(3) Subject to the Leasing Guidelines, the negotiation of Leases,
the administration and enforcement by commercially reasonable methods of all
Leases and all other service, maintenance and other agreements or contracts made
by or on behalf of Owner for the Property, and the performance of the
obligations specified in Article IV relating to the leasing of the Property;
(4) The selection, engagement, employment, payment, supervision,
direction and discharge of all Property employees reasonably necessary or
appropriate for the proper, safe and economic operation and maintenance of the
Property, in number and at wages in accordance with the Operating Budget, the
carrying of Worker's Compensation Insurance (and, when required by law,
compulsory Non-Occupational Disability Insurance) covering such employees, and
the use of reasonable care in the selection, supervision and discharge of such
employees. Manager shall use its
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diligent, good faith efforts to comply with all laws and regulations and
collective bargaining agreements, if any, affecting such employment. All
persons employed in connection with the operation and maintenance of the
Property shall be employees of Manager or its Affiliates or employees of
contractors providing contract services to the Property;
(5) The cleaning, maintenance, servicing and repair of the
Property (whether by employees of Manager or through supervision of
contractors), including all machinery, equipment and other items whether leased
or provided by Manager or provided by Owner for the operation of the Property,
in accordance with Article XI;
(6) The management and administration of the Marketing Fund and
the advertising, merchandising and promotion of the Property and the Occupants'
respective businesses in accordance with the Annual Plan and this Agreement or
as otherwise approved in writing by Owner;
(7) The provision to Owner of the financial, accounting and
reporting services relating to the Property specified in Article XII;
(8) The making of recommendations concerning the Property
(including, without limitation, as to the tenant mix, maintenance, refurbishment
of the Property and structural alterations or improvements to the Property) as
Owner may from time to time reasonably require;
(9) Preparing, maintaining and providing (at the request of
Owner) copies to Owner of all depreciation schedules for the machinery,
equipment and other property located at the Property;
(10) Notifying Owner in its quarterly report to the Board of
Directors of Owner of any material tax assessments, reassessments, or other
impositions relating to the Property or to Owner in its capacity as owner of the
Property received by or on behalf of Manager and the handling of any relevant
appeals at the request and cost of Owner;
(11) Attending, by telephone or, at the request of Owner, in
person, such meetings with any one or more of the representatives of Owner as
Owner may reasonably require (provided Manager receives reasonable notice
thereof) for the purposes of delivering Annual Plans, reports, financial
statements and other documents, making such recommendations or discussing such
aspects of the operation and
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management of the Property as Manager is required to provide under this
Agreement, provided that this provision will not be deemed to require Manager to
deliver Annual Plans, reports, financial statements or other documents at times
earlier than the times otherwise set forth herein;
(12) Formulating and, subject to the Annual Plan, implementing an
insurance program for the Property;
(13) The management, administration and coordination of all
design and construction associated with the maintenance, repair and/or leasing
of the Property including all tenant improvements to be constructed at the
Property, but excluding all initial construction and tenant improvements
associated with any expansion, redevelopment or refurbishment of the Property
(which will be covered in a separate Development Agreement), provided, however,
that Manager shall not be required to perform any actual design or construction
work, and provided further that with respect to tenant improvements, Manager
shall only be responsible for the approval, supervision and coordination of the
design of any Occupant's store to the extent contemplated in such Occupant's
Lease, including without limitation the design of such Occupant's store front
and the specifications of such Occupant's equipment;
(14) Keeping Owner reasonably informed through reports at regular
quarterly meetings of the Board of Directors of Owner with respect to any other
material matters relating to the management, leasing and operation of the
Property; and
(15) Performing all additional duties which Owner may reasonably
require Manager to perform from time to time which are (i) consistent with the
provisions of this Agreement, and (ii) generally performed by property managers
of properties of the type and quality as the Property.
B. INDEPENDENT CONTRACTOR; EMPLOYEES. In performing its duties
hereunder, Manager at all times shall be acting as an independent contractor
contracted by Owner (except where acting as agent for Owner as specifically
required pursuant to this Agreement) and all contractors or consultants engaged
or supervised by Manager shall be independent contractors or employees of
Manager. All Property employees shall be employed by Manager or its Affiliates
and Manager shall oversee such Property employees in the discharge of their
duties.
C. COMPLIANCE WITH REQUIREMENTS. Subject to the Annual Plan or as
otherwise approved or authorized in writing by Owner and Manager, Manager shall
manage, maintain, lease and operate the Property in compliance with (1) all
Legal
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Requirements concerning the Property; (2) the provisions of all mortgages,
notes, deeds of trust and any other instruments encumbering the Property,
provided that Manager shall not be obligated to comply with the terms of any
amendments or modifications of such mortgages, notes or deeds of trust unless
Owner has delivered copies to Manager of any of such amendments or modifications
which impose new or additional requirements or restrictions on Manager or the
leasing or operation of the Property; (3) all Insurance Requirements; (4) the
Leases; and (5) all covenants binding Manager under agreements or arrangements
made with third parties including, without limitation, contractors, consultants
and the lessors of any leased equipment or machinery, and, to the extent it is
in Manager's legal capacity to do so, Manager shall perform all obligations
binding Owner under agreements or arrangements made with third parties. If
Manager ascertains that the Property is not in compliance with any of the
foregoing items and such compliance is not contemplated by the Annual Plan,
Manager shall notify Owner in writing, and Owner shall instruct Manager in
writing as to how to proceed. To the extent that Manager complies with Owner's
instructions relating to Owner's, Manager's or the Property's compliance or
non-compliance with any of the foregoing items, Manager shall in no event be
deemed in breach of any provision of this Agreement, and Manager shall be fully
indemnified under the provisions of Section XVIII.O(2).
Notwithstanding the foregoing, Manager, with the prior written
approval of Owner, shall be entitled to contest in good faith any Legal
Requirement or Insurance Requirement provided that such contest is not
reasonably expected to result in the cancellation or interruption of insurance
coverage for the Property or subject Owner to any civil or criminal liability or
fines and is not reasonably expected to result in a breach, violation or
termination of any mortgage, Lease or other material contract or agreement
encumbering or relating to the Property. Manager's good faith noncompliance
with the applicable Legal Requirement or Insurance Requirement shall not be
deemed a default under this Agreement provided that Manager prosecutes such
contest in good faith and with due diligence to a final determination.
D. IMPLEMENTATION OF ANNUAL PLAN. Manager shall use its diligent good
faith efforts to implement the terms of each approved Annual Plan and shall
exercise control over and shall expend or otherwise transfer rents and other
sums received on behalf of Owner in accordance with the terms hereof. Manager
shall not take any actions which are inconsistent with the Annual Plan and are
not otherwise authorized in writing by Owner, PROVIDED that Manager may exceed
the annual Operating Budget with respect to the payment of Operating Expenses as
set forth in Article VIII.A.
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E. PROPERTY MANAGER. Manager shall retain the services of an
experienced project manager (as an employee of Manager) (the "PROPERTY
MANAGER"), at Owner's cost, to perform the on-site management functions
specified herein.
F. NO DEFAULT. Notwithstanding anything to the contrary in this
Agreement, except to the extent that the payment of additional monies is proven
by Owner to have been required as a direct result of Manager's gross negligence,
willful misconduct or fraud Manager shall not be required to expend money in
excess of that contained in the Owner's Account or otherwise made available by
Owner to be expended by Manager hereunder. Manager will not be in breach or
default of any obligation under this Agreement if, upon receipt of a timely
written request from Manager, Owner fails to advance funds as provided in
Article IX below, fails to make a decision, recommendation or request, fails to
give a direction, approval or consent, fails to execute any notice or document
required by Manager, or fails to make a demand or other communication in any
such case necessary for the performance by Manager of that obligation under this
Agreement.
G. POWERS. For the purposes of carrying out its duties referred to in
this Agreement, Manager is authorized from time to time during the continuance
of this Agreement:
(1) To enter upon the Property for the purposes of carrying out
the provisions of this Agreement;
(2) To negotiate Leases in Owner's name and implement rent
escalations, the terms of such Leases and rent escalations to be in accordance
with the Leasing Guidelines, PROVIDED that Manager is authorized to enter into
Leases having rent terms which do not vary by more than ten percent (10%) from
the terms of the Leasing Guidelines (except for Temporary Leases which will not
be covered by the Leasing Guidelines and may be negotiated by Manager on the
terms set forth in Article IV.C) and, to the extent it is in Manager's legal
capacity and commercially reasonable to do so, on Owner's behalf to fully
perform and exercise the rights of Owner under any such Leases;
(3) To execute in Owner's name all Temporary Leases, all Small
Shop Leases, all Large Shop Leases and all licenses or other occupancy
agreements negotiated for Common Areas, provided that Manager shall have
obtained Owner's prior written consent with respect to those Leases and
agreements requiring such consent pursuant to Article IV, and, for the purpose
only of such execution, Owner hereby appoints Manager as Owner's
attorney-in-fact;
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(4) As agent for Owner and without need for consent of Owner, to
institute, prosecute, defend, settle or otherwise deal with (i) any claim or
legal proceeding against Owner which is not covered by Owner's insurance or
Owner's self-insured retention, but is likely to be settled or otherwise
resolved at a total cost to Owner (excluding attorneys' fees and expenses but
including payments made to any claimant or potential claimant) that is equal to
or less than Fifty Thousand Dollars ($50,000), subject to annual increase on
each January 1 commencing on January 1, 1997 based on the percentage increase in
the Index during the preceding Fiscal Year, (ii) any collection or enforcement
action or eviction proceeding with respect to any Lease other than an Anchor
Lease or a Large Shop Lease, and (iii) any claim, lawsuit or proceeding against
Owner which is (A) covered by the Owner's self insured retention, to the extent
that payments made from such self-insured retention are recoverable from
Occupants, and in the event that the entire amount of such self-insured
retention set forth in the Operating Budget for any Fiscal Year has been
exhausted, only if such claim, lawsuit or proceeding is settled or resolved at a
cost to Owner (excluding attorneys' fees) of less than Fifty Thousand Dollars
($50,000), subject to annual increase on each January 1 commencing on January 1,
1997 based on the percentage increase in the Index during the preceding Fiscal
Year, or (B) covered by insurance and is being defended, pursued or settled by
Owner's insurance company or adjuster; and, subject to the prior written consent
of Owner, to commence, prosecute or defend or otherwise deal with any other
legal or other action relating to any other matter concerning the Property;
(5) As agent for Owner, to accept and receive all Gross Income
for deposit into the Owner's Account;
(6) To advertise, merchandise and promote the Property in
accordance with the Annual Plan or as otherwise approved in writing by Owner;
(7) To select, retain, engage, employ, replace, supervise,
dismiss, or otherwise deal with any contractors or consultants as may be
reasonably necessary or desirable for the efficient management and operation of
the Property by Manager, PROVIDED that such contractor is not a Related Person
of Manager and the applicable contract or agreement shall not be for a term
longer than one (1) year unless such contract may be terminated on no more than
thirty (30) days' notice without charge or penalty; and
(8) Subject to the Annual Plan or as otherwise authorized or
approved in writing by Owner, to do and perform in respect of the Property all
things reasonably necessary or appropriate on the part of Manager in compliance
with the
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covenants and obligations of Manager herein contained to fully and effectively
manage the Property and otherwise perform its obligations hereunder.
ARTICLE IV
----------
LEASING THE PROPERTY
--------------------
A. LEASING OBLIGATIONS. Manager shall use its diligent, good faith
efforts during the term of this Agreement to lease the Property in accordance
with the Annual Plan. In connection therewith, Manager shall:
(1) assist in the preparation of and make recommendations to
Owner as to variations to the Standard Form of Shop Lease to be used at the
Property from time to time;
(2) use the Standard Form of Shop Lease as the basis for the
negotiation of all Small Shop Leases and Large Shop Leases;
(3) subject to the terms of the Leasing Guidelines, negotiate the
terms and conditions of all Leases, including, without limitation, all
extensions, renewals, amendments and modifications thereto, in accordance with
the Annual Plan, with such immaterial variances from the Standard Form of Shop
Lease as may be reasonably required, unless otherwise authorized in writing by
Owner; PROVIDED that Manager may negotiate terms and conditions for Leases which
vary from the rent terms set forth in the Leasing Guidelines by up to ten
percent (10%);
(4) arrange for the execution of Leases and all amendments and
modifications thereto by all parties thereto, and distribute copies thereof in
accordance with this Agreement;
(5) locate and endeavor to secure, in accordance with the Annual
Plan, suitable Occupants for all areas of the Property that may be vacant from
time to time or are to be come vacant in the near future and are reasonably
available for occupation or use, including, to the extent applicable, the Common
Areas;
(6) review the general suitability of prospective Occupants and,
to the extent Manager may deem it reasonably necessary or appropriate, seek
references from prospective Occupants and conduct such other investigations as
will establish
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<PAGE>
whether or not the prospective Occupant is capable of performing all obligations
which the prospective Occupant would be required to perform under its Lease;
(7) coordinate the activities of management, leasing, design and
engineering personnel and/or consultants to implement the leasing program for
the Property; and
(8) perform such other leasing activities as may be required by
and consistent with the prevailing national standard for properties of a similar
type and quality as the Property.
B. BROKERS. Manager may engage and cooperate with brokers, as may be
reasonably necessary or appropriate, so as to secure prospective tenants for the
Property. Unless otherwise specifically contemplated under the Annual Plan or,
unless otherwise approved in writing by Owner, Manager shall be responsible for
the payment of any commissions payable in connection with procuring tenants for
the Property and Manager does hereby indemnify and hold Owner harmless from and
against any and all loss, cost, liability or damage (including attorneys' fees
and expenses incurred in good faith and court costs), incurred by Owner in
connection with any claim for leasing commissions in connection with the
leasing of the Property after the date hereof.
C. TEMPORARY LEASES. If the terms and conditions of any Temporary
Lease are consistent with the budget for Temporary Leases (subject to a variance
of up to ten percent (10%) on the rent terms) and are on the standard form of
lease for Temporary Leases (without material modification thereto) or have
otherwise been approved in writing by Owner, Manager is authorized to execute
such Temporary Leases on behalf of Owner, without seeking Owner's consent
thereto. Manager shall deliver a conformed copy of any such Temporary Lease to
Owner promptly after Owner's request therefor.
D. SMALL SHOP LEASES. If the terms and conditions of any Small Shop
Lease are consistent with the Annual Plan and the Leasing Guidelines (subject to
a variance of up to ten percent (10%) on the rent terms) or have otherwise been
approved in writing by Owner, Manager is authorized to execute such Small Shop
Lease on behalf of Owner, without seeking Owner's consent thereto. Manager
shall deliver a conformed copy of each such Small Shop Lease to Owner within ten
(10) Business Days after Manager's execution thereof.
E. LARGE SHOP LEASES AND NONCONFORMING SMALL SHOP AND TEMPORARY
LEASES. Manager shall obtain the written consent of Owner to the terms and
conditions of any Large Shop Lease or any Small Shop or Temporary Lease which
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Manager is not authorized to execute on behalf of Owner pursuant to the terms
hereof, by delivering such Lease to Owner together with all reasonably relevant
information. Owner shall grant or deny (with specificity) its approval of the
terms and conditions of any such Lease within ten (10) Business Days after
Owner's receipt of such Lease and relevant information. In the event that Owner
shall fail to notify Manager (by telephone, facsimile or otherwise) of its
approval or rejection within such ten (10) Business Day period, Owner shall be
deemed to have approved such Lease. Upon Owner's approval or deemed approval of
any such Lease, Manager shall be authorized to execute such Lease on behalf of
Owner, and shall deliver a conformed copy thereof to Owner within ten (10)
Business Days after Manager's execution of such Lease.
F. ANCHOR LEASES. Manager shall obtain the written consent of Owner
to the terms and conditions of any Anchor Lease by delivering such Anchor Lease
to Owner together with all reasonably relevant information. Owner shall grant
or deny (with specificity) its approval of the terms and conditions of any
Anchor Lease within twenty-one (21) days after Owner's receipt of such Lease and
relevant information. Manager will deliver each fully negotiated and approved
Anchor Lease to Owner for Owner's execution thereof, and provided that the terms
of any such Anchor Lease are consistent with the terms approved in writing by
Owner, Owner shall execute any such Anchor Lease within fifteen (15) Business
Days after Owner's receipt thereof.
G. LEASING FEE. Except for any amounts to be reimbursed to Manager in
accordance with the terms hereof, Manager shall be entitled to receive fees and
commissions in connection with the negotiation and execution or administration
of Leases in accordance with Section XIII.C as its sole compensation for the
leasing services contemplated by this Article IV.
H. OCCUPANT IMPROVEMENTS. Manager shall review, approve and
coordinate the design of the Occupants' stores to the extent contemplated in the
Occupants' respective Leases, including without limitation obtaining and
reviewing design drawings for Occupants' store fronts and specifications for
Occupants' equipment, and monitoring the progress of Occupants' construction of
standard tenant improvements at the Property.
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ARTICLE V
---------
TENANT RELATIONS
----------------
A. REASONABLE EFFORTS. Manager shall exercise its diligent good faith
efforts consistent with Article IV to maintain good tenant relations with
Occupants of the Property in a reasonable manner.
B. PROCEDURES. Manager shall establish procedures for the prompt
receipt, investigation and handling of Occupant requests and complaints, and
shall request that any and all allegations by Occupants of defaults by Owner or
Manager under the Leases be made in writing.
C. ENFORCEMENT OF LEASES. Manager shall establish procedures
consistent with this Agreement for the collection and receipt of rent and all
other charges due Owner under and in accordance with the Leases, including
procedures for advising Occupants of overdue rent. To the extent commercially
reasonable, Manager shall, on behalf of Owner:
(1) subject to the limitations set forth in Section III.G(4),
engage attorneys experienced in the field of landlord-tenant relations to
prosecute defaults under any of the Leases;
(2) take such other action as may be directed by Owner to enforce
the Leases; and
(3) hire auditors to audit Occupants in order to collect
applicable sales information, and charge the reasonable costs of such auditors
to the Property.
ARTICLE VI
----------
RECEIPTS
--------
A. CASH RECEIPTS. Except as provided in Section B of this Article,
all rent and other monies with respect to the Property received by Manager from
whatever source (the "CASH RECEIPTS") shall promptly be deposited by Manager
into the Owner's Account.
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B. SECURITY DEPOSIT ACCOUNT. Manager shall deposit into a segregated
interest bearing account (hereinafter referred to as the "SECURITY DEPOSIT
ACCOUNT"), prior to the close of business of the third succeeding Business Day
after receipt by Manager, all security deposits. If any Lease requires the
security deposit or any other payment to be in an interest bearing account,
Manager shall so comply. Manager shall hold all security deposits received in a
form other than cash (e.g., letters of credit or certificates of deposit) in a
safe and secure location. Manager shall from time to time withdraw funds from
any Security Deposit Account (and convert any non-cash security deposits to
cash) and deposit the same in the Owner's Account in accordance with the terms
of the Leases. Manager shall not commingle security deposits with any funds or
other property of Manager.
ARTICLE VII
-----------
ANNUAL PLAN
-----------
A. INITIAL ANNUAL PLAN. Owner and Manager have agreed upon and
adopted an initial Annual Plan for the remainder of the 1996 Fiscal Year.
B. SUBMISSION OF ANNUAL PLANS. At least thirty (30) days prior to the
beginning of each Fiscal Year Manager shall deliver to Owner for its approval an
Annual Plan for the succeeding Fiscal Year which shall incorporate:
(1) an Operating Budget for that Fiscal Year setting forth, with
reasonable specificity, the estimated Gross Income and Operating Expenses for
the Property and showing ongoing expenses and extraordinary expenses and the
approximate dates upon which funds therefor will be needed;
(2) a capital expenditures budget for that Fiscal Year;
(3) the projected timing and estimated amount(s) of any required
capital advances by Owner for that Fiscal Year;
(4) Manager's marketing and leasing plans for the Property for
the following Fiscal Year, and any modifications to the Leasing Guidelines, if
any, proposed by Manager;
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(5) the type and coverage levels and premiums of all insurance
for the Property to be maintained during the subsequent Fiscal Year if not
covered by Owner's or its Affiliate's corporate leasing program;
(6) a summary of all agreements relating to the Property between
Manager and any Related Persons of Manager; and
(7) such other matters as Owner may reasonably require to be
included in such Annual Plan from time to time.
The Annual Plan shall be in form and substance reasonably acceptable to Owner,
and shall be submitted together with a report containing recommendations for the
subsequent Fiscal Year in relation to any matters deemed appropriate by Manager
or reasonably requested by Owner.
C. OWNER'S APPROVAL. Owner shall approve or disapprove Manager's
proposed Annual Plan within thirty (30) days after receipt thereof. Owner shall
specify the reasons for any disapproval. Owner's failure to respond within such
thirty (30)-day period shall be deemed to be an approval of the Annual Plan as
submitted. Upon Manager's timely receipt from Owner of a notice of disapproval
or a request for supplemental information regarding the proposed Annual Plan or
any component thereof, Manager shall diligently undertake to modify the
disapproved matters or to provide Owner with such requested supplemental
information. Owner and Manager shall act in good faith in order to agree upon
each Annual Plan and provide for the continued orderly operation of the
Property. Pending the resolution of any such dispute, the submitted Annual Plan
shall control with the sole exception of those specific items not approved by
Owner, and the Annual Plan for the preceding Fiscal Year (exclusive of any line
items relating to expenditures for specified capital works which shall be
established by Owner) shall control with respect to those specific items not
approved by Owner; provided, however, that unless Owner and Manager otherwise
agree:
(1) individual unapproved line items may be increased to such
amount as may be necessary for Non-Discretionary Expenses and any Operating
Expenses incurred in connection with any Emergency;
(2) any other unapproved line item relating to Operating Expenses
payable to third parties who are not Related Persons to Manager, or pursuant to
existing contracts with third parties who are Related Persons to Manager which
are known at that time to have increased or decreased in cost shall be increased
or decreased, as applicable, to the then current level as of the end of such
prior Fiscal Year;
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(3) any line items relating to expenditures for capital works or
other capital expenditure in the Annual Plan for the preceding Fiscal Year shall
be disregarded except where the capital expenditure approved for the preceding
Fiscal Year remains to be paid in accordance with the approval;
(4) with respect to each other unapproved line item of the
submitted Operating Budget, the amount for such line item set forth in the
Operating Budget for the preceding Fiscal year shall be increased by five
percent (5%).
D. MISCELLANEOUS PROVISIONS. Manager shall operate the Property
in accordance with the applicable Operating Budget with such variances as may be
permitted pursuant to Section VIII.A, or as otherwise expressly provided by this
Agreement. Manager may from time to time recommend to Owner proposed amendments
to the then current Annual Plan or Operating Budget, and upon Owner's written
approval thereof, Manager shall operate the Property in accordance with the
Annual Plan or Operating Budget as so amended. Any inconsistencies between the
terms and conditions of this Agreement and the provisions of any Annual Plan
shall be governed by the provisions of the Annual Plan. Manager shall not be
deemed to be in breach of its obligation to comply with the operating standards
provided in this Agreement to the extent that the failure to comply with such
standards results from insufficient funds due to Owner's refusal to approve any
element of an Annual Plan proposed by Manager, or insufficient funds being on
deposit in the Owner's Account due to withdrawals by Owner, provided that the
foregoing shall not be deemed to relieve Manager from liability for such
obligations if the need for such funds resulted from Manager's gross negligence,
willful misconduct or fraud.
ARTICLE VIII
------------
DISBURSEMENTS
-------------
A. PAYMENT OF OPERATING EXPENSES. Subject to the provisions of
Article IX, Manager shall pay, prior to delinquency, during each month of the
term hereof from funds on deposit in the Owner's Account as provided in
Section B of this Article, all Operating Expenses due and payable in accordance
with the Operating Budget without further consent of Owner, and such further
sums as Owner may have directed in writing Manager to pay. In addition, Manager
may pay the following Operating Expenses without obtaining Owner's consent
whether or not the amount thereof is in excess of the respective amounts set
forth therefor in the Operating Budget: (1) all Non-Discretionary Expenses, (2)
Emergency expenditures in accordance with Section XI.D,
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<PAGE>
and (3) Discretionary Expenses exceeding any individual line item in the
Operating Budget, provided that the aggregate amount of such excess
Discretionary Expenses in any Fiscal Year, exclusive of any amounts expended
pursuant to the foregoing clauses (1) or (2), shall not exceed five percent (5%)
of the aggregate amount of all Discretionary Expenses set forth in the Operating
Budget for such Fiscal Year, without Owner's prior written consent.
B. CHECKS. Manager shall designate one or more officers or employees
to sign checks for the payment of Operating Expenses from the Owner's Account.
Except for the drawing of certain checks on the Owner's Account as expressly
authorized herein, Manager shall not have any authority to withdraw funds from,
or otherwise give instructions relating to, the Owner's Account. Owner shall
designate one or more representatives of Owner as signatories on the Owner's
Account which representatives shall have the right to sign checks, draw funds
from and otherwise give instructions relating to the Owner's Account, PROVIDED
that Owner shall not withdraw funds from the Owner's Account which would, in the
reasonable judgment of Manager, be necessary to be retained to ensure that all
Operating Expenses and capital expenses can be paid from time to time as and
when they become due.
ARTICLE IX
----------
ADVANCES FOR OPERATING EXPENSES
-------------------------------
A. NOTIFICATION. Pursuant to Section XII.A(16), Manager shall submit
to Owner, on a monthly basis, an estimate of the Operating Expenses and other
items required to be paid by Manager hereunder which will become due during the
ensuing calendar month and the dates on which such amounts will be payable. In
addition, if, during any month within the term of this Agreement, Manager
determines that the balance in the Owner's Account is or will be insufficient to
pay Operating Expenses and any other items required to be paid by Manager
hereunder, Manager shall promptly notify Owner of that event and of the amount
of the deficiency, actual or anticipated. Such notice shall be accompanied by
an explanation for any variance from the Operating Budget, and, unless any such
variance is the result solely of a change of not more than thirty (30) days in
the timing of payment of certain Operating Expenses, or is the result of Owner's
withdrawal of funds from the Owner's Account, then as promptly as practicable
thereafter Manager shall deliver to Owner for Owner's reasonable approval a
revised Operating Budget for the remainder of the applicable Fiscal Year.
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B. OWNER'S ADVANCES. Promptly after receipt of the Manager's estimate
under Section A of this Article or upon request by Manager, Owner may advance or
cause to be advanced to the Owner's Account such funds as are necessary to pay
Operating Expenses as they become due. Manager's obligation to pay the
obligations of the Property and Owner under this Agreement is conditioned upon
the availability of sufficient funds (from a Person other than Manager) to
perform such obligation, and, Manager shall not be deemed in default of any
provision of this Agreement for its failure to pay or discharge any Operating
Expenses or other Property expenses to the extent the balance of the Owner's
Account is insufficient to pay the same.
C. INDEMNIFICATION. Owner hereby agrees to indemnify, defend and
protect Manager and to hold Manager harmless from and against any and all causes
of action, losses, costs, damages, expenses or liabilities (including reasonable
attorneys' fees and expenses incurred in good faith and court costs) suffered or
incurred by Manager as a result of Owner's failure to advance funds to cover a
deficiency in the Owner's Account if:
(1) the expense relates solely to the Property;
(2) the deficiency in the Owner's Account has not been caused by
Manager's gross negligence, willful misconduct or fraud; and
(3) Manager promptly notified Owner of the existence and the
amount of the deficiency in accordance with Section A of this Article.
ARTICLE X
---------
FIDELITY INSURANCE COVERAGE
---------------------------
Manager and all officers and employees of Manager who may handle or
are responsible for the handling of receipts or disbursements shall be covered
by insurance maintained by Manager, at its sole cost and expense, in an amount
not less than One Million Dollars ($1,000,000) for employee dishonesty coverage
against any and all loss, theft, embezzlement or other fraudulent acts on the
part of Manager or Manager's employees, and not less than One Hundred Thousand
Dollars ($100,000) for money and securities on and off the premises, transit and
depositors forgery coverage, indemnifying Owner, as obligees, against any and
all loss, theft, embezzlement or other fraudulent acts on the part of Manager or
Manager's employees.
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ARTICLE XI
----------
MAINTENANCE OF THE PROPERTY
---------------------------
A. STANDARD. Manager shall cause the Property and all buildings,
improvements and systems comprising same to be maintained at a standard not less
than the prevailing national standard of industry practice for properties of a
similar type and quality as the Property. In connection therewith, Manager
shall use its diligent good faith efforts to contract in the name and at the
expense of Owner, for all services and utilities necessary for the efficient
maintenance and operation of the Property, as contemplated by the Annual Plan.
Manager shall not enter into any contracts on behalf of Owner without the prior
written consent of Owner unless (1) the payments required to be made by Manager
and/or Owner under such contract, in the aggregate, are contemplated by the
applicable Annual Plan or will be less than or equal to One Hundred Thousand
Dollars ($100,000) per Fiscal Year, subject to annual increase on each January 1
commencing on January 1, 1997 based on the percentage increase in the Index
during the preceding Fiscal Year, and such expense is included within a line
item in the Operating Budget, (2) such contract is for a term no longer than one
year unless such contract may be terminated on no more than thirty (30) days'
notice without charge or penalty, and (3) such contract is not with a Related
Person to Manager, in which event Manager shall be entitled to enter into such
contract without Owner's consent. All work for the maintenance and repair of
the Property shall be performed by independent contractors or affiliates of
Manager, or by Property employees, except to the extent required by Manager's
gross negligence, willful misconduct or fraud.
B. SUPPLIES AND EQUIPMENT. Manager shall, at Owner's expense,
purchase such supplies, equipment and services as are necessary for the
maintenance and operation of the Property; PROVIDED, HOWEVER, that except as
otherwise expressly permitted hereunder no disbursement for this purpose shall
exceed the amount set forth in the Operating Budget (subject to variances
permitted by Section VIII.A) and no such disbursement shall be made unless the
necessary funds are available to Manager from the Owner's Account.
C. ENFORCEMENT OF CONTRACTS. In connection with the maintenance and
operation of the Property, Manager shall take all commercially reasonable steps,
including legal action when authorized in writing by Owner, to enforce all
maintenance, service and supply contracts, guarantees, warranties, bonds and
other third party contractual undertakings, if any.
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D. EMERGENCIES. In the event of an Emergency, Manager may make such
repairs to the Property and take such other actions as Manager may deem
reasonably necessary irrespective of any cost limitations or other restrictions
imposed by this Agreement, provided, however, that Manager will use its diligent
good faith efforts to notify Owner prior to making any such repair or taking any
such action and shall not take any such action if Owner has otherwise directed
Manager in writing following receipt of such notification. Promptly after an
Emergency, or after knowledge of any conditions which require maintenance or
repair work at a projected cost in excess of the annual amounts authorized in
the Annual Plan, Manager shall deliver a notice thereof to Owner together with
its recommendations with regard thereto.
ARTICLE XII
-----------
RECORDS AND REPORTS
-------------------
A. MONTHLY REPORTS. Manager shall maintain at its offices and deliver
to Owner at Owner's request a report in form reasonably acceptable to Owner
containing the following information with respect to the Property within thirty
(30) days after the end of each calendar month (or within thirty (30) days after
the end of such other period as may be agreed between the parties) (each such
month or other period being referred to herein as a "PERIOD"):
(1) An itemized statement of Cash Receipts for the Period and
cumulatively for the Fiscal Year to date and the amount of all deposits into the
Owner's Account for the Period and cumulatively for the Fiscal Year to date;
(2) An itemized statement of capital receipts for the Period and
cumulatively for the Fiscal Year to date;
(3) An itemized statement showing the Operating Expenses for the
Period and the cumulative Operating Expenses for the Fiscal Year to date;
(4) An itemized statement showing the capital expenditures and
significant maintenance items of a capital nature for the Period and
cumulatively for the Fiscal Year to date;
(5) A list of debtors, aging such debtors as at the end of the
Period and specifying the source of the debt;
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(6) To the extent such information is available to Manager, a
reconciliation statement for the Period of the Owner's Account and any other
account opened by the Manager for the purposes of this Agreement or maintained
by the Manager in the name of or on behalf of Owner;
(7) A statement of net operating income for the Period and
cumulatively for the Fiscal Year to date;
(8) A statement of variations between the Operating Budget and
the net operating income for the Period and cumulatively for the Fiscal Year to
date;
(9) A statement of variations between the capital budget and
capital expenditures for the Period and cumulatively for the Fiscal Year to
date;
(10) A leasing status report for all Occupants containing a rent
roll, a statement of vacancies in the Property at the end of the Period (showing
the rental value of the premises and the status of any negotiations with
potential Occupants) and any new or renewed Leases executed, pending or under
negotiation and highlighting all changes in the status of any Leases since the
last such monthly report, PROVIDED, HOWEVER, that with respect to Temporary
Leases, Manager need provide in its monthly report only aggregate amounts for
income and expenses and delineate any in-line space occupied under any Temporary
Leases;
(11) Details of rent and fee reviews negotiated during the Period
under all Leases other than Temporary Leases;
(12) A statement of the respective sales figures achieved by each
Occupant (except for Occupants under Temporary Leases) during the Period and
during the current Fiscal Year to date, including comparisons with the same
period in the previous Fiscal Year; and, to the extent that any Occupants are
required for that Period to, and in fact do, deliver audited statements under
their Leases or Manager has carried out an audit as permitted under such Leases,
an audited statement of such Occupants' respective sales figures;
(13) A statement containing full details of any Emergency
occurring during the Period including details of the action taken by Manager
under Article XI and an itemized schedule of costs incurred by Manager in
respect of the Emergency;
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(14) A management report summarizing significant events or
activities affecting the Property which occurred during the Period or which are
likely to occur in subsequent months;
(15) An estimate of any Operating Expenses and other items
required to be paid by Manager hereunder becoming due during the ensuing month
and the dates on which such amounts will become due;
(16) For every three-month period, a report of the amount spent
on marketing, advertising and promotion of the Property and Occupants'
respective businesses in the immediately preceding three-month period; and
(17) Any other information or statements reasonably requested by
Owner from time to time.
B. FINANCIAL STATEMENTS. (1) Manager shall maintain or cause to be
maintained accurate and complete financial accounts (including the appropriate
ledgers and journals) and supporting documents (including invoices and receipts)
for the Property showing assets, liabilities, income, operations, transactions
and the financial position of the Property to enable the financial statements
referred to in Section B(2) of this Article to be properly and efficiently
prepared (including, without limitation, by maintaining proper computer programs
and systems), and must keep "hard" copies of such financial accounts and
supporting documents at its principal office, or otherwise ensure that such
copies are readily available, for at least seven (7) years. Owner acknowledges
that (unless Owner shall have contributed to the cost of acquiring or developing
such software) the computer software maintained by Manager for the purposes of
this Section B belongs to Manager if the software is used by Manager or Related
Persons in connection with other shopping centers or assets.
(2) Manager shall deliver to Owner, within thirty (30) days after
the end of each fiscal quarter, except for the last quarter of any Fiscal Year
in which case the applicable period shall be sixty (60) days after the end of
such Fiscal Year:
(i) for the periods ending March 31, June 30 and September 30 in
the relevant Fiscal Year, unaudited financial statements for the Property for
the respective periods and for the Fiscal Year to date; and
(ii) for the period ending December 31, in the relevant Fiscal
Year, unaudited financial statements for the Property for the respective period
and for the Fiscal Year to date,
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in each case including, without limitation, a profit and loss statement, a
balance sheet and reconciliations for the Owner's Account and any other account
operated by Manager for the purposes of this Agreement.
(3) The financial reports delivered pursuant to Section B(2) of
this Article shall be accompanied by:
(i) a revised projection for the balance of the Fiscal Year
comparing the Property's position with the Annual Plan, taking into account the
actual Gross Income, Operating Expenses and capital expenses received from or
incurred for the Property to the relevant date and of the estimated sums for the
balance of the Fiscal Year of anticipated Operating Expenses, capital expenses,
Gross Income and capital receipts, together with an explanation of material
variances from the Annual Plan;
(ii) a revised statement of anticipated events or activities
affecting the Property which are expected to take place;
(iii) such other information, including, without limitation,
such reports as may be required by any lender or mortgagee of Owner, as Owner
may reasonably request in good faith concerning the Property; and
(iv) for the period ending December 31, in each Fiscal Year
only, an inventory of all equipment, machinery and other property owned by Owner
showing their current depreciated values as at December 31, of the relevant
Fiscal Year for tax purposes.
(4) All financial reports prepared pursuant to this Article
shall be prepared on a basis of presentation as agreed upon by Owner and Manager
from time to time.
C. RECORDS. (1) Manager shall maintain proper and sufficient
management accounts and records for the Property to enable Manager to
efficiently perform its obligations under this Agreement and to enable Owner to
promptly obtain any information concerning the Property required by Owner, and
Manager shall keep such management accounts and records at the Property or
another location in the continental United States reasonably approved by Owner
for at least seven (7) years. All records maintained by Manager pursuant to
this Agreement shall be the property of Owner and shall be delivered to Owner
upon the termination of this Agreement or, at Owner's request, prior to disposal
by Manager. Manager shall maintain files with the
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originals, or if the originals have been delivered to Owner, copies of all
Leases and other material contracts and agreements relating to the Property.
(2) Without limiting Section C(1) above, Manager shall keep or
cause to be kept the following records with respect to the Property:
(i) a rent roll of Occupants containing all relevant information
in relation to each such Occupant;
(ii) a record of all material contracts or other material
agreements made with contractors or consultants containing details of the
essential terms of such contracts or arrangements;
(iii) a register of depreciable improvements and equipment
showing the cost, date of purchase and current depreciated value of each item
shown in the books of account kept by Manager for Owner;
(iv) a record of all insurance claims pending, current or
contemplated in respect of any insured risk incurred as a consequence of the
ownership, use, operation or occupation of the Property made or managed by
Manager on behalf of Owner showing the status of each claim (a loss run prepared
by a third party insurance adjustor will satisfy this requirement);
(v) an updated record of the total benefits and entitlements of
all Property employees; and
(vi) a register of all complaints received concerning the
Property from all Persons including, without limitation, Occupants, customers,
visitors, authorities, and neighboring residents, owners and occupiers, and the
responses made thereto, except those complaints which, in Manager's reasonable
opinion, do not require further action.
D. PRODUCTION OF RECORDS AND INFORMATION. Subject to all other
provisions of this Agreement, Manager shall:
(1) if requested by Owner produce such financial accounts, books
of account, records or information in relation to the Property to any one or
more of Owner's appraisers, accountants, lenders or other agents as Owner may
reasonably require and take or permit those Persons to take photocopies of the
books of account and records or information at the expense of such Persons;
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(2) if requested by Owner, permit Owner or its agents to carry
out an independent audit or inspection of Manager's books of accounts, records
or information for the Property or Owner at Owner's cost, unless the amount of
Gross Income or total Operating Expenses for any Fiscal Year as determined by
any such audit or inspection differs by more than five percent (5%) from the
amount of Gross Income or total Operating Expenses for such Fiscal Year recorded
in Manager's books and records, in which case Manager shall be responsible for
the cost of such audit or inspection; and
(3) from time to time, as may be reasonably appropriate in order
to give Owner time to make any necessary or appropriate decisions in response
thereto, provide information and recommendations to Owner as to:
(i) market conditions and trends affecting the Property;
(ii) changes or proposed changes to Legal Requirements affecting
the Property (including, without limitation, reassessments carried out by any
responsible authority) and any changes or proposed changes to practices or
procedures adopted by a majority of property owners or managers or both
concerning the prevailing national standard of industry practice with respect to
the management, operation and leasing of properties of a type and quality
similar to the Property of which Manager is aware;
(iii) any proposed or recommended amendments to the Standard
Form of Shop Lease or other standard documents for the Property, the rules for
the Property or the memorandum or articles of association of any committee,
merchants association or similar body appointed to operate and administer the
Media Fund;
(iv) any improvements which may be made to the Property, this
Agreement, the procedures employed by Manager for carrying out its obligations
under this Agreement, the Operating Budget, the capital budget or any other
matter to improve the value, economical operation and efficiency or appearance
of the Property;
(v) the occupancy mix within the Property;
(vi) the type of insurance maintained for the Property, the
coverage level of insurance under any policy effected for the Property and
alterations to the terms of any insurance policy held by or on behalf of Owner
for the Property; and
(vii) any other matters which should be disclosed to Owner in
the proper performance of its obligations under this Agreement or which may be
reasonably requested by Owner from time to time, including, without limitation,
any additional
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information or financial reports and statements that Owner may reasonably
require to provide to its lenders, bankers, partners, shareholders, joint
venturers or any similar Person, PROVIDED that Owner shall be responsible for
any additional costs of Manager in providing such additional information or
reports.
E. TAX RETURNS. Within ninety (90) days after the end of each Fiscal
Year, Manager will provide the information relating to the Property necessary to
complete the tax returns of Owner and will cooperate with Owner and its
attorneys, accountants and tax advisers with respect to the completion thereof
in good faith.
F. GENERAL QUALIFICATIONS. Owner acknowledges that Manager and its
Affiliates manage shopping centers other than the Property on behalf of
proprietors other than Owner (collectively, "OTHER MANAGEMENT ACTIVITIES").
Owner further acknowledges that:
(1) in order to undertake effectively the Other Management
Activities in accordance with their respective obligations under agreements
relating to those Other Management Activities, Manager and Related Persons
employ reasonable standardized and uniform information and accounting procedures
and systems (collectively, the "MANAGEMENT INFORMATION SYSTEMS"); and
(2) the obligations of Manager under this Agreement to provide
information (I.E., additional information that is not specifically described in
this Agreement and which is requested by Owner pursuant to this Article XII,
pertaining to the management and operations of the Property (collectively, "
OWNER'S ADDITIONAL INFORMATION REQUIREMENTS")) are not intended to operate in
such a way as to cause unreasonable disruption to the Management Information
Systems or to require Manager to incur unreasonable costs and expenses in
obtaining and adapting the Management Information Systems in order to provide
Owner's Additional Information Requirements. Notwithstanding the foregoing, and
any other provisions of this Agreement, unless any such requested information is
Confidential Information as defined below, Manager will comply with Owner's
Additional Information Requirements and will supply the information requested;
PROVIDED, however, that Owner will reimburse Manager for the reasonable direct
additional costs that Manager demonstrates Manager or any Affiliate incurred in
complying with such request, if it is not common practice for managers of
regional malls of a kind similar to the Property to provide the information
requested pursuant to the Owner's Additional Information Requirements.
Notwithstanding anything to the contrary contained in this Agreement,
in no event shall Manager be obligated to provide to Owner any information,
document or
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report which (i) is prepared for the purposes of, or any minutes of proceedings
of, the board of directors of Manager or any Affiliate of Manager, (ii) directly
and primarily relates to commercially confidential information concerning other
shopping centers managed by any Affiliates of Manager, or (iii) is prepared for
the direct and primary purposes of, or constitutes a report to the Westfield
Finance and Management Committee or other corporate management committee
performing similar functions (collectively, "CONFIDENTIAL INFORMATION").
Notwithstanding anything to the contrary contained herein, Owner shall
in no event acquire any rights with respect to Manager's Management Information
Systems or Manager's plans, programs or processes for the management and
operation of the Property.
ARTICLE XIII
------------
COSTS AND EXPENSES - COMPENSATION
---------------------------------
A. MANAGEMENT FEE. Manager shall be entitled to a management and
leasing fee (the "MANAGEMENT FEE") for rendering the services herein required
during the term of this Agreement equal to five percent (5.0%) of all minimum,
fixed and percentage rent (including without limitation (1) proceeds from any
litigation wherein damages equivalent to or based upon rent payable to Owner
from a defaulted Occupant are recovered, exclusive of interest, (2) all security
deposits which have been applied to rent payable to Owner, and (3) all proceeds
from loss of rents insurance maintained by Owner relating to the Property but
excluding income from specialty leasing which is paid to Owner on a net basis)
under all Leases at the Property during each Fiscal Year (or the pro rata
portion of such amounts for any partial Fiscal Year during the term of this
Agreement). Subject to adjustment as hereinafter provided, such fee shall be
payable monthly by Owner in arrears at the end of each month during the term of
this Agreement based on the minimum, fixed and percentage rent for such month as
shown in the most recent leasing status report delivered pursuant to
Article XII.A(10). Manager is hereby authorized to pay to itself on account of
the Management Fee each such monthly installment from the Owner's Account. The
Management Fee shall be adjusted on the following basis so that the aggregate
Management Fee equals the amount set forth in this Section A: (1) monthly on an
interim basis as soon as practicable after Manager has delivered to Owner the
financial statements specified in Section XII.A for such month, (2) quarterly on
an interim basis as soon as is practicable after the delivery to Owner of the
quarterly financial statements specified in Section XII.B(2)(i), and (3)
annually on a final basis as soon as is practicable after the delivery to Owner
of the annual financial
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statements specified in Section XII.B(2)(ii). Promptly after each such
adjustment, Owner or Manager, as the case may be, shall pay to the other the
amount of the applicable shortfall or overpayment of the Management Fee as
determined by such adjustment. In the event that there are insufficient funds
in the Owner's Account to pay the Management Fee due for any month during the
term of this Agreement, then if Owner does not pay the amount of such Management
Fee within ten (10) Business Days after receipt of notice of such insufficiency,
such unpaid Management Fee shall bear interest at a rate equal to the lesser of
(1) the Prime Rate plus two percent (2%), compounded monthly, or (2) the highest
rate allowable by law, for the period from the date such Management fee was due
until the date that it is paid in full by Owner to Manager. With respect to any
partial Fiscal Year during the term of this Agreement, for the purpose of
calculating the Management Fee, the percentage rent shall be allocated to the
portion of the year during which the Management Fee is payable by multiplying
(1) the amount of percentage rent received from the Property for the entire
applicable Fiscal Year, by (2) a fraction, the numerator of which shall be the
applicable Occupant's gross sales upon which the percentage rent is calculated
with respect to the portion of such Fiscal Year during which this Agreement was
in effect, and the denominator of which shall be such gross sales of the
applicable Occupants with respect to such entire Fiscal Year.
B. EXPENSE REIMBURSEMENT. In addition to the Management Fee specified
in Section A above, Manager shall be entitled to reimbursement as an Operating
Expense of the Property, for those costs and expenses relating to the
management, operation and leasing of the Property incurred by it and
specifically authorized for reimbursement under the terms of this Agreement.
Manager shall not be obligated to incur or bear any expenses of the Property
except those reimbursable under the terms of the immediately preceding sentence.
C. LEASING. Manager shall be entitled to receive from Owner (1) a
lease preparation fee of Seven Hundred and Fifty Dollars ($750) per Lease and
(2) to the extent not recovered from any Occupant, a plan review fee of One
Thousand Dollars ($1,000) per Occupant, such amounts to be subject to annual
increase from and after January 1, 1997 based on the annual increase in the
Index during the preceding Fiscal Year.
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ARTICLE XIV
-----------
INSURANCE
---------
Unless such insurance is maintained by Owner and its Affiliate as part
of a corporate insurance program, Manager shall procure and maintain all
insurance required pursuant to the applicable Annual Plan or any mortgage or
deed of trust encumbering the Property, and shall procure such insurance in such
amount and from such companies as may be approved by Owner in the Annual Plan or
otherwise authorized by Owner in writing. Manager shall comply with all
Insurance Requirements in the management and operation of the Property and shall
use its diligent good faith efforts to cause all Occupants to comply with any
applicable Insurance Requirements.
ARTICLE XV
----------
ALTERATIONS
-----------
Manager shall make no changes or alterations in or additions to the
Property or any part thereof of a material nature without the prior written
consent of Owner, except as otherwise expressly set forth in the Annual Plan.
Except with respect to any expansion, redevelopment or refurbishment, or
preliminary services relating thereto, performed pursuant to a Development
Agreement for the Property, Manager shall supervise the performance of all
repairs, renovations and alterations performed at the Property, and shall
monitor all Occupant alterations of the Property on behalf of Owner in such a
manner as may be reasonably required of Manager. Manager shall promptly report
any liens on the Property to Owner.
ARTICLE XVI
-----------
TERMINATION
-----------
A. TERM. The term of this Agreement shall be for an initial term
expiring on [INSERT DATE OF TERMINATION OF OTHER MANAGEMENT AGREEMENTS].
Thereafter, until this Agreement is terminated in accordance with its terms,
this Agreement shall be deemed renewed automatically each year for an additional
one year period unless the trustee (the "WAT Trustee") of the Westfield America
Trust, an Australian publicly listed property trust, and 75% of the Independent
Directors (as such
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term is defined in the Third Amended and Restated Articles of the Owner) of the
Owner's Board of Directors agree that either (I) there has been unsatisfactory
performance by the Manager that is materially detrimental to the Owner or (II)
the fees payable to Manager are not fair, PROVIDED that Owner shall not have the
right to terminate this Agreement under clause (II) above if Manager agrees to
continue to provide management services for the Property at a fee that the WAT
Trustee and 75% of the Independent Directors have determined to be fair and
PROVIDED FURTHER that the WAT Trustee's agreement with respect to the matters
set forth in clauses (I) or (II) will only be required if the WAT Trustee is the
owner of 10% or more of the outstanding capital stock of the Owner. If Owner
shall elect not to renew the term of this Agreement at the expiration of the
initial term or any extended term as set forth above, Owner shall deliver to
Manager prior written notice of Owner's determination not to renew this
Agreement based on the terms set forth in this subparagraph A not less than 30
days prior to the expiration of the then existing term. If Owner elects not to
renew this Agreement, Owner shall designate the date, not less than 60 nor more
than 180 days from the date of the notice, on which the Manager shall turn over
management of the Property to Owner and this Agreement shall terminate as of
such date.
B. NON-CURABLE TERMINATING EVENTS. (1) Owner may terminate this
Agreement on not less than 15 days written notice to Manager upon the occurrence
of any of the following events:
(1) the Bankruptcy of Manager;
(2) Owner sells or transfers 100% of its interest in the
Property (other than to a Related Person), whether directly or
indirectly;
(3) any of the Other Management Agreements are validly
terminated by Owner or one of its Affiliates in accordance with
their terms by reason of Manager's material default thereunder;
(4) the foreclosure by any mortgagee upon the Property or the
taking of possession thereof by deed-in-lieu of foreclosure,
except as otherwise agreed in writing by Manager and such
Mortgagee;
(5) an act of fraud, embezzlement or theft constituting a
felony against Owner or its Affiliates which causes it material
injury is perpetrated by Manager or by Developer or by Advisor in
its corporate capacity (as distinguished from the acts of any
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employees of such entities which are taken without the approval
or complicity of the Board of Directors of Manager's managing
general partner) under this Agreement, the Advisory Agreement,
the Development Framework Agreement, any Development Agreement or
any Leasing Agreement;
(6) the Property or a substantial part of the Property is
damaged or destroyed where the Owner has determined not to
rebuild or reconstruct, provided, however, that in such event
Manager will continue to operate the Property for a reasonable
period of time until Owner winds down the operation of the
Property, and provided further that (i) this Agreement shall be
automatically reinstated if, within twenty-four (24) months after
the date of such damage or destruction, Owner determines to
rebuild the Property or develop a new shopping center as a
replacement for the Property, and (ii) in the case of the
destruction of only a substantial part of the Property, if Owner
elects to continue the operation of the remaining portion of the
Property, this Agreement shall remain in effect with respect to
the portion of the Property to be operated; or
(7) an Event of Default (as defined therein) shall have
occurred and be continuing under that certain Pledge and
Security Agreement, dated as of May , 1997, among the
Company, Westland Management, Inc., Westfield Partners,
Inc. and Westland Realty, Inc.
(2) This Agreement shall terminate if Manager shall notify Owner
that management of regional shopping centers shall cease to be one of
the principal business undertakings of Westfield Holdings Limited and
its affiliates in the United States, PROVIDED that this Agreement
shall continue for a period of 180 days after delivery of such notice
to Owner if Owner shall be reasonably satisfied with Manager's ability
to continue managing the Property during such period.
C. CURABLE DEFAULTS. (1) Either Owner or Manager may terminate this
Agreement by written notice to the other party in the event that the other party
shall default (the "Defaulting Party") in the performance or observance of any
material term, condition or covenant contained in this Agreement in respect of
the Property not falling under Section XVI.B or shall fail to perform or observe
the same in accordance with the required standard under this Agreement and such
default shall continue for a period of thirty (30) days after written notice
thereof shall have been received by the non-defaulting party (the
"Non-Defaulting Party") specifying such default and requesting that the same be
remedied in such thirty-day period, provided that a ten (10) day period shall
apply with respect to any failure to make a monetary payment hereunder (a
"DEFAULT NOTICE").
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The Defaulting Party shall be deemed to have complied with a Default
Notice given under this Section XVI.C if the default (other than a monetary
default) is such that it cannot reasonably be remedied within thirty (30) days
and the Defaulting Party shall, in good faith, have commenced to remedy the
default specified therein as soon as is practicable after receiving such Default
Notice, and, thereafter shall have diligently prosecuted the cure to its
completion.
(2) A Non-Defaulting Party shall have the right to terminate this
Agreement based on a default by a Defaulting Party under this Section XVI.C only
if such default is determined to constitute an Adjudicated Default as provided
below. If a Non-Defaulting Party believes that the other party has defaulted in
the performance of a material obligation under this Agreement, and that such
default remains uncured following the delivery of a default notice and the
expiration of the applicable cure period provided in Section XVI.C(1), then such
Non-Defaulting Party may deliver a written notice to the other party setting
forth its intention to terminate this Agreement pursuant to this Section (a
"TERMINATION NOTICE"). If the Defaulting Party desires to contest such
termination, then the Defaulting Party shall so notify the Non-Defaulting Party
within ten (10) Business Days after receipt of the Termination Notice, and a
senior officer of each party shall meet promptly and negotiate in good faith in
order to resolve such dispute. If such senior officers are unable to resolve
the dispute within thirty (30) days after the Defaulting Party's receipt of the
Termination Notice, then the Defaulting Party may institute an action in the
appropriate judicial forum within thirty (30) days thereafter to determine
whether the Defaulting Party has defaulted in the performance of a material
obligation hereunder. An "ADJUDICATED DEFAULT" shall be deemed to have occurred
if:
(i) the parties' respective senior officers are unable to
resolve such dispute and the Defaulting Party does not institute a judicial
proceeding within sixty (60) days after it's receipt of a Termination Notice;
(ii) a court renders a final decision finding that the
Defaulting Party has defaulted in the performance of a material obligation
hereunder, and the Defaulting Party does not deliver a notice of appeal to the
appropriate parties within the applicable appeal period; or
(iii) a court renders a final decision finding that the
Defaulting Party has defaulted in the performance of a material obligation
hereunder and an appeal is perfected by the Defaulting Party within the
applicable appeal period, and a second court renders a final decision finding
that the Defaulting Party has defaulted in the performance of a material
obligation hereunder.
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D. MANAGER'S RIGHTS AND OBLIGATIONS ON TERMINATION. Upon termination
of this Agreement Manager shall:
(3) promptly surrender and deliver to Owner any space in the
Property occupied by Manager and pay to Owner or as Owner shall direct all Gross
Income and other monies related to the Property on hand and all moneys due to
Owner under this Agreement including any moneys received after termination;
(4) promptly deliver to Owner originals in the possession of or
reasonably available to Manager, its Affiliates, agents or employees or, if such
originals are not in the possession or reasonably available to Manager, copies
of all contracts, documents, reports, market studies, files, funds, surveys,
insurance policies, papers, Leases, keys, records and other property pertaining
to this Agreement or to the Property in the possession of or reasonably
available to Manager, its Affiliates, agents or employees;
(5) furnish all such information and take all such action as
Owner may reasonably require in order to effect an orderly and systematic
termination of Manager's duties and activities hereunder and the appointment of
a substitute manager;
(6) as soon as is reasonably practicable, deliver to Owner, at
Owner's expense, audited financial statements reflecting the balance of all
Gross Income, all capital contributions, all Operating Expenses, all capital
expenses and the credit balance of all accounts maintained by the Manager under
this Agreement as at the date of termination;
(7) if requested by Owner, at Owner's cost, promptly give written
notice to the Occupants, in a form reasonably satisfactory to Owner, that
Manager no longer manages or is otherwise associated with the Property;
(8) immediately assign and transfer all accounts maintained by
Manager under this Agreement for Owner and assign all contracts with respect to
the Property to a person designated by Owner or as otherwise directed by Owner
and such person shall assume all of Manager's obligations under such contracts;
and
(9) be paid all Management Fees earned under the provisions of
this Agreement prior to such termination. Manager shall not be obligated to
refund any
41
<PAGE>
Management Fees earned and received from any month prior to the month in which
this Agreement is terminated, provided, however, that Manager shall refund to
Owner any overpayments of the Management Fee previously paid to Manager.
ARTICLE XVII
------------
DELIVERY OF DOCUMENTS AND NOTICES
---------------------------------
In order to be deemed effective, all documents to be delivered and all
notices, approvals, authorizations and/or consents to be given or obtained by
any party to this Agreement shall be in writing and shall be given by personal
delivery, or sent by express mail or nationally recognized overnight courier, or
by registered or certified mail, postage prepaid, return receipt requested, or
by facsimile (with confirmed receipt) addressed as follows:
To Manager: CenterMark Management Company
c/o Westfield Corporation, Inc.
11601 Wilshire Blvd.
12th Floor
Los Angeles, CA 90025
Attention: Executive Director
Fax: 310-444-9071
To Owner: c/o Westfield America Inc.
11601 Wilshire Blvd.
12th Floor
Los Angeles, CA 90025
Attention: President
Fax: 310-444-9071
The above addresses may be changed for future communications or delivery of
notice hereunder by giving notice of such change to the others listed above in
the manner prescribed by this Article. All notices shall be deemed effective
when received by all applicable parties at the addresses set forth above (as
such addresses may be changed by the parties in accordance herewith).
Notwithstanding the foregoing, no notice shall be deemed ineffective because of
any party's refusal to accept delivery at the address specified for the giving
of such notice in accordance herewith.
42
<PAGE>
ARTICLE XVIII
-------------
MISCELLANEOUS PROVISIONS
------------------------
A. LAW TO APPLY. This Agreement is made in and shall be governed by
and construed in accordance with the laws of the State of New York.
B. INCORPORATION BY REFERENCE. Exhibit A, as attached hereto, is
hereby expressly incorporated herein to the same extent and with the same effect
as if fully set out herein.
C. SECTION HEADINGS AND REFERENCES. Headings at the beginning of
Articles and Sections of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement. All references herein to specific
Articles or Sections are references to the applicable Articles or Sections of
this Agreement, unless otherwise indicated.
D. TERMS. When required by the context, whenever the singular number
is used in this Agreement, the same shall include the plural, and the plural
shall include the singular, and the masculine gender shall include the feminine
and neuter genders.
E. WAIVER. Any waiver, express or implied, by a party hereto, of any
breach of this Agreement by another party or parties, shall not be considered a
waiver of any subsequent breach.
F. SEVERABILITY. The invalidity or unenforceability of any portion of
this Agreement shall not render the remainder hereof invalid or unenforceable.
G. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had all signed
the same signature page. Any signature page of this Agreement may be detached
from any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one more additional signature
pages.
H. TIME. Time is of the essence of this Agreement and each of its
provisions.
43
<PAGE>
I. INCORPORATION OF PRIOR AGREEMENTS. This Agreement contains all of
the agreements of the parties hereto with respect to the matters contained
herein, and no prior agreement or understanding pertaining to any such matter
shall be effective for any purpose. No provision of this Agreement may be
amended or added to except by an agreement in writing signed by the parties
hereto.
J. FURTHER ASSURANCES. Each party hereto hereby agrees to execute and
deliver any and all instruments, agreements and other documents reasonably
necessary to effect the acts contemplated hereby, to the extent required by this
Agreement.
K. ATTORNEYS' FEES. If any party commences an action against another
to enforce any of the terms hereof or because of the breach by any party of any
of the terms hereof, then the successful party after final judgment shall be
entitled to receive from the other party its reasonable attorneys' fees and
other costs and expenses incurred in connection with the prosecution or defense
of such action.
L. PERSONAL AGREEMENT. This Agreement shall be binding on the parties
hereto. No assignment by Manager shall be effective for any purpose without the
written consent and approval of Owner; PROVIDED, however, that notwithstanding
the foregoing provisions of this Section L, Manager shall have the right to
assign its rights and obligations under this Agreement without Owner's prior
consent to any Affiliate of WHL as long as the transferee Person assumes the
obligations and liabilities of Manager hereunder from and after the effective
date of such transfer. The transfer of an interest in Manager or any
constituent partner of Manager shall not be deemed an assignment of this
Agreement so long as WHL continues to own, directly or indirectly, at least a
50% voting and economic interest in Manager. Upon any such transfer, Manager
shall be released from all liabilities arising hereunder from and after the
effective date of such transfer. Manager agrees that it will not subcontract
all or substantially all of its management responsibilities under this
Agreement, except to an Affiliate of WHL, without the written consent and
approval of Owner. Any attempted assignment or sub-contract in violation of the
provisions of this Section L shall be void AB INITIO.
M. NO PARTNERSHIP. Nothing contained in this Agreement shall
constitute Owner and Manager as partners with one another. Subject to the terms
and provisions of this Agreement, each of the parties shall have the right to
engage in other businesses and business transactions and the other party shall
have no right or interest therein.
N. AMENDMENTS. No amendment to this Agreement shall be effective
unless signed by the party to be charged with any additional responsibilities
thereunder.
44
<PAGE>
O. INDEMNITIES. (1) Manager hereby agrees to indemnify, defend and
protect Owner and its respective officers and directors (such persons
collectively called the "INDEMNIFIED PARTIES" for the purposes of this Section
XVIII.O(1)), and hold each of the Indemnified Parties harmless against all
losses, damages, costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses incurred in good faith and court costs) incurred by
the Indemnified Parties by reason of any claim or demand being made upon or any
action taken against any of the Indemnified Parties arising from Manager's gross
negligence or willful misconduct or fraud with respect to its duties and
obligations under this Agreement. The Indemnified Parties shall, in good faith,
endeavor to notify Manager in writing as to every such claim, demand or action
against the Indemnified Parties within ten (10) Business Days after the
Indemnified Parties become aware that such claim or demand has been made or such
action has been taken. A failure to notify Manager shall not limit Manager's
liability under this Section XVIII.O(1) to the extent that such failure to
notify does not adversely affect Manager's rights with respect to such claim.
(2) Owner hereby agrees to indemnify, defend and protect Manager and
each of Manager's constituent partners and their respective officers and
directors (each such person collectively called the " INDEMNIFIED PARTIES" for
the purposes of this Section XVIII.O(2)), and hold each of the Indemnified
Parties harmless against all losses, damages, costs, expenses and liabilities
(including, without limitation, attorneys' fees and expenses incurred in good
faith and court costs) incurred by the Indemnified Parties by reason of any
claim or demand being made upon or any action taken against any of the
Indemnified Parties arising from (I) any gross negligence or willful misconduct
or fraud of Owner, except to the extent Manager or its Affiliate is responsible
for such gross negligence or willful misconduct, or (II) any act taken or
omission made by Manager in the performance of its obligations under this
Agreement, which act or omission was not the result of Manager's gross
negligence or willful misconduct or fraud. The Indemnified Parties shall, in
good faith, endeavor to notify Owner in writing as to every such claim, demand
or action against the indemnified parties within ten (10) Business Days after
the Indemnified Parties become aware that such claim or demand has been made or
such action has been taken. A failure to notify Owner shall not limit Owner's
liability under this Section XVIII.O(2) to the extent that such failure to
notify does not adversely affect Owner's rights with respect to such claim.
(3) No person engaged as an independent contractor by Owner or Manager
shall be considered an employee, servant, agent or other Person that Owner or
Manager (as the case may be) shall be obligated to indemnify for the purposes of
this Section XVIII.O. Manager shall use its reasonable efforts to cause Owner
to be listed as an indemnified party in any indemnity contained in an agreement
with an independent
45
<PAGE>
contractor. The indemnity contained in this Section XVIII.O made by Owner and
Manager shall survive the termination of this Agreement.
P. OBJECT OF AGREEMENT. The object of this Agreement is the provision
of services by Manager to Owner, and no tangible property will be conveyed other
than tangible property incidental to the provision of such services.
Q. OWNER'S LENDERS AND/OR PURCHASERS. (1) Manager shall, at the
request of Owner, enter into agreements with lenders providing financing to
Owner encumbering all or any party of the Property, pursuant to which agreements
Manager (i) recognizes the collateral rights, if any, of such lender(s) with
respect to this Agreement, and (ii) acknowledges that if any such lender
forecloses upon Owner's interest in this Agreement, then such lender or its
assignee shall not be liable for any act or omission of Owner under this
Agreement prior to the date of such foreclosure or assignment; provided that
Manager shall not be obligated to enter into any such agreement that materially
increases Manager's obligations or materially diminishes Manager's rights
hereunder.
(2) Manager shall, at Owner's request, cooperate with and provide
information to any lender(s) providing financing to Owner or to any potential
purchaser(s) of the Property regarding actual facts and matters within the
knowledge of Manager's personnel engaged in the management of the Property.
R. CONFIDENTIALITY. (a) Manager agrees to hold in confidence and not
to use or disclose to others any confidential or proprietary information of
Owner heretofore or hereafter disclosed to Manager ("Owner Confidential
Information"), including, but not limited to, any data, information, plans,
programs, processes, costs, operations or the names of any tenants which may
come within the knowledge of Manager in the performance of, or as a result of,
its services, except where required by judicial or administrative order, or
where Owner specifically gives Manager written authorization to disclose any of
the foregoing to others or such disclosure hereunder. If Manager is required by
a judicial or administrative order to disclose any Owner Confidential
Information, Manager will promptly notify Owner thereof, consult with Owner on
the advisability of taking steps to resist or narrow such request and cooperate
with Owner in any attempt it may make to obtain an order or other assurance with
confidential treatment will be accorded to the Owner Confidential Information
disclosed.
(b) Owner agrees to hold in confidence and not to use or disclose to
others any confidential or proprietary information of Manager heretofore or
hereafter disclosed to Owner ("Manager Confidential Information"), including,
but not limited to,
46
<PAGE>
any information, plans, programs, processes, costs or operations which may come
within the knowledge of Owner as a result of the services performed by Manager,
except where required by judicial or administrative order, or where Manager
specifically gives Owner written authorization to disclose any of the foregoing
to others or such disclosure hereunder. If Owner is required by a judicial or
administrative order to disclose any Manager Confidential Information, Owner
will promptly notify Manager thereof, consult with Manager on the advisability
of taking steps to resist or narrow such request and cooperate with Manager in
any attempt it may make to obtain an order or other assurance with confidential
treatment will be accorded to the Manager Confidential Information disclosed.
47
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be executed as of the date first above written.
OWNER:
----------------------------------
By:
----------------------------------------
Name:
Title:
MANAGER: CENTERMARK MANAGEMENT
------- COMPANY
By: Westfield Services, Inc.,
a general partner
By:
-------------------------------
Name:
Title:
48
<PAGE>
EXHIBIT A
---------
OTHER MANAGEMENT AGREEMENTS
---------------------------
Separate Management Agreements, each dated as July 1, 1996, as amended, with
respect to each of the following shopping centers:
Connecticut Post Mall
Eagle Rock Plaza
Eastland Shopping Center
Enfield Center
Mid Rivers Mall
Montgomery Mall
Plaza Bonita
South County Center
South Shore Mall
Trumbull Mall
West County Center
Plaza at West Covina
West Park Mall
Westland Center
<PAGE>
EXHIBIT 10.16
ENFIELD CENTER
FIRST AMENDMENT TO
MANAGEMENT AGREEMENT
THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT, dated as of May ,
1997, by and between WESTFIELD AMERICA, INC., a Missouri corporation (formerly
known as CenterMark Properties, Inc.) ("Owner"), and CENTERMARK MANAGEMENT
COMPANY, a Delaware partnership ("Manager").
W I T N E S S E T H:
WHEREAS, Owner and Manager are parties to that certain Management
Agreement (the "Original Management Agreement"), dated as of July 1, 1996,
relating to Enfield Center, Enfield, Connecticut; and
WHEREAS, Owner and Manager desire to amend the Original Management
Agreement in the manner hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Owner and Manager agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definition
shall have the respective meanings set forth in the Original Management
Agreement.
2. AMENDMENT TO ARTICLE II OF THE ORIGINAL MANAGEMENT AGREEMENT.
Article II of the Original Management Agreement is hereby amended by deleting
the third sentence of the first paragraph thereof and substituting the
following therefor:
"Manager agrees that during the term of this Agreement it will not,
directly or indirectly, act as the property manager for any
shopping center which directly competes with the Property (a
"Competing Mall"), PROVIDED that the foregoing restriction shall
not be deemed to be violated if Manager shall acquire, either
directly or indirectly, all or substantially all of the assets of,
or an interest in, an entity that does not have any ownership
interest in shopping center properties or power centers in
the United States which is engaged in the property management
business and which manages, among other properties, a shopping
center which is a Competing Mall."
3. AMENDMENT TO ARTICLE XVI OF THE ORIGINAL MANAGEMENT AGREEMENT.
Article XVI of the Original Management Agreement is hereby amended by
deleting subsections A and B thereof in their entirety and substituting the
following therefor:
"A. TERM. From and after the date of the First Amendment to
Management Agreement, dated as of May , 1997, between Owner and
Manager, the term of this Agreement shall be for an initial term of
three years expiring on May , 2000. Thereafter, until this
Agreement is terminated in accordance with its terms, this Agreement
shall be deemed renewed automatically each year for an additional one
year period unless the trustee (the "WAT Trustee") of the Westfield
America Trust, an Australian publicly listed property trust, and 75%
of the Independent Directors (as such term is defined in the Third
Amended and Restated Articles of the Owner) of the Owner's Board of
Directors agree that either (i) there has been unsatisfactory
performance by the Manager that is materially detrimental to the Owner
or (ii) the fees payable to Manager are not fair, PROVIDED that Owner
shall not have the right to terminate this Agreement under clause (ii)
above if Manager agrees to continue to provide management services for
the Property at a fee that the WAT Trustee and 75% of the Independent
Directors have determined to be fair and PROVIDED FURTHER that the WAT
Trustee's agreement with respect to the matters set forth in clauses
(i) or (ii) will
<PAGE>
only be required if the WAT Trustee is the owner of 10% or more of
the outstanding capital stock of the Owner. If Owner shall elect
not to renew the term of this Agreement at the expiration of the
initial term or any extended term as set forth above, Owner
shall deliver to Manager prior written notice of Owner's determination
not to renew this Agreement based on the terms set forth in this
subparagraph A not less than 30 days prior to the expiration of the
then existing term. If Owner elects not to renew this Agreement,
Owner shall designate the date, not less than 60 nor more than 180
days from the date of the notice, on which the Manager shall turn over
management of the Property to Owner and this Agreement shall terminate
as of such date.
B. NON-CURABLE TERMINATING EVENTS. (1) Owner may terminate this
Agreement on not less than 15 days written notice to Manager upon the
occurrence of any of the following events:
(i) the Bankruptcy of Manager;
(ii) Owner sells or transfers 100% of its interest in the
Property (other than to a Related Person), whether directly or
indirectly;
(iii) any of the Other Management Agreements are validly
terminated by Owner or one of its Affiliates in accordance with
their terms by reason of Manager's material default thereunder;
(iv) the foreclosure by any mortgagee upon the Property or
the taking of possession thereof by deed-in-lieu of foreclosure,
except as otherwise agreed in writing by Manager and such
Mortgagee;
(v) an act of fraud, embezzlement or theft constituting a
felony against Owner or its Affiliates which causes it material
injury is perpetrated by Manager or by Developer or by Advisor in
its corporate capacity (as distinguished from the acts of any
employees of such entities which are taken without the approval
or complicity of the Board of Directors of Manager's managing
general partner) under this Agreement, the Advisory Agreement,
the Development Framework Agreement, any Development Agreement or
any Leasing Agreement;
(vi) the Property or a substantial part of the Property is
damaged or destroyed where the Owner has determined not to
rebuild or reconstruct, provided, however, that in such event
Manager will continue to operate the Property for a reasonable
period of time until Owner winds down the operation of the
Property, and provided further that (i) this Agreement shall be
automatically reinstated if, within twenty-four (24) months after
the date of such damage or destruction, Owner determines to
2
<PAGE>
rebuild the Property or develop a new shopping center as a
replacement for the Property, and (ii) in the case of the
destruction of only a substantial part of the Property, if Owner
elects to continue the operation of the remaining portion of the
Property, this Agreement shall remain in effect with respect to
the portion of the Property to be operated; or
(vii) an Event of Default (as defined therein) shall have
occurred and be continuing under that certain Pledge and Security
Agreement, dated as of May , 1997, among the Company, Westland
Management, Inc., Westfield Partners, Inc. and Westland
Realty, Inc.
(2) This Agreement shall terminate if Manager shall notify Owner
that management of regional shopping centers shall cease to be one of
the principal business undertakings of Westfield Holdings Limited and
its affiliates in the United States, PROVIDED that this Agreement
shall continue for a period of 180 days after delivery of such notice
to Owner if Owner shall be reasonably satisfied with Manager's ability
to continue managing the Property during such period."
(vii) an Event of Default (as defined therein) shall have
occurred and be continuing under that certain Pledge and
Security Agreement, dated as of May , 1997, among the
Company, Pledgee, Westland Management, Inc., Westfield Partners,
Inc. and Westland Realty, Inc.
4. RATIFICATION. Except as amended hereby, the Original Management
Agreement is hereby ratified and remains in full force and effect.
5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had all signed
the same signature page. Any signature page of this Amendment may be detached
from any counterpart of this Amendment without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Amendment
identical in form hereto but having attached to it one more additional signature
pages.
6. EFFECTIVE DATE. This Amendment shall be effective as of the
closing of the initial public offering of common stock of the Owner pursuant to
its Registration Statement on Form S-11 (No. 333-22731).
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
OWNER:
WESTFIELD AMERICA, INC.
------------------------------------
Name:
Title:
MANAGER:
CENTERMARK MANAGEMENT COMPANY
By: Westfield Services, Inc.
a general partner
By:
----------------------------
Name:
Title:
4
<PAGE>
EXHIBIT 10.22
FIRST AMENDMENT TO
GSP OPTION AGREEMENT
THIS FIRST AMENDMENT TO GSP OPTION AGREEMENT, dated as of May __,
1997, is made by and between WESTFIELD CAPITAL CORPORATION FINANCE PTY.
LIMITED, a corporation organized under the laws of New South Wales, Australia
("Grantor"), and WESTFIELD AMERICA, INC., a Missouri corporation (formerly
known as CenterMark Properties, Inc.) ("Grantee").
W I T N E S S E T H :
WHEREAS, the Grantor and Grantee are parties to that certain GSP
Option Agreement (the "Original GSP Option Agreement"), dated as of July 1,
1996, pursuant to which the Grantor granted to the Grantee the option to
acquire all of the outstanding common stock of Westland Realty, Inc.; and
WHEREAS, the Grantor and the Grantee desire to amend the Original
GSP Option Agreement as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Grantor and the Grantee
agree as follows:
1. DEFINITIONS: All capitalized terms used herein without
definition shall have the respective meanings set forth in the Original GSP
Option Agreement.
2. AMENDMENT TO SECTION 2. Section 2 of the Original GSP Option
Agreement is hereby amended by deleting such section in its entirety and
substituting the following therefor:
"2. OPTION TERM.
(a) The Grantee's right to exercise the Option shall
commence on the first business day after the date of delivery of
the Valuation Notice (as such term is defined in Section 5.2(b))
and shall continue until 5:00 p.m. (e.s.t.) on the 120th
consecutive day thereafter (the "Option Period").
(b) The Grantor shall deliver written notice (the
"Stabilization Notice") to the Grantee, delivered in the manner
provided in Section 16.5 hereof, upon the earlier to occur of the
following events:
(i) the completion and stabilization of the current
expansion of the property (as more generally described on
Exhibit A hereto) which shall be deemed to have occurred
<PAGE>
when 95% of the gross leasable area of the expansion
(excluding premises leased to anchor tenants) has been
leased to bona fide third party tenants; or
(ii) the date 18 months after the Grantee receives written
notice, delivered as provided in Section 16.5, from the
Grantor stating that the construction of the expansion has
been substantially completed.
(c) The valuation procedure resulting in the Valuation
Notice shall commence upon the earlier to occur of the following
events (the "Valuation Procedure Commencement Events"):
(i) The Grantee's delivery of written notice to the
Grantor, delivered at any time after the Grantee's receipt
of the Stabilization Notice, stating that the Grantee has
elected to commence the valuation procedure; or
(ii) January 3, 2000, as such date may be extended by
agreement of the Grantor and the Grantee;
provided that in any such case the Grantee shall deliver written
notice to the Grantor of its election to commence the valuation
procedure prior to 5:00 p.m. (e.s.t.) on January 3, 2000.
3. AMENDMENT TO SECTION 5.1(B). Section 5.1(b) of the Original GSP
Option Agreement is amended by deleting the reference to "Class B-2 common
stock" and substituting "common stock" therefor.
4. AMENDMENT TO SECTION 5.2(A). Section 5.2(a) of the Original GSP
Option Agreement is amended by deleting such section in its entirety and
substituting the following therefor:
"(a) Promptly after the receipt by the Grantor of notice
from the Grantee under Section 2(c)(i) of the Grantee's
election to commence the valuation procedure, the Grantor
and the Grantee shall appoint Landauer Real Estate
Counselors ("Landauer") or such other independent real
estate appraiser as shall be agreed upon by the Grantor and
the Grantee as the appraiser to determine the fair market
value of the Property (the "Fair Market Value of the
Property"). Landauer or such other mutually agreed upon
appraiser shall be defined herein as the "Appraiser". If
the Grantor and/or the Grantee shall desire to appoint
another appraiser but cannot agree on the identity of such
other appraiser for any reason or no reason within 15
business days of the date of the Grantee's notice under
Section
2
<PAGE>
2(c), the Appraiser shall be Landauer. The determination
of the Fair Market Value of the Property determined by the
Appraiser shall be binding upon the Grantor and the Grantee,
and shall be delivered by the Appraiser in writing to the
Grantor and the Grantee within 30 days of the appointment of
the Appraiser."
5. AMENDMENT TO SECTION 16.1. Section 16.1 of the Original GSP
Option Agreement is amended by deleting clause (iv) thereof in its entirety and
renumbering clause (v) to be clause (iv).
6. AMENDMENT TO SCHEDULE I. Schedule I to the Original GSP Option
Agreement is hereby amended by substituting the Schedule I attached hereto
therefor so as to recognize that the $145,000,000 loan being made by the Grantee
to Westland Realty as of the date hereof may remain outstanding upon any
exercise of the Option.
7. AMENDMENT TO EXHIBIT A. Exhibit A to the Original GSP Option
Agreement is hereby amended by substituting the Exhibit A attached hereto
therefor.
8. RATIFICATION. Except as amended hereby, the Original GSP Option
Agreement is hereby ratified and remains in full force and effect.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument with the same effect as if all parties hereto had all signed the
same signature page. Any signature page of this Agreement may be detached from
any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one more additional signature
pages.
10. EFFECTIVE DATE. This Agreement shall be effective as of the
closing of the initial public offering of common stock of the Grantee pursuant
to its Registration Statement on Form S-11 (No. 333-22731).
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
WESTFIELD AMERICA, INC.
By:______________________________________________
Name:
Title:
WESTFIELD CAPITAL CORPORATION
FINANCE PTY. LIMITED
By:______________________________________________
Name:
Title:
4
<PAGE>
SCHEDULE I
SUBSIDIARY DEBT
1. $145,000,000 loan by Grantee to Westland Management, Inc. and Westfield
Partners, Inc.
5
<PAGE>
EXHIBIT A
DESCRIPTION OF EXPANSION
The expansions consist of (i) the two department store and
200,000 square feet of additional mall gross leasable area expansion that
opened in the Fall of 1996 and (ii) the expansion currently under
construction scheduled to open in the Summer of 1997 of approximately 50,000
square feet of mall gross leasable area connecting the food court to the
lower level of the expansion area.
6
<PAGE>
EXHIBIT 10.25
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of __________, 1997 (this
"Agreement"), among Westfield America, Inc., a Missouri corporation (the
"Company"), Westfield Holdings Limited, an Australian public corporation
("WHL"), for the benefit of WHL and each of its subsidiaries (collectively,
"Westfield Holdings"). Capitalized terms used but not otherwise defined
herein have their respective meanings set forth in Section 1 of this
Agreement.
W I T N E S S E T H:
WHEREAS, the Company plans to commence an underwritten initial
public offering (the "Public Offering") of shares of Common Stock, par value
$.01 per share (the "Common Stock"), of the Company;
WHEREAS, in connection with the Public Offering, the Company
desires to enter into various agreements with WHL and certain of its
subsidiaries or amend existing contractual arrangements with such entities;
WHEREAS, the parties hereto desire to enter into this Agreement
for the purpose of providing for certain registration rights for the benefit
of the holders of Registrable Securities; and
WHEREAS, the execution and delivery of this Agreement is a
condition precedent to the various agreements and amendments with Westfield
Holdings in connection with the Public Offering.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to
and on the terms and conditions set forth, the parties hereto hereby agree as
follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following respective meanings:
AFFILIATE: As applied to any Person, any Person directly or
indirectly controlling or controlled by or under common control with such
Person.
<PAGE>
BOARD: The Board of Directors of the Company.
BUSINESS DAY: Each day other than a Saturday, a Sunday or any
other day on which banking institutions in the City of New York are
authorized or obligated by law or executive order to be closed.
COMMISSION: The Securities and Exchange Commission and any
successor federal agency having similar powers.
COMMON STOCK: As defined in the first recital of this Agreement.
COMPANY: As defined in the introductory paragraph of this
Agreement.
EFFECTIVENESS DATE: The three-year anniversary of the closing of
the Public Offering for Common Stock held prior to consummation of the Public
Offering and 90 days (one-year, in the case of an initial Shelf Registration
or Shelf Registration) for all other Common Stock.
EFFECTIVENESS PERIOD: As defined in Section 2.1(a).
INITIAL SHELF REGISTRATION: As defined in section 2.1(a).
INITIATING HOLDER: WHL and each subsidiary of WHL that holds or
will hold Registrable Securities or any transferee or transferees to whom
Registrable Securities shall have been transferred holding in the aggregate
at least 50% of the total number of Registrable Securities outstanding at the
time of any request pursuant to section 2.2.
OTHER SECURITIES: Any stock (other than Common Stock) and any
other securities of the Company or any other Person (corporate or otherwise)
which the holders of the Registrable Securities at any time shall be entitled
to receive, or shall have received, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock.
PERSON: Any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, government (or an agency or political
subdivision thereof) or other entity of any kind, including any successor
(by merger or otherwise) of such entity.
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PUBLIC OFFERING: As defined in the first recital of this Agreement.
REGISTRABLE SECURITIES: (i) The shares of Common Stock (or Other
Securities) held by Westfield Holdings upon completion of the Public
Offering, (ii) any other shares of Common Stock (or Other Securities)
thereafter acquired by Westfield Holdings and (iii) any securities issued or
issuable with respect to such shares of Common Stock (or Other Securities) by
way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when (i) a registration statement
with respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (ii) such securities shall have
been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (iii) such securities shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and in
the opinion of counsel to the Company reasonably acceptable to the holder of
such Registrable Security, each in their reasonable judgment, the subsequent
disposition of them shall not require registration or qualification of them
under the Securities Act or any similar state law then enforced, (iv) such
securities shall have ceased to be outstanding, or (v) such securities may be
sold or transferred pursuant to Rule 144(k) (or any similar provisions then
in force) under the Securities Act.
REGISTRATION EXPENSES: All expenses incident to the Company's
performance of or compliance with sections 2 and 3, including, without
limitation, all registration, filing and National Association of Securities
Dealers, Inc. fees, all fees and expenses of complying with securities or
blue sky laws and the preparation of a blue sky memorandum, all word
processing, duplicating and printing expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits
or "comfort" letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of one special counsel
retained by the holders of the Registrable Securities being registered, fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions, and fees
and expenses of any Person, including special experts, retained by the
Company and the Initiating Holders, PROVIDED that, in any case where
Registration Expenses are not to be borne by the Company, such expenses shall
not include salaries of Company personnel or general overhead expenses
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of the Company, auditing fees, or other expenses for the preparation of
financial statements or other data normally prepared by the Company in the
ordinary course of its business or which the Company would have incurred in
any event.
REQUIRED HOLDERS. Westfield Holdings or the holders of at least
25% of the Registrable Securities.
SECURITIES ACT: The Securities Act of 1933, as amended, or any
similar federal statute, as at the time in effect, and any reference to a
particular section of such Act shall include a reference to the comparable
section, if any, of any such similar federal statute.
SHELF REGISTRATION: A "shelf" registration for an offering to be
made on a continuous basis pursuant to Rule 415 of Regulation C (17 C.F.R.
Section 240.415) promulgated under the Securities Act, or similar rule that
may be adopted by the Commission.
SUBSEQUENT SHELF REGISTRATION: As defined in section 2.1(b).
2. REGISTRATION UNDER SECURITIES ACT, ETC. 2.1 SHELF
REGISTRATIONS. (a) INITIAL SHELF REGISTRATION. The Company agrees that,
upon the request of any Initiating Holder made at any time after the
Effectiveness Date, the Company shall use all reasonable efforts to prepare
and cause to be filed with the Commission a registration statement for a
Shelf Registration covering up to the aggregate number of Registrable
Securities and permitting sales in ordinary course brokerage or dealer
transactions (the "Initial Shelf Registration") on or as soon as practicable
after the Effectiveness Date. The Company agrees to use all reasonable
efforts to cause the Initial Shelf Registration to be declared effective
under the Securities Act within three months after it is filed with the
Commission (the "Initial Shelf Registration Statement"). The Initial Shelf
Registration Statement shall be on a Form S-3 or other appropriate form
permitting registration of such Registrable Securities for resale by such
holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company shall use all
reasonable efforts to keep the Initial Shelf Registration Statement
continuously effective under the Securities Act for the period ending when
(x) all Registrable Securities covered by the Initial Shelf Registration
Statement have been sold pursuant thereto, (y) no Registrable Securities
remain outstanding, or (z) a Subsequent Shelf Registration covering all of
the Registrable Securities has been declared effective under the Securities
Act.
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(b) SUBSEQUENT SHELF REGISTRATIONS. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for
any reason at any time during the Effectiveness Period (other than pursuant
to clauses (x) or (y) of section 2.1(a)), the Company shall use every
reasonable effort to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event within 120 days of such cessation of
effectiveness, amend such Shelf Registration in a manner reasonably expected
to obtain the withdrawal of such order or file an additional Shelf
Registration covering all of the Registrable Securities (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, the Company
shall use all reasonable efforts to cause the Subsequent Shelf Registration
to be declared effective as soon as practicable after such filing and to keep
such registration statement effective for a period equal to the Effectiveness
Period less the aggregate number of days during which the Initial Shelf
Registration or any Subsequent Shelf Registration was previously effective.
(c) REGISTRATION RIGHTS EXCLUSIVE. The Company will not register
securities for sale for the account of any Person other than holders of
Registrable Securities, and will not register any securities other than
Registrable Securities in any registration of Registrable Securities pursuant
to this section 2.1. The Company will not grant to any Person the right to
request a registration of securities not permitted by this subdivision (c).
(d) SUPPLEMENTS AND AMENDMENTS. The Company shall supplement and
amend the Initial Shelf Registration or any Subsequent Shelf Registration if
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration, if
required by the Securities Act or if reasonably requested by any underwriter
of such Registrable Securities. Notwithstanding the foregoing, but subject
to the rights of holders of Registrable Securities under section 2.3, if the
Company shall furnish to the Initiating Holders a certificate signed by a
President or an Executive Vice President of the Company stating that in the
good faith judgment of the Board it would be significantly disadvantageous to
the Company and its shareholders for any such Shelf Registration Statement to
be amended or supplemented, the Company may defer such amending or
supplementing of such Shelf Registration Statement for not more than 60 days
and in any such event the holders shall be required to discontinue
disposition of any Registrable Securities covered by such Shelf Registration
Statement during such period.
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2.2 REGISTRATION ON REQUEST. (a) REQUEST. At any time after the
Effectiveness Date, upon the written request of one or more Initiating
Holders, requesting that the Company effect the registration under the
Securities Act (which shall be a Shelf Registration if requested by the
Initiating Holders after the one-year anniversary of the Public Offering), of
all or part of such Initiating Holders' Registrable Securities and specifying
the intended method or methods of disposition thereof, the Company will
promptly, but in any event within 20 days, give written notice of such
requested registration to all holders of Registrable Securities and thereupon
will use all reasonable efforts to effect the registration under the
Securities Act of all Registrable Securities of the Initiating Holders
requested to be registered within 15 days after receipt of the Company's
notice, all to the extent required to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of Registrable Securities so
to be registered, PROVIDED that the Company shall not be required to effect a
registration pursuant to this section 2.2 until a period of six months shall
have elapsed from the effective date of the most recent registration
previously effected pursuant to this section 2.2, and PROVIDED further that,
the Company shall not be required to effect more than three such
registrations in the aggregate at the request of Initiating Holders pursuant
to this section 2.2. Notwithstanding the foregoing, but subject to the
rights of holders of Registrable Securities under section 2.3, if the Company
shall furnish to the Initiating Holders a certificate signed by a President
or an Executive vice President of the Company stating that in the good faith
judgment of the Board it would be significantly disadvantageous to the
Company and its shareholders for such registration statement to be filed on
or before the filing which would otherwise be required pursuant to this
section 2.2, the Company may defer the filing (but not the preparation) of
the registration statement which is required to effect any registration
pursuant to this section 2.2 for an additional period of not more than 60
days following the anticipated filing of such registration statement,
PROVIDED that at all times the Company is in good faith using all reasonable
efforts to cause such registration statement to become effective.
(b) REGISTRATION STATEMENT FORM. Each registration requested
pursuant to this section 2.2 shall be effected by the filing of a
registration statement on any form which the Company is eligible to use, such
form (which form shall be suitable for a Shelf Registration, if applicable)
to be selected by the Company after consultation with counsel and notice of
such selection of such form to be delivered to the holders of all Registrable
Securities eligible to participate in such registration. Such selection
shall be final unless the use of such form has been objected to in writing by
the Required Holders.
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(c) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this section 2.2 shall not be deemed to be effected unless it has
been declared effective by the Commission or otherwise becomes effective,
PROVIDED that a registration which does not become effective after the
Company has filed a registration statement with respect thereto solely by
reason of the refusal to proceed of all of the Initiating Holders (other than
any refusal to proceed based upon (i) the advice of their counsel that the
registration statement, or the prospectus contained therein, contains an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing or (ii) the discovery
of a material adverse change in the condition, business or prospects of the
Company from that known to the Initiating Holders at the time of their
request that makes the proposed offering unreasonable in the good faith
judgment of such Holders) shall be deemed to have been effected by the
Company at the request of such holders. Notwithstanding the foregoing, a
registration requested pursuant to this section 2.2 shall not be deemed to
have been effected for purposes of this section 2.2 if
(i) the registration does not remain effective for a period of at
least 120 days (or one year, in the case of a Shelf Registration) or, if
earlier, until all the Registrable Securities requested to be registered in
connection therewith were sold, or
(ii) after it has become effective, such registration is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason prior to
the sale of at least 85% of the securities to be sold pursuant to such
registration statement, or
(iii) the conditions to closing specified in the purchase agreement
or underwriting agreement entered into in connection with such registration
are not satisfied, other than by reason of some act or omission by the
holders of the Registrable Securities that were to have been registered.
(d) REGISTRATION RIGHTS EXCLUSIVE. The Company will not register
securities for sale for the account of any Person other than holders of
Registrable Securities, and will not register any securities other than
Registrable Securities in any registration of Registrable Securities requested
by one or more holders pursuant to this section 2.2, unless permitted to do so
by the written
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consent of the Required Holders. The Company will not grant to any Person
the right to request a registration of securities not permitted by this
subdivision (d).
(e) OTHER REQUESTS. Upon the written request of one or more
holders of Registrable Securities (other than Initiating Holders), requesting
that the Company effect the registration under the Securities Act of all or
part of such holders' Registrable Securities and specifying the intended
method or methods of disposition thereof, the Company will promptly, but in
any event within 20 days, give written notice of such requested registration,
including the names and addresses of such requesting holders, to all holders
of Registrable Securities but shall not have any obligation to effect any
registration pursuant to such request until it has received a request of
Initiating Holders pursuant to section 2.2(a).
2.3 INCIDENTAL REGISTRATION. (a) At any time after the
Effectiveness Date, If the Company at any time proposes to register any of
its equity securities under the Securities Act (other than pursuant to
section 2.2 or on Form S-8, Form S-4 or any successor forms thereto), whether
or not for sale for its own account, it will each such time give prompt
written notice to all holders of Registrable Securities of its intention to
do so, which notice shall be given to all such holders at least 30 days prior
to the date such registration is proposed to be consummated, and, upon the
written request of any such holder made within 15 days after the receipt of
any such notice (which request shall specify the Registrable Securities
intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will use all reasonable efforts to effect
the registration under the Securities Act of all Registrable Securities which
the Company has been so requested to register by the holders thereof, on the
same terms and conditions as the equity securities of the Company or, if such
offering is for the account of other shareholders, the equity securities
included therein, to the extent required to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered, PROVIDED that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, shall
be relieved of its obligation to register any Registrable Securities in
connection with such registration, without prejudice, however, to the rights
of any holder or holders of Registrable Securities to request that such
registration be effected as a registration upon request under section 2.2.
Notwithstanding the foregoing, if the Initial Shelf
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Registration or any Subsequent Shelf Registration is then in effect, the
Company shall have no obligation to effect the registration of Registrable
Securities under this section 2.3 unless the securities proposed to be
registered by the Company are to be disposed of in an underwritten public
offering.
(b) If the securities proposed to be registered by the Company are
to be disposed of in an underwritten public offering, such notice of the
Company's intention to register such securities shall designate the proposed
underwriters of such offering (which shall be one or more underwriting firms
of recognized national standing) and shall contain the Company's agreement to
use all reasonable efforts, if requested to do so, to arrange for such
underwriters to include in such underwriting the Registrable Securities which
the Company has been so requested to register pursuant to this section 2.3,
it being understood that the holders of such Registrable Securities shall
have no right to select different underwriters for the disposition of their
Registrable Securities.
(c) No registration effected under this section 2.3 shall relieve
the Company from its obligation to effect registrations upon request under
section 2.2 or to effect the Initial Shelf Registration or any Subsequent
Shelf Registration pursuant to section 2.1.
(d) If a requested registration pursuant to this section 2.3
involves an underwritten offering, and the managing underwriter shall advise
the Company in writing (with a copy to each holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering within a commercially reasonable price range (such
writing to state the basis of such opinion and the approximate number of
shares of securities which may be included in such offering without such
effect), the Company will include in such registration, to the extent of the
number of securities which the Company is so advised can be sold in such
offering, (i) first, securities that the Company proposes to issue and sell
for its own account, (ii) second, Registrable Securities requested to be
registered by the holders thereof pursuant to this section 2.3, pro rata
among such holders on the basis of the number of shares of Common Stock
proposed to be registered by such holders, and (iii) third, all other
securities proposed to be registered.
2.4 REGISTRATION PROCEDURES. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable
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Securities under the Securities Act as provided in section 2, the Company
will promptly:
(a) prepare and file with the Commission as promptly as
practicable, but in any event not later than 90 days (or such longer period
as may be required in order for the Company to comply with the applicable
provisions under the Securities Act) after receipt of a request to file a
registration statement with respect to Registrable Securities, a
registration statement with respect to such Registrable Securities and use
all reasonable efforts to cause such registration statement to become
effective; PROVIDED, HOWEVER, that if the Company shall furnish to the
Initiating Holders making such a request a certificate signed by a
President or Executive Vice President of the Company stating that in the
good faith judgment of the Board it would be significantly disadvantageous
to the Company and its shareholders for such registration statement to be
filed on or before the date such filing would be required, the Company
shall have an additional period of not more than 60 days within which to
file such registration statement; and PROVIDED, FURTHER, that before
filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall provide each holder of Registrable
Securities being registered in such registration and any attorney retained
by such holder with an adequate and appropriate opportunity to participate
in the preparation of such registration statement and each prospectus
included therein (and each amendment or supplement thereto) to be filed
with the Commission;
(b) prepare and file with the Commission such amendments, post-
effective amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective (or, in the case of a Shelf Registration,
continuously effective) and to comply with the rules, regulations or
instructions of the registration form utilized by the Company, the
Securities Act and the rules and regulations thereunder with respect to the
disposition of all Registrable Securities and other securities covered by
such registration statement until the earlier of such time as all of such
Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth
in such registration statement or the expiration of six months (nine
months, in the case of a Shelf Registration) after such registration
statement becomes effective or, in the case of the Initial Shelf
Registration or any
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Subsequent Shelf Registration, for the remainder of the Effectiveness
Period (but not before the expiration of the 90-day period referred to
in Section 4(3) of the Securities Act and Rule 174 thereunder, if
applicable); and will furnish to each such seller prior to the filing
thereof a copy of any amendment, post-effective amendment or supplement to
such registration statement or prospectus and shall not file any such
amendment, post-effective amendment or supplement to which any such seller
or holder shall have reasonably objected on the grounds that such amendment
or supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
thereunder;
(c) furnish to each seller of such Registrable Securities such
number of conformed copies of such registration statement and of each such
amendment, post-effective amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included
in such registration statement (including each preliminary prospectus and
any summary prospectus), in conformity with the requirements of the
Securities Act, such documents, if any, incorporated by reference in such
registration statement or prospectus, and such other documents, as such
seller may reasonably request;
(d) promptly prior to the filing of any document which is to be
incorporated by reference into the registration statement or the prospectus
(after initial filing of the registration statement), provide copies of
such document to counsel to each seller of Registrable Securities, make the
Company's representatives available for discussion of such document and
make such changes in such document prior to the filing thereof as counsel
for such selling holders may reasonably request;
(e) use all reasonable efforts to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions as each seller of such Registrable Securities shall
reasonably request, to keep such registration or qualification in effect
for so long as such registration statement remains in effect, and do any
and all other acts and things which may be necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of its
Registrable Securities covered by such registration statement, except that
the Company shall not for any such purpose be required to (i) qualify
generally to do business as a foreign corporation in any jurisdiction
wherein it would not but
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for the requirements of this subdivision (e) be obligated to be so
qualified, (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such jurisdiction;
(f) cooperate with the sellers of such Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and enable such Registrable Securities to
be registered in such names as such sellers may request at least two
Business Days prior to any sale of Registrable Securities;
(g) use all reasonable efforts to cause such Registrable
Securities to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable each seller thereof
to consummate the disposition of such Registrable Securities;
(h) furnish to each seller of such Registrable Securities a
signed counterpart, addressed to such seller, of (i) an opinion of counsel
for the Company, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement) and (ii) a
"comfort" letter, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement), signed by the
independent public accountants who have certified the Company's financial
statements included in such registration statement, covering substantially
the same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements,
as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in underwritten public
offerings of securities and, in the case of the accountants' letter, such
other financial matters, as such seller may reasonably request;
(i) immediately notify each seller of such Registrable
Securities and (if requested by any such seller) confirm such advice in
writing, (i) when or if the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to the
registration statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional
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information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose and (v) of
the existence of any fact which makes any statement made in the
registration statement, the prospectus or any document incorporated therein
by reference untrue or which requires the making of any changes in the
registration statement, the prospectus or any document incorporated therein
by reference in order to make the statements therein not misleading;
(j) if any fact contemplated by clause (i)(v) above shall
exist, prepare a supplement or post-effective amendment to the registration
statement or the related prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities the prospectus
will not contain an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading;
(k) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of the registration statement at
the earliest possible moment;
(l) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
securities holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first month of the first fiscal quarter
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of section 11(a) of the Securities
Act;
(m) provide and cause to be maintained transfer agents and
registrars for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(n) cause all Registrable Securities issuable upon exercise
thereof, covered by the registration statement to be listed on each
securities
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exchange on which similar securities issued by the Company are then listed
if requested by the Required Holders;
(o) enter into and perform any other customary agreements and
take such other actions as are reasonably required in order to expedite
or facilitate the disposition of such Registrable Securities;
(p) make available for inspection by each holder of Registrable
Securities included in such registration statement, any managing
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
holder or any managing underwriter, all financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the Company's and its subsidiaries' officers,
directors and employees, and the independent public accountants of the
Company, to supply all information reasonably requested by any such person
in connection with such registration statement;
(q) cooperate and cause the executive officers of the Company
to cooperate in connection with such registration, to the extent reasonably
requested by each seller of Registrable Securities or by the underwriters,
if any, including, in the case of any underwritten registration upon
request under Section 2.1 or 2.2, by making executive officers of the
Company available for road show presentations and other investor meetings
to the extent customary in similar underwritten offerings; and
(r) use all reasonable efforts to take all other steps necessary
to effect the registration of the Registrable Securities contemplated
hereby and cooperate with the holders thereof to facilitate the
disposition of such Registrable Securities pursuant thereto.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing and as shall be required by law or by the
Commission in connection therewith.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
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existence of any fact of the kind described in clause (i)(v) of this
section 2.4, such holder will forthwith discontinue disposition of Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by paragraph (j) of this section 2.4, or until
it is advised in writing (the "Advice") by the Company that the use of the
prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in the prospectus, and,
if so directed by the Company, such holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time periods regarding the effectiveness of
registration statements set forth in paragraph (b) of this section 2.4 shall be
extended by the number of days during the period from and including the date of
the giving of such notice pursuant to clause (i)(v) of this section 2.4 to and
including the date when each seller of Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by paragraph (j) of this section 2.4 or the
Advice.
2.5 UNDERWRITTEN OFFERINGS. (a) UNDERWRITTEN OFFERINGS EXCLUSIVE.
Whenever a registration requested by one or more holders pursuant to section 2.1
or 2.2 is for an underwritten offering, only Registrable Securities which are to
be distributed by the underwriters designated by such holders may be included in
such registration, unless such holders shall have permitted other securities to
be included in such registration and such underwritten offering as provided in
subdivision 2.2(e). If such holders shall determine that the number of
Registrable Securities to be sold in any such underwritten offering should be
limited due to market conditions or otherwise, the Company will include in such
registration to the extent of the number which the Company is so advised can be
sold in such offering (i) first, Registrable Securities requested to be included
in such registration, PRO RATA among the holders thereof on the basis of the
number of shares of Common Stock proposed to be registered by such holders,
(ii) second, securities that the Company proposes to issue and sell for its own
account and (iii) third, all other securities proposed to be registered.
(b) UNDERWRITING AGREEMENT. If requested by the underwriters for any
underwritten offering of Registrable Securities on behalf of a holder or holders
of Registrable Securities pursuant to a registration effected pursuant to
section 2.1 or requested under section 2.2, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agree-
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ment to contain such representations and warranties by the Company and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, indemnities to the effect and to the extent provided in section 2.7.
The holders of Registrable Securities on whose behalf Registrable Securities
are to be distributed by such underwriters shall be parties to any such
underwriting agreement and the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters, shall also be made to and for the benefit of such holders of
Registrable Securities. Such holders of Registrable Securities shall not be
required by the Company to make any representations or warranties to or
agreements with the Company or the underwriters other than reasonable
representations, warranties or agreements regarding such holder, such holder's
Registrable Securities and such holder's intended method or methods of
disposition and any other representation required by law.
(c) SELECTION OF UNDERWRITERS. Whenever a registration requested
pursuant to section 2.2 is for an underwritten offering, the holders of a
majority of the Registrable Securities included in such registration shall have
the right to select the managing underwriter(s) to administer the offering,
subject to the approval of the Company, such approval not to be unreasonably
withheld. Whenever a holder of Registrable Securities desires to distribute its
securities under a registration effected pursuant to section 2.1 in an
underwritten offering, such holder shall have the right to select the managing
underwriter(s) to administer the offering, subject to the approval of the
Company, such approval not to be unreasonably withheld.
2.6 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of
Registrable Securities on whose behalf such Registrable Securities are to be so
registered and their underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders and such underwriters or their respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
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2.7 INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. The
Company will, and hereby does, indemnify and hold harmless, to the full extent
permitted by law, in the case of any registration statement filed pursuant to
Section 2.1, 2.2 or 2.3, each holder of any Registrable Securities covered by
such registration statement, and each other Person who participates as an
underwriter in the offering or sale of such securities and each other Person, if
any, who controls such holder or any such underwriter within the meaning of
Section 15 of the Securities Act, and their respective directors, officers,
partners, investment advisors, agents and affiliates, against any losses,
claims, damages or liabilities, joint or several, to which such holder or
underwriter or any such director, officer, partner, investment advisor, agent,
affiliate or controlling person may become subject under the Securities Act or
common law or otherwise, including, without limitation, reasonable costs of
investigation and subject to Section 3 hereof, reasonable fees and expenses of
legal counsel, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement filed by the Company under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company will reimburse such holder or underwriter and each such
director, officer, partner, investment advisor, employee, agent, affiliate and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; PROVIDED, HOWEVER, that the Company shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such holder, underwriter, director, officer, partner, investment
advisor, employee, agent, affiliate or controlling Person, as the case may be,
expressly for use in the preparation thereof; PROVIDED further, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement of any material fact contained in any such
registration statement, preliminary prospectus, final prospectus or summary
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prospectus contained therein or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading in a
prospectus or prospectus supplement, if (i) such untrue statement or omission is
completely corrected in an amendment or supplement to such prospectus or
prospectus supplement, the seller of the Registrable Securities has an
obligation under the Securities Act to deliver a prospectus or prospectus
supplement in connection with such sale of Registrable Securities and the seller
of Registrable Securities thereafter fails to deliver such prospectus or
prospectus supplement as so amended or supplemented prior to or concurrently
with the sale of Registrable Securities to the person asserting such loss,
claim, damage or liability after the Company has furnished such seller with a
sufficient number of copies of the same or (ii) if the seller received written
notice from the Company of the existence of such an untrue statement or such an
omission and the seller continued to dispose of Registrable Securities prior to
the time of the receipt of either (a) an amended or supplemented prospectus or
prospectus supplement that completely corrected the untrue statement or the
omission or (b) a notice from the Company that the use of the existing
prospectus or prospectus supplement may be resumed. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such seller or any such director, officer, partner, investment advisor,
employee, agent, affiliate or controlling person and shall survive the transfer
of such securities by such seller.
(b) INDEMNIFICATION BY THE SELLERS. As a condition to including any
Registrable Securities in any registration statement, the Company shall have
received an undertaking satisfactory to it from the prospective seller of such
Registrable Securities, to indemnify and hold harmless (in the same manner and
to the same extent as set forth in Section 2.7(a)) the Company, and each
director of the Company, each officer of the Company and each other Person, if
any, who participates as an underwriter in the offering or sale of such
securities and each other Person who controls the Company or any such
underwriter within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such seller expressly for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement; PROVIDED, HOWEVER, that (A) the indemnifying party
shall not be liable in any such
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case to the extent that any such statement or omission is completely corrected
(x) in the final prospectus, in the case of a preliminary prospectus, or (y)
in an amendment or supplement to a prospectus or prospectus supplement
(PROVIDED, HOWEVER, that nothing in this clause (y) shall limit the indemnifying
party's liability with respect to sales made prior to the receipt by the Company
from the indemnifying party of written notice of such an untrue statement or
such an omission) and (B) the liability of such indemnifying party under this
Section 2.7(b) shall be limited to the amount of proceeds received by such
indemnifying party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by such holder.
(c) NOTICE OF CLAIMS, ETC. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in Section 2.7(a) or (b), such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; PROVIDED,
HOWEVER, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 2.7, except to the extent that the
indemnifying party is materially prejudiced by such failure to give notice. In
case any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it may
wish, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; PROVIDED, HOWEVER, that (i) if the indemnified party
reasonably believes that it is advisable for it to be represented by separate
counsel because there exists or may exist a conflict of interest between its
interests and those of the indemnifying party with respect to such claim, or
there exist defenses available to such indemnified party that may not be
available to the indemnifying party, or (ii) if the indemnifying party shall
fail to assume responsibility for such defense, the indemnified party may retain
counsel satisfactory to it and, in the case of clause (i), reasonably
satisfactory to the indemnifying party, and the indemnifying party shall pay all
fees and expenses of such counsel; PROVIDED FURTHER, that the indemnifying party
shall not be deemed to have failed to assume responsibility for such defense if
the indemnifying party has not received notice of such claim pursuant to this
Section 2.7(c). In the event an indemnifying party elects not to assume, or
shall not be entitled to assume because of a conflict of interest between its
interests and those of the indemnified party, the defense of a claim, such
indemnifying party
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shall not be obligated to pay the fees and expenses of more than one counsel or
firm of counsel in any jurisdiction in any one legal action or group of related
legal actions for all parties indemnified by such indemnifying party in respect
of such claim, unless in the reasonable judgment of any such indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties in respect of such claim. No indemnifying party shall
be liable for any settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably withheld or delayed.
No indemnifying party shall, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation or that requires action other than the payment of money by
the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 2.7 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.7(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 2.7(a) or (b), the indemnified party
and the indemnifying party under Section 2.7(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Company
and the prospective sellers of Registrable Securities covered by the
registration statement that resulted in such loss, claim, damage or liability,
or action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement; PROVIDED, HOWEVER, that for purposes of this clause (ii), the
relative benefits received by the prospective sellers shall be deemed not to
exceed the amount of proceeds received by such prospective sellers. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this Section 2.7(d) are several in
proportion to the relative value of their respective Registrable Securities
covered by such registration statement and not joint. In addition, no
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Person shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
(e) OTHER INDEMNIFICATION. Indemnification and contribution similar
to that specified in the preceding subdivisions of this Section 2.7 (with
appropriate modifications) shall be given by the Company and each holder of
Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act.
(f) INDEMNIFICATION PAYMENTS. The indemnification and contribution
required by this Section 2.7 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
3. EXPENSES. The Company will pay all Registration Expenses in
connection with the Initial Shelf Registration, any Subsequent Shelf
Registration and any registration effected pursuant to Section 2.3. The Company
will pay all Registration Expenses in connection with three registrations of
Registrable Securities requested pursuant to section 2.2 by the Initiating
Holders, PROVIDED that the Company will pay all Registration Expenses in
connection with registrations requested pursuant to section 2.2 which are not
deemed to be effected within the meaning of subdivision (c) of section 2.2. All
Registration Expenses in connection with each subsequent registration of
Registrable Securities requested by one or more holders pursuant to section 2.2
shall be apportioned among the holders of all Registrable Securities and other
securities requesting or joining in such registration, on the basis of the
respective amounts of securities then being registered by such holders or on
their behalf.
4. RULES 144 AND 144A. The Company will file the reports required to
be filed by it under the Securities Act and the rules and regulations adopted by
the Commission thereunder (or, if the Company is not required to file such
reports, will, upon the request of any holder of Registrable Securities, make
publicly available other information), and will take such further action as any
holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (A) Rule 144 under the Securities Act, as such
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Rule may be amended from time to time, (b) Rule 144A under the Securities Act,
as such Rule may be amended from time to time or (c) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
5. HOLDBACK AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES.
Each holder of Registrable Securities agrees not to effect any public sale or
distribution (including sales pursuant to Rule 144, Rule 144A and Regulation S)
of any equity securities of the Company or of any securities convertible into or
exchangeable or exercisable for such equity securities, during the period
beginning on the later of (i) the effective date of any registration statement
relating to a registration pursuant to section 2.2 or 2.3 of this Agreement
involving an underwritten offering or involving an underwritten offering by the
Company of equity securities and (ii) the date on which such holder shall have
received notice of such effective date of any such registration statement and
ending on the date 90 following the effective date of such registration
statement (except as part of such underwritten offering), unless the
underwriters managing such underwritten offering otherwise agree.
(b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. The Company agrees
(A) not to effect any public sale or distribution (including sales pursuant to
Rule 144A and Regulation S) of any of its equity securities, or any securities
convertible into or exchangeable or exercisable for such equity securities
(except pursuant to registrations on Form S-4 or Form S-8 or any successor
forms), during the 90 day period beginning on the effective date of any
registration statement relating to a registration pursuant to section 2.2 or 2.3
of this Agreement involving an underwritten offering in which Registrable
Securities are included (except as part of such underwritten offering), unless
the underwriters managing such offering otherwise agree, and (ii) to cause each
holder of its Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, purchased from the Company at any time after the
date of this Agreement (other than in a registered public offering) to agree not
to effect any public sale or distribution (including sales pursuant to Rule 144,
Rule 144A and Regulation S) of any such securities during such period (except as
part of such underwritten offering, if otherwise permitted), unless the
underwriters managing such offering otherwise agree.
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6. Amendment and Modification. This Agreement may be amended,
modified or supplemented by the Company with the written consent of the
Initiating Holders and a majority (by number of shares, including Registrable
Securities issuable upon conversion or exchange of other securities) of any
other holder of Registrable Securities whose interests would be adversely
affected by such amendment. Each holder of any Registrable Securities at the
time shall be bound by any consent authorized by this section 6, whether or not
such Registrable Securities shall have been marked to indicate such consent.
7. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of Registrable Securities held by any
holder or holders of Registrable Securities contemplated by this Agreement. If
the beneficial owner of any Registrable Securities so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities.
8. NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally,
mailed, certified or registered mail with postage prepaid, sent by next-day or
overnight mail or delivery or sent by telecopy or telegram, as follows:
(a) If to the Company, to it at:
11601 Wilshire Boulevard
12th Floor
Los Angeles, California 90025
Telephone: (310) 478-4456
Facsimile: (310) 478-1267
Attention: Robert P. Bermingham,
General Counsel and Secretary
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With a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Attention: Barry Mills, Esq.
(b) If to Westfield Holdings, to it at:
Level 24 Westfield Towers
100 William Street
Sydney NSW
Telephone: (612) 9358-7000
Facsimile: (612) 9358-7077
Attention: Timothy Walsh, Esq.
General Counsel
With a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telephone: (212) 909-6000
Facsimile: (212) 909-6836
Attention: Barry Mills, Esq.
(c) if to any other holder of Registrable Securities, at its address as it
appears on the transfer books of the Company.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; and when receipt
is acknowledged, if telecopied.
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9. REMEDIES. The holders of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, shall be entitled to specific performance of their rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
10. NO INCONSISTENT AGREEMENTS. The Company will not, on or after
the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof.
11. MISCELLANEOUS.
(a) SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. In addition, the provisions of this
Agreement which are for the benefit of a holder of Registrable Securities shall
be for the benefit of and enforceable by any subsequent holder of any
Registrable Securities, PROVIDED that such subsequent holder shall agree to be
bound by the provisions of this Agreement. Notwithstanding any transfer of such
rights, all of the obligations of the Company hereunder shall survive any such
transfer and shall continue to inure to the benefit of all transferees.
(b) GOVERNING LAW. This Agreement and the rights and obligations of
the parties hereunder and the persons subject hereto shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York,
without giving effect to the choice of law principles of such State.
(c) INVALIDITY OF PROVISION; SEVERABILITY. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, it being
intended that all of the rights and privileges of
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the holders of Registrable Securities shall be enforceable to the fullest extent
permitted by law.
(d) HEADINGS; EXECUTION IN COUNTERPART. The headings and captions
contained herein are for convenience and shall not control or affect the meaning
or construction of any provision hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
which together shall constitute one and the same agreement.
(e) ENTIRE AGREEMENT. This Agreement is intended by the parties
hereto as a final expression of their agreement and intended to be a complete
and exclusive statement of their agreement and understanding in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the date first above written.
WESTFIELD AMERICA, INC.
By: _______________________________
Name:
Title:
WESTFIELD HOLDINGS LIMITED
By: _______________________________
Name:
Title:
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EXHIBIT 10.26
INVESTORS AGREEMENT
INVESTORS AGREEMENT (hereinafter called the "Agreement"), dated as of
May __, 1997, among WESTFIELD AMERICA, INC., a Missouri corporation (the
"Company"), WESTFIELD AMERICA MANAGEMENT LIMITED, an Australian corporation (the
"WAT Manager"), in its capacity as manager of the Westfield America Trust
("WAT"), a public trust constituted by the Westfield America Trust Deed, dated
March 28, 1996, as amended, PERPETUAL TRUSTEE COMPANY LIMITED, in its capacity
as trustee of WAT (the "WAT Trustee"), WESTFIELD CORPORATION, INC., a Delaware
corporation ("Westfield Corporation"), WESTFIELD AMERICAN INVESTMENTS PTY.
LIMITED, an Australian corporation ("Annatar"), and WESTFIELD HOLDINGS LIMITED,
an Australian corporation ("WHL", and collectively with WHL, Westfield
Corporation and Annatar and any other subsidiary of WHL, the "Westfield Group").
RECITALS
WHEREAS, the Company is authorized to issue 200,000,000 shares of
common stock, par value $.01 per share (the "Common Stock"), 200 shares of
non-voting senior preferred stock, par value $1.00 per share (the "Senior
Preferred Stock"), 940,000 shares of Series A cumulative redeemable preferred
stock, par value $1.00 per share (the "Series A Preferred Stock"), and 400,000
shares of Series B cumulative redeemable preferred stock, par value $1.00 per
share (the "Series B Preferred Stock", and collectively with the Common Stock,
the Senior Preferred Stock and the Series A Preferred Stock, the "Capital
Stock");
WHEREAS, the WAT Trustee is the record and beneficial owner of
39,494,125 shares and the Westfield Group is the record and beneficial owner of
10,930,762 shares of Common Stock;
WHEREAS, the Company is in the business of owning, operating, leasing,
developing, redeveloping and acquiring shopping centers and powers centers
(collectively, the Centers") in the United States;
WHEREAS, the parties hereto are parties to a Stockholders Agreement,
dated as of July 1, 1996 (the "Existing Agreement"), that contains
<PAGE>
provisions relating to the composition of the Board of Directors of the Company
(the "Board") and certain other matters;
WHEREAS, the Company plans to commence an initial public offering (the
"Public Offering") of shares of Common Stock and the WAT Trustee and the
Westfield Group intend to remain shareholders of the Company after the Public
Offering and wish to enter into this Agreement with the Company in order to
terminate the Existing Agreement and to establish and define their respective
rights and obligations with respect to the matters hereinafter set forth after
the Public Offering;
WHEREAS, pursuant to the Third Restated Articles of Incorporation
of the Company (the "Articles"), the Second Amended and Restated By-Laws of
the Company (the "By-Laws") and certain actions taken by the Board, following
the closing of the Public Offering, the Board will be comprised of 9
directors (the "Directors") and will be divided into three classes, as nearly
equal in number as possible, with the term of office of the first class
expiring at the Annual Meeting of Shareholders in 1998, the second class
expiring at the Annual Meeting of Shareholders in 1999, and the third class
expiring at the Annual Meeting of Stockholders in 2000, with the successors
to any expired class to be elected for three-year terms;
WHEREAS, it is expected that following the Public Offering, a majority
of the Directors will be Independent Directors (as defined below); and
WHEREAS, the WAT Manager and the WAT Trustee have advised the Company
that under Australian law the unitholders of WAT must approve the exercise by
the WAT Trustee of its voting rights with respect to the election of the
Directors (the "Australian Voting Requirement").
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. EFFECTIVENESS. The parties hereto hereby covenant and agree that
immediately upon the closing of the Public Offering the Existing Agreement shall
terminate and this Agreement shall become effective.
2. ELECTION OF DIRECTORS. (a) MEETING OF WAT UNITHOLDERS. For so
long as the Australian Voting Requirement is applicable, the WAT Trustee
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hereby covenants and agrees to (i) call a meeting of WAT unitholders to obtain
the approval for the WAT Trustee to exercise voting rights in respect of the
election of Directors and (ii) attend, in person or by proxy, any shareholders
meeting at which the shareholders of the Company are to vote for the election of
Directors and to vote or cause to be voted all of their shares of Common Stock
at each such meeting. The timing of the election of directors will be
coordinated with the requirements for unitholders meetings as required by
Australian corporate law so that sufficient time is permitted for the WAT
Trustee to obtain unitholder approval.
(b) INDEPENDENT DIRECTOR. For purposes of this Agreement,
"Independent Director" shall mean a director of the Company who (i) is not, and
has not for the last 12 months been, an officer, director or employee of any of
the Westfield Group or the WAT Trustee, (ii) is not an Affiliate of any of the
Westfield Group or the WAT Trustee or an officer or employee of such an
Affiliate, (iii) is not a member of the immediate family of any natural person
described in clauses (i) and (ii) above, and (iv) is free from any relationship
that would interfere with the exercise of independent judgment as a Director.
For purposes of this definition of Independent Director only, an "Affiliate"
shall mean any person directly or indirectly Controlling, Controlled by, or
under Control with, such other person; "Control" shall mean the power to
exercise a controlling influence over the management or policies of a company,
unless such power is solely the result of an official position with any of the
Westfield Group or the WAT Trustee; and "member of the immediate family" shall
mean any parent, spouse of a parent, child, spouse of a child, spouse, brother
or sister and includes step and adoptive relationships.
3. RIGHT OF FIRST REFUSAL. (a) Whenever and as often as the WAT
Trustee or its successors or assigns (each, a "Seller") shall desire to sell all
or any of the Warrants granted to the WAT Trustee pursuant to the Subscription
Agreement and Plan of Reorganization Relating to CenterMark Properties, Inc.,
dated as of May 13, 1996, and in connection with the Public Offering (together,
the "Company Warrants"), pursuant to a bona fide offer for the purchase thereof,
the Seller shall give notice (the "Notice") to WHL (the "Offeree") in writing to
such effect, enclosing a copy of such bona fide offer (it being agreed that the
Seller shall cause any such offer to be reduced to writing) and specifying the
portion of the Company Warrants which the Seller desires to sell (the "Seller's
Warrant"), the name of the person or persons to whom the Seller desires to make
such sale and the dollar value of the consideration which has been offered in
connection therewith. Upon receipt of the Notice, the Offeree initially shall
have the first
3
<PAGE>
right and option to purchase up to all of the Seller's Warrant, for cash at a
purchase price equal to the dollar value of such consideration, exercisable for
a period of 30 days from the date of receipt of the Notice (the "Expiration
Date"). Failure of the Offeree to respond to the Notice within the 30-day
period shall be deemed to constitute a notification to the Seller of the
Offeree's decision not to exercise the first right and option to purchase the
Seller's Warrant under this Section 3.
(b) The Offeree may exercise the right and option provided in this
Section 3 by giving written notice to the Seller not later than the close of
business on the date of expiration of such right and option (or if such date is
not a business day, then on or before the close of business on the next
succeeding business day), advising of the election to exercise the same and the
date (not later than 30 days from the date of such notice) upon which payment of
the purchase price for the Seller's Warrant shall be made. The Seller shall
cause to be delivered to the Offeree notice, on the payment date specified in
such notice, the certificate or certificates representing the Seller's Warrant
being purchased by the Offeree, properly endorsed for transfer, against payment
of the purchase price therefor.
(c) If all the Seller's Warrant is not purchased by the Offeree in
accordance with this Section, the Seller (i) shall not be required to sell any
of the Seller's Warrant to the Offeree and (ii) may, during the 90-day period
commencing on the expiration of the rights and options provided for in this
Section, sell all (but not less than all) of the Seller's Warrant to the
transferee named in the Notice for a consideration the dollar value of which is
equal to or greater than the dollar value of the consideration specified in the
Notice, subject in each case to the restrictions contained in this Section 3 of
this Agreement.
(d) WHL may designate or assign its rights to purchase the Company
Warrants pursuant to this Section 3 to any person or entity with the prior
written consent of the Seller, such consent not be unreasonably withheld or
delayed.
4. NON-COMPETITION. WHL shall not, and shall not permit any of its
subsidiaries, for so long as it or any of its subsidiaries is the Advisor (as
defined in the Advisory Agreement, dated July 1, 1996, as amended, between the
Company and the Advisor) and the Manager (as defined in the Management
Agreements, dated July 1, 1996, as amended, between the Company, the Manager and
the Centers) of the Centers, directly or indirectly, to acquire any
4
<PAGE>
ownership interest in shopping center properties or power centers in the
United States (a "Competitive Business") or own an interest in, as a partner,
member, stockholder, co-venturer or otherwise, any corporation, company,
partnership, firm, association, enterprise or other entity that owns any
ownership interest in a Competitive Business, PROVIDED that nothing contained
in this Section 4 shall prohibit or restrain WHL or any of its subsidiaries
or Affiliates from (a) owning the interests it currently holds in Garden
State Plaza or owning any interest in Westfield America Trust or the Company,
(b) acquiring shares of capital stock or other equity interests in any entity
where such shares or interests represent a minority interest of 5% or less of
such entity's outstanding capital stock or equity interests, PROVIDED that
such entity is not controlled by WHL or any such subsidiary and employees of
the Westfield Group do not serve as an executive officer, director, manager
or advisor to such entity, (c) acquiring indebtedness of any person, (d)
acquiring by asset purchase, stock purchase, merger, consolidation or
otherwise of any corporation, partnership or other business entity partially
engaged in the Competitive Business, PROVIDED that such activities relating
to the Competitive Business do not exceed 5% of the revenues or net equity of
such entity or such entity disposes of such Competitive Business within one
year of such acquisition, or (e) acquiring any interest in airport projects
or the retail portions thereof.
5. GSP OPTION AGREEMENT. The Company and Westfield Capital
Corporation Finance Pty Limited ("WCC"), a subsidiary of WHL, are parties to
that certain GSP Option Agreement (the "GSP Option Agreement"), dated as of
July1, 1997, granting the Company the option to buy the outstanding common
stock of Westland Realty, Inc. Pursuant to Section 5.2(b) of the GSP Option
Agreement, if the Company exercises its option, WCC may elect to receive the
purchase price under the GSP Option Agreement in stock of the Company or in
cash. WHL hereby notifies the Company that, if the option is exercised by
the Company, WCC has irrevocably elected to receive common stock of the
Company for the purchase price, such shares of common stock to be duly
authorized, validly issued, fully paid and nonassessable and free and clear
of all security interests, mortgages, liens, charges, restrictions,
encumbrances and claims of any nature whatsoever. The amount of shares of
common stock shall be determined by dividing the purchase price by an amount
equal to the average of the closing sale price of the Company on the New York
Stock Exchange for the 20 trading days prior to the exercise of the option.
6. NOTICES. All notices, requests, demands and other communications
made in connection with this Agreement shall, except as otherwise expressly
herein provided, be in writing and shall be (a) mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
(b) transmitted by hand delivery or telecopy, addressed as follows:
(i) if to the Company, to:
Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
Telecopy: (310) 444-9071
Telephone: (310) 445-2406
Attention: Co- President
5
<PAGE>
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Barry Mills, Esq.
(ii) if to WAM, to:
Westfield America Management Limited
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Telecopy: 011-612 9358-7077
Telephone: 011-612 9358-7154
Attention: Company Secretary
with a copy to:
The National Manager
Property Trusts
Perpetual Trustees Australia Limited
Level 7
1 Castlereagh Street
Sydney
Australia
Telecopy: 011-612 9233-8582
Telephone: 011-612 9229-9975
Attention: Mr. Allan Cowper
6
<PAGE>
(iii) if to the WAT Trustee, to:
The National Manager
Property Trusts
Perpetual Trustees Australia Limited
Level 7
1 Castlereagh Street
Sydney
Australia
Telecopy: 011-612 9233-7688
Telephone: 011-612 9229-9975
Attention: Mr. Allan Cowper
with a copy to:
Westfield America Management Limited
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Telecopy: 011-612 9358-7077
Telephone: 011-612 9358-7154
Attention: Company Secretary
(iv) if to Westfield Corporation, to:
c/o Westfield Corporation, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025-3348
Telecopy: (310) 444-9071
Telephone: (310) 478-4456
Attention: President
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Barry Mills, Esq.
7
<PAGE>
(v) if to Annatar, to:
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Telecopy: 011-612 9358-7165
Telephone: 011-612 9358-7154
Attention: Company Secretary
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Barry Mills, Esq.
(iv) if to WHL, to:
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Telecopy: 011-612 9358-7165
Telephone: 011-612 9358-7154
Attention: Company Secretary
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Barry Mills, Esq.
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
8
<PAGE>
7. REMEDIES. The parties hereto agree that in the event of any
violation by WHL or any of its subsidiaries of the provisions of Section 4 of
this Agreement, the Company will be irreparably damaged. Accordingly, the
Company shall be entitled to an injunction (either preliminary, permanent or
both) restraining any violation of the provisions of Section 4 of this
Agreement by WHL or any of its subsidiaries or to any other appropriate
decree of specific performance. Such remedy shall not be exclusive and shall
be in addition to any other remedy that the Company shall have, including,
without limitation, recovery of damages.
8. SEVERABILITY. If any provision of this Agreement is inoperative
or unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable, unless to give effect to any
such remaining provision or provisions would frustrate the purpose and intention
of the parties hereunder. The invalidity of any one or more phrases, sentences,
clauses, sections or subsections of this Agreement shall not affect the
remaining portions of this Agreement.
9. HEADINGS. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
10. ENTIRE AGREEMENT. This Agreement, together with all exhibits
hereto, constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
11. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and both of which shall
together constitute one and the same instrument.
12. GOVERNING LAW. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
State of Missouri.
13. ASSIGNMENT. This Agreement shall not be assignable by any of the
parties hereto,without the prior written consent of the other parties hereto,
9
<PAGE>
except that members of the Westfield Group shall be permitted to assign any of
their rights hereunder to any subsidiary of WHL.
14. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, executors, administrators, successors and permitted
assigns.
15. AMENDMENT; WAIVERS. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought.
16. LIMITATION OF LIABILITY. As the WAT Trustee enters into this
Agreement only in its capacity as trustee of WAT, the WAT Trustee is liable
under this Agreement only up to the extent to which it is indemnified out of the
assets of WAT. The WAT Trustee is only personally liable to the extent that it
is fraudulent, negligent, or in breach of trust. If the WAT Trustee is not
personally liable, the parties other than the WAT Trustee must not sue the WAT
Trustee personally or seek to wind it up to recover any outstanding money, and
the WAT Trustee is entitled to plead this clause as a bar to the taking of any
such proceedings.
17. WAT TRUST DEED. Each of the parties to this Agreement, other
than the WAT Trustee, acknowledges that it has received a copy of the WAT Trust
Deed (as amended) establishing WAT and that it understands the rights and
obligations of the WAT Trustee and the Manager therein.
[Intentionally Left Blank]
10
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
WESTFIELD AMERICA, INC.
By:
-----------------------------------------
Name:
Title:
PERPETUAL TRUSTEE COMPANY LIMITED,
in its capacity as trustee of
Westfield America Trust
By:
-----------------------------------------
Name:
Title:
WESTFIELD AMERICA MANAGEMENT LIMITED,
in its capacity as manager of
Westfield America Trust
By:
-----------------------------------------
Name:
Title:
WESTFIELD CORPORATION, INC.
By:
-----------------------------------------
Name:
Title:
11
<PAGE>
WESTFIELD AMERICAN INVESTMENTS PTY. LIMITED
By:
-----------------------------------------
Name:
Title:
WESTFIELD HOLDINGS LIMITED
By:
-----------------------------------------
Name:
Title:
12
<PAGE>
EXHIBIT 10.27
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT(hereinafter called the "Agreement"), dated
as of May __, 1997, among WESTFIELD AMERICA, INC., a Missouri corporation (the
"Company"), FRANK P. LOWY, DAVID H. LOWY, PETER S. LOWY and STEVEN M. LOWY
(collectively, the "Lowy Family").
RECITALS
WHEREAS, the Company is in the business of owning, operating, leasing,
developing, redeveloping and acquiring shopping centers and powers centers
(collectively, the "Centers") in the United States;
WHEREAS, the Lowy Family and interests associated with the Lowy Family
currently have significant ownership interests and significant management
involvement in the operations of Westfield Holdings Limited, an Australian
corporation ("WHL", and together with its subsidiaries, the "Westfield Group"),
and WHL is a shareholder of the Company; and
WHEREAS, the Company plans to undertake an initial public offering
(the "Public Offering") of shares of common stock, par value $.01 per share (the
"Common Stock"), and, in connection therewith, the Lowy Family has agreed to
enter into certain restrictive covenants on the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. NON-COMPETITION. Each member of the Lowy Family shall not,
directly or indirectly, acquire any ownership interest in shopping center
properties or power centers in the United States (a "Competitive Business") or
own an interest in, as a partner, member, stockholder, co-venturer or otherwise,
any corporation, company, partnership, firm, association, enterprise or other
entity that owns any ownership interest in a Competitive Business, PROVIDED that
nothing contained in this Section 1 shall prohibit or restrain any member of the
Lowy Family from (a) owning any interest in WHL (which is the owner of Garden
State Plaza Shopping Center in Paramus, New Jersey) or Westfield America
Trust, an Australian public property trust organized under the laws of New
South Wales, (b) acquiring shares of
<PAGE>
capital stock or other equity interests in any entity where such shares or
interests represent a minority interest of 5% or less of such entity's
outstanding capital stock or equity interests, PROVIDED that such entity is
not controlled by members of the Lowy Family or WHL or any of its
subsidiaries and employees of the Westfield Group do not serve as an
executive officer, director, manager or advisor to such entity, (c) acquiring
indebtedness of any person, (d) acquiring by asset purchase, stock purchase,
merger, consolidation or otherwise of any corporation, partnership or other
business entity partially engaged in the Competitive Business, PROVIDED that
such activities relating to the Competitive Business do not exceed 5% of the
revenues or net equity of such entity or such entity disposes of such
Competitive Business within one year of such acquisition, or (e) acquiring
any interest in airport projects or the retail portions thereof. The
non-compete covenants contained in this Agreement shall only apply to the
members of the Lowy Family for so long as (i) any member of the Westfield
Group is the Advisor (as defined in the Advisory Agreement, dated as of July
1, 1996, as amended, between the Company and the Advisor) and the Manager
(as defined in the Management Agreements, dated as of July 1, 1996, as
amended, between the Company and/or its affiliates and the Manager) of any of
the Centers, and (ii) interests associated with the Lowy Family have
significant ownership interests and significant management involvement in the
operations of WHL.
2. NOTICES. All notices, requests, demands and other communications
made in connection with this Agreement shall, except as otherwise expressly
herein provided, be in writing and shall be (a) mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid, or
(b) transmitted by hand delivery or telecopy, addressed as follows:
(i) if to the Company, to:
Westfield America, Inc.
11601 Wilshire Boulevard
Los Angeles, California 90025
Telecopy: (310) 444-9071
Telephone: (310) 445-2406
Attention: Co-President
2
<PAGE>
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Barry Mills, Esq.
(ii) if to any member of the Lowy Family, to such member at:
Level 24 Westfield Towers
100 William Street
Sydney, NSW 2011
Australia
Telecopy: 011-612-9358-7165
Telephone: 011-612-9358-7154
with a copy to:
David Gonski
Wentworth Associates
Level 23
MLC Center
Martin Place, Sydney
NSW 2000 Australia
Telecopy: (61-2) 9358-7015
Telephone: (61-2) 9358-7312
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
3. REMEDIES. The parties hereto agree that in the event of any
violation by any member of the Lowy Family of the provisions of Section 1 of
this Agreement, the Company will be irreparably damaged. Accordingly, the
Company shall be entitled to an injunction (either preliminary, permanent or
both) restraining any violation of the provisions of Section 1 of this
Agreement by any member of the Lowy Family or to any other appropriate decree
of specific performance. Such remedy shall not be exclusive and shall be in
addition to any other remedy that the Company shall have, including, without
limitation, recovery of damages.
3
<PAGE>
4. SEVERABILITY. If any provision of this Agreement is inoperative
or unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable, unless to give effect to any
such remaining provision or provisions would frustrate the purpose and intention
of the parties hereunder. The invalidity of any one or more phrases, sentences,
clauses, sections or subsections of this Agreement shall not affect the
remaining portions of this Agreement.
5. HEADINGS. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
6. ENTIRE AGREEMENT. This Agreement, together with all exhibits
hereto, constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
7. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and both of which shall
together constitute one and the same instrument.
8. GOVERNING LAW. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
State of New York.
9. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, executors, administrators and successors.
10. AMENDMENT; WAIVERS. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought.
[Intentionally Left Blank]
4
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
WESTFIELD AMERICA, INC.
By: ________________________________
Name:
Title:
____________________________________
Frank P. Lowy
____________________________________
David H. Lowy
____________________________________
Peter S. Lowy
____________________________________
Steven M. Lowy
5
<PAGE>
Exhibit 10.32
WESTFIELD HOLDINGS LIMITED
Level 24, 100 William Street
Sydney NSW 2011
May __, 1997
To the U.S. Underwriters and International
Managers listed on Schedule A hereto and to the
holders of the Common Stock issued under
Registration Statement on Form S-11
(No. 333-22731)
Gentlemen:
Reference is made to (i) that certain Promissory Note, dated the date
hereof, from Westland Management, Inc. and Westfield Partners, Inc. in the
original principal amount of $145 million, and (ii) that certain Pledge and
Security Agreement, dated as of the date hereof, from Westland Realty, Inc.,
Westland Management Inc. and Westfield Partners, Inc., securing such
Promissory Note. Westland Realty, Inc., Westland Management, Inc. and
Westfield Partners, Inc. are indirect wholly-owned subsidiaries of Westfield
Holdings Limited.
This letter will confirm that the Board of Directors of Westfield
Holdings Limited has authorized the following representation to each of
the addressess of this letter:
That (i) Westland Management, Inc. and Westfield Partners,
Inc. will not prepay the Promissory Note prior to May __, 2004 except
in connection with a sale of the Garden State Plaza shopping center (or
Westfield Holdings' indirect interest therein) to an unaffiliated third
party, and (ii) if the Promissory Note shall be prepaid prior to May
__, 2004 for any reason the Make-Whole Amount payable under the Note
shall be payable for the period through May __, 2004.
The letter will further confirm that the undersigned acknowledges that
each of the addressee is relying on the foregoing representation and connection
with the issue and sale of Common Stock under the above-referenced Registration
Statement.
Very truly yours,
WESTFIELD HOLDINGS LIMITED
By: _________________________________
<PAGE>
EXHIBIT 21.1
LIST OF SUBSIDIARIES OF THE COMPANY
The following entities are wholly-owned by the Company:
- -------------------------------------------------------------------------------
PLACE OF INCORPORATION OF
ORGANIZATION
- -------------------------------------------------------------------------------
Westfield America Meriden Square, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Westfield America of Annapolis, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Westfield America of Bonita, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Westfield America of Missouri, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Westfield America of Vancouver, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Westfield America of West Covina, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Westfield America of Wheaton Inc. Delaware corporation
- -------------------------------------------------------------------------------
CMF, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Eagle Rock Properties, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Mid Rivers Office Development 1, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Montgomery Mall Limited Partnership Maryland limited partnership
- -------------------------------------------------------------------------------
Montgomery Mall Properties, Inc. Delaware corporation
- -------------------------------------------------------------------------------
South County Properties, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Topanga Center, Inc. Delaware corporation
- -------------------------------------------------------------------------------
West Park Mall, Inc. Delaware corporation
- -------------------------------------------------------------------------------
West Park Partners, L.P. Missouri limited partnership
- -------------------------------------------------------------------------------
WAP HC, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Westland Properties Inc. Delaware corporation
- -------------------------------------------------------------------------------
The Connecticut Post Limited Partnership Connecticut limited partnership
- -------------------------------------------------------------------------------
Residential Rentals and Investments, Inc. Connecticut corporation
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
PLACE OF INCORPORATION OF
ORGANIZATION
- -------------------------------------------------------------------------------
Trumbull Department Stores, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Westfield Management, Inc. California limited partnership
- -------------------------------------------------------------------------------
Westland Milford Properties, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Westland Partners, Inc. Delaware corporation
- -------------------------------------------------------------------------------
Westland Shopping Center, L.P. California limited partnership
- -------------------------------------------------------------------------------
Westland South Shore Mall, L.P. California limited partnership
- -------------------------------------------------------------------------------
The Company owns interests in the following entities:
- -------------------------------------------------------------------------------
PERCENTAGE PLACE OF INCORPORATION OF
OWNED ORGANIZATION
- -------------------------------------------------------------------------------
Annapolis Mall Limited Partnership 30.00% Maryland limited partnership
- -------------------------------------------------------------------------------
EWH Escondido Associates, L.P. 45.00% Delaware limited partnership
- -------------------------------------------------------------------------------
M-R St. Peters, L.P. 50.00% Delaware limited partnership
- -------------------------------------------------------------------------------
MBM Associates 1.00% California limited partnership
- -------------------------------------------------------------------------------
Meriden Square Partnership 50.00% Connecticut general partnership
- -------------------------------------------------------------------------------
Mid Rivers Limited Partnership 33.33% Missouri limited partnership
- -------------------------------------------------------------------------------
Mission Valley Partnership 75.80% California limited partnership
- -------------------------------------------------------------------------------
Owensmouth Office Associates, Ltd. 50.00% California limited partnership
- -------------------------------------------------------------------------------
Plaza Camino Real 40.00% California limited partnership
- -------------------------------------------------------------------------------
Topanga Plaza Partnership 42.00% California general partnership
- -------------------------------------------------------------------------------
Vancouver Mall 50.00% Washington general partnership
- -------------------------------------------------------------------------------
West Valley Partnership 42.50% California limited partnership
- -------------------------------------------------------------------------------
2
